Gina Baker

The house-flipping calculator is a tool to determine your total spend, return on investment (ROI), and profits from a fix-and-flip project. To arrive at these projections, flippers must input the costs of acquisition, rehab and renovation, carrying, and closing, as well as the estimated after-repair value of the property. Flippers should always use these calculations to evaluate a potential project and ensure they earn money for each flip. Use our fix-and-flip calculator below to get estimates on your property profitability. In this article, we’ll also dive into a breakdown of each component and how they contribute to your fix-and-flip projects: How the House-flipping Calculator Works Our calculator does the time-consuming house-flipping calculations for you. After inputting your property costs and other items like budget and timeline, the house-flipping cost calculator will compute the numbers to determine the ROI, profits, and total spend of one fix-and-flip project. Keep in mind that this is an estimate and should be used in conjunction with your own research. These numbers will allow investors to plan for current and future projects so you can support a lucrative house-flipping business. If you’re debating on a property purchase, the flip cost estimator will tell you if the property is worth purchasing based on the after-repair value. Also, the fix-and-flip calculator is helpful when deciding how many projects you want to take on each year, and you can anticipate future potential earnings based on what your return on investment will be. Who Can Benefit From a House-flipping Calculator? A house-flipping calculator is right for you whether you’re a fix-and-flip beginner or a more experienced flipper. For those just starting out, it can be used to decide whether or not you should purchase a property or show roughly what amount you should pay for the property, how quickly you need to sell it, and how much you need to sell it for. It is also right for flippers who are trying to determine their budget for one specific property flip. For more experienced flippers who have completed these calculations before, it can serve as a double-check of your own calculations. It is also a valuable tool for monitoring how much money is being spent on the project and whether it is concentrated in one area. Your expected ROI will be met if you stay within your budget, and your fix-and-flip project should turn a profit as well. House-flip Calculator Inputs When using our free house-flipping calculator, you will be prompted to input costs associated with fixing and flipping a property. There are several major fix-and-flip cost categories, which include your acquisition costs, rehab costs, and sales and marketing costs. These inputs are needed in order to calculate items such as your profit per fix-and-flip project and your ROI. House-flip Calculator Outputs After you put all of your inputs into the calculator, it will use them to calculate outputs, such as your total spend, profit, if the property is a good investment, and your potential ROI. If you are contemplating a particular purchase, you can use these outputs as a comparison to other properties. If you already own the property and are getting ready to fix and flip it, you will have an understanding and estimation of the potential profitability of your project. Bottom Line Use a house-flipping calculator to keep track of your finances and estimate the profitability of your investment property. By inputting the costs associated with the flip, such as acquisition, rehab, carrying, and closing costs, you will be able to calculate the total spend, return on investment, and profits for each property you flip. As you learn how to calculate flipping a house from the steps above, keep an eye on these finances to ensure you stick to your timeline and budget and build a lucrative fix-and-flip business.

Real estate investing involves buying properties with the goal of generating profit. There are many lucrative ways people can invest in real estate, such as fixing and flipping houses, holding and renting properties to tenants, or reselling homes. While investing in real estate can be a rewarding and profitable career or side hustle, there is a lot to learn about the science and strategy of real estate investment, and it isn’t the best fit for everyone. Read our guide to real estate investing for beginners to learn how real estate investing works, if it’s the right fit for you, and the processes needed to build a successful investing business. 1. Decide if Investing in Real Estate Is Right for You Some people jump into real estate investing because they’ve heard it can generate passive, easy, and steady income and build wealth. The idea of easy passive income is appealing, but the truth is real estate investing is anything but passive. It takes focus, hard work, and careful planning to build an investment business that generates money. The average salary for a real estate investor is $119,731, but this number varies greatly depending on whether you are doing it as a full-time career or a side hustle. The amount of money you make also depends on your location and the type of investing you’re doing. Research your location to see if you’re in an area where real estate investing can lead to a positive cash flow business. Here are the top 10 cities for real estate investors: (Source: ZipRecruiter) Dive into these questions to help you decide if you’re ready to become a real estate investor: You also need to ask yourself several personal questions about whether real estate investing is right for you. This will help you determine whether it is a good fit for your lifestyle, personality, and finances. 2. Understand the Different Real Estate Investment Strategies Before you ask “what is real estate investment?” you need to specify what investment strategy or model you will concentrate on and how that strategy works. Each approach entails different responsibilities, roles, and return on investment (ROI). Here are the most common investment strategies and who each is best for: As you decide which investing model you’d like to venture into, revisit some of the questions you asked yourself when choosing to become a real estate investor. Think about how much time you’d like to devote to your role as an investor. Will you be doing this full time or as a side hustle? If you’d only like to devote part of your time, then a turnkey investment property might be better suited for you. Also, ask yourself how hands-on you would like to be. Someone who is doing a buy-and-hold model where they will be a landlord will typically be dedicating a lot more time to the profession than someone who is investing in a real estate investment trust (REIT) and earning passive income. You also should think about how much money you have to allocate to real estate investing because that will dictate the properties you can purchase. 3. Learn About the Types of Real Estate Investment Properties Once you decide the strategy you’ll be using for your real estate investment business, you’ll also need to learn about the types of properties you can invest in. This will assist you in focusing your business and targeting specific properties that fit your business model. There are many types of properties that range in size, cost, profit potential, and structure—from a single-family home or large apartment complex to land. Here are the various types of properties with links to articles that will teach you how to buy this specific type of property: Multifamily properties (or kinds of multifamily homes like duplexes, triplexes, and fourplexes) Apartment buildings and complexes Land Distressed properties like preforeclosure and foreclosure Vacation rental homes Turnkey properties Commercial real estate The type of property you invest in should coincide with your investment strategy. For example, if you are looking to flip properties for profit, you will get more value from buying distressed properties that need repairs and renovations. If you want to become a landlord by holding and renting properties, a multifamily, vacation, or complex might be better suited for you. Research each property type in conjunction with your strategy to make sure you are interested in pursuing that path of investing. A resourceful way to find different property types is by looking at online listing websites like . With over 36 million monthly views, Zillow is one of the most trafficked listing sites available. Filter searches based on property type, cost, square footage, and home preferences to compare and contrast a variety of properties. 4. Create a Business Plan To organize a successful investing business, you need a business plan. The plan will be a step-by-step outline that dictates how you will meet your business and financial goals. A business plan is even more important for investors who will be working with a team or receiving financial assistance from a third party because it will be presented to cultivate partnerships. Your business plan should include short-term and long-term goals, a summary of your business model, financial calculations, and analyses of the local real estate markets. Other items that should be included in a business plan are: Mission and vision statement Strengths, weaknesses, opportunities, and threats (SWOT) analysis Your investing model Specific and measurable goals Company summary Financial plan Market analyses and marketing plan Team and system Exit strategy 5. Find Real Estate Investment Properties & Run Reports Knowing where to search for investment properties is one of the most important components of being a real estate investor. These listing sites will be the gateway to learning about the properties available in your desired location and deciding which ones you’ll purchase to meet your investment goals. However, you can also opt to work with a knowledgeable real estate agent to assist you in finding properties that meet your criteria. Depending on your business model, you will be visiting different listing websites to find the type of properties you wish to purchase. For example, on , , and , you can search for a variety of property types, but will mostly find traditional property sales involving a real estate agent. In contrast, if you’re looking for distressed properties or those sold by the owner, you’ll have better luck on websites like , , and . Here are some of the best listing websites to find investment properties for sale: As an investor, once you find these properties, you will visit them, do calculations to see which is the best purchase option, and run reports to analyze the price and profitability of the property. In particular, you should be familiar with reports like a comparative market analysis (CMA) and rental market analysis (RMA). Both reports can be run personally or through a real estate agent. A CMA report analyzes a property’s value compared to similar properties, known as “comps.” It is an excellent tool for investors, informing you about how much you should offer for the property if you’re buying—or if you’re selling, what a good sale price for the property would be. Similarly, an RMA report will compare rental property values so landlords can properly price their rentals for tenants. Investors should know how to create and use the CMA and RMA reports before purchasing any property and to make an informed decision about whether the property will ultimately yield a profit. 