Financial Planning for Real Estate Agents

Brian Thorp
Brian Thorp is the founder and CEO of Wealthtender and Editor-in-Chief. Prior to founding Wealthtender, Brian spent nearly 22 years in multiple leadership roles at Invesco. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

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If you’re a real estate agent, you know the benefits of being your own boss firsthand. You get to set your own schedule, develop your own client base, and work as much or as little as you’d like. 

While pursuing a career in the real estate industry comes with many perks, it’s quite competitive. It’s your job to stand out from other agents and close deals on a regular basis, no matter what the market conditions may be. 

As you focus on growing your real estate business, you may unintentionally let personal matters like financial planning fall by the wayside. Since a strong financial plan is the key to a high quality of life, it’s essential to make it a priority. 

Challenges of Financial Planning for Real Estate Agents

Every day, you work hard to help buyers find their ideal home and sellers get the most from the sale of their property. So if you have minimal experience or no time to dedicate to your own financial planning needs, don’t worry; it’s not in your job description. You can continue to do what you do best transacting real estate while hiring a financial advisor to support you with your personal finances. 

Fortunately, there are an increasing number of financial advisors who specialize in assisting real estate agents like yourself who understand the unique financial planning challenges of being a real estate professional.

By reading this guide and partnering with a financial advisor experienced in working with professionals like you, you can create and maintain financial security and avoid the stresses that real estate agents often face throughout their careers. 

Financial Planning for Real Estate Agents

There are a number of topics to consider as well as questions you’ll have when you’re planning your finances as a real estate agent. Here’s a brief overview:

Living Well on a Real Estate Agent Income 

When you work in real estate as an agent, you often own your own business or at least have much more autonomy than many people in other professions. You also have much more control over your income.

If you work hard and make real estate your full-time venture, you can live quite well. According to the U.S. Bureau of Labor Statistics, the average salary for a real estate agent in 2021 was $48,770 per year or $23.45 per hour, but many real estate professionals earn considerably more than this average, especially after years of building their reputation or working in a hot housing market.

When the real estate market is booming, and you’re closing deals left and right, you may be tempted to splurge. If you do so, be careful, as you want to ensure you have enough money saved up for slower times. 

Here are a few questions a financial advisor can help you answer so you can make the most of your income as a real estate agent.

  • How much does my real estate business need to earn each year in order for me to meet my financial goals?
  • What are some ways to budget with a fluctuating income? 
  • What financial planning insights have you gained working with other real estate agents like me?


Q: What is a common financial planning challenge unique to real estate agents that you frequently encounter when working with your clients? How do you work with them to overcome this challenge?

We asked Jordan Curnutt, a specialist financial planner for top real estate agents, to answer this question. Here’s what he said.

Headshot of Jordan Curnutt, CFP®
Jordan Curnutt, CFP® Financial Planner for Top Producing Real Estate Professionals

Real estate agents face a unique financial challenge that revolves around managing their variable commission income. This is something I frequently come across when working with clients in the industry.

You see, as a real estate agent, your personal finances can be directly affected by seasonal fluctuations each year, as well as the longer-term market cycles in the industry. This means that your income can vary significantly from month to month or even year to year.

What I often observe is that agents tend to lean towards one of two extremes when it comes to managing their money. Some become overly aggressive, taking on more risk and finding themselves in a difficult situation during the next downturn. On the other hand, many agents adopt a conservative approach, which can result in their net worth growing at too slow of a pace.

Now, the ideal solution to this challenge will differ depending on your personal circumstances. However, there is one constant factor: having a plan in place before the market shifts and the determination to stick to it.

That’s where our expertise comes in. We work closely with real estate agents like you to develop a customized commission management system. This system enables you to experience net worth growth while still having access to conservative assets that can sustain your lifestyle during the next market downturn.

By partnering with us, you can overcome the ups and downs of variable income and achieve financial stability in the real estate industry.

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Jordan Curnutt, CFP® | Quantum Financial Planning

Repaying Your Student Loans

To become a real estate agent, you must participate in your state’s required pre-license education curriculum and pass your real estate license exam. Even though you don’t need a college degree to pursue a real estate career, many real estate agents hold undergraduate degrees in business, marketing, finance, or a related field.

If you do have a college degree, there’s a good chance you have student loans to pay back. In the event you are left with some student loan debt, it’s important that you design a realistic repayment plan. A financial advisor can help you determine whether you should repay your student loans quickly or prioritize other financial goals instead. 

