Expense or Investment?


Due to the nature of real estate, I find that getting brokers to make a real investment in their business can be challenging. Sure, they will spend $49 per month here, $29 per month there but I would classify these as expenses – ongoing costs that are a result of doing business but that don’t actually result in:

  1. Making a business run more efficiently
  2. Creating more income
  3. Saving time

…which are the key differences between expenses and investments.

The interesting thing is that when a broker changes his or her mindset about how money is spent, it becomes very easy to identify those things that are truly investments versus those that represent money going out the door.

In addition to mindset, time is the most important ingredient in transforming costs, fees, and money outflow into something quantifiable that brings time and money back into the business.

In fact, many broker’s expenses can be re-categorized as investments with a change in mindset and broker’s time commitment. Consider these five situations and think about whether you regard these as expenses or investments:

  • It is time to renew your license. You have to make sure your clock hours are squared away and this is an opportune time to learn something new and make a deposit into your knowledge bank. Do you take advantage of this opportunity to learn more about a niche market, how to do something new in the MLS that might save you time later on, or broaden your skillset? Or do you push the clock hours to the last minute and your goal is just to get through the classes online rather than be intentional about the classes being chosen? If you are the former, then your clock hour fees are an investment. If it is the latter, they are an expense.
  • If your office is a mess, do you hire your teenager to shred papers which you will just do again in six months (in which case it is an expense) or do you hire an organizer to help you make a few tweaks to your methods so you won’t have that pile of paperwork in six months (in which case it is an investment)?
  • You know you need to stay in touch with your database. But because you are always in a time crunch, you don’t have a customized template and don’t have the time to learn Microsoft Publisher or Adobe InDesign or how to get the stats from your MLS. Instead of sending something custom and relevant to your database each month (which would mean that you are investing in your database), you instead send something generic that is available from the printer…the same thing that hundreds of other brokers are sending (then this is simply a marketing expense)? It might make you feel good that you got something out, but is it really effective or does it have a higher likelihood of going right into the recycling bin?
  • Let’s say you have a great-looking listing. The owners have well-proportioned furniture pieces and you have gone the extra mile helping them make sure their property and curb appeal are ready to wow. You hire not only a professional photographer, but one who also handles drone work. You also contract to have a 3D Tour done. These are all expenses you deemed necessary to sell the home, but when you can also use them in marketing pieces to the neighbors and showcase this property as an example of your results-driven marketing plan in future listing appointments (with the photographer’s permission, of course), then you are making an investment in your listing system. You are leveraging the time and money invested in the first listing in order to obtain future listings.
  • The same principles apply if you are hiring a coach, strategist, or even have a gym membership. If you are paying for time or access, but miss appointments or don’t invest the time in the assignments you are given, then these are just another expense you are paying for each month. In order to get the most out of anything you are paying for, you need to invest the necessary time to move that expense to the investment category.

You may also have things that you pay for on a personal level that are tools to help you be more productive in business. These too are investments. Consider:

  • A house cleaner can help you leverage your time. But if you are just using that time to maintain your business (e.g. working with your current active clients) versus time doing more business-building activities (e.g. planning a client appreciation event), then you are looking at an expense rather than an investment.
  • If you invested in new materials for your listings and open houses including A-board signage, welcome signage, snacks, display materials, takeaway books, and more to have much more-effective client connections but your car was too small to transport these, a car with a larger trunk would indeed be an investment.
  • Your health! Seeing your doctor, addressing any health concerns you have, and doing preventative care should also be seen as an investment in your business. Sleep, massages, and pain management are all tools that help you be more productive and run your business more efficiently.

I urge you to take a look at your last month’s expenditures—both business and personal. Which are simply expenses and which are investments? Which of these will actually help you work more effectively or efficiently? Which of these are you going to leverage into new business or opportunities? Which of these could be great investments but you need to spend more of your time getting them to where they need to be to truly help you take your business to the next level? And which of these do you need to cancel?

You may be hard-pressed to get to 100% investments, but I bet there are certain things that you are spending money on that you shouldn’t, that you aren’t spending money on that you should, and things you are spending money on that need more of your time.

Denise Lones

Denise Lones, president of The Lones Group and author of the weekly syndicated Zebra Report, brings over two decades of experience in the real estate industry with expertise in branding, strategic marketing, business analysis, and broker/managing broker training. You can reach Denise at (360) 527-8904 or at www.TheLonesGroup.com.

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