Investment return (net income)

[audiokat]

Wondering what type of percentages have most of you have received as a return on your income. I have received varying reports considering the average overhead of doing business. I have heard as little as 35% and as much as 55%. This is accounting for a 25% tax payment of course. So basically these people are saying the cost of doing busines. (i.e. gas, advertising, technology,mls,insurance,lockboxes, signs etc...) equates to 10-30% of their income. I am curious what some other experienced pro's are seeing over the years.

P.S. Is this in the right section of the forum?


Steve Mabee

[Chief Tutor]

I can't remember the actual NAR study, but there was an article a few years ago which broke down average marketing costs based on years in business. The range was from 10%-30%. They broke it down as follows:

0-2 years in the business - Average marketing expenses were about 30% of total revenues earned.

3-5 years in the business - Average marketing expenses were about 20% of total revenues earned.

5+ years in the business - Average marketing expenses were about 10% of total revenues earned.

Hope this helps.

Chief

[audiokat]

I can't remember the actual NAR study, but there was an article a few years ago which broke down average marketing costs based on years in business. The range was from 10%-30%. They broke it down as follows:

0-2 years in the business - Average marketing expenses were about 30% of total revenues earned.

3-5 years in the business - Average marketing expenses were about 20% of total revenues earned.

5+ years in the business - Average marketing expenses were about 10% of total revenues earned.

Hope this helps.

Chief


I suppose so since it is exactly what I was told. Oddly enough the gentlemen who told me 55% was speaking of his first year in the business. The woman who told me 10% has been doing real estate for 20 years.

Anyone else?

[audiokat]

I can't remember the actual NAR study, but there was an article a few years ago which broke down average marketing costs based on years in business. The range was from 10%-30%. They broke it down as follows:

0-2 years in the business - Average marketing expenses were about 30% of total revenues earned.

3-5 years in the business - Average marketing expenses were about 20% of total revenues earned.

5+ years in the business - Average marketing expenses were about 10% of total revenues earned.

Hope this helps.

Chief


Why would you imagine marketing costs would go down so dramitcally. Is it becuase starup costs are included in those figures or because the average agent probably becomes more apt at realizing the marketing methods that work well for him/her.

Steve Mabee

[Ocelot]

I'm no pro, I don't even have my license yet but I can tell you that the average annual income increase each year according to statistics. You may still be spending the same money on advertising but you make more money so therefore you're using less of a percentage of your total money. Correct me if I'm wrong guys.

[audiokat]

I'm no pro, I don't even have my license yet but I can tell you that the average annual income increase each year according to statistics. You may still be spending the same money on advertising but you make more money so therefore you're using less of a percentage of your total money. Correct me if I'm wrong guys.


That certainly seems like a valid theory.


Thanks,

Steve Mabee