Your bank account will thank you

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Making the Most out of Your Real Estate Agent Benefits

When you work for someone else, you may receive a variety of benefits like health insurance, 401(k) with a company match, paid time off, training opportunities, and bonuses. As a real estate agent, you’re likely an independent contractor or small business owner. 

This means you’re responsible for your own benefits. You need to figure out which benefits you need and want as well as how you can obtain them. When you meet with a financial advisor, they can help you answer questions such as:

  • Which health insurance plan should I purchase?
  • How much time off can I take without falling behind on my financial goals?
  • What type of retirement plan is right for real estate agents like me?

Buying a House as a Real Estate Agent

Helping others buy houses may be what you do best. But that doesn’t always mean you’re a mortgage expert or have the ability to buy your own house without roadblocks. Since you may not have W2s or pay stubs to show you can repay a home loan, it can be harder to get approved.

A financial advisor experienced working with real estate agents can help you explore your options for buying a house despite the mortgage challenges you may face as an independent contractor or small business owner. Rather than a government-backed or conventional loan, they may recommend an alternative mortgage option. 

One example is a bank statement loan, which is specifically designed for small business owners who may not be able to verify their income via traditional methods. A financial advisor can also help you figure out how much “house” you can comfortably afford on a fluctuating income. 


Q: For the thousands of real estate agents who also invest in real estate, what special financial planning recommendations do you suggest they consider, given both their income and net worth can be directly impacted by local market conditions?

We asked Marcus Blanchard, a financial advisor who specializes in working with real estate agents, to answer this question. Here’s what he said.

Headshot of Marcus Blanchard, CFP®, WMCP, ChFC
Marcus Blanchard, CFP®, WMCP, ChFC I Help You NOT Get Sunk By Tax Torpedos When Planning For Retirement

One challenge real estate agents have is how irregular their income can be at times. Putting your dollars to good use and building an adequate “Safety Bucket” is critical when an agent’s local market hits a cool-down period in real estate transactions.

This also applies to any investment properties one might own. Are there adequate reserves to cover surprise expenses or tenant turnover? Having adequate reserves also provides the opportunity to strike when a great deal presents itself.

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Marcus Blanchard, CFP®, WMCP, ChFC | Focal Point Financial Planning

Saving for Retirement as a Real Estate Agent

Even though you likely won’t have an employer-sponsored retirement plan like a 401k or 403b with a match, you can still save a lot of money for retirement. You may want to consider investing in common self-employed retirement vehicles like SEP IRAs, Simple IRAs, and SOLO 401ks. 

Believe it or not, some of these plans will allow you to save even more for retirement than you’d be able to if you had a traditional 8 to 5, W2 job. If you work with a financial planner, you can design a feasible retirement strategy. You’ll uncover answers to questions like:

  • Which retirement plan(s) should I open as a real estate agent?
  • How much do I need to save to meet my preferred retirement lifestyle?
  • What is my long-term investment strategy?

Expenses and Deductions: Keep More of Your Income

If you own a real estate business or work as an independent contractor, there are plenty of deductions at your disposal. These deductions can help you save on the high taxes you may face as a self-employed individual. 

Some of the most common tax deductions for real estate agents include commissions paid, home office, marketing, and advertising expenses, software, and business tools. If you work with a financial advisor, they can help you address questions such as: 

  • Does it make sense to take the standard deduction or itemize?
  • Which deductions am I eligible for as a real estate agent?
  • How do I keep track of all of my expenses? 


Q: What tax planning challenges often arise for real estate agents, and what steps should they consider taking to make smart moves?

We asked Leland Gross, a financial planner who specializes in serving Realtors and self-employed millennials, for his thoughts on this topic.

Headshot of Leland Gross, CFP®, EA
Leland Gross, CFP®, EA I Help Realtors And Self-Employed Millennials Get The Life They Want

Tax planning for real estate agents presents unique challenges that require careful consideration.

One key decision agents face is how they structure their business for tax purposes, often between a single member LLC or an LLC taxed as an S Corporation. For many reasons, many agents opt for the S Corp route, but it’s crucial to evaluate this decision thoroughly before making a choice.

I often see agents elect to be treated as an S Corporation prematurely, and while they save in taxes, they also assume significant auxiliary costs in the way of tax preparation fees and added administrative costs with things like payroll requirements. An S Corporation could be the best fit, but it is alway worth evaluating both options before making a decision.

Additionally, real estate agents often struggle with managing their tax obligations throughout the year. Establishing quarterly estimated payments can help mitigate this challenge. Paying quarterly and using a safe harbor amount (like 100% of taxes paid last year for example) can help to avoid late penalties and interest from the IRS.

