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 youâre interested in earning real estate agent income by getting into the house buying and selling game, thatâs good news for you.
Hereâs the truth though⌠Just because youâre a real estate agent in a sellerâs market doesnât mean that youâre 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 youâre 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 Youâre Likely to Make
The first step to planning on living off of real estate agent income is to know how much youâre likely to make in real estate. The problem with just looking up âaverage real estate agent salaryâ though is that those averages donât 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 youâll be able to meet the income levels you read about.
For that reason, our favorite resource when it comes to understanding how much youâre likely to make as an agent is talking to other agents.
You can talk to agents by emailing people that you see on âFor Saleâ 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 donât start automatically paying you an income.
For starters, you wonât 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 todayâs world, can cost a lot given the amount of marketing clutter thatâs out there.
Be sure to plan for those expenses so that you donât 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, youâre 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 doesnât 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 youâre 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, youâre more likely to sell and during cool markets, youâll 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, youâll give yourself a much better chance of success in real estate.
5. Appreciate The Rate of Failure
Itâs important that you donât put all of your resources into pursuing a real estate career because youâre mesmerized by the âBillion Dollar Real Estate Mogulsâ 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 peopleâs 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 doesnât come with a 401K plan. To make sure that you donât have to keep showing houses well into your 90âs, understand that youâll want to be proactive about socking money away as you move through your real estate career.
Dropping 20 â 30% of your earnings into a ROTH IRA can do wonders for your future.
7. Get Friendly With Lenders
If youâve learned anything from reading this piece so far, we hope that itâs 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.