When you work as a commercial real estate agent, budgeting and motivation are key parts of the job. You must stay focused and remain financially viable as you build your business.
Here are some facts to consider:
- You will have costs to cover personally until your income grows as an agent and also in an ongoing way.
- It takes time to build your client base, income pipeline, and your market share, so be prepared for some hard work.
- Commercial property deals can be slower to convert or fewer in number when compared to residential sales, however the commission potential per transaction can be larger when you focus on quality listings in good locations.
Taking these 3 facts into consideration, you can see why a budget approach is wise when you move into a new brokerage or new area. All good intentions are useful to be an agent, but action is more critical to achieving results.
Often you hear the question asked, ‘How long does it take to establish yourself as an agent?’ To answer the question, a lot depends on your location, your prospecting activities, property types, the economy, and your business skills. On average it takes about 4 to 6 months to create reasonable momentum and opportunity as an agent (assuming you have the skills and take the right actions). Commissions will follow with that personal process however motivation and prospecting are critical parts of the property business for an agent. Do you have a prospecting model? How diligent are you in making the calls and the contacts every day?
The main costs you will have as an agent are fairly basic, but they are important. Without them nothing much will happen. Here is a list of the main ones to consider:
- Motor vehicle – Your motor vehicle should be reliable, professional and economical. Most of your time will be spent out in the property market and driving around your town or city. As the cost of fuel and running costs rise, choose a motor vehicle that will not be a high cost to run.
- Telephone – You can get some very good mobile telephone deals today that will easily cover your communication strategies. Think about your data use, internet connection, emails, calls, and SMS messages. Have sufficient flexibility in your telephone package to cover those issues. People will want to contact you regularly so make the process easy and convenient for them.
- Marketing material – You really do not need a lot of marketing material as an agent but you do need professional business cards and lots of them. I would go so far as to say you really only need business cards if you are prepared to meet lots of people; your business card will support and strengthen the process. Make it a target to give out at least 25 business cards per day as you meet new people locally.
- Computer – Your computer is your lifeline of communication. You can connect to your office at anytime and anywhere when you have a good computer and internet link. Carry your laptop computer with you in your car for that very purpose.
- Email and Internet – Cloud based email systems are preferable than those that are located in the office server. Many an agent has been frustrated by the office server ‘going down’ for lengthy periods of time, so if you must use the office email and server system, have a backup process to use at any time that is cloud based.
- Database – Your database is your pipeline to the future. Understand how you are going to prospect and connect with new people, and then fill your database regularly. Over time the database will give you the commissions and leads.
- Living expenses – You will have costs to live, and at the early stages of your career be prepared for little income or no commission cheques for some time. Budget for no income for 6 months, and then start your prospecting focus and actions to drive new opportunity in your direction. It will take 4 to 6 months to get the traction and the client base you need. During that time, improve your professional skills through practice.
Look at the elements of your budget and ensure that it helps you remain viable as you build your real estate business.