How Much Money Can You Make as a Real Estate Broker Owner?

Starting a business is a big decision that can be full of risks and anxieties for anybody, and real estate brokerage is no different. One thing that is different about starting your own real estate brokerage, however, is how low the cost of entry can be, and how quickly you can turn that initial investment around and start making real profit.

With a careful plan and smart budgeting decisions, getting into the independent real estate game is perfectly feasible for just about anybody with the right credentials. Once you get the ball rolling, you can make really good money in this position, even taking into account the expenses needed to keep your agency running smoothly.

Getting started

It takes money to make money and, in the entrepreneurial world, this is especially true at the very beginning. The initial investments will be the single most important expenses you have at the beginning of your independent brokerage journey, and for good reason, but there is such a thing as getting too excited about these expenses. Remember, a business is a long-term commitment, and you’ll have plenty of time to get all of those fancy bells and whistles. Don’t go broke right away!

If you’re careful with your spending, starting out can actually be very affordable. Following this Budget Planning Worksheet, there are three general price points to consider. If you’re working with a less limited budget, the “Full Force” budget assumes you have the basics locked down and squared away, with a sustainable plan and budget to keep these running for a few months at least. If that’s the case, this budget includes expenses that aren’t as crucial up-front, like office space, paid marketing, and education expenses. Altogether, this plan will set you back an estimated $11,870 in initial investment.

On the other side of things, however, the “Entry Level” budget plan is designed for tight budgets. This is the “bare-bones” initial investment, but still includes everything you need to get your brokerage up and running. You forego bigger expenses like office space and listing marketing for now, but you’re able to get started with an initial investment of an estimated $2,215. Certainly much more affordable, and an investment that you can make back likely as soon as you complete your first closing!

The ”Midway” plan is somewhere in the middle of these two, giving you more than the bare-bones but without all of the bells and whistles of the Full Force launch. Importantly, these aren’t the only three budget plans to consider, your budget plan should be planned out carefully to meet your needs and situation. Consider these price points to be indicators of just how affordable getting started can be.

Keeping it up

The initial investment is crucial but, fortunately, it only happens once. Once you’re up and running, the real planning begins. This next step is when you need to take into consideration regular expenses and, eventually, the cost of scaling.

Although the path may seem uneasy at first, it’s important to remember that the numbers are on your side. More than 50% of real estate brokerages in the US are independently owned, so you can rest assured that this business venture is not an impossible task or a rare success story. Overhead and general expenses, including expenses paid out to any agents you’ve hired, are the main regular costs that need to be squared away right away. Often, a broker can be paying out anywhere from 50% up to even 70% of their revenue towards covering these expenses. This can seem like a shocking amount, but remember, if over half of brokerages are operating this way, it must be because that 30-50% amount looks pretty good.

Once these regular expenses are stable and taken care of, it’s time to think about scaling. Whatever that initial income is, let’s say X, if you can somehow push that income up to a higher number Y, you certainly should. The math is simple, 50% of Y is better than 50% of X. This is what scaling is all about. It happens later in the process since you will need that time to build the capital necessary to make the shift, maybe from bare-bones expenses to the “Midway” level, but the payoff of scaling successfully is very real. Further, once you’re at the point where scaling is a feasible option for your brokerage, the sky's the limit. As long as you continue to budget and plan smart, attracting talented agents and keeping overhead manageable can lead to a very doable 6-7 figure income. Those are numbers that are on your side, too!

Exact amounts are hard to pin down since they are highly contextual, but the takeaway should be clear. With the right planning and the right attitude, starting your own brokerage not only gives you the freedom and autonomy that you need, it can also be just as rewarding financially.

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