Profit. What is profit? It’s a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something. Profit is the reason that we are in this because it leads to the things that we desire, whether it’s to have, to do, or to give. Whatever it is, profit ultimately leads to helping us fund the things in life that we have a passion around. In the real estate business, the goal is to lead with revenue, not expenses.

In your business, it’s not about the gross figure or what you earned, it’s about how much you keep. At the end of the day when you receive a commission, it’s not all truly yours. With that being said, what is a commission, truly? It is money that is going to go towards taxes, expenses, and then profit.

You want to make sure that you are setting yourself up correctly for success in making sure that when tax time comes around, you have the money there. If you always put money aside for your taxes, if you owe less to the IRS than what you’ve saved, that’s money that you can use to put back into your business, or maybe even take your family on vacation. It’s very smart to create a system for yourself so that when you go get a commission check, you know exactly where that money is going to go.

Watch your expenses carefully because if you don’t, you can start to lose and your expenses will start to eat away at your final category, which is profit. Get real with yourself and look at the expenses being paid each month to see if you are truly maximizing your profit potential. A common myth is that to earn money, I must spend money. That’s simply not true. You don’t need expenses that aren’t fully beneficial to you. Use all the tools at your disposal first before you go out and spend money on things just because it is easier or because it’s in front of you.

There are no shortcuts and leading with revenue is going to take some work. There is no such thing as ‘easy money’ and anything worth having is worth building and doing the right way. Avoid the ‘shiny object’ syndrome!! Say no to the ‘shiny objects’ that come up and promise a return on your investment. How do you know if that particular investment is going to provide a return? You must track it to see it.

A good practice to track expenses is to go into your business checking account quarterly and download the last 3 months’ worth of statements. Grab a highlighter and sit down with them, and do the following:

• Go through and highlight in green the things that are absolute necessities, like realtor fees (mls, association fees, brokerage fees, etc)
• Next, highlight in pink the things that you’ve completely forgotten about and that you haven’t looked at or done anything within the last 6 months, like subscription services. Those things add up so see if you can part ways with them to cut down on your expenses each month. All of these expenses can be stopped immediately.
• In yellow, highlight the things that you need to determine if you can still benefit from them and/or if they are worth the expense that you pay each month to keep them.

It is possible to be profitable in real estate, but you have to start early and be diligent about watching and tracking your expenses often. The sooner you sit down and go through what leaves your bank account each month, the sooner your profit will allow you to fund the life of your dreams!