Most people get into real estate because they love the thrill of selling and leasing properties to those seeking a dream home or commercial premises.
Of course, that is the main part of the job, but there are other equally important considerations for realtors with aspirations of launching their own business.
Money management, accountancy and budgeting may sound like pretty dull topics of conversation, but they are an essential component of any successful business – particularly those, like real estate, where there are numerous transactions carried out, some with rather large sums of money involved.
It is essential then that you are competent in money management in the running of your real estate business, and even if you intend on contracting some of your accountancy needs to a third party, you still need to understand budgeting and the like to ensure the effective day-to-day running of your firm.
All businesses need to make money, and those that are largely commission-based require management that is well-disciplined and organized in order to forecast effectively – there will be periods of time where your financial incomings dry up for a while.
With efficient money management, you can:
To get you up and running, here are three basic money management tips for realtors and real estate agencies:
By budgeting in advance, you can plan for the short and medium-term future, and also protect your real estate firm from any unexpected costs by building in a contingency to your accounts.
Carefully managing your money will keep you ticking over until the next set of commissions come rolling in. A handy tip is to track every expense that comes out of your accounts per month – no matter how small. Account for these eventualities and you will have a better picture of your financial position.
Are you overspending in certain areas? Effective logging and budgeting will unearth this information and allow you to be more profitable in the long run.
Yes, it kind of goes without saying, but there are numerous regulations and statutory requirements that you must comply with.
Those are likely to be determined by your individual state commission for real estate and complying with them will ensure you don’t face financial penalties down the line.
You will, of course, need to file your taxes, and this is where effective accountancy and bookkeeping becomes invaluable.
If you employ staff, you also have to pay them on time and the appropriate amount – if you don’t, you might face a legal issue that you could do without.
Running the financial side of your real estate business may sound daunting, but once you have learnt the basics – and have effective filing and tracking systems in place – you will find that the whole process is so much easier.
The MBA programs available at Kettering University teach aspects of accounting and financial management, and these can be considered a cost-effective investment for you and any other decision-makers in your firm – ultimately, what you learn here could be the difference between success and failure.
Once you are comfortable with the financial requirements of business, you can get back to what you enjoy most – selling and leasing real estate.