As a real estate professional, figuring out the optimal spending breakdown is essential for success. You know you’ve got to spend money to earn money, but how much of your income should you be spending and which expenses should be prioritized?
Luckily, we’ve got the answers to your questions. We’ve helped countless real estate professionals double and even triple their businesses and set themselves up for sustainable growth in the future. For the best results, follow this breakdown:
Marketing and Lead Gen — 20%
Marketing and lead generation should be your largest expense. Some people worry about spending too much on this category, but the more you spend, the more your revenue will increase, bringing in greater resources to put toward every other area in your business.
Salaries, Bonuses, and Benefits — 17.5%
The second-largest spending category should be salaries, bonuses, and benefits. To ensure you’re attracting and retaining the best team members, you need to be sure each member of your team feels incentivized to work toward high goals and rewarded for their efforts when they achieve those goals. Like marketing and lead gen, this category of spending is vitally important in driving revenue.
Occupancy and Rent — 5%
Your home base is an important part of your business. Good office space is crucial in creating a professional atmosphere to show clients. It also provides an environment for your team to work and build a team culture. Keep in mind that it’s easy to overspend on rent if you don’t have a clear number in your budget set aside for these expenses. Aim to put five percent of income toward your office space.
Tech — 2%
Good tech tools are key for running a real estate business smoothly. Reliable communication is essential, so communication tools would fall into this category. That includes phones and video platform software like Zoom.
Other software platforms can make your life easier. A good CRM, Docusign, or a hiring tool like Wizehire, will make your business much more efficient. This category should not be eating up your budget, however, so be sure to limit spending to 2 percent of income.
Education and Training — 2%
Some real estate professionals try to skip training and education expenses in order to save money, but this is a huge mistake. It’s essential that you spend some of the budget on these things. Educational conferences, training programs, coaching, and other resources don’t have to be expensive, and these can go a long way in building your business.
For easy-to-use digital learning, Workman Success Systems offers training programs for every member of your team. Click here to learn more about how this training option can teach your team how to improve in every area of the business. If you’re looking for free educational content for your team, click here to access scripts that will help you convert more leads and step-by-step info on increasing referrals.
Supplies and Equipment — 2%
Don’t forget to include office supplies, lockboxes, for-sale signs, and all other necessary tools in your budget. These small purchases are easy to forget in the budget, but they add up and they’re important to account for.
Automobile and Auto Insurance — 1.5%
You likely didn’t go into real estate because you wanted to sit in an office without going anywhere all day. It’s a highly mobile career. Whether you’re visiting homes across town, meeting clients, or hosting events, you’ll need reliable transportation. Budget 1.5 percent of your income for these expenses.
Profit — 50%
After all your expenses, you should have 50 percent of your income left. This is the portion of income that becomes profit, and it’s also the portion you’ll pay taxes on. Taxes can be complicated for real estate agents, so be sure you take the time to understand the way tax season works. For a simple guide on paying taxes as a real estate agent, click here.
The rest of your profit can be put back into your business to build and grow. You’ll be able to build an unstoppable team with this structure. To learn more about how to structure your spending and income, schedule a free consultation with one of our Workman Success Systems business analysts.