How to Finance Your Real Estate Career


Are you considering a career in real estate, but you’re afraid to make the leap because you’re not sure how you would finance your real estate career? You’re not alone! 

A recent real estate career survey found that over 50% of Americans would consider changing careers if they were to lose their job or experience a significant pay decrease because of the COVID-19 pandemic. And nearly 1 in 5 respondents were interested in a career in real estate. But 51% of those potential career-changers were worried about the upfront financial investment of a real estate career.

As a real estate agent, you are an independent contractor, working on commission. This means you only get paid when you close a deal. It’s like starting your own business. You need to market yourself, find clients, and build a pipeline of sales to establish consistent income. 

So you’ll have a period where you’re incurring expenses, but you’re not yet earning an income. Let’s examine those expenses and discuss your options for financing your real estate career.

How Much Does It Cost to Finance a Real Estate Career?

The cost to finance a real estate career varies by state and by the individual.

First, you have the cost of getting your real estate license. In Texas, for example, you can complete your real estate education and get your real estate license for under $1,000. In California, you can complete your education and get your license for under $600.

But there are more costs to consider than just your license. As a new real estate agent, you’ll likely need to pay some upfront marketing expenses or industry association dues. And there will be at least a month or two before you get your first commission check. This varies by agent, and it can take some agents six months or more to get their first commission check. So you’ll need to cover living expenses in the meantime.  

The good news is that you have options for financing your real estate career.

Ways to Finance Your Real Estate Career

Here are five ways to finance your real estate career.

1. Leverage Household Income

One of the most common ways to finance your real estate career is to leverage the income from another person in your household. If you have a significant other who can help cover the cost of your real estate license and can make ends meet while you establish your new career, start there. 

Of course, not everyone has that type of financial support available. So let’s explore other options. 

2. Rely on Your Savings

Have you been able to set money aside? What better use of your savings is there than to realize your career dreams? 

And if you haven’t been saving, it’s not too late. Many agents go out of their way to save money while working toward their real estate license. You can enroll in your real estate courses now, and use the time it takes to get your license growing your savings account.

When you can rely on your savings, you’re able to focus on real estate full-time without getting into debt or giving up any control of your real estate business to an investing partner. 

According to Aceable analyst Laura Adams, “While it can be tempting to drain a retirement account to get started in real estate, that comes with huge downsides. In most situations, you get restricted from taking withdrawals if you’re younger than age 59.5. That means tapping a traditional retirement account can result in income taxes plus a 10% penalty on distributions. Paying a hefty penalty and taking funds from your future generally isn’t a wise financial move.”

3. Don’t Quit Your Day Job

You don’t have to jump into real estate full-time. You can keep your day job while meeting with clients on evenings and weekends. You could even take a salaried job in the real estate industry to learn on the job while building your client base and earning reliable income. Apartment leasing, property management, and assisting in a real estate brokerage all provide valuable real estate experience.

Adams cautions, “If you have a job, don’t be in a hurry to quit before you feel confident in your real estate career. Consider maintaining an income bridge that helps get your new venture off the ground and allows you to feel financially secure.”

Just know that you’ll be working long hours when you’re working two jobs. And you might not have as much time to devote to finding new real estate clients when you’re working another job. So it’s generally a good idea to plan to go full-time as soon as you're able.

4. Partner Up

Mortgage brokers, escrow companies, and title companies have a vested interest in the success of real estate agents who bring them new business. So they might be willing to help finance your real estate career in anticipation of the future business you’ll generate for them.

The only downside to this arrangement is that your financial partner might want to have some control over how you operate your business once you’re up and running. Have a frank discussion about expectations upfront to avoid frustration later in the relationship.

5. Borrow Some Start-Up Capital

When you’ve exhausted your other options, you can always consider borrowing funds. 

Options for borrowing to finance your real estate career include:

  • Borrowing from yourself by taking out a home equity line of credit (HELOC) or borrowing against your retirement account.

  • Applying for a business loan.

  • Getting a business line of credit.

  • Accepting a loan from friends or family.

Are you ready for a career change?

You deserve a career you love. Don’t let a mundane detail like money keep you from living your best life when there are financing options available. Take the first step on the road to your new career by enrolling in your real estate course today!

Want to get your Real Estate License? Begin your Pre-Licensing Course today!

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