Another common pitfall I come across is waiting until the last minute to address tax planning strategies. Many real estate agents don’t address their taxes until the beginning of the year, typically between January and April, when they are filing their tax returns.

To maximize tax efficiency, agents should engage in annual tax planning during the latter half of the year. Tax planning allows agents to look ahead and explore strategies to minimize liabilities before year-end.

By addressing these challenges proactively, real estate agents can navigate the complexities of tax planning with confidence and ensure they’re making informed decisions to optimize their financial situation. Remember: tip your server, not the IRS.

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Leland Gross, CFP®, EA | PeaceLink Financial Planning

Your Insurance Needs as a Real Estate Agent

As a real estate agent, you’ll need to invest in health insurance unless you can obtain it through your spouse. Professional liability insurance is also vital as it can cover the professional services you provide and protect you from property damage claims as well as bodily injury. A financial advisor can help you decide which types of insurance you need and how to go about finding the right policies for your unique situation. 


Q: I recently left my job to become a full-time real estate agent, besides health and life insurance coverage, is there another type of insurance coverage I may be missing?

We asked Ross Riskin, founder of Riskin Wealth Management, to answer this question.

Headshot of Ross Riskin, DBA, CPA/PFS, CCFC, MS Tax
Ross Riskin, DBA, CPA/PFS, CCFC, MS Tax Focused on helping you grow, preserve, and enjoy your wealth!

Something I have noticed more recently is that many real estate agents I have worked and talked with do not have sufficient disability insurance coverage and most have no coverage at all!

This is something many may take for granted especially if they were previously working as an employee at a larger company, which likely provided both short-term and long-term coverage as a fringe benefit at no cost them as an employee.

We have the data and know the chances of suffering from a “disability” are far greater than passing away, which is why having at least some minimum level of coverage is usually a necessary part of someone’s risk management strategy.

Unfortunately, the opportunity to obtain cost-effective coverage through a group disability insurance policy as a realtor is limited, as options that are available to other professionals through affiliated groups such as CPAs through the American Institute of Certified Public Accountants (AICPA), financial planners through the Financial Planning Association (FPA), and attorneys through the American Bar Association (ABA) don’t really exist for realtors.

Even the National Association of Realtors (NAR), which provides access to health insurance, life insurance, and pet insurance does not provide access to disability insurance for its members.

Unfortunately, realtors are not classified in the same coverage tiers as CPAs and attorneys, which means they are going to be paying more in premiums for less coverage.

However, picking up a policy with at least some sort of coverage while one is still young and healthy is usually a smart move to make and it is extremely important for realtors to connect with an advisor to assess how much disability coverage they need and what types of policies are best suited to work within their budget.”

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Ross Riskin, DBA, CPA/PFS, CCFC, MS Tax | Riskin Wealth Management, LLC

Financial Planning is a Necessity

Being a real estate agent is hard work. To earn a healthy income and expand your client base, you must think out of the box and put in long hours. For this reason, it’s vital that you develop and stick to a game plan for your personal finances. A financial planner can help you through this process so you can ensure your hard work truly benefits you and your loved ones. 

Enjoy a Secure Financial Future 

Financial planning is key if you want to figure out your short and long-term financial plans and eventually meet them. It can eliminate stress in your future and set you and your family up for a life of happiness and security.

How To Find The Best Financial Advisors for Real Estate Agents

While you may find a great financial advisor to work with through the referral of an acquaintance or whose office you drive by in the neighborhoods where you work, it’s important to consider several factors to improve your odds of hiring the best financial advisor for your individual needs.

As a real estate agent, you may decide the best financial advisor for you is one who specializes in understanding the unique financial planning challenges and opportunities common among real estate professionals. These real estate financial advisors may hold credentials that demonstrate their expertise along with considerable experience working with clients in the real estate profession that could benefit your own financial planning needs.

Because many financial advisors can work with you online, you’re not limited to hiring a financial advisor in your neighborhood when the best financial advisor for you may live hundreds of miles away.

In other words, whether you choose to hire a financial advisor who lives near or far, it may be most important to hire a financial advisor who truly understands your individual needs based on their education, experience, and commitment to helping people just like you.

You’ll find a growing number of financial advisors for real estate agents on Wealthtender and we’re happy to introduce you to the financial advisors showcased just below who are experienced in serving real estate professionals. To learn more, simply click on a preview card to view their profile page.

