Home prices are starting to cool off but are still going up rapidly amidst the bullish economy. As a matter of fact, from now till April 2020, prices are projected to rise by another 4.1%.
If you’re interested in earning real estate agent income by getting into the house buying and selling game, that’s good news for you.
Here’s the truth though… Just because you’re a real estate agent in a seller’s market doesn’t mean that you’re for sure going to make a killing.
Plenty of talented agents have jumped into selling with high hopes only to quit within a couple of years.
To make sure that you’re ready for whatever comes your way, below, our team has compiled a list of tips that will help you to better plan on living off of real estate agent income.
1. Know How Much You’re Likely to Make
The first step to planning on living off of real estate agent income is to know how much you’re likely to make in real estate. The problem with just looking up “average real estate agent salary” though is that those averages don’t disclose how many hours you need to work to hit those numbers.
Remember, being an agent means being self-employed. There is no minimum 40-hour work week that somebody is going to give you that will ensure you’ll be able to meet the income levels you read about.
For that reason, our favorite resource when it comes to understanding how much you’re likely to make as an agent is talking to other agents.
You can talk to agents by emailing people that you see on “For Sale” signs or by finding a local real estate meet up to join.
2. Understand That Jobs Come with Expenses
When you get a real estate client, they don’t start automatically paying you an income.
For starters, you won’t get a cent until you successfully sell their home. On top of that, selling their home is likely to cost you money.
Most agents will front all marketing costs associated with making a home sale which, in today’s world, can cost a lot given the amount of marketing clutter that’s out there.
Be sure to plan for those expenses so that you don’t get caught off guard and end having to dip into money that you need to live.
3. Plan for Potential Losses
Another big tip that not enough people think about when planning their lives around real estate agent income is that you could experience serious cash losses. As a matter of fact, you’re likely to at certain points in your career.
For example, if you get a listing and spend $2000.00 marketing it, what happens if that listing doesn’t end up selling? Usually, your client will fire you and hire somebody else.
Guess what happens to those $2000.00 you spent on marketing when that happens? Nothing.
It stays gone.
Making sure that you’re financially prepared to weather bad investments as an agent is key to avoiding potential bankruptcy situations.
4. Make Sure That You Have Savings to Cover Dry Spells
Real estate markets get hot and cool down. During hot markets, you’re more likely to sell and during cool markets, you’ll likely be out of work.
Work hard to make money when the going is good and only spend a fraction of what you make so that you have a little something socked away for when the going gets rough.
If you live by that savings strategy, you’ll give yourself a much better chance of success in real estate.
5. Appreciate The Rate of Failure
It’s important that you don’t put all of your resources into pursuing a real estate career because you’re mesmerized by the “Billion Dollar Real Estate Moguls” you see on HGTV.
The reality of real estate is that the vast majority of people that start out as agents will fail in two years. The reason for that failure is a lot of things but no matter people’s reasons, it should tell you that real estate agent income is hard to come by.
Keeping that truth in mind should help you to better appreciate and parcel out real estate income that you receive when you get it.
6. Get Smart About Retirement
Being a real estate agent doesn’t come with a 401K plan. To make sure that you don’t have to keep showing houses well into your 90’s, understand that you’ll want to be proactive about socking money away as you move through your real estate career.
Dropping 20 – 30% of your earnings into a ROTH IRA can do wonders for your future.
7. Get Friendly With Lenders
If you’ve learned anything from reading this piece so far, we hope that it’s that real estate income is often unpredictable. To make sure that you can get through slumps, we recommend getting friendly with lenders that understand the real estate business.
Websites like https://mycommission.com offer cash advances for agents and other local banks may be able to help as well.
Just know where your lifelines are in case you should need them.
Wrapping Up How to Plan for Living on Real Estate Agent Income
Real estate agent income can far outpace the income of an average person. It can also fall well short of it.
After reading out tips, we hope that you feel better prepared to create plans around your agent income that will allow you to live a consistently decent lifestyle today and far into retirement.
For more information on all things real estate and finance, check out more of our newest content.