6. Understand Legalities When purchasing investment properties, you must know the legalities behind each transaction and your business overall. Real estate laws vary by state, but generally follow guidelines set forth by the Fair Housing Act, which prohibits discrimination of protected classes like color, race, religion, national origin, disability, sex, and familial status. It is important for investors to understand these laws because they apply to all members of a real estate transaction, including real estate agents, investors, property managers, and landlords. Furthermore, for those choosing a buy-and-hold investment model where they will become a landlord to tenants, it is especially crucial to know landlord-tenant laws. These laws vary by state as well, so research particulars in your state and local jurisdiction to make sure you are in compliance. The landlord-tenant laws will stipulate items like lease terms, security deposits, notices to tenants, property management, and eviction laws. Regardless of your investment business model, many investors choose to start a real estate holding company or limited liability corporation (LLC) to protect their investments. This is a legal entity that will protect your assets in the event of a lawsuit or other catastrophic event that can lead to a financial loss. It will also provide tax benefits and separate your business from your personal finances. Speak to an attorney about starting a holding company or about landlord-tenant laws to guarantee your business is legally set up for success. To learn more about investor laws and regulations, consider taking courses from . Lorman offers over 14,300 courses and resources in a variety of topics and industries, but they are especially useful for classes that speak to investing in real estate for beginners. Lorman courses range from topics like Uniform Residential Landlord Tenant Act and Tenant Discrimination to Real Estate Investment Analysis and Related Tax Planning Opportunities. Classes can be accessed 24/7 on mobile, computer, or tablet devices, so you can learn on the go. 7. Build a Real Estate Investing Team While many investors choose to conduct business on their own, it is rare that one person possesses all the skills necessary to run a profitable investment business. Investors need to surround themselves with a team of qualified and experienced professionals to not only help them save time and money, but also to keep their properties in legal, marketable, and proper condition. The individuals that should be on your team are the following: Attorney Real estate agent Property manager Handyperson Plumber Accountant Title company Electrician Contractor Landscaper Mortgage professional Financial advisor These professionals will be responsible for a variety of tasks—from securing your property purchase to doing emergency repairs. For example, an attorney and real estate agent can work together to negotiate a property purchase or a plumber can be on-call for a leaking pipe. While many items can be done on your own, having a Rolodex filled with names and contacts that you can call immediately is extremely beneficial for any property owner. If you decide to do property management on your own, especially if you’re choosing to be a landlord, you should prepare a property maintenance checklist. This will ensure you are covering everything needed to get and keep your property in tip-top shape. Assess for normal wear and tear versus damage in your properties, as well as seasonal upkeep. 8. Choose Real Estate Software In conjunction with your real estate investing team, you should also invest in software to manage your properties and communicate with vendors and tenants. Investors who are choosing to purchase land or flip properties may not need as many maintenance and tenant-facing features in their software. If that sounds like you, opt to use a more financial-driven product like that will focus on keeping your money organized. However, if you are renting your property to tenants, you are likely to need real estate software tools that assist you in collecting rent, managing maintenance requests, screening tenants, creating and signing leases, and marketing your listings. There are many options available, but here are a few of the best software tools: 9. Conduct Real Estate Investment Calculations Being a real estate investor means that you will be conducting financial calculations very often. You will need to be aware of how much money you're spending as well as how much money you’re earning in order to have a successful business. If you spend above your means, your bottom line will suffer, and it will affect the next moves you can make in your real estate investing business. These are the following equations that all investors should be familiar with: In addition to these equations, landlords should also be able to determine how much to charge for rent. There is no cut-and-dry equation to setting a rent price because there are other factors that contribute to this decision, like location, market trends, seasonality, and amenities. However, many landlords use the 1% rule, multiplying the property purchase price by 1% to come up with their monthly rental price. 10. Work With Tenants Many real estate investing options will not require you to work with tenants, like wholesaling, crowdfunding, or land banking. However, if you are planning to become a landlord and rent out your properties, you must learn how to effectively work with tenants. This requires many steps, from screening potential tenants and reviewing paperwork to leases and collecting rent. As mentioned above, there is real estate software that can assist you with tenant communication and screening, but regardless, you should know the processes from beginning to end. This will help you avoid tenant scams as well as minimize vacancies and maximize profits. Here is some of the work you’ll do with tenants: Find tenants for your rental: Landlords must advertise and market their listings online so potential tenants know they are available. This requires them to create property descriptions, organize, manage, and post their listings to popular sites like , , and to gain exposure and find quality tenants. Review application and paperwork: Before allowing someone to move into your property, it’s necessary to determine whether they are qualified to pay rent on time and take care of the property. All landlords should have a standard rental application, a list of required paperwork, and interview questions to properly screen applicants. This will give the landlord an opportunity to verify their income, perform a background and credit check, and review past rental history before making a decision on whether they will be a good fit for the building. Sign leases and rental agreements: After approving an applicant's application, the tenants and landlord will sign a lease, if it’s a long-term residence, or a rental agreement, if it’s a short-term residence. This legally binding document for both parties stipulates the terms and conditions of living in the unit. Both sides should be aware of their responsibilities as a tenant and a landlord and be able to uphold them throughout the rental term. Collect rent: There should be a set system in place for landlords to collect rent from their tenants, whether that’s electronic via , , software system, or bank transfer, or physical (e.g., check or money order). All payments should be documented for bookkeeping purposes, and tenants need to receive a receipt to document for their records. Landlords should also be cognizant of the real estate market to determine if a rent increase or decrease is needed. Remedy maintenance issues: If there is property damage, emergency repairs, or standard maintenance that need to be taken care of, landlords need to be prepared to remedy them immediately. This could be anything from snow removal to a burst pipe to pest control. Communication with tenants during these situations will prove your dedication and attentiveness to your property and your tenants’ well-being. Show tenant appreciation (or evict, if necessary): The hope for landlords is that all tenants will be excellent and will stay in the apartment for the long term. If so, you can show your appreciation with small gifts or rent credit. Unfortunately, that isn’t always the case and, instead, may require landlords to evict their tenants. If it comes to this, landlords need to be aware of the process and laws in their state that accompany an eviction. While all landlords should know these tenant processes without the help of property management software, having a product like will save a massive amount of time and effort while performing landlord duties. Many of the items described above, like rent collection, maintenance requests, screening, leases, and listing marketing and advertising, are available through the Buildium platform. Buildium provides additional features that assist with accounting and offer support for landlords. See if this system is a good fit for your real estate business. Bottom Line Even though investing in real estate is not a simple task, it is a worthwhile and lucrative career path or side hustle for those who decide to take on the challenge. To be successful at real estate investing, it’s necessary to learn everything you can before diving in so you never have to ask the question “what is real estate investing?” Use this real estate investing for beginners article as your jumping-off point and visit the other articles mentioned within it to gain a better understanding of the type of real estate investing that is best for you.

