Thinking about opening your own real estate office but worried about the expense? Currently opening your own brokerage and trying to plan a budget? Well, the cost of a real estate office can vary greatly depending on location, setup, and size of the office. Read on to learn about the key costs you must be aware of prior to opening an office.
To begin, the easiest way to get an idea of how much a real estate office will cost you is to work with a franchise. While the franchiser will not be able to tell you an exact amount, they can give you a rough idea and discuss it with you further. In addition to this, a franchise may also provide you with technology and other tools to help get your office going much faster and more inexpensively than you may be able to do independently.
In exchange for their technology, systems, and expertise, franchises often have an initial franchise fee. If you decide to go with a franchise, you will have to factor in this cost which will be different with each franchise company.
Next, the office space you pick will be a major addition to your start up costs. This expense depends on the location you choose, how much space you want, and whether you lease or purchase a space.
Typically, when you enter into a lease, you will have to be ready to put down a security deposit as well as the first and last month’s payment. However, each leasing situation varies; be sure to shop around to ensure that you are getting a fair deal.
Office Build Outs
Similarly, office build out costs will fluctuate. If you’re lucky, you’ll find a turnkey location that requires minimal changes before you begin operations. In other cases, major renovations are necessary. Depending on the building and landlord, brokers may be able to successfully negotiate their way out of paying for the build outs. If you must pay for the build outs, it could become your largest start up cost.
It would be extreme to purchase furniture for every room in your office before opening your doors, but some elements of the office must be furnished immediately.
For example, most recommend having a conference room, front reception area, manager’s office, at least one other office, and an open business area set up in order to attract real estate agents to join your office. Don’t get overwhelmed—research modern, open layouts and find ways of possible combining these ideas, such as mixing a reception area and an open business meeting spot.
Beyond these main components, it is not necessary to furnish every office nor is it necessary to have multiple conference rooms ready. As your office starts growing, then you can begin tackling these areas.
Similarly, you must have a sufficient amount of equipment. However, every office does not require its own computer for you to open your doors. Your first shopping list for your equipment should look something like this: a commercial copier, front desk computer, manager computer, conference room computer (with a wall mounted monitor), phone system, network, and a few computers for your open business area. Once again, as your office grows, you will be adding equipment.
Ultimately, the equipment decisions will be up to your personal opinion. Some brokers will suggest every personal office should have its own computer and printer. We recommend having an office policy that if an agent chooses to rent a private office, they may supply their own computer and use the office’s network for wifi and printing. Look at your new brokerage from an agent’s eyes; are you providing enough for agents to be willing to supply their own computer?
The internet, electricity, and phone system must be in place prior to opening your doors. Depending on the service, you may be required to pay a deposit upfront. Be sure to look into this prior to signing agreements, as deposits can be high and will affect your opening budget.
Paying out salaries will be a major factor on your budget, varying upon the amount of people you hire for office staff. During the beginning stages of your business, don’t get carried away fully staffing your office, especially before recruiting agents. For example, you may want to hire an office manager, but for the first few months or so you may be able to run the office yourself. You should hire a front desk administrator to open your office with, though. With some real estate franchise systems, offices are able to operate with 100 real estate agents with just one front desk administrator and a single manager.
Hopefully, you drew up a plan of how much money you should be making versus how much you’ll be spending. Those numbers are important, but they aren’t as accurate for your office on day one. You should expect little to no revenue plus ongoing expenses for the first few months, so prepare at the minimum six months of carrying costs.
The goal is to be breaking even or profiting well before the six-month mark, but until you are turning a profit, it is important to ensure that your business will survive.
Although this report does not give a dollar and cent breakdown, it should help provide a starting point to planning your budget. Be sure to pay close attention to your beginning costs and contracts to avoid any expensive surprises.