How to Manage Your Money as a Real Estate Agent (Stop Living Check To Check)

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Brandon:

What is the best way to manage the incoming funds as they're closing properties and earning commissions throughout the year?

Joe:

Sure. Early on, before you have a business bank account set up or an entity set up, like I said, keep 20%. I like calling, creating a new account: tax account savings account.

Brandon:

Sure.

Joe:

Dump that 20% over to that tax account. At the end of the day, I'll come through with a bunch of deductions. Worst case scenario, you built a little savings over there if you don't have to use it all for taxes.

Brandon:

Got it.

Joe:

Definitely put some aside.

Brandon:

Okay.

Joe:

I've also seen the realtor, year one, it was incredible, I had a bunch of closings. I didn't save any money. What do we do?

Brandon:

That's what I was going to ask you next.

Joe:

Worst case too, keep in mind, you can always file and we can set up a payment plan.

Brandon:

Okay. So let's talk about that. Because that, I can't tell you how many real estate agents are on some type of advanced commission structure because they haven't managed their finances properly. There's this ebbs and flows of income and expenses. And, quite frankly, most real estate agents aren't great at managing their money. That's the reality. That's why I highly recommend people reach out to you and work with you. Now, and so, if they get into trouble, if they find themselves in a situation where they earned a lot of money, and have a lot of income, didn't put money aside, what are the payment options? What does that look like? What are some options?

Joe:

So, when we do those two payment plans, we also do offer in compromises, or OICs. So say you owe a bunch of back taxes. You're a realtor, you haven't filed. Or you're new to real estate, you haven't filed. You owed a bunch of taxes. Right now, the IRS is really working out these Offers in Compromises where they're selling for less money. They're doing it right now, especially during the pandemic. Keep that in mind. But let's say you're a realtor, you got off and running and you didn't save any money, and you owe a bunch of taxes and you don't have it.

Brandon:

Yep.

Joe:

Worst case, we file the tax return. You don't want to not file. People think, "Oh, no. I owe this. I'm not going to file yet until I can figure this out. Uh-uh (negative)." There's penalties for not filing, there's penalties for late payments. So you file. Get a notice from the IRS. Within 30 days, "I owe X," call my office. We can reach out to the IRS on your behalf, set up a payment plan, keep it the lowest amount of money per month. Work out deals with penalties with them, stuff like that.

Brandon:

Got it. Now, another big question that comes up is, so when they get their check from their broker, do you recommend that that check, the physical money, go into the business bank account, the personal bank account, and put money into... How should they be routing the funds?

Joe:

And this is one of the things that I coach and teach people on. Again, they're not used to running a business.

Brandon:

Right.

Joe:

A realtor is now running a business. This is their business.

Brandon:

300%.

Joe:

But ideally, whether it's just a Schedule C or an LLC or an S corporation. Set that up. We open up a business bank account. Business bank account. The full commission check goes into this business bank account.

Brandon:

Okay.

Joe:

I then instruct you, "Okay, out of that money, pay your auto, pay your insurance, pay your cell phone, use a debit card for meals. Run all these business expenses out of here." Well wait, Joe, I need money for my personal bills." "Okay. Figure out how much money you need, make that transfer from the business account to your personal account, pay your personal bills there. Do not commingle the funds. Run this like a business."

Meet Your Mentor:
Brandon Mulrenin
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Brandon Mulrenin

Brandon Mulrenin, founder and CEO of reverseselling.com has dedicated his life’s work to the study of human behavior and communication.

He began his sales career in the mortgage industry as a mortgage loan officer with Quicken Loans in Detroit. He worked his way up the corporate ladder to become the AVP of Quicken Loans’ preferred real estate partner, Rocket Homes, formerly, In-House Realty.

Brandon then decided to go out on his own and built his real estate sales business to the point where he was listing and selling over 100 homes a year with one assistant and one buyers agent. Brandon’s success was quickly recognized as he awarded the #1 listing agent for Keller Williams Premier in 2014. It was during this time that Brandon began to train other real estate agents all over the world with his reverse selling system.

Then in 2018, Brandon launched his own independent real estate brokerage firm in Metro Detroit, Michigan which has quickly become one of the fastest growing real estate companies in the entire state.

Brandon is now the managing CEO of four entities: Brookstone Realtors, National Mortgage Funding, Maximus Title Agency, and reverseselling.com

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