The purpose of a rental property calculator is for investors and landlords to determine the current value of a property or evaluate a property they’re considering purchasing by calculating the return on investment (ROI), capitalization (cap) rate, and cash flow. While this can be a complicated process if you’re figuring out the numbers on your own, by using a calculator designed with specific investment formulas, the process becomes much more efficient. Use our free rental property calculator below to determine your investment property numbers, and then read our detailed breakdown of how these inputs and outputs affect your current or potential property purchase: Note: This calculator is for estimation purposes only. How the Rental Property Calculator Works The rental property calculator, also called a rental income calculator or property analysis calculator, works by calculating data inputs like property purchase details, monthly operating expenses, and property income. These numbers include items like your property’s current value, mortgage rate, loan term, down payment, renovation costs, closing costs, and any expected property-related expenses. After entering these numbers, the rental income calculator will calculate the property’s cash flow, cap rate, and return on investment. Knowing these numbers gives you an overview of whether the property you already own or the property you might purchase is a good investment. Inputs for the Rental Property Calculator To use the rental income calculator, gather information about the property to get accurate results. Ask your real estate agent to procure these figures from the current property owner if you are considering a purchase or review your finances if you are evaluating your own property. Here are the input numbers you’ll need to have: Purchase Details The purchase details provide the foundation for the calculations by setting a baseline of how much the property is currently worth and determining whether it will be a sound investment based on the other investment factors of expenses and income. If you are evaluating a potential purchase, consider whether the property’s value is commensurate with the income potential. If you are calculating the rental property value of an already owned property, you should be determining whether the current value of your property is helping you meet your financial goals. Your calculator inputs will differ based on whether you’ve taken out a loan to purchase the property or paid the purchase price in full with cash. If you've decided to finance the property with a loan, calculate the monthly loan payments, interest rate, and length of the loan as part of your expenses. These numbers will affect the property’s ROI and cash flow. However, it will not affect the cap rate because the cap rate does not take the loan into account. As we continue through the inputs, we will further explain these differences. Additional Inputs for Investors Using a Loan If you did not pay or are not planning to pay for the property with all cash, you’ll need to reach out to a mortgage professional to speak about loan options. While there are many types of investment loans available, they will all have the same general requirements to include in the rental property calculator. Our calculator will operate similarly to a rental mortgage calculator by using the following variables to calculate your monthly mortgage payment: Monthly Operating Expenses Monthly operating expenses are the monthly items that will deduct from your income but are necessary expenses for your property. Unlike the purchase details, these numbers will be the same whether or not you took a loan to purchase the property. It’s important to be accurate with these numbers to correctly calculate the return on investment, cap rate, and cash flow of your current or potential investment. If you own the property already, review your financial statements to input these numbers. If you are evaluating a potential property, ask your real estate agent if they can provide estimates of these numbers or do your own research based on public records and average calculations. We’ll also provide methods below that will assist in gathering this information. Income Details The final section of the calculator requires inputs pertaining to your property income. This section is very important as it will affect the cash flow and ROI calculator outputs. For the most accurate results, use the rental income calculator to get all the numbers together beforehand. Have your vacancy rate, operating expenses, and monthly rental income in front of you so you can easily input the correct numbers. For owners evaluating their current properties, look thoroughly at your property financial statements to accurately portray these numbers. If you don’t own the property yet, but are evaluating its potential, find these numbers through your real estate agent or the current property owner’s records. You can also use the calculation tricks we’ve provided below for each input variable: Outputs for the Rental Property Calculator The ultimate goal of the rental property calculator is to evaluate whether a property is a good investment based on the property’s ROI, cash flow, and capitalization rate (cap rate). These results, also called outputs, will be calculated with specific formulas using your monthly operating expense and purchase detail inputs. If you’re evaluating a potential property purchase and these outputs are not where you want them to be, it might be a sign to move on to another property. However, it could also mean that the property, as it is now, is not capitalizing on certain financial aspects. For instance, if comparable properties in the same location are charging $2,500 per month in rent and the current owner only charges $1,500, these output variables might be lower than they should be. Under your new management, you can raise the rent to increase your cash flow and return on investment. Use our gross rent multiplier (GRM) calculator to compare multiple properties and understand the potential profitability of an investment. This multiplier will also estimate the payoff period of your property. Check out Gross Rent Multiplier (GRM) Calculator & How to Use It for more information. Continue reading to understand more about each of these output variables, the formulas associated with them, and how they will help determine if you’re making a sound investment decision. Return on Investment A return on investment, commonly known as ROI, measures how much profit you make—or have made—on an investment property displayed as a percentage. Calculating return on investment for rental properties is valuable for all investors, as this metric will help compare properties to one another or evaluate their current properties. It measures how well the rental property is doing and can be a great way to decide which property to purchase or how much you should offer on a potential property. To learn how to calculate ROI for your rental property, take your annual return and divide that by your total cash investment. The calculator will do this for you, but if you want to do it on your own, you can calculate the return on your rental property by subtracting your expenses from your total rental income. Then you divide this by your total investment. The ROI formula written with your inputs and outputs will look like this: ROI (without loan) = [(Monthly Rental Income + Other Monthly Income) - Vacancy Rate] x 12 months - (Monthly Operating Expenses x 12 months) _______________________________________ Purchase Details If you have a loan or are planning on taking out a loan to finance the purchase, you will have to include that as part of your calculations: ROI (with loan) = [(Monthly Rental Income + Other Monthly Income) - Vacancy Rate] x 12 months - (Monthly Operating Expenses x 12 months) - (Monthly Loan Amount x 12 months) ______________________________________ (Repairs/Renovation + Closing Costs + Down Payment) A good ROI on an investment property is generally 10% or higher. ROI is affected by several factors like property management fees, rental income, mortgage payments, homeowner association (HOA) dues, insurance premiums, and other items directly related to income and expenses. Investors can increase their ROI by taking a deep dive into their expenses to reduce costs. Also, if you’re potentially purchasing a property, consider making improvements that will increase your property value and, therefore, your ROI when renting it to tenants. Cash Flow Cash flow is another critical output found by using our free rental income calculator. Simply put, cash flow is the money flowing in (rental income) and flowing out (expenses) of your investment property. The cash flow output will differ based on whether you’ve taken or are planning to take out a loan to pay for your property. This is because the loan payment will be considered as money flowing out and will decrease your cash flow monthly and yearly. To figure out the cash flow, the calculator starts with your rental income and subtracts your operating expenses and mortgage payments. Here is the formula for calculating cash flow: Cash Flow (without a loan) = [(Monthly Rental Income + Other Monthly Income) - Vacancy Rate] x 12 months - (Monthly Operating Expenses x 12 months) Like the ROI, the cash flow rental calculator impacts your loan payments because they are considered cash deductions. Cash Flow (with a loan) = [(Monthly Rental Income + Other Monthly Income) - Vacancy Rate] x 12 months - [(Monthly Operating Expenses x 12 months) - (Month Loan Payment x 12 months) Cash flow is either categorized as cash flow positive or cash flow negative. If you’re buying an investment property, you typically want a cash flow positive property, which means that at the end of each month, you’re making a profit after all rents are collected and all expenses paid. If you’re purchasing a property with a loan, consider putting more money toward the down payment to increase the cash flow. If you’re purchasing a property with cash or have already done so, look at your monthly expenses and see if there are areas where you can reduce them, like shopping around for property management companies or using less expensive software. Capitalization or Cap Rate The capitalization rate, commonly known as the cap rate, is a rate that helps investors evaluate a real estate investment. The cap rate formula is the net operating income divided by the property value. Cap rates vary by location and property type, but a good cap rate ranges from 4% to 10% or higher. Typically the higher the cap rate, the more profitable the investment, but also the riskier the investment. Unlike the ROI and cash flow outputs, the cap rate does include mortgage debt, so only one formula is needed whether or not an investor decides to take a loan on the property or not: Cap rate = Rental income + Additional income - Vacancy Losses ________________________________ Property Value The cap rate of a property shows the rate of return on investment (ROI), meaning how much the owner can gain or lose if they purchase the property. It’s an extremely important figure that allows you to compare investment scenarios or investment properties. Who Should & Should Not Use a Rental Property Calculator A rental property ROI calculator should be used by a real estate investor who wants an easy solution to finding out if a rental property is a sound investment. It’s generally right for long-term investors who want to push a few buttons and have things like the property’s cash flow and ROI calculated for them. Most investors use a rental property cash flow calculator before deciding whether to purchase an investment property. Other investors use it to determine if they should keep or sell their current investment property. Specifically, a rental property ROI calculator is right for: Duplex, triplex, fourplex, and other multifamily real estate investors Apartment building investors First-time and single-family home investors Landlords who will be managing the property themselves Investors who want to sell a property and be able to give the potential buyer all of the figures on the property, such as cash flow Landlords with a large portfolio of properties Investors looking to purchase a vacation property On the other hand, a rental income calculator is generally not right for fix-and-flip investors who purchase a property to rehab it and sell it for a profit. These short-term investors usually don’t care about rental income or monthly cash flow. Instead, they focus on after repair value (ARV) and how much ROI they can make by selling the property as quickly as possible. Bottom Line A rental property calculator is an extremely useful tool for investors to calculate the ROI, cap rate, and cash flow of a current property or potential property purchase. Knowing these calculations will put investors and landlords in a better position to evaluate investment options and continue improving the profitability of their investments.

