You’re in the real estate business: your job is being excellent at picking out and improving properties, selling them to the correct audiences and racking up sales at the end of the day to boost your profits, not micro-managing your business’ finances just to try and stay above the red line. With a few simple tips and tricks, you can keep financial troubles at bay, and focus on what you’re best at, without any distractions and worries from the bank.
1. Go Mobile
If you’re actively working in real estate, then the likelihood is that you’re always on the move, whether you’re property-hunting or traveling to meet new or pre-existing clients. “Movement is just a part of business now: everyone is always on the go, and you need a financial system which reflects that,” Dylan Metcalfe, a business writer at Britstudent and Write My X, claims, “so going mobile with your banking can really help. While this could be as simple as utilizing your bank’s mobile application, which many of them have these days, there are also other applications that can do even more for you. Handling taxes, payroll, and other economic difficulties are just some of the things that become a lot easier when you embrace mobile technology.”
Smartphones are everywhere, so nearly everyone has one, making working consistently across a team of several real estate agents easy. The only consideration you’ll have to make will be different companies making the phones, since they will have different ‘stores’ with differing levels of security and accessibility and, thus, different applications. So if you find a really useful one and want to share it with a team, make sure it’s available on multiple different app stores, just in case.
Mobile applications can streamline your banking, making your real estate business more effective and letting you stay in control of your finances, all from your pocket, which will be perfect for whenever you’re on the go and too busy to sit down and work out your economic situation with pen and paper. There’ll be less paperwork for you to man-handle and store away, and more structure in your business, without all the mess.
2. Pay Yourself First, But Be Careful
When it comes to dishing out salaries at the end of the month within your real estate business, make sure you always pay yourself first. Don’t take almost all the profit and leave your employees with next-to-nothing, but make sure that you do pay yourself. It is recommended to start off with paying yourself 10% of profits as a starting business, then increasing from there if business increases or decreases as necessary in times of need, when real estate prices aren’t great around your area or property pickings are slim.
Paying yourself first means that you always have personal finances, so you can support yourself – and a family, if that applies to you – before your business, because you are, ultimately, more important than your business. You will always be able to afford living costs, and perhaps a little bit more, with this technique, and, if anything bad happens to the business and unexpected costs arise, you have a personal pot to take money out of and cover the fees until your business can recover and get back on its feet.
However, remember to be frugal. Don’t take too many liberties with business benefits and lower your salary as much as possible, to make sure that, if bad economic times arise and you need the spare money that you’ve set aside, you’ve got enough to support yourself and not end up bankrupt. The real estate business can be incredibly tumultuous, so you need an economic plan which takes this into account. Focusing on skimping and saving instead of working hard isn’t the answer, but do remember to be careful with your finances and not splash the cash just because you’ve had a good month.
3. Be Prepared, And Don’t Squander Starting Capital
Many start-up businesses with brilliant plans and intentions get shut down prematurely by their unfortunate financial situations, since their backers simply didn’t realize how much capital is needed for the first stage of a start-up, with not a lot of monetary feedback in the first few months, or even years. To gain a profit, you need to put in lots of hard work and effort, and, more than likely, trudge through the first phase of business with not a lot of profit to show for it.
To avoid this hindering your chances at setting up and running a successful real estate business, make sure that you have enough capital to begin with so that you’re not preparing for failure. Having a small-scale, personal real estate collection and then improving and selling these buildings could help you to build up a big enough purse to get your real estate business started, while renting out the properties could provide you with a constant cash flow alongside your real estate business which can serve as a backup for when times aren’t so great.
“If you do have enough starting capital, make sure it doesn’t get to your head,” Blake Backhaus, a finance blogger at Australia2write and Nextcoursework, says, “many business owners will spend all their money on trivialities like business cards and company cars before they even receive any revenue from their businesses, and real estate businesses can be just as guilty of this. Make sure that you’re sensible!”
Real estate can be a difficult business to get into, but it’s becoming more and more lucrative with every passing year, due to the increase in demand for housing from a rapidly increasing population. Once you’ve established your business, you’ll need to get your finances in order, so remembering these useful hints will help you to keep in control, and ward off any unwelcome letters from the bank which hinder so many new real estate businesses. At the end of the day, while you might be excellent at handling the buying and selling of property, economical business matters may not come so easily to you, so make sure that you keep on top of your business’ finances.
This article has been contributed by Michael Dehoyos.