We’ve already established that real estate agents need a cash reserve. The reason is because, at times, there could be a disruption in cash flow. For most real estate agents, this might turn into an issue.
Always having cash on hand for emergency purposes is necessary. If there’s ever a cash flow disruption, those emergency funds can get a real estate agent through the tough times. But, how does a real estate agent prevent cash flow disruptions from occurring in the first place?
That’s what this blog is about. Keep reading for ways that you, the real estate agent, can keep the cash flowing in your businesses.
Real Estate Agent Advice: Prevent Cash Flow Disruptions
We found these cash flow disruption prevention techniques from Sage Advice. The info is for anyone who runs a business, not just real estate agents. When necessary, we’ve adjusted for the real estate industry.
- Forecast your cash flow
This almost goes without writing. If you’re a real estate agent, you must forecast your cash flow. How much do you intend on spending on gas this month, the next month, out to at least 4 months? Have you decided to sell houses outside of your normal area? Determining how much cash you will need to be a successful real estate agent in the months ahead is the first way to prevent a cash flow crisis.
- Stay on top of payments
As a real estate agent, you have expenses. For example, you have a phone expense. You use your cell phone, sometimes, at all hours of he day and into the night. You also have car expenses including gas expenses and keeping your car in shape.
You might even have a marketing expense. If you’ve hired a company like Web.com to develop your site, you paid them to do so. There’s a great chance that you’re paying Web.com to promote your site. That’s another monthly expense.
- Anticipate problems before they happen
This is an important aspect of preventing cash flow disruptions. You must always look to anticipate problems before they happen. That means anticipating if a specific month will be harder on your cash flow than other months.
Anticipating cash flow problems in the real estate industry isn’t easy to accomplish. The best way is to monitor the real estate market conditions not only nationwide, but also in the state in which you work as well as in the specific cities in which you work.
Keep in contact with peers about how the market’s performing. Then, make sure to research as much as you can to get an idea of any softness in the price of houses in and around your area of expertise.
You could also anticipate a much bigger marketing push a month or two months out depending on your likely commission in home sales (or lack thereof) in the current month. More money towards finding houses to sell and buyers could lead to a cash flow problem.
Being a successful real estate agent means managing cash flow. Study the 3 tips above, as well as the other tips on Sage Advice, to prevent cash flow disruptions.