Landlords must request and meticulously review proof of income documents from each potential tenant to determine if they can afford to pay rent and if they’re committing fraud with forged documents. Pay stubs, tax returns, bank statements, and a letter of employment are the most common and best proofs of income. However, depending on an applicant’s employment status, supplemental forms like Social Security statements or profit and loss statements can provide proof of earnings. While landlords can manually verify income, you can also use a tenant screening service like to assist you. Set up your rental application through MyRental and choose the income verification documents you’d like each applicant to upload. Then, MyRental will evaluate each application and document to let you know if they’re a viable candidate. Get 20% off by signing up for MyRental today. Let’s review the 10 most useful proof of income documents, what to do if tenants can’t prove their income, and tips for spotting fakes: 1. Pay Stubs Best for: W-2 employees Pay stubs are the most commonly used form to prove income for tenants. Also known as a check stub, pay stubs are a part of the paycheck that lists the details of an employee’s pay as well as deductions for taxes, health insurance, Social Security, etc. Currently, 41 states require employers to deliver pay stubs electronically or physically to each employee, so tenants will likely be able to provide these documents. How to Verify Income From a Pay Stub Landlords should request the two most recent pay stubs from each potential tenant as part of the rental application and screening process. While each pay stub may look different, they all should have several important pieces of information that a landlord can use to evaluate the tenant: Applicant name and address Employer name and address Year-to-date (YTD) gross earnings Gross income for pay period Pay schedule/period The tenant and employer’s name and address should be checked against the information they included on the application. Also, landlords can call and speak with the employer to confirm this information, particularly to verify that the tenant is currently employed at this location. To verify the income, landlords should consider the income per pay period and pay schedule. Pay schedules, or pay periods, differ per company, which means the number of paychecks received per year will differ. The most common are: Weekly: 52 paychecks per year Bi-weekly: 26 paychecks per year Twice per month: 24 paychecks per year Monthly: 12 paychecks per year Weekly and monthly paychecks are the easiest to spot. On the other hand, bi-weekly and twice per month can be tricky. An effective way to determine the difference is to see if the tenant is paid on two set days per month, like the 15th and 30th, or uneven days like the example above on the 7th. If it is two set days, they are likely paid twice a month and receive 24 paychecks. If the intervals are on uneven days, they are bi-weekly and receive 26 paychecks per year. To see how much a prospective tenant makes in a year, multiply the income per pay period by the number of paychecks per year. Based on the example above, multiply $800 per pay cycle by 26 checks to get a yearly income of $20,800. Divide this number by 12 to know their gross monthly income (in this example, it would be $1,733 per month). This number should be greater than or equal to the amount you’ve determined as your tenant income qualifier for the tenant to afford your rental property. 2. Tax Returns Best for: Self-employed business owners, freelancers, and contracted workers Tax returns, also known as 1040s, can be a supporting document for W-2 employees or a primary document for self-employed applicants. They are particularly helpful for self-employed individuals because people who are self-employed do not give themselves pay stubs, so tax returns therefore document their income instead. Landlords should ask for the past two years' worth of tax returns to verify income and continued income over time. The applicant can get the copy they filed directly from the IRS, their accountant, or download it online. Some applicants use tax preparation software and can access digital files to print, email, or upload a PDF version of their tax return. How to Verify Income From Tax Returns Even though pay stubs will give landlords information about income, the tax return will confirm those numbers, shed further light on additional sources of income, and show debts like alimony, student loan debt, other owned properties, and so on. Landlords cannot use this additional information as a means to discriminate against potential tenants, but as a way to determine the debt-to-income ratio of their tenant and adjusted income. For example, someone may be earning $200,000 a year, but have to pay $150,000 in alimony, which makes their actual income $50,000. This will be the difference in whether or not they can afford the apartment. Important elements to look at when reviewing a tax return are: Applicant name and address Gross income Adjusted gross income Date of tax return The landlord can look at the applicant’s name and address to verify that they match what’s listed on their rental application. Landlords can then look at the wages and their adjusted gross income to verify that a prospective tenant can afford the rent. Take the gross income, divide by 12 months to get monthly income, and divide by 33% to determine one-third of their income to cover housing expenses. Also, if the adjusted gross income is significantly different than the gross income, landlords should use the same equation to calculate their income. Tax returns can be difficult to read for those who are unfamiliar with them. Consider using a tenant screening product like that can review documents for you. Avail’s system will complete full background checks and income verification to let you know who the best tenant is for your property. In addition, you can compare multiple rental applications side-by-side to guarantee you’re getting the best tenants. 3. Bank Statements Best for: Reviewing transactions to corroborate with other documents, e.g., tax returns, pay stubs, and Social Security benefits While bank statements mostly serve as secondary proof of earnings, they do have several unique benefits for landlords to verify tenant income. The statements will show paycheck deposits, the tenant’s entire banking history, and their cash reserves. In addition, it will indicate if the bank account is in their name and confirm their current address. How to Verify Income From a Bank Statement Landlords should ask the applicant for two to three of the most recent checking and savings statements to review. From there, they should check each statement for the following items: Applicant name and address Date of statement Beginning and ending statement balance Money in (deposits/credits) and money out (withdrawals/debits) Transaction history Bank name and address Double-check the bank statement deposits against the amount indicated on the pay stubs. This is a great way to spot any fraudulent pay stubs and confirm monthly gross income. Review the applicant's banking history to make sure there's more money coming in than going out and there are not a lot of frivolous purchases. Look for bounced checks, overdraft fees, and bill-paying history. Also, evaluate their savings account to see if there are enough reserves to pay for rent in the event the applicant loses their job and does not have steady income coming into their account. 4. Letter of Employment Best for: Use with pay stubs from W-2 employees A letter of employment is used as secondary proof of an applicant’s gainful employment and income. It is also a way to determine a potential tenant's employment length. Some landlords require a specific length of employment in their current role to be qualified to rent their property. This shows consistency in income and commitment, which are beneficial traits of a highly qualified tenant. However, others only require seeing that their prospective tenant makes the appropriate income to qualify. How to Verify Income From an Employment Letter An employment letter often takes more effort to obtain than pay stubs or bank statements because it needs to be requested from the applicant’s employer. But, the actual letter should be on company letterhead and contain the following elements: Applicant name Date of letter Beginning date of employment Applicant position at company Gross yearly salary (and guaranteed bonuses, if applicable) Employer name, address, contact information, and signature Unfortunately, letters of employment can be easily forged on a Word or Google document. On the other hand, they contain information that can be used to confirm the employment details of the potential tenant. Check the employer's name, address, and gross yearly income against pay stubs and the information written on the rental application. Call the company to confirm the details as well as research through to make sure the document is a truthful employment and an income qualifier for the tenant. Supplemental Proof of Income Documents Even though the four income documents listed above are the most commonly used and provide a substantial amount of income information to a landlord, they are not the only documents available to verify income. For instance, an applicant's income can be verified by an accountant if they’re self-employed, or they can collect money from other sources like court-ordered agreements. Depending on your applicant’s employment status and income sources, you may have to request additional documents to prove income like the following: What to Do if Tenants Cannot Prove Income There are times when applicants cannot prove their income or may not be able to afford the property. For example, a newly graduated college student is looking for their first apartment, or an individual is recollecting their finances after a bankruptcy. There are two options in this scenario: to reject the tenant or to ask them to get a co-signer or guarantor. If you’ve decided that you do not want to accept the applicant as a tenant, it is essential to handle declining the applicant properly. It’s a good idea to create a rejection letter, also known as an adverse action letter, with a checklist of potential legal reasons an applicant is denied. On the other hand, if you feel that the prospective tenant has a promising background, but just not enough income to meet rent requirements, you can ask them to seek a co-signer or guarantor. It could be a family member, friend, co-worker, or anyone the applicant knows who is willing to be liable on the lease if