You’re looking to become a real estate broker. It’s an exciting career. If you want to start your own brokerage, there are some facts you need to know. Among those are costs that hit every new brokerage. Some of these might be on your radar, but you want to be sure to account for all of the expenses to improve your chances of rapid success.
Fees and Legal Expenses
You had to pay fees just to get your license. Unfortunately, business expenses don’t stop there. Because you’re working for yourself, you will be paying for some legally mandated stuff that might not have been coming out of your pocket before. That includes payroll tax. As an employee, you were only paying half of payroll taxes. Now, you foot the entire bill. You’ll also have association fees, insurance (both for the business and for yourself) and MLS fees. These are pretty inescapable. And, if you plan to have employees, you’ll need insurance policies to cover them too.
Aside from the mandatory stuff, you have to spend money to keep your brokerage functional. Even if you’re working from home, you’ll need office supplies. Marketing materials are essential for building up a client base and networking. You’ll absolutely need phone and internet service. You’ll also have new vehicle expenses. Even if you don’t buy a new car for the brokerage (which is an expense you should strive to avoid in the first year), there will be additional gas and maintenance costs. You have to do some driving to sell real estate.
You may find other technology products and services increasing your spending, and (especially if you incorporate) you might need to pay for some legal expertise to make sure you’re above board.
Even though you shelled out money to get certified to do this job, you aren’t done learning. Continued learning is an eternal part of real estate. Whether you go to conferences, read books or continue your education in other ways, you’ll have to invest at least time into the learning process. Putting some cash into education is virtually inevitable. Certified resources are vital to keeping up with changes in the industry — especially when they are changes to laws and local codes and ordinances.
Ultimately, there will be more expenses that appear while you’re getting the brokerage started, but you’ll have more control over the rest of your spending. Whether or not you lease an office space, how much you want to spend on business cards and most of the minutiae of the business will be up to you. When you budget for the costs you can’t avoid, it makes it easier to manage the other expenses. As long as you can make a reasonable budget and stick to it, you have a real chance to be profitable in your very first year. After that, the sky’s the limit.