Watch this Real Estate Budget Template instructional video after downloading our free budget template to learn how to apply it to the growth of your real estate business.
When most agents start out, they usually handle all facets of the transaction. However, as business grows, they will also see a reduction in available free time. At some point, a growing real estate business will want to add support staff and buyers agents. However, when is the best time to add Admins and Buyers Agents? With a Real Estate Budget Template, you can easily determine the optimal time.
Today, we will take a look at our Production Growth Budget Schedule, and utilize it to help you grow your business.
VIDEO: Real Estate Budget Template – Free Download
Four Key Metrics of a Production Growth Budget Schedule
Data is great for real estate agents because it helps eliminate a lot of the guesswork associated with growth. For example, having a fixed percentage of expenses regardless of how much income is generated is ideal for determining how much you spend on lead generation, staff, and other costs.
Here are the Four Key Metrics that apply to every successful real estate budget:
Gross Commission Income (GCI)
In most cases, your Gross Commission Income is 3-percent of your total production volume. If you generate $10 Million in closed sales, the GCI will be $300,000. Once the Gross Commission Income is determined, the next important metric is your Total Operating Expenses.
Total Operating Expenses
In our real estate budget template, we allocate a total of 30% of your GCI is for your operating expenses. This includes:
- Marketing Costs (10%)
- Admin Salaries/Bonuses (12%)
- Supplies (2%)
- Office Rent (.5%)
- Training/Education (5%)
Using our $10 Million in production example, 30-percent of $300,000 is $90,000, which leaves you with $210,000.
Cost of Sales
In the case of real estate agents or teams, Cost of Sales refers to:
- Splits with your Brokerage
- Commission Paid to Agents
- Referral Fees
For demonstration purposes, let’s say Cost of Sales for our $300,000 GCI adds up to 12-percent, or $36,000.
$210,000 – $36,000 = $174,000 of Net Income
After all of the expenses have been paid, the bottom line of our real estate template budget is our Net Income. Now that we have established the four key metrics, let’s revisit the expense portion and determine what kind of staff we can add when producing $300,000 of GCI.
Using the Real Estate Budget Template to Determine Growth Potential
In the Total Operating Expenses section above, Administrative Staff pay accounts for 12-percent of GCI.
Using the $10 Million annual production example, $300,000 x .12 = $36,000
The next question to ask is: what type of Admin support can I afford based on the 12-percent of Gross Commission Income?
There are a variety of factors involved in determining the types of hires you can make, including cost of living and average annual income in your area, the type of benefits you can offer, and if they will be full- or part-time. The same formula applies to increasing your lead generation and marketing budgets, as well as how many agents you can add to your team.
The beauty of this template is even if you haven’t reached the point where you can afford a full-time Admin, you have a general idea of how much production you need to reach that goal.
Get Started with your Real Estate Budget Template by clicking the button below:
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