the applicant cannot or will not pay the rent. The guarantor should complete an application and submit their documents for the landlord to review to make sure they are qualified to co-sign the lease. If the applicant does not have a person they can ask to be a guarantor, there are companies that will guarantee the property with you. is an insurance company that provides financial solutions, minimizing risk for landlords and providing opportunities for tenants. Landlords must sign up and choose the right level of protection for their property. Then potential tenants can apply through The Guarantors to get financial assistance to rent a home. Tips for Spotting Fake Proofs of Income Now that you know how to show proof of income and how landlords verify income, it’s also important to know how to spot fraudulent documents. Unfortunately, some applicants will provide fake documentation on the rental application with the hopes of tricking a landlord into giving them a lease. Knowing what to look for can help you vet your prospect’s proof of income, thus saving you time, money, and possible litigation. Here are some tips for how to spot fake income documents: Listen to your gut: If the applicant’s income doesn’t seem to add up or if you feel something isn’t right, go with your intuition. If you have trouble verifying their claims, you should reject them as a tenant. If there are issues in the beginning, they often become magnified later on and may cost you in evictions and legal fees. Require tenants to sign a Form 4506: If you want to verify the information on a profit and loss statement or validate a potential tenant’s income, you can request a transcript from the IRS with a signed Form 4506. The transcript will show the tenant’s federal tax documents. The transcript is the official income received and recorded by the IRS and is stamped as official, so it can’t be forged. Use a checks and balances system: The purpose of collecting several documents to prove an applicant's finances is for applying a checks and balances system. Review pay stub financials against tax returns and bank statements. Check the letter of employment against the pay stubs. Use the CPA letter in comparison to tax returns and P&L statements. Reviewing all the documents next to each other will show if there are any fakes or inconsistencies. Do research online: With the majority of individuals and businesses on the internet, landlords can easily do research online through Google, government websites, and LinkedIn to verify information provided by the applicant. Use the internet to your advantage, but remember not everything on the internet is truthful. Pay attention to inconsistencies: When doing your checks and balances with the paperwork, take note of the specific numbers that you find. If the salary on a letter of employment reads $60,000 and the pay stubs say the salary is $55,000, you should immediately be on alert for a fake document. Notice if paperwork has official markings: Documents from employers should all be on letterhead or include the logo of the company that the prospective tenant works for. Tax returns, court-ordered agreements, and Social Security statements should include government markings. If you do not see these titles and logos on official paperwork, a red flag should be raised. Bottom Line Landlords must request specific documentation as part of their rental application process to verify the income of each potential tenant. Without income verification documents, landlords can put themselves into a tough situation that can result in a loss of profit, time, money, and/or eviction. Review each document with a fine-toothed comb, and don’t hesitate to ask for supplemental documents to protect your real estate investment and profits.

To be a successful real estate agent or broker, start by defining measurable and realistic goals. Choose the right sponsoring brokerage, establish marketing and lead generation plans, organize your finances, and build relationships. Maximize your time and effort by using technology tools like marketing, document management, and customer relationship management (CRM) software—helping you find potential leads and manage clients efficiently. Continue reading for more actionable tips on how to be successful in real estate. One of the best places to start building real estate success is through name recognition. , which has over 36 million visitors monthly, is a simple way to display your brand and value to clients. Zillow can give you exclusivity on your listings and place your contact information on the listings of non-Premier Agents in your area. Start collecting commissions and getting your brand known on the largest real estate marketplace on the internet. 1. Define What Success Means for You & Create a Business Plan Success means different things to different real estate agents and brokers. It may be reaching monetary goals, completing a certain number of deals each year, creating connections with a variety of clients, or participating in community events. It also could be a combination of several of these goals. Regardless of your end goal, define what a successful real estate career means to you by setting measurable and achievable goals to gauge your success over time. When you begin your real estate career, and as you continue building upon your business from year to year, you must create a real estate business plan to outline where your business will improve and grow as well as how you will measure your success. Your real estate business plan should include the following elements: Write your mission statement Conduct a strengths, weaknesses, opportunities, and threats (SWOT) analysis Set specific and measurable goals Plan your marketing and lead generation strategy Calculate your income goal Set times to revisit your business plan By outlining these elements and determining the most important goals, you will be able to define what a successful real estate career looks like and carry out an established plan to achieve it. For more detailed information on creating a business plan, visit our article How to Write a Real Estate Business Plan: Elements, Examples & Free Template and download the free template to get started. 2. Choose a Brokerage That Fits Your Needs & Leverage Its Reputation The brokerage you choose is a big determining factor in how successful you will be. This is especially true if you’re a new real estate agent with no experience, but it also is important for experienced agents. Your brokerage is responsible for your initial reputation in the real estate industry. When you align yourself with a brokerage firm, you adopt their reputation as part of your own. When prospective clients research you, you will be associated with your sponsoring brokerage. If your brokerage has a great reputation, like or , it will reflect highly on you. However, if your brokerage has negative reviews, poor online presence, and a generally bad reputation, these will also reflect on you. In addition, your brokerage should provide you with tools to aid your success like lead generation systems, client relationship management (CRM) platforms, training, marketing materials, mentorship, and income. Although they may not offer all of these or may charge a fee for some items, you should ask about these elements when interviewing potential firms to join as they are helpful in being successful in real estate. 3. Evaluate & Keep Track of Your Finances Many real estate agents don’t close a transaction for several months after getting their license, so it’s essential to evaluate your financial situation before entering the profession. It’s best to have a cushion of funds to fall back on as you begin, so you can still live comfortably while pursuing your new career. Also, consider the initial costs to become an agent, like prelicensing education, licensing fees, and board dues, to determine whether you’re financially ready to enter the real estate industry. As a licensed agent, you are an independent contractor fully responsible for recording income and deducting taxes and insurances. And as you learn how to become successful in real estate and your business grows, expenses will increase as well. Agents and brokers need to take account of business expenses that will impact profits like: Marketing materials Brokerage desk fees Multiple listing services fees Client meals Lead generation Marketing and advertising Client relationship management platform Vehicle and mileage expenses All agents should carefully track their expenses in a spreadsheet or use accounting software like . For $12 a month, QuickBooks Self-Employed can help agents manage their expenses, track mileage, calculate tax deductions, and generate reports. It also has an easy-to-use mobile app to keep expenses categorized with the touch of a finger. You can even create custom reports that organize your spending to allocate money where it needs to go in your business. 4. Find a Mentor A real estate mentor is a valuable resource for both a brand-new and experienced agent who wants to continue growing. A mentor can teach you how to navigate the ever-changing real estate market, work through different types of real estate transactions, find unique ways to make money in real estate, employ marketing and lead generation strategies, and interact with clients. Learning how to become a successful real estate agent through their experiences will improve your business and is a priceless source of information. Many real estate brokerages offer a mentorship program as part of their onboarding, which agents can take advantage of. However, if they do not offer this opportunity, you can find a mentor in other ways. Introduce yourself to senior members of the firm and ask if you can shadow them throughout the day on showings, phone calls, or administrative tasks. Consider joining a real estate team, so you can lean on other team members while learning the ropes of the real estate industry. Team members often share leads, marketing, and listings, so it’s a great way to get a jump-start on working with clients and bringing in your first deal and paycheck. 