28 Jan Ep. 61 The 1st Steps to Take After Deciding to Become a Self Employed Realtor

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Hey this is Adam Kruse owner broker of the Hermann London real estate group and host of the St. Louis realtor podcast and this is Shannon St. Pierre a realtor at Hermann London and co-host of the St. Louis realtor podcast before we begin we just want to say that we are a real tourist which is different from someone who is simply an agent the term real tour identifies a real estate professional who is a member of the National Association of Realtors and subscribes to its strict code of ethics and even though it’s called the St. Louis realtor podcast this show is for everyone who’s interested in real estate buyers sellers Realtors HGTV Watchers everyone so if this specific episode isn’t exactly what you’re looking for go through our past episodes and I guarantee you’ll find a topic that interests you if there’s a topic you want us to cover email us at podcast at Hermann London calm that’s Hermann h e r m a n n london dot com and we’ll talk about it on an upcoming episode thanks for listening and enjoy live from the rooftop of the Hermann London real estate group in beautiful downtown Maplewood it’s the St. Louis realtor podcast with Adam Kruse and Shannon St. Pierre welcome welcome everybody to the St. Louis realtor podcast live from the Hermann London real estate group I’m your host broker owner of Hermann London Adam Kruse here with my fabulous co-host realtor Shannon St. Pierre hello realtor rehabber however you do it a little bit of it all don’t you investor investor okay so today we’re going to cover a bunch of stuff about becoming self-employed we’re going to share some tips specifically about becoming a realtor later on Shannon you’re gonna share with us about a new property you have right yes in soulard a good one I’m excited to hear about it tons of unique features I hear there might be solar okay cool alright and then I wanted to just quickly mention the banner behind us the thanks to my friend Mike Brennan I got this idea from him to have our you know every year our company has a theme kind of that we’re trying to just keep in mind for the whole year and this year’s theme is some day is today and the idea is that people often think of things and they say someday I want to do that you know you have your bucket list or whatever some day I want to firewalk as one of mine someday I want to go to Italy or whatever and we’re trying to say someday is today so so we know you firewalking I’m working on it I’m gonna bring it up I think in every podcast I know someday I’m gonna fire and so one of the things that applies you know to our to our kind of our concept of some day is today here is today’s topic which is all about you know be deciding to become self-employed right right so I think it’s really interesting people how many people do friends family acquaintances say oh I’ve always lied about being a real estate agent I’ve wanted to get my license I’ve thought about it yeah a lot just I hear it all the time right Oh the time or whatever it is I want to go you know I want to like start a company that rescues dogs or you know you hear all sorts of different stuff that people want to do yeah well more people more and more people are becoming self-employed yeah and someday is today but first Shannon we had this kind of situation last night we love to talk about things that happen to us as realtors and things that we come across and so i wanted to briefly mention you know escalation clauses right so tell me quickly what is an escalation clause so the escalation clauses when there’s competing offers and the realtor’s they write in the offer that their clients are willing to pay five hundred or a thousand dollars over the other highest offer up to X amount right and over the years we’ve seen different buyers agents do kind of do their own version of the escalation Clause differently right right some of them just write a sentence in the special agreements some of them want to see a copy of the other agents offer or the other buyers offer some listing agents say they won’t take an escalation clause because we have too many already it’s just been really interesting to see how different agents handle it over the years but your situation last night that made us want to talk about this today is what happens when both escalation clauses are escalating essentially to the exact same price right so I called you and and that’s exactly what had happened is the escalation clauses were to the dollar pretty much exactly the same huh and then we usually default then and look at the financing right so yeah another yeah the financing terms of the offers who has stronger buying power is one conventional ones of is one FHA say or and in in this case they were pretty equal again well so everything was pretty equal it was literally two offers and they were exactly the same now one had a lot shorter closing timeframe so then that’s the next thing that we kind of look at is what are they willing to close but that wasn’t as important it would I think is really is interesting is they were to the tea the same so what do you do okay so just to take a step back you have a listing multiple people right offers on it as agents generally when we have multiple offers Wilson well tell them all the buyers agents hey we have multiple offers submit your highest and best offer yeah by x time essentially taking away the buyers total negotiating abilities and now they went from negotiating to begging essentially right and so they both submitted their highest and best offer both included this escalation clause and similar terms and an ear case both included a letter right because the popular thing now to do is for the buyers to write a letter directly to the seller saying we’re gonna love this house we love this neighborhood right we want to raise our family here all this kind of stuff in these