Deep Dive

How to Cut Expenses in a Real Estate Business

Running a real estate business can be like squeezing into skinny jeans: tight margins everywhere! This guide shows you how to ruthlessly cut unnecessary expenses using a simple system. Grab your bank statements, some highlighters, and start slashing costs to keep your profits fat and happy!

As a real estate investor, profit margins are often thinner than a mullet in the 1980s. To keep more of your hard-earned money, you need to be ruthless about cutting unnecessary business expenses.

But how do you know where to trim the fat? Here’s a simple system for dissecting your spending:

Grab Your Bank Statements

Print out the last 2-3 months of bank statements for your business accounts. Grab some colored highlighters and get ready to channel your inner kindergarten teacher.

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Categorize Every Expense

Go through the statements and highlight each expense in one of three colors:

Green - Profitable - Expenses generating high ROI or critical to operations

Yellow - Replaceable - Expenses that could be upgraded or swapped for something better

Red - Unnecessary - Expenses providing little value and ripe for cutting

Be Brutally Honest

Don’t let emotions cloud your judgment. If an expense isn’t clearly green, make it yellow or red. Be harsh and highlight that gym membership your BFF convinced you to get for the "team".

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Analyze The Data

Once everything is highlighted, tally up the totals for each color. Calculate what percentage of expenses are profitable, replaceable, and unnecessary.

Make A Plan of Attack

Start by immediately cutting as many red unnecessary expenses as possible. Then explore ways to replace yellow expenses with better options. Meet with staff responsible for big buckets of spending to discuss.

Execute Without Mercy

Cancel unwanted subscriptions, eliminate extraneous tools, reduce excess payroll, end low-ROI ad campaigns. Don't justify keeping extras around “just in case” - cut first, re-add later if needed.

By critically evaluating your real estate business’s expenses in this way, most investors find they can easily save 10-20% in unnecessary costs. That quickly adds up to tens of thousands in savings each year.

Big companies have CFOs to handle this type of spend optimization. As a small business owner, you get to be your own CFO. Put these expense cutting tactics to work and you’ll be bank account F-O-T (Full Of Tens).

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