5. Select a Farm Area & Become an Expert in That Market You cannot be a success in real estate without knowing the specifics of the market you are serving. This includes general information about the U.S. as a whole as well as your state, county, and city or town. Read real estate publications, research and visit properties in the area, and do a deep dive into real estate statistics surrounding interest rates, price points, inventory, and days on market. Knowing these details ensures you have a firm grasp on the market and are able to speak to and inform clients. Once you have an understanding of current market trends, decide on a real estate farm area where you can focus your business efforts. This will guarantee that you are targeting the right audience of buyers and sellers with marketing materials like farming postcards that are suited specifically to their needs. This will help you successfully generate leads for your real estate business and create a recognized brand in your area. For help with branding and marketing needs, check out . Pick from predesigned templates or customize your own materials that will be eye-catching, but also display your value as a real estate professional. Then use its direct mail service to organize geographic mailing lists and send campaigns to your target clientele to start generating leads. 6. Target a Specific Niche & Establish Your Marketing Strategy Along with choosing a farm area, real estate professionals often choose a specialized niche to target clientele even further as a strategy to become successful in real estate. This could be buyers or sellers, property types, foreclosures, rental properties, or properties based on certain interior or exterior amenities. While it may seem counterintuitive to narrow your focus, it is a way to differentiate yourself from the competition and work with clients who share your passions and interests. It will also make marketing to this audience even easier because you will be able to showcase your expertise and experience in your specific field. All real estate professionals should create a real estate marketing plan that encompasses all the ideas and resources you’ll need to execute your materials and build your brand. A few examples of marketing materials you should prepare are: Direct mailers like postcards, flyers, and brochures Business cards Real estate signs Advertisements All this work may seem overwhelming at first, but you can take it little by little and develop your brand over time. Download the free template from our article Real Estate Marketing Plan Template & Strategy Guide and start checking items off your list. Real estate professionals can also work with a marketing company to get their plans up and running. is an all-in-one system with real estate-specific marketing and lead generation tools to help agents succeed in the industry. Its marketing tools include both digital and print options that can be automated to save agents time and effort. Market Leader also provides exclusive leads if agents are interested in paid lead generation opportunities. 7. Inject Your Personality Into Your Business With Branding While clients want to work with a knowledgeable and organized agent, they also want to work with a real estate agent with a personality and enthusiasm for their clients and job. A successful real estate agent displays all these qualities through personal branding—attracting leads and building a client base. When creating your marketing materials, think about the materials that can convey your personality and message the most, like your agent bio and headshot. After all, these two items are typically the first impression you’ll make on your audience. Your biography should be a short story about you, your accomplishments, professional experience, and what you can bring to the table as a real estate expert. When people read it, it should instill confidence in your skills while also being personable. Similarly, your headshot should welcome and encourage the viewer to reach out to you for your services. Take a look at the headshot, bio, and images of realtor Ariel Self. Her headshot is smiling and confident, inviting visitors to dig deeper into her information. Ariel’s bio narrates how she gained experience in the New Jersey real estate market, her primary locations of focus, and speaks about her value and promise to clients. Her website displays pictures and videos of Ariel on trips, working, and having fun, showcasing her personality. These are valuable components that convey her success as a real estate agent. 8. Create an Engaging & Search Engine Optimized Online Presence Creating an engaging and consistent online presence helps clients find you across platforms and establishes you as the go-to, successful real estate professional. Clients follow and interact with online realtors, look at their listings, and contact them through various social media outlets—remember this as you post photos, videos, and content. Create your online presence through websites and landing pages, as well as social media marketing platforms like: Facebook Instagram LinkedIn TikTok YouTube While your online presence should be dispersed throughout multiple platforms, it is not necessary to use every single website and social media channel in existence to be recognized. In addition to your website, choose two to three social media options, and commit to post and comment consistently. Here are some additional tips on how to be a successful real estate agent through your online presence: 9. Utilize Lead Generation Tools to Boost Marketing Efforts While leads can be generated organically through websites, social media, and word of mouth, many real estate professionals choose to purchase leads to supplement their business. This is an effective method of lead generation that is profitable and affordable, with prices ranging from about $10 to $60 per lead, depending on the provider you choose. Combining organic and paid lead generation tactics will ensure a constant flow of clients to your real estate business. Many lead generation websites combine generation tactics along with marketing, brand building, CRM, and listing capabilities. Agents and brokerages should review each software to determine the best for their particular needs. Here are a few of the top places to generate and purchase real estate leads: 10. Organize & Nurture Your Client Base With a CRM In addition to generating leads, real estate agents and brokers need a way to organize their leads, current clients, and past clients as a method of how to succeed in real estate. To do this in the most time-efficient manner, invest in a client relationship management (CRM) system. CRM software not only organizes and prioritizes contacts in a database, but also has automation like task reminders, lead tracking, listing management, and marketing services. This allows agents to spend more time working with their clients—helping them be more successful overall. There are free and paid CRM options, so agents should evaluate their budget and business needs before deciding which platform works best for them. Here are a few of the top CRM provider options that agents should investigate, but you can also review our Best Free Real Estate CRM Software and Best Real Estate CRM Software articles to get more details: 11. Network With Like-minded Real Estate Professionals Networking with other real estate professionals is essential to building a positive reputation in a highly competitive industry. Speak with other members of your real estate brokerage, attend networking events, and join associations to meet other like-minded real estate agents and brokers. A relationship with other agents can lead to real estate referrals, increasing the success of your real estate business. It’s also beneficial to befriend other real estate-related professionals like home inspectors, appraisers, mortgage officers, contractors, and attorneys. Reach out to them for advice about transactions and recommend them to clients for their services, which they can do as well. Having a mutually beneficial relationship with other professionals will make your clients feel like they are getting the red carpet treatment. 12. Always Continue Learning & Improving In any profession, especially in the ever-changing landscape of real estate, it’s crucial that agents always continue learning. As a state requirement, all real estate agents and brokers must renew their licenses every one to two years by completing continuing education (CE) hours. These hours will cover any new laws and regulations in your state, as well as allow you to take elective real estate courses based on your interests. While you can opt for traditional in-person courses, online real estate schools make fulfilling your education hours easy and engaging, even from the comfort of your own home. Schools like , , and offer self-paced, livestream, and on-demand video classes to help agents and brokers complete their designated hours. The CE Shop, in particular, offers continuing education in all 50 states in a self-paced format at affordable prices. Choose from course packages or customize your courses to choose topics that interest you. Read our review to learn more. In addition to the required education, real estate professionals should also seek further knowledge in their niche fields. For instance, if you work primarily with buyers, getting a certificate as an Accredited Buyer Representative will establish your credentials to potential clients. Or, if you specialize in buying and selling environmentally friendly homes, getting a designation as a “Green” Realtor will make you highly desirable. Taking on opportunities to improve your knowledge and enhance your status and credibility in the real estate industry will benefit you and your clients. To find a certification or designation that is a great fit for you, read through our article Top 10 Real Estate Certifications & Designations Agents Need to Gain Clients This 2022. 13. Use Apps & Business Tools to Manage Your Operations When agents are busy working with clients, showing properties, and marketing their services, it’s easy to forget the back-office components essential in managing and running a successful real estate business. Luckily, software tools like phone apps and databases keep agents organized, so they can spend more time working with clients and less time organizing behind the scenes. Here are a few of the business items you’re required to manage and will help you be more successful, as well as recommended software tools: There are so many additional software tools available to real estate agents and brokers that will assist in how to be successful in real estate. Review our article 41 Best Real Estate Software & Tools for Top Agents to learn about more options that can improve the success of your real estate business. Bottom Line Learning how to be successful in the real estate business is not just about closing deals, but also entails using technology to streamline efficiency, networking, and lead generation. Incorporate the 13 tips above on how to be successful in real estate to get started on the right track to building a lucrative career in the industry.