letters and so now in this case the seller often chooses what they want to do based on like a motion it sounds like yes yeah that’s and that’s pretty much the case of the letters – for the buyers to make their plea let the seller know who they are what their intentions might be to try and sway them their way yeah okay interesting so escalation clauses is you know to me it’s one of the things we I consider myself to be kind of a real estate nerd and I you know and I think you might be a real estate nerd too right and we love to kind of get into the finer details of what happens in certain situations and we could probably do an entire episode on escalation clauses if we wanted to correct especially if we wanted to break down the one that you got last night which was not just a sentence in the special agreements paragraph it was a whole page of kind of wording all about the escalation clause which I I had never seen and and you I don’t think you’ve seen that specific addendum I guess yeah yeah I had not seen that specific one it was just so interesting to read it and think about how like why they decided to word things the way they did and the unfortunate part about that one from my perspective was like I was saying last night is you and I should be able to read this or anyone should be able to read this and not have any questions about what anything means right but that document left me saying well I think this sentence means this what do you think it means right and I didn’t and we didn’t know really how to even fill it out I actually had the call the agent and ask her how and why do you need this certain information and why did you mention the appraisal in there and so we don’t have to get all into that but the the escalation clauses are super interesting and I and I guess the point is that if you are a buyer in this market you will probably come across a situation where you’re buying a house with multiple offers and it’s good to have an agent who understands kind of the complexities of how to how to handle that you know and what what do you do we only have offers for buyers where there’s not multiple offers anymore yeah and so you have your own like strategies probably to win like you’re saying when the terms are the same it comes down to other things like the letter or you know we often encourage our agents to just basically try to make friends or whatever like try to really call the listing agent and find out what else the seller is looking for what else they care about yeah there might be terms or anything like that so alright thanks for sharing about that as we’re gonna get into today talking about self-employed being self-employed and we’re gonna talk about a bunch of different stuff related to that we have this whole list of questions that were submitted to us I wanted to make a couple disclosures if you don’t mind please do maybe the boring part of our podcast but you know Shannon and I are both Realtors we’re not attorneys we’re not CPAs and so if we say anything today that we want you to before you would act on it I guess we would want you to consult with your attorney or your CPA and make sure that they agree with what we’re saying or that they think it’s the best move you know I’m for your specific scenario different yeah and then the other thing is you know we’re recording this podcast today we are live but it’s also an audio that people might be listening to today a month from now five years from now and so things change and so no matter when you are listening to this we want you to reach out again to your attorney or CPA to very find that what we’re saying is still the case and actually I really want you to reach out to us too you know and make sure that what we’re saying is still the case yes and tax laws change every year so just assume things change yeah so you’re ready to jump into it yes let’s do it cool okay so we have this big list of questions and again the main concept here is I’m thinking about becoming self-employed and I have all these questions how do I do it what do i do what do I need to think about what do I need to be concerned about and so part of becoming a real estate agent is becoming self-employed so whether you’re becoming a real estate agent or you’re opening up a dog-walking business absolutely a lot of these questions will pertain to you and then we are going to jump into a lot of specific questions about becoming a realtor yes as we go on to so the first question was what special things do I need to do to become self-employed and you want to share any thoughts on that well when I saw this question is like well nothing you just can’t start doing whatever it is that you want to do well I’ll tell you the first thing that Aunt Mairzy said to me when I told her yeah it Mairzy okay when I was gonna quit I used to be an auditor you know and when I was gonna quit my auditing job to become a full time realtor this was in 2005 because you went to school to be an accountant I did and Mairzy said what about health insurance right and if luckily for me I had already figured that out and I was able to say well here’s you guess what I’m able to get health insurance like a single-user health insurance plan and and it’s actually going to be cheaper for me this was back in the day let’s leave politics aside but this is back in the day my health insurance was actually going to be cheaper for me then even my portion of what I paid when I was employed as a auditor yeah you know actually I had the same scenario Jess when I came out of the corporate world and I wouldn’t get my own policy yeah it went down well I think that a lot of times in the corporate world you know you’re paying for the insurance of of everyone at that company I will say that’s not the case any longer so yeah my insurance is I don’t know what it would be in a corporate world but my insurance today is drastically higher than what I was paying back then but so special things I need to do to become