Find Financial Advisors Who Specialize in Working with Real Estate Agents

📍 Click on a pin in the map view below for a preview of financial advisors who specialize in working with real estate agents and can help you reach your money goals with a personalized plan. Or choose the grid view to search our directory of financial advisors with additional filtering options.

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FAQs for Real Estate Agents

What are the tax consequences I should be aware of if my client wants to sell their property or if I am a real estate investor looking to sell?

Ross Riskin, DBA, CPA/PFS, CCFC, MS Tax

Riskin Wealth Management

Ross: This is a great question and one that has been coming up more and more given how hot the real estate market has been recently! If you or your clients have this type of question, the first thing they should do is talk with their CPA, or financial advisor if he or she is also a CPA, before doing anything else as the answers can change depending on a variety of factors. However, here are a few general things to keep in mind if you are either a real estate agent working with clients who are thinking about selling or are a real estate investor. This list is not all inclusive, but there are four primary questions we need answered in order to determine the tax consequences associated with the sale of real estate.

– What was the purchase price of the property?
– Were any improvements made to the property?
– What was the sale price of the property?
– How long ago was the property purchased?
– How was the property being used (primary residence, rental, etc.)? 

Here are some general bullet points showcasing how gains and losses are treated differently depending on the use of the property:

Sale of Principal Residence

Losses are realized but are not deductible.

Gains up to $500,000 (married filing jointly) and $250,000 (single tax filer) may be excluded from taxable income if the property is used as the primary residence for at least 2 of the past 5 years.

Sale of Rental Property

Losses are realized but may or may not be recognized in the current year depending on other passive income that is generated, the client’s involvement with the property, and their Adjusted Gross Income (AGI).

Gains on property held for longer than 1 year and 1 day are realized and taxed at long-term capital gains rates but are subject to depreciation recapture.

Gains on property held for less than 1 year and 1 day are realized and taxed at ordinary income tax rates.

Gains may be deferred if the like-kind exchange rules under IRC 1031 are followed.

Given how beneficial the tax laws are for homeowners who are looking to sell their principal residences, let’s look at an example of how the gain exclusion formula works that both realtors and real estate investors should become more familiar with.

Let’s say your client (single tax filer) purchased a home on July 1, 2020 for $350,000, made improvements to the property costing $50,000 and sold the property for $550,000 on March 1, 2021. The gain on the sale of the property would be $150,000 ($550,000 – $350,000 – $50,000) and $77,083 ($150,000 – 7 months / 24 months x $250,000 gain exclusion) of the gain would be included in taxable income in the year of sale. Even though the full $250,000 gain exclusion wouldn’t be available until the client lived in the home for an entire 2 years, he or she would only need to occupy the property as their primary residence for 15 months (15 months / 24 months x $250,000 = $156,250 gain exclusion) in order to have their entire gain excluded from taxable income.

These are just a few things to keep in mind, but the most important takeaway here is to start a conversation with an advisor who has a strong tax background so you are well-positioned to make a tax-smart investment decision. Gains in the real estate market look amazing on paper right now, you just want to make sure most of those gains wind up in your “pocket” at the end of the day.

What is the job outlook for real estate agents?

According to the Bureau of Labor Statistics, employment of real estate agents is projected to grow 2 percent from 2019 to 2029, slower than the average for all occupations. Demand for these workers will continue, because people turn to real estate brokers and sales agents when looking for a home, such as to buy a larger home or to relocate for a job.

Are there financial coaches who specialize in working with real estate agents?

Yes. While financial advisors are generally best suited to help real estate professionals who need investment advice and guidance, many financial coaches have considerable experience working with real estate agents whose hectic schedules have meant day-to-day budgeting and financial habits could use improvement.

Use the Wealthtender Financial Coach Directory to find the best financial coach or counselor for your individual needs.

The Best Finance Blogs and Podcasts for Real Estate Agents

With over 250 personal finance blogs and financial podcasts featured on Wealthtender, you’ll find several that regularly publish articles and episodes with financial planning insights useful to real estate agents.

We’ve also curated a list of popular blogs and podcasts for real estate professionals offering articles and interviews on a range of topics, including financial and career advice:

Do you have a favorite blog or podcast for real estate agents not featured above? Let us know in the comments section below or by email at yourfriends@wealthtender.com.

About the Author
A headshot of Brian Thorp, the founder and CEO of Wealthtender

About the Author

Brian Thorp

Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian

To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Read our editorial policy and terms of service to learn more. Wealthtender is not a client of these financial services providers.
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