Before I got into real estate I heard there were a lot of 'expenses' but I still thought the compensation would surely outweigh them severely, and it can I know this as I see mega agents killing it, however, I had no idea how much higher they would be then when I was a w2 employee! about 2.5x higher!

Before I could get by spending between $2000 - $2300 month, I'm single no kids, and I don't need to live extravagently. As I was combing over my budget, considering buying a car, getting cable television, and starting a new postcard campaign this is what I came up with:

before new car, cable, & postcard (5,000 month) campaign my monthly bills (factoring in those MLS/NAR/Lockbox/etc. quarterlies & annuals into a monthly breakdown)

$4612

If I add the new expenses:

$6082 ($300 car, $70 cable, $1100 mailers)

and I was planning to put $7k - $10k down on the car which will dent my bankroll a good bit..


Living Expense Total 1484
Communications Total 240
Insurance Total 378
Auto (non-insurance) Total 870
Associations/Professional/Desk Fee Total 1342.33
Advertising/Marketing/Lead Gen Total 1727.49
Professional Services Total 41
Total 6082.82

Does this look like a decent budget or is it way out of whack?

In your auto expenses are you factoring in gas and maintanence? Also for living expenses are you factoring in food?

Some of those items look too low to be annual expenses . . . . but others look too high to be monthly.

Gas ($500), Maintenance, & Food ($500) are all incorporated. They are all monthly expenses. It is a fairly accurate budget as far as projected:actual is concerned, give or take a little on some items that can differ.

I will be going into Real Estate full time starting the first week of November and I am going to do the following to control my expenses and budget.

Business:

- Create my own website, update it and maintain it to save money, this will also keep me busy and I love working with the internet.

- Buy office supplies in bulk from Costco as opposed to Staples or smaller stores.

- Print everything I can at the office and try not to use my own printer and ink at home (unless I really have to!)

- Save on gas by planning my day and what I need to get done and where I need to go etc.

Personal:

- Brew my own coffee, eat breakfast and lunch at home as well and try not to spend too much money at restaurants unless I am entertaining a client or having a meeting etc.

- Pay myself first from every commission check and put it into an investment or high interest savings account

- Shop for clothing twice a year, buy all my winter clothing for business in the fall and my summer clothing in the spring and don't fo shopping regularly for clothing I really don't need


Besides that, my budget is simple and I plan business and personal seperately and plan annually.

So your Association Fees et cetera would total $16,107.96 annually ?

Yes I pay a little over $1200 month desk fee to keep most of my commission. It comes out to about $15,000 per year that I can deduct (so effectively, less than $15,000 when you figure in tax advantage) versus letting my broker passively "take" about $21000 to reach the same split when commissions role in which I cannot deduct. So if deducting the $15,000 saves me $3,000 in taxes, effectively a savings of $9,000 over going with the traditional no fee 'split'.

Aren't you severely mixing the line items in your personal and business budgets?

GIGO

Just sayin -

I have an LLC (sole proprietorship as far as IRS is concerned) and file a 1040 and Schedule C, I am my business and my business is me, all you need to know is which ones are business expenses and which ones are not.. why over complicate things? I just need to know how much money I need to make to actually survive, pay taxes, AND Net a profit, right? That is my budget's purpose, not to confuse me or complicate my life. And those were my catagory totals, I have it broken down further, I know E&O is deductible & auto insurance is not (at least if you take mileage)..

hey man,
be careful..
you can only spend 10-20% on marketing
and 10% on expenses...

So far unless you projected to make 140k
you cannot spend 6,000 a month...

A great book to read is the millionaire agent by gary keller..
he breaks down how much you can spend
based on your gross commissions..

It sounds like you are already spending too much.
I earn over 200k..and will only spend 5,000 a month total

this includes,..all my expenses,marketing, mortgage, car bill, gas bill, mailings, websites etc.. everything.

its called red light ,..green light..

if i earn more..only then can i spend more.

good luck

Once again I agree with Lindy (hope that is OK to use - I was nicknamed Pine here and it stuck).

The Millionaire Real Estate Agent and the subsequent books by Gary should be a must read - I know some CP agents, besides Lindy, that use it like their business bible.

But still - you should have had 6 months worth of personal expense and businesses expenses set aside to start comfortably - but that doesn't mean all the bells and whistles - that means 6 months of what it takes you to stay in the game.

I'm averaging around $1,200/mo. in business expenses but I take every little expense I can find. Kind of embarrassing b/c from what some of you are posting, my expenses are apparently too high. Are you all including any State and Federal Income tax in your equations?

Here's a basic general list of my business expense categories:

Office rent, phones (2), internets (3), websites (2), domain names (6), electronic forms, advertising (3), marketing, association dues (5), lockboxes, keys (many), licenses (2), insurance (2), continuing education, professional reading, office equipment, business cards/badges, materials, vendors, postage, Fed Ex, Mailbox, office supplies, meals, gifts, taxes (3), tax preparation, other fees, signs/riders/frames. And, I'm sure there's more.

its a learning curve..I didnt watch this last year and expenses ate up my profits..
now im a hawk

I'd put 2k or more on mine for the month. If I bagged REMAX I would be where you are VA. I thinnk your numbers are on. My big ones after REMAX are MLS fees by 3, gas, advertising as you described.

I don't have any office fees other than about $45 / month for Realtor.com enhanced listings and a contact management system. My main expenses are: my website hosting and domain names, whatever tech items I want to buy for work (like I just spent almost $2000 on my new camera, lenses, flash unit, etc...which I do use mostly for work) I use my broker's signs. My other expenses of course is the gas/maintenance on my car. I buy a few brochure boxes, printer ink/office supplies. Much of my mailing is paid by the brokerage (not farming but mailing stuff out to clients).