self-employed I want you to look into health insurance as we already said I want you to talk to an attorney and a CPA and kind of see how they want you to structure sort of your business entity and then CPA is a great place to start if you’re thinking about becoming self-employed I think a CPA can really get you set up yeah you might need the attorney possibly for an LLC or for some other things but well the CPS can really get you’re on the right track yeah I think it’s interesting that they all have their own perspective so the accountant the CPA will be giving you information from his perspective or their perspective about you know tax purposes and whatever you know and for example we’ll talk this about this a little bit how if you start an LLC you’re still technically what they call a sole proprietor if you’re the only one who owns this LLC then you’re still technically a sole proprietor because an LLC is what they call a flow-through entity so your LLC doesn’t actually have its own tax return you know Shannon St. Pierre still just does her own tax return and so from the accountants perspective he doesn’t care about the LLC right right now it depends on how you set up the LLC so I don’t want it just willy-nilly say go you know set up the LLC when you’re setting up the LLC you have to determine if you’re going to be a sole proprietor an LLC tax is an S corp or C Corp and you can do so there are some choices and there are some tax there are choices and tax consequences talk to CPA again most likely if you’re just starting your own small business I think that you’re going to just be taxed as a sole proprietor you’re probably going to take the like S corp election a couple years down the road once your income or your company’s revenue is a lot higher then getting started but so the CPA will say you know who cares if you’re an LLC or not because it’s gonna be tax the same but the attorney might say you should be an LLC for a liability protection right now LC stands for limited liability okay so we want to talk to health insurance we want to talk to our CPA we want to talk to our attorney we probably want to talk to an insurer person in general about getting business-related insurance maybe errors and emissions maybe general liability there’s a lot of different types of insurances that are available and any insurance agent would love to tell you all about it I’m sure absolutely yeah call ya’ll noone call your insurance agent so and then they say what’s the very first step to in becoming self-employed it’s like a loaded question it’s like well should you figure out what kind of company you want to do like the first step I think would be to like have some sort of a goal on what you want to do yes you know you can you can start an LLC today very easily and you can order business cards that say president on them right correct but the company has to have some sort of a name and a mission or vision or you know some sort of a goal and so I think the first steps to becoming self-employed would probably be to figure out exactly what you want to do hopefully a lot of people I think make that decision it’s money motivated but hopefully you’re also going to include things in there about what you’re interested in or passionate about you know that kind of thing what is my business classified as to the government and I think we’ve sort of answered that already where if you’re an LLC a single owner LLC then you’re basically classified as a sole proprietor to the government if you if your business grows then you may end up becoming S corp and if it grows a lot more you might end up becoming C Corp I hear a lot of people are not you know like kind of single owner or smaller companies probably with revenue under 10 million dollars or something like that are not doing C Corp so much anymore because no I think the C Corp really is corporation like yeah large I can start a C Corp today right but there’s no kind of the purpose I think there’s no purpose in doing it you tell I’m huge and I have a board of directors and I have maybe even stockholders and all this kind of yes and they and you have to follow all those so even if you’re C an S corp you have to have meetings on file every yeah like the meeting minutes for the escort yeah so there’s still rules that apply but it’s like welcome to self-employment because you’re going to get different answers from whoever you talk to very much and your different attorneys will give you different answers some attorneys will tell you that you should file your LLC in Nevada because they have a history of not piercing the corporate veil some will say Delaware you notice a lot of companies are Delaware because of the business tax savings whatever but no matter what whoever you talk to they’re all gonna give you different advice your insurance company is gonna want to sell you a bunch of insurance your CPA is gonna want you to get QuickBooks you know and pay a monthly fee for that like but welcome to being self-employed you are the boss you get to make decisions and I think that’s part of the fun of it right and I think it doesn’t have to be super complicated I think it’s just a matter of you know just documenting initially I mean if you want just start a business just start documenting you know your expenses yeah and then I see the next question is doing a separate checking account just open up a second checking account doesn’t this so that you have to be in the business name just open up a second checking account yeah maybe get a different credit card and put all business expenses on the credit card do all payments through that separate checking accounts so we have another one how is a w-2 employee different from an independent contractor a w-2 employee is an employee somewhere and my example is always like let’s say you work somewhere and you’re paid you’re you know they hire you on as you’re paying you’re gonna be paid ten dollars an hour yes right most likely what you find on