Real estate flashcards are a tried-and-true way of mastering common topics and concepts for your licensing exam. Your flashcards should include questions and terminologies covering property ownership, financing, contracts, real estate calculations, and other subjects from your prelicensing coursework. Test your knowledge against our video flashcards or download our 50 free real estate flashcards containing definitions, true or false statements, common acronyms, and real estate vocabulary. Even though your exam will contain multiple-choice questions only, studying flashcards will ensure you retain all the real estate knowledge you need to pass your exam. takes flashcards a step further with its $39 all-in-one online preparation tool. It provides you with six months of unlimited access to video, audio, practice tests, and real estate exam vocabulary to make sure you’re prepared. Even with a 95% pass rate, Real Estate Exam Scholar offers a pass guarantee, giving all students assurance that they will succeed or get their money back. Tips for Passing the Real Estate Exam Studying for any exam can be daunting, especially with a busy schedule and distractions that can divert your attention. Nevertheless, you must set aside time to study for your real estate exam to avoid spending more time and money retaking it. Also, the sooner you pass the exam, the sooner you’ll be able to start a successful real estate career. In addition to using flashcards, here are study tips to use that will improve your understanding and memory: Take notes on paper Schedule short periods of focused study Study a little bit every day Read out loud to improve memory Take a walk before your real estate exam Use mnemonic devices Remove distractions Study with friends It’s also necessary to think about your test strategies on the actual day of the exam. Multiple-choice questions can be tricky if you’re not focused and relaxed, especially when you’re on a time frame to complete them. Just like any other multiple-choice question test, you often need to master the questions more than the content. Answer the questions you know first and temporarily skip the difficult questions. After you’ve gone through the entire test, return to the difficult questions you originally skipped. Use strategies like the process of elimination to get rid of answers that you know are wrong and then take your best guess of which remaining answer is correct. Also, once you’ve chosen an answer, do not second-guess yourself. Oftentimes, your gut tells you the right answer. Free Practice Exam & Sample Questions Every state provides its aspiring real estate agents with a Candidate Handbook when registering for the real estate license exam. The Handbook provides information on licensing requirements, scheduling the exam, and the structure and contents that will be on the test. Reviewing sample questions from your state-specific Candidate Handbook is an effective method of studying and quizzing yourself before exam day. Example pages from the Texas Candidate Handbook The Handbook will also break down the categories you’ll be tested on and the number of questions per category you’ll be expected to know. This information is valuable for real estate agents to understand the overall structure and areas of focus for the exam, but also to determine the areas that need improvement before test day. These commonly tested categories are: Property ownership and land use controls and regulations Laws of agency and fiduciary duties Property valuation and financial analysis Financing Transfer of property Practice of real estate and disclosures Contracts Real Estate Schools That Provide Flashcards & Other Study Tools In addition to studying on your own, many agents invest in an online real estate study program to prepare for the exam. Among real estate exam flashcards, online real estate providers offer many other tools, like audio, videos, practice tests, study guides, and real estate definitions, for the exam. Here are a few of the best real estate exam study providers: Bottom Line Using real estate exam flashcards is an effective way to prepare for your licensing exam. Download our 50 real estate terminology flashcards and combine them with other tools like sample questions and testing tips to guarantee you’re exuding confidence on exam day.

While you’ll need a license to be a real estate agent and conduct transactions, becoming one and starting a successful business entails many aspects, like learning how to generate leads, create business plans, and manage marketing efforts. To stay on top of your game, you need to continue gaining knowledge about the housing market and industry trends. Read along as we tell you the steps of how to become a real estate agent as well as provide tips and helpful articles that will assist you as you start and build your real estate career. 1. Consider What It Means to be a Real Estate Agent Before you embark on a career as a real estate agent, you need to consider whether it will be the best career choice for you. Real estate requires you to adapt to flexible work hours, have top-notch organizational and communication skills, and be interested in the housing market's statistics and trends. When considering a real estate career, think about how much money you will earn and how much you will invest back into your business. You will spend money to get your license, create and distribute marketing materials, and generate leads, so it’s best to have a cushion of cash when you start your career. In addition, you’ll need to put money aside to invest back into your business. As far as the money you’ll earn, a real estate agent’s salary is not necessarily consistent, especially when you first enter the industry. Since your salary is based 100% on commission at the majority of brokerage firms, you may have months where you earn more money than others. You will also be responsible for your own health insurance and taxes. 2. Go Through the Licensing Process The next step on how to become a real estate agent is getting your license. You must possess a real estate license to legally provide real estate services to buyers and sellers. Every state differs in their requirements to be a real estate agent, including the number of prelicensing hours, legal qualifications, exam structure, and application process. Here are the basic steps and links to articles that can tell you more about the licensing process: 3. Organize & Set Up Real Estate Business Tools While you can add “licensed real estate agent” to your resume after earning your license, you must do much more to be considered a successful real estate agent. Daily activities include communicating with clients, conducting transactions, generating leads, organizing your schedule, planning for your business, and creating marketing materials. Your real estate broker should help you set up tools and systems, but there are also many resources available to assist you with becoming a real estate professional and furthering your career. Business Plans Creating business plans is part of being a small business owner. As independent contractors, real estate agents own their business and are their own bosses. To succeed, you must have a business plan to set the foundational goals, create income goals, organize finances, and strategize to build your real estate business. In addition, your business plan should include the following: Mission statement SWOT analysis to analyze the strengths, weaknesses, opportunities, and threats Specific and measurable goals Marketing strategies Lead generation strategies Income goal Time to revisit your plan If you have not started thinking about any plans, it’s time to get moving. Visit our articles and download the free templates to begin strategizing plans to create a successful real estate business: How to Write a Real Estate Business Plan: Elements, Examples & Free Template (+ Goal Calculator) 12-step Real Estate Listing Marketing Plan (+ Free Checklist) Real Estate Marketing Plan Template & Strategy Guide Lead Generation Generating leads is a quintessential step to become a real estate agent and build a profitable business. Agents can purchase leads, or they can be generated organically through friends and family, also known as your sphere of influence (SOI), social media, or word of mouth. It’s important to devise a plan for how you will consistently gather new leads and nurture past clients to keep them coming back and referring you to their SOI. Read our article "Top 15 Ways to Generate Real Estate Leads" for tips on generating paid and organic leads. You can also work with lead generation companies like , , and to supplement your generation efforts. These companies enable agents and brokers to build real estate websites, post listings, optimize social media posts, establish email automation, and advertise. , in particular, is an excellent option for agents who wish to purchase exclusive buyer and seller leads. Choose your target farm area by ZIP code to start getting leads. Then, engage your leads using websites and landing pages, automated email campaigns, pay-per-click advertising on Google and Facebook, and nurture funnels. The BoldLeads customer relationship manager (CRM) also assists with organizing and prioritizing which leads are most likely to convert. Client Management Another important tool to have when you’re learning how to become a real estate agent is a client management system. When you’re first starting out as a real estate agent, you may feel like a spreadsheet will suffice to organize your contacts and follow-ups. But as you continue to gain leads, have current clients, and nurture past clients, a spreadsheet will be more difficult to manage and may cause clients to fall through the cracks. Luckily, there are tools available, known as client relationship management (CRM) software, to efficiently manage all of your clients in one place. The main function of CRMs is to organize your client contacts and help you maintain consistent communication with them via email, text, and phone calls. Similar to lead generation tools, there are options for free CRMs, like and , and paid versions, all of which have different features that can benefit client management. Paid CRMs, like , , and , typically have more features than free providers. In addition to client management, most CRMs also include a sales pipeline that tracks lead progress, third-party integrations with listing websites like and , and built-in document and database management. Hence, a CRM is an essential tool for becoming a real estate professional. One of the best real estate CRMs is because of its all-in-one CRM, lead generation, and transaction management system. Along with the ability to organize your contacts, build multichannel automated campaigns, and task reminders, it also provides Facebook ad management, a power dialer to reach clients faster, and over 100 third-party integrations. A tool like LionDesk is beneficial for any agent who wants to efficiently manage their time with minimal effort. Try LionDesk for free for 30 days. Marketing After you’ve developed your real estate business and marketing plans, you need to follow through by creating marketing materials. Marketing materials establish your brand and help you target an intended audience to generate leads. Real estate branding items like a logo, headshot, and slogan should be among the first things you create and distribute as you become a real estate agent. Additional marketing efforts can include printed materials like business cards or direct mail or an online presence using a website or social media. It is best to do a combination of print and online marketing to give your real estate business as much exposure as possible. Here are some of the most fruitful marketing materials for real estate agents: Business cards Social media Website and landing pages Advertisements Open house signs Convert leads into clients (Source: Market Leader) If you are not particularly savvy in design, outsource your marketing to a real estate marketing company like , , or . Along with a comprehensive CRM, Market Leader has automated tools for agents to create materials like single-listing websites, social media posts for LinkedIn and Facebook, and text and email campaigns. In addition, its marketing suite allows you to review templates and customize them to fit your needs. 4. Get to Know Your Market Part of the process of becoming a real estate agent is learning about the real estate market. Good agents provide clients with general information regarding the national housing market. However, successful agents have expertise in both the national market and their target market area, so they can provide clients with insightful information to guide them in their transactions. To learn about the housing market, read real estate publications regularly and compare current statistics to trends from the past. This will provide you with a better understanding of how real estate trends change over time and give you the ability to predict the housing market in the future. Take a look through our article "20 Most Crucial Real Estate Statistics for 2022" to start learning about the market. 5. Embark on a Successful Real Estate Career, but Keep Learning Once you have planned and compiled all the systems you need to be successful, implement these tools to embark on a successful real estate career. The key is to be consistent and continually improve on these tools by adding new methods of lead generation and marketing. Revisit your plans and tactics to determine the return on investment and lead conversion rates to change or add to the current strategies you are using. If you’re ready for more ideas now, read these articles that are filled with tips and tricks to help you succeed in the real estate industry: 7 Ways to Become Successful in Real Estate 11 New Real Estate Agent Tips to Get Your Business Started 14 Real Estate Agent Tips 11 Unique Ways to Make Money in Real Estate Bottom Line Getting your real estate license is only one step toward becoming a real estate agent. While you do need a license to complete transactions, lead generation, marketing, business plans, and market knowledge are essential components of truly becoming a real estate professional. Include the above tips in your strategy to not only become a real estate agent, but, more so, a successful agent.

