In real estate, nothing is guaranteed. Plan ahead, and build good financial habits with these essential budget tips to weather the many seasons of the real estate market, Ojo Labs’ Chris Heller writes.

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Top-tier real estate agents are known to make a steady income, but don’t expect to earn the big bucks as soon as you get started. It will take some time to gather leads, yield conversions and establish yourself in the industry. 

So, what can you do to make it through these lean years? Create a solid financial plan. A financial plan will help you know what you should be spending money on and what expenses you may not want to make a priority or even avoid altogether. 

This article will provide you with the financial planning tips you need to know. 

1. Settle debts 

Debts are never a good thing. Most debts will incur interest. They will also lower your credit score making it difficult to qualify for loans and housing. Come up with a plan to get rid of debt which may require consolidating it or dedicating a budget to paying it off.

2. Get an emergency fund together

No matter how far along you are in your career, you may come across a dry spell. In real estate, nothing is guaranteed. That’s why it’s advisable to start working on an emergency fund sooner rather than later. 

An emergency fund should be enough to get you through six months. You can start on it by depositing a certain amount into a savings account every month. You can even set up a direct deposit to ensure you don’t spend the money before it gets deposited. 

3. Get a business line of credit

A business line of credit serves as a safety net. It’s similar to a loan, only instead of getting a lump sum of money, you qualify for a specific amount of money you can borrow from in emergency situations. You can pay back the money back right away or over time. 

4. Figure out a marketing budget

It’s essential to continue marketing yourself no matter how tight your budget may be. If you don’t maintain some sort of visibility, you won’t be able to draw in leads and make money. Figure out how much you can afford — 10 percent of your income is recommended — and do your best to keep yourself out there.  

5. Seek out discounts 

A smart shopper seeks out discounts. You can get discounts on everything from the food you buy to the clothes you wear to the software you use in your office. You may also consider joining the Realtor Benefits program, which provides members with discounts on marketing tools, apps, cars, insurance and more. 

6. Remember, ‘If it’s free, it’s for me’

Some of the tools you need for success may be available to you for free. For example, you can do quite a bit of social media marketing simply by posting on your timeline, which doesn’t cost a dime. You may also get free resources through your brokerage firm, such as a free website, free signage, a free blog, free marketing and more.

7. Track your expenses 

It’s important to track your expenses in your personal and business life. This will give you insight as to where your money is going and what cuts can be made. You can track your expenses using simple tools like an Excel sheet, or you can go a little more high-tech with free money management apps like Mint, Mvelopes and Expensify. 

8. Find out about tax deductions 

If you are an independent contractor or self-employed, you may have certain tax deductions coming your way. For instance, you may be able to claim your insurance premiums or expenses for working at home. Talk to your accountant to find out how you can get a bigger check at tax time.

9. Set aside money for taxes

And speaking of taxes, keep in mind that you will need to pay 30 percent of your commissions back to Uncle Sam every April. You can ease the strain of a large tax bill by putting that money away immediately, before you spend it.

10. DIY if possible 

When it comes to marketing, many people like to make themselves look as professional as possible. But before you go spending a lot of money, think of what you can DIY.

For example, with some basic skills, you may be able to create your own website through WordPress or Wix. And though digital marketing may be convenient, knocking on doors and making phone calls are less expensive strategies that can be quite effective. 

11. Consider your expenses

When making a budget, it’s essential to set aside enough for necessary business expenses.

Your expenses include: 

  • Marketing expenses: Every agent should set aside about 10 percent of their income for marketing so they can stay visible.
  • MLS membership: Agents can’t stay competitive without an MLS membership. These typically cost anywhere from $20 to $50 per month.
  • Education expenses: You will have to set aside money for taking courses and renewing your license.
  • Office overhead: Most brokerages will charge desk fees to cover supplies and other resources they provide.
  • Insurance: Insurance requirements for real estate agents vary from state to state, but you may be required to carry E&O insurance as well as liability insurance. These can take a chunk out of your budget, but not as much of a chunk as a lawsuit will. 

Once you figure out your business expenses, you can assess other expenses such as rent, food, etc. This will give you an idea of how much you can spend on entertainment and other leisurely activities. 

The real estate industry can be quite lucrative, but those first few years can be tough. Creating a financial plan will help. The tips in this article will get you headed in the right direction. Good luck making it through the red to get to the green. 

Chris Heller is a best-selling author and currently serves as the Chief Real Estate Officer at Ojo Labs. He also serves as an Advisor and Head of the Editorial Board for  Connect with him on Facebook and LinkedIn.

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