your paycheck and these are just rough numbers is that you’re actually like taking home closer to something like $8 an hour right because after taxes and and all that kind of stuff so they withhold the taxes and paid the taxes for you they would hold the taxes pay the taxes for you but your company is actually paying out closer to $12 an hour so there’s somewhere around that $4 per every hour that you work that’s being paid in in taxes and so that I guess the main difference is w2 employee the employer is paying your taxes for you from depending contractor you need to track your expenses and pay your own taxes right so like as an independent contractor as a realtor if I owe one of our Realtors a thousand dollars for example I give them a thousand dollars you know we don’t take taxes out and then give him $800 we give them $1,000 and then it’s on that the realtor with you know we give help and guidance and all this kind of stuff but it’s on the realtor to then deduct their expenses and then pay taxes on their you know the remaining income essentially and then before we talk about the banking thing the next one was do I need an employer identification number ìin and do I need to set up an LLC most likely you will get an EIN number which you get by going to irs.gov so you’re gonna go to in Missouri you’re gonna go to https://www.sos.mo.gov/ first to file for your LLC if you don’t have an attorney do it or that’s what your attorneys gonna do you go to https://www.sos.mo.gov/ and you file you get your LLC and so then you get your articles of incorporation and all that kind of stuff and then you’re gonna go to irs.gov and you’re gonna file for an EIN number which is what you’re gonna need to open a bank account right if you want to but in ein is just like a social security number for the business yeah exactly so the next question do I need a separate checking account do I need a special type of checking account how do I avoid checking account fees doesn’t matter if the checking account is online or only a part of a credit union so I would say again if you’re just an LLC or you’re a flow-through entity do you need a separate checking account no not necessarily but I would encourage you to get one I personally would encourage you strongly to get a separate checking account and a separate credit card so that you can easily keep track of your expenses through the credit card and then through the checking account you can just keep track of your income and all that stuff and it’s better to not have it kind of merged and there’s another word that I’ll think of later where your commingling yeah you don’t really want to co-mingle like hey I had to buy my daughter some new soccer cleats and hey I had to pay like my printer bill for the you know for my business in the same account it just makes it really hard to track and so it’s generally free to open a checking account somewhere at some bank or credit union so credit you so you might as well have it and just make your kind of accounting and and tracking a lot easier in regards to the checking account for the bank if you want the checking account in the business name then you do actually have to have the business papers to go along with that so if you don’t have the LLC set up or anything of the sort then you can’t have a checking account in a business name that you’re just totally you need an LLC and you’ll need the ein number yes if you do it yourself that’s roughly I think of roughly a hundred dollars maybe even less it’s been a little while since I set one up it’s not a ton of money for Inman’s in the state of Missouri it’s different in Illinois in the state of Missouri there you go and if you pay your attorney to do it it’ll cost obviously some amount greater than that fifty or something I don’t know yeah and so they’re basically you know you’re paying what you’re doing I’m what kind of LLC you’re setting up yeah and I guess if they’re gonna get into like an operating agreement you know you don’t most I think LLC people that just own their own company by themselves probably don’t even have an operating agreement right but if you start taking on a partner or anything like that then you should and my opinion you should get an operating agreement that outlines it’s kind of like a prenup you know what happens if I die it what happens if you die what happens if I hate you hate me asks for that too a checking account in a business name they want a copy of your operating agreement which I think that you can say like I don’t have one or like here it is it’s a one-page give you a form or something something like yeah it’s it’s more like if you’re gonna have a partner or like in my case I’ve gone into business with a few different people buying a property with them yeah and so we we you know we put the property and the LLC name and then we have an operating agreement again so what if I want to sell and you don’t want to sell and it kind of outcomes of the operating we used an attorney to do it okay and so do you just use the same one now do you just copy and paste it depends if in in Mike so what we did at the very beginning was you know a guy and I Matt and I were gonna buy a building and so we needed an operating agreement and so basically the attorney asked us a ton of questions and then we had a ton of questions and ideas on how we wanted to handle things and so then they kind of took all of our questions answers to all the questions they asked and all of our comments or whatever and put that into a workable operating agreement okay and so then I have used essentially that same operating agreement over again with other people that I bought properties with whereas a really similar situation me personally I like to pay the attorney to you know just like hey I’m doing I’m gonna reuse the same operating agreement but it’s slightly different deal I just like to pay them to refresh it or just make sure it’s done right because it’s such a big deal so is it expensive