To start a career as a real estate agent, you’re required to obtain a license from the state’s governing Real Estate Commission where you wish to practice. While the steps may change in order, each state has the same general requirements of completing prelicensing education, getting background checks, passing the real estate exam, finding a sponsoring brokerage, acquiring insurance, and submitting an application. Time frames, number of education hours, and fees may vary across the country. Read along to learn the general steps of how to get a real estate license and use the interactive map to get information about steps, requirements, and online real estate schools specific to your state. Here are the steps you’ll need to complete to get your real estate license: 1. Meet Your State’s Legal Requirements All states have an age requirement to qualify for licensure, most of which are 18 years or older. Some states, like Alaska and Nebraska, stipulate you must be at least 19 years old. Illinois has the oldest requirement of 21 years or older unless the candidate has attended at least four semesters of post-secondary education with an emphasis on real estate. Along with age restrictions, the majority of states also require aspiring agents to have at least a high school diploma or GED (General Educational Development Test). There are certain exceptions for states like Montana, where candidates only need a 10th-grade education prior to licensure, and states like Rhode Island or Nevada, which do not have any education requirements to get a real estate license. Generally, individuals with a criminal record are eligible to get a real estate license, although it is decided on a case-by-case basis. Applicants are required to disclose all offenses and include an explanation and all court documentation. Each state’s Real Estate Commission will review the documentation in order to determine if the applicant is eligible for licensure. If candidates have a felony conviction, especially one that relates directly to the functions of a real estate agent like fraud or embezzlement, it will be more difficult to earn a license for real estate. It’s best to reach out directly to your state’s Real Estate Commission to review your application before moving forward with the process. 2. Complete Prelicensing Education No matter which state you get your real estate license from, you will be required to complete prelicensing classes. The hour requirement depends on the state, but can range from 40 hours in states like Michigan and New Hampshire to 180 hours in Texas. The classes can be taken in-person at a local real estate school or a local or national online real estate school. Aspiring agents should choose courses based on their learning needs, especially the learning format that helps them understand and maintain knowledge. If you prefer more traditional learning methods, in-person courses or livestream online classes will be best for getting your real estate license. But if you’re currently working a full-time job and transitioning to the real estate industry or have other obligations that make your schedule busy, a self-paced online program may be a better option. In addition, it’s important that your courses include tools that can help you succeed, like flashcards, worksheets, e-books, textbooks, webinars, and discussions. Which Real Estate School And Program Is Right for You? 3. Get Fingerprints & Background Check As part of the application process, the majority of states require real estate license applicants to get fingerprints to conduct a background check. There are about 15 states that do not require fingerprints, but will run a background check based on the information provided in your application. Either way, this information goes hand-in-hand with your criminal record disclosure and is used to review your background to determine your eligibility for licensure. To get fingerprints, applicants must visit a local law enforcement agency or a livescan fingerprint provider like or , based on your state’s preferred agency. The fee for fingerprinting varies per state, but ranges from about $15 to $80. Fingerprints are run through the state and/or national databases, so there can be a full picture of your background, including any discretions. 4. Pass Your Real Estate Exam All states require you to pass a real estate exam as part of the process of how to get a real estate license. The exam is primarily issued by PSI or Pearson VUE, which are national academic, civil, and licensing exam providers. An exception to this is California and New York, which conduct their exams through their own state’s real estate department. The exam covers all the national and state topics studied during the prelicensing coursework. The number of questions on the exam ranges from 75 to 200 questions, depending on your state. Others fall somewhere in the middle, like New Jersey with 110 questions and South Carolina with 120 questions. While every state’s test differs slightly on the topics they include, there are a few common items covered: Property ownership and land use controls and regulations Laws of agency and fiduciary duties Property valuation and financial analysis Financing Transfer of property Practice of real estate and disclosures Contracts Real estate calculations To get specifics on which items will be included on your state’s exam plus the number of questions that will be included for each topic, review your state’s Real Estate Candidate Handbook. For example, the Ohio Real Estate Candidate Handbook outlines how to schedule your test, what is needed at the testing center, and what is included on the test. Check out the handbook by clicking your state’s “How to” guide on the state-by-state map and review the section on scheduling your exam. The pass rate for each state is either 70% or 75%, except for Vermont, which bases its score on the amount of knowledge a minimally competent practitioner (MCP) should have to operate as a real estate professional. If you do not pass the exam on the first attempt, you are able to retake the exam. Most states allow an unlimited number of retakes. However, there are a few that have a limit on exam retakes before requiring candidates to retake some or all of the prelicensing coursework. This is the case in states like Georgia, Tennessee, and West Virginia, requiring you to pass the exam within 90 days or two attempts, whichever comes first. If you’re looking for exam preparation tools to build your confidence before exam day, check out or . Both offer affordable, comprehensive exam preparation for all 50 states with tools and features to encourage retention. Courses include video and audio lessons as well as flashcards, practice exams, and a pass guarantee. Read our comprehensive reviews to see which is right for you: Real Estate Exam Scholar Review PrepAgent Review 5. Pick a Sponsoring Brokerage In order to be an active real estate agent, you must be sponsored by a brokerage. You are considered an independent contractor, and your license will hang under the responsibility of the brokerage you choose. It’s important to make a decision on your sponsoring brokerage based on your business preferences and what type of real estate you want to specialize in. Make sure to review the following items before making a decision: Decide which type of brokerage to target Decide between going solo and joining a team Compare commission plans Examine the reputation of the real estate brokerage Evaluate additional success factors 6. Acquire Errors & Omissions Insurance About 30 of the 50 states require real estate agents to acquire errors and omissions insurance (E&O) to be considered active agents. E&O insurance protects real estate businesses from mistakes made during professional service. Some brokerages may provide their brokers with E&O. Otherwise, you’ll have to purchase it yourself and submit a certificate of independent coverage with your application documents. Many Real Estate Commissions work closely with Rice Insurance Services, LLC to provide affordable options. Check with your state coverage requirements before making a purchase. 7. Apply for Your License Your last step in getting a real estate license is submitting an application to your state’s Real Estate Commission. The application form consists of basic information like your name, address, date of birth, and background history, as well as information regarding your real estate education and sponsoring brokerage. Most states give applicants the ability to apply online through an online portal; if not, you’ll need to submit a paper application. Along with your application document, you’re required to submit an application fee, certificate of completion from your real estate school, fingerprints and background check, proof of a passing exam score, and explanations of any criminal record (if applicable). The application fee can range from $50, like in North Carolina, to $485, like in Colorado. When applying for your real estate license, visit your state’s “how to” article using the state-by-state map above to make sure you have all the correct materials and links. Bottom Line The process to get your real estate license can be complicated if you don’t know the steps in your state. Use our guide to help get a general idea of the licensing process. After you are generally familiar, review your state’s specific article using the state-by-state map to get started on your successful real estate career.