Cash flow real estate investing is something that every real estate agent needs to understand in order to successfully manage their finances while operating as a real estate agent. This is true whether the agent is working on a solo, personal level or if they are employed by a company; it is also true of real estate businesses, which have to manage cash flow in order to keep their business running and employees paid.
In the simplest terms, real estate business cash flow California can best be described as inconsistent and fluid. Charting cash flow real estate investing will often show that real estate agents may go months without any sales—they might even have the bulk of their sales within a 2-3 month period, leaving several months in between any serious cash flow. Let’s take a closer look at real estate business cash flow California to gain a better understanding of how it works and how it impacts real estate agents.
What Determines Cash Flow?
Cash flow can depend on a number of factors, which include but aren’t limited to:
- The current housing market; in other words, how many people are buying houses? How many people are selling houses? What are houses selling for? The general economy can impact cash flow significantly.
- Seasonal dry spells in the housing market; people are more likely to buy and sell homes in the fall and early winter months, with the goal of moving into new homes by or just shortly after the new year. This can lead to dry spells during certain months with very few sales and thus few commissions.
- Personal skill and experience; on average, how many homes does the agent sell per year? Per month? Are they successful at their job? More successful real estate agents may have more cash flow based on their skill and experience within the industry.
Cash Flow and Personal Finances
Someone on a normal income will typically have a solid understanding of exactly how much money the will be making every week and every month. Real estate cash flow works differently because of its fluctuating nature. A real estate agent might make $7,000 in commissions one month—and then nothing for 2 months straight. For this reason, real estate agents often contact real estate commission advance companies who can provide them with advances on pending commissions so that they have access to their money right away.