the first time we had it made I think it was expensive I don’t remember exactly how much it was let me guess one thousand dollars some totally depend on the attorney that you use I’m sure you can get a free one online and whatever but then every time we update it for a new one you know it’s only about an hour or so of their time and so it’s whatever their hourly charge okay you know but like that that’s the kind of thing that people love to to skip that and I don’t want to pay that $300 whatever I don’t I don’t have to pay it I don’t want to pay it right but then I think that’s the kind of thing that when you need it you’re so happy that you have it and you you’re so happy that you paid that money to do it and so for something like an operating agreement that 300 should be just automatically calculated in the cost of you know taking on this property right like you do insurance the mortgage payments yes taxes totally so $300 should be just kind of included in there just considered in there yeah exactly does it matter if the checking account is online only or a part of a credit union I I don’t I don’t think so yeah I mean I kind of like going to the bank occasionally to get some cash or whatever well I don’t understand maybe I am a little old school I don’t get it if you have one of these online banks and you need cash what do you do and you’re gonna say you go to an ATM Adam probably right that’s what I guess yes can you deposit cash to an ATM the same way you just take a picture of the check what if it’s cash can you take can you keep taking that so if you need cash I’m assuming it’s just an ATM thing yeah so you can look into a personal preference you know I think the goal is to find a bank that isn’t gonna charge you any fees at all you know hi I’d like to give you my money what we’re gonna have to charge you for that you know I went to some banks when we were I’ve started bank accounts before and they wanted to charge me like $40 a year fee or checking accounts are a moneymaker so I do encourage you to kind of shop around on that one because I think in most places that you go they do have fees yeah shop around yeah let’s see do I need a separate credit card is there something I need to do to make it a business credit card what credit card has the best perks so I do encourage you to get a separate credit card again I already mentioned that so you can track your expenses separately you know if you take your wife out to lunch or your husband out to lunch whatever you use your personal credit card right but if you’re going to maybe put gas in your car or buy a sign for your business or something like that then you use your business credit card it just makes accounting for everything that much easier a huge difference in regards to accounting and taxes and getting everything together yeah is there something I need to do to make it a business credit card not that I know of I think I I guess I do have one credit card that’s a business credit card and I might have just applied as a business I don’t think my personal opinion is that it’s not important whether it’s a business credit card or not especially establish credit for your business well yeah I don’t know that it will establish but most credit card companies will allow you to do a check that box business credit card business name and there’s nothing specific that you have to do like it is opening up a checking account where you have to bring in the operating agreements or your LLC documents or anything of the sort would be like great that’s fine by me now there is a difference between on some of them mm-hmm a personal credit card and a business credit card like my business credit card has a lot more advantages like I have a lot more like car rental well coverage okay okay so I don’t you know the insurance that they always tried to tell you at Car Rental places like my credit card already my business credit card already offers that coverage insurance coverage where my personal credit card does not so renting a car should always go into the business credit card yeah I know one of the credit cards I have you get free TSA PreCheck with that you know yeah you get three TSA PreCheck you get access to the priority pass in the airport so that’s like the little one no this is I think it’s called Chase Sapphire Reserve or something you know and it’s metal too as you feel pretty special when you take out your metal credit card the credit card perks I guess mattered to different people if you like mileage if you like travel if you want just discounts if you think some of them have bigger cashback than the others no matter what credit card you go with if you’re not paying it off every month you’re paying for all those perks yeah we’ve talked about yeah pay it off every month that’s otherwise finance otherwise just go for a lower credit card with lower fee fees and finance charges versus yeah every business is different my hope for you would be that you are like paying off your credit card bill every single month because you don’t want to start incurring a big credit card bill by debt you know how do I keep track of my expenses do I need a QuickBooks subscription can I use a Google sheets template so keeping track of your expenses again severed bank account separate credit card and then do I need a QuickBooks subscription I would say maybe not yet if you’re just getting started or like most of our Realtors I don’t think they have a QuickBooks subscription well I see where you’re going with that like I think I used Excel spreadsheet for a while yeah and then moved into QuickBooks and it is pretty sweet because every time I have my credit card in my QuickBooks connected right no charges it automatically goes in there and then I have categories and so I just go to QuickBooks and just make sure everything’s been are you paying for QuickBooks ten dollars a month ten dollars a month okay I think I’m paying at 70 I don’t know what the difference is well there’s the self-employed one which is like it doesn’t it’s very very basic kind of I need the next level up okay I’m there it’s a dick thing wait we just hold on but it’s but all you have to do is create your report for your accountant at the end of the year or however you do taxes and you’re done it’s just am i doing my taxes got so much easier when I started using QuickBooks even over Excel okay so do I need a QuickBooks subscription no could you get one yes sounds like they have a $10 one right now there’s also quicken there’s all sorts of stuff you could use a Google sheets template that’s literally like income expenses you know net income our revenue expenses net income if you wanted to when you’re starting a new business I encourage you to try to like save money where you can and you know I know when I started this company I was definitely the one taking the trash out and any you know any type of examples like that that you hear eventually they had to convince me to get a cleaning person around here do I need a seep to I need to visit a CPA or lawyer before I do anything do I need a CPA or lawyer on retainer so need I would say no should do we say yeah probably yeah a lawyer you never met with the lawyer talk to a lawyer about anything not in regards to my business okay so well that sounds like a story it I guess we would say it depends and I I think I would want to leave this podcast with the general advice like yeah call one you know and your business depends right so you especially as a realtor it kind of came with part of being a realtor at a brokerage like ours as we kind of have a lot of that stuff sort of organized for you and help you get it all help you get your thing set up yeah but if you’re opening again a dog-walking business and you don’t have a broker who’s handling a lot of the like legal things for you that is trite and so very true I like our for example if you’re a graphic designer you can just trust people that they’re gonna pay you for a while and then you’ll get burned and then you’ll call an attorney and have them make an agreement that you’ll now make any future clients sign you know so you can either do it now before you get burned or you can get burned and then do it you know and do I need a CPA or a lawyer on retainer I would say absolutely not I mean I’m I don’t have any CPA or lawyer on retainer I like to kind of pay a la carte as I use it you know yeah I can’t say I put a retainer on the CPA but I certainly have a recipe that I use I actually have two and so I will call them with questions especially with big bucks St. Pierre over here to CPS just can’t keep it all track no but they each have their specialty like I could use one but it’s interesting when you get I’m sure you have experienced this where one is really good at doing this but the other one is like one is just a tax genius like his whole gold life is be a tax attorney he loves the tax laws so but trying to get him and keep him on track with like the quarterly stuff is a little bit harder and it’s not his thing it’s not his niche so I used one for the quarterly and I use them for my yearly and I go to him for tax advice especially when it comes to properties and buying and selling yeah and rehabbing and investing like the guy is just a genius when it comes to that so okay so that’s a good point like all CPAs are not created equal all attorneys are not created equal right yes i won years ago I called I had something oh I was gonna negotiate the lease for this office that we’re sitting in and I called like kind of our family friend attorney who had been fixing speeding tickets for me and stuff like that and he was like he was like having yes I’m an attorney but having me review your lease would be like having an eye doctor work on your foot you know and say they all have kind of like specialties that they focus on and it makes sense to talk to one that specializes in whatever you’re doing yeah yeah certainly if you business laws significantly different than family law yeah so which so go for the business guy do I have to pay quarterly taxes and when should I start paying quarterly taxes so I believe yes you do have to pay quarterly taxes and I believe that it’s based on your previous year’s tax burden and you’re supposed to just pay a quarter of that every quarter when you get into a certain level is that correct uh that’s in a CPA question I guess I don’t know for sure yeah there’s a point a very specific point where you need to start paying quarterly though yeah and some people would say don’t pay quarterly keep your money you know earn interest on it or invested or whatever and then just pay yearly and they’re like the IRS is penalty is so low that you could have done better with your money that’s I’ve heard that I’m not I’m not advising that at all I do pay quarterly because I would rather get a little bit of pain or it’s still a lot of pain I’d rather get I’d rather write a smaller check four times a year than the one monster check at the end of the year and you have to be very disciplined be putting that money away all year long but I think that some some some this is where you really do have to have that CPA or yeah it’s because I think you have to pay quarterly you don’t you’re yeah I think you do penalize every quarter though yeah well and then you’re late and then there’s late and penalty charges just pay quarterly and I mean you know you hear a lot of people get in trouble where they don’t pay their taxes and they have tax liens and all this kind of stuff we see it in real estate where people have to pay off tax liens to be able to buy our property or I’ve had two deals this year where the you know the deal was going to go through but we were waiting on the buyer was waiting on a letter from the IRS to verify to the lender exactly what they’re like work out deal was with the IRS so the buyers going hey I have to pay the IRS you know whatever $200 a month towards my back taxes and the lenders like put that and get the IRS to put that in writing and then the IRS is like sure we will and then we’re like okay it’ll be weeks it’s taken weeks to get the letter but you people get in trouble when they don’t pay their taxes in the end of the year comes and they go no I owe all this money so ya pay quarterly or they’ll get a letter from the IRS like after they do pay all that money they owe you were supposed to pay quarterly here’s your late fees and penalties like hold on it gets complicated I mean that’s why I definitely encourage the CPA part okay so how does becoming self-employed affect my ability to buy a house or refinancing that’s a great question so best to talk to a mortgage person but my experience in that is that if you want to get a loan and I guess this is just for mortgage I don’t know if it’s affects your car loan and all that kind of stuff but if you want to get a loan to buy a home they want to see two years experience as a self-employed person and generally that means two years tax returns so not just two years from today it’s like two years from today plus another tax return yep to actual self-employed tax returns so if you are you know working at some company now and you have a nice salary and you’re thinking about quitting your job but you’re also thinking about buying a house soon I do encourage you to buy your house before you quit your job yes so I’ve had this scenario where a couple was house shopping and he was you know wasn’t they even switch companies or jobs even but he went from being a an employer to an independent contractor with the company oh wow he was working with and he made this switch not really realizing it that it showed that it would shut down the deal so they no longer qualified for a mortgage well getting it buying a house because I mean we have to have two years I mean and he he fought that one he came back he’s like no that can’t be true I’ve been you know it’s the same job at the same know me I’m working for but now I’m just an independent contractor so he I think exhausted all options and finally said oh I guess you’re right so it’s good to talk to some sort of bank or mortgage person before you would quit your job if you intend to get some sort of major loan any time in the near future or change your employment status change your employment says hopefully you’re independently wealthy and you can just pay cash for the house absolutely I mean that happens all the time though that’s what you probably would do so let’s get into some realtor specific stuff so you want to become self-employed you want to become a realtor and you want to help people buy and sell homes or do property management or do commercial whatever it is one of the first things that you’ll do is you’ll take the classes that you need to take so that you’re allowed to take the real estate test okay so you can get like you can get discounts at these schools yeah so you can take your classes in class it all depends on how you learn right you can take your class in class or online career education systems real estate Express first choice real estate school just to name a few you did I also did career education systems and they were awesome that was an in-class one I think they have online – yeah they do I think that’s STL seee or I forget exactly what it is but you can Google career education systems I don’t know how people do it online it just depends on how people learn and what their lifestyle is right you might not be able to like I did it where I did night school for my salespersons class right and then I did like during the day I think it was six days for my broker’s class and it depends on your lifestyle and how you learned some people would prefer to be at home drinking a beer sitting on their stuff taking the classes you know it’s just really hard for me to retain information that way the instructor liked that he relayed that he had so many stories that it was um there helped really kind of bring it all together yeah and so if you do reach out to us we can get you discounts at most of those real estate class schools or whatever that are available through queer kind of like an affiliate for some of them but yeah it’s really funny when you’re in the class because you’re like hey I have a question about this and they go that’s not on the test yep we’re not going to talk about that yeah you know and which is really interesting because you go to take all these classes to pass this test and then you walk out and you show up at a brokerage or and now your real estate agent and you know nothing absolutely nothing you only know how to do a showing you don’t and so I say like you go to you go to real estate class to learn everything you need to know to pass the test and then you join our company and it will teach you everything you need to know to make money and be successful as a real estate agent right but also I really it’s I’m just going off topic now but we had someone come in to the office yesterday to interview me about our brokerage which I also think is really interesting when you become an agent you do these classes kind of on your own type thing yeah it’s not you interviewing at brokerages it’s you interviewing the brokers absolutely yeah yeah you can basically work in any brokers that you want actually you get to go around and kind of see how they all are see which one’s gonna be the best fit for you I love those meetings some people come in unprepared and then if I can share some people come in with a huge list of questions that they ask me you know which I love that because then they kind of get to like like you did and then you get to get a feel of how I answer the questions and what we and all that kind of stuff you know right and like our company offers so much we have so many different types of Realtors that do their businesses in so many different ways we offer so much to everybody but it’s hard if someone comes in and sits down and says so tell me