Planning & Budgeting for the First 12 Months
Go in with your eyes wide open. Learn more about planning for the first year, creating a budget and the costs you’ll encounter.
Read the transcript
Hi. I’m Angela Fisher, the Agent Development Director here at CENTURY 21 Signature Real Estate. In this video, we’ll jump into all of the costs/considerations you need to know about to help you be more successful as you begin your journey in real estate.
So the first idea I want to talk about today is this idea of a ramp up timeline. You see the thing I think most people in real estate forget to account for is all of this money going out in the beginning & no money coming in in the first 3-6 months. You may be thinking – I think I can do better than that – & maybe you can BUT something to think through is that even if you started day ONE with a pre-approved, motivated, buyer – the average buyer typically spends about 8-10 weeks just searching & looking at homes BEFORE they write an offer. Then an average closing time is another 45-60 days…so if you add all of this up, you’re looking at at least 3 months until your first closing – which again…is the only days in which we get paid in this business.
The other reason, really, for this ramp up period is that there’s SO much to learn. You will spend what seems like a lot of time “in class” & studying to get your real estate license but honestly – that process in no way truly prepares you for what lies ahead in actually working with buyers & sellers and in learning all of the tools/systems involved.
You’re also spending so much of this first few months just letting everyone you know know you’re in real estate – so you can see why most new agents are probably closer to the 6 month mark for their first closing (aka. Commission check).
While your ramping up – something else, again, to think about is all of the on-oing operating expenses of running your real estate business – you’ll have the right away, “open your business” costs – things like joining the local MLS, buying lockboxes, signs, business cards, etc…, you’ll have monthly MLS fees, monthly broker fees, marketing & lead generation costs…really the list can get quite lengthy. So what’d I recommend (& truly this is just on average) is to plan for a minimum of around $500/month for business expenses…and remember for most of this time – there’s no money coming in while all of that money is going out.
COUNT ALL YOUR COSTS before jumping in – have a working home/personal budget (& as you recall I said previously – you probably want to have a good 3-6 months saved up for the home budget) and be ready for monthly expenses to begin right away in your business.
Now, there’s one more thing you should consider & know…in real estate there is definitely also a seasonal business cycle. In Iowa especially – it tends to follow our seasons – with “down” time being more through the winter months & the busiest times being in the summer. I like to think of it looking like a bell curve. I can’t necessarily say there’s a good or bad time to start because there can actually be pros & cons to any time you pick but it’s important to know real estate does have a seasonal sales cycle.
So, to wrap this all up – 3 main things to think through before jumping into real estate to help set yourself up for success – 1) Consider the 3-6 month ramp up time, 2) Count your costs & really be prepared for the financial impact of starting your business, and 3) Think about the time of year you’re getting in due to the seasonal sales cycle.
We want you to be as prepared as you possibly can so you can make an informed decision about when & if real estate is right for you.
Before real estate, I was a 2nd-grade teacher. I have had my license since 2014 and am now the Agent Development Director with Century 21 Signature Real Estate. I feel blessed to do what I do every day because I truly enjoy helping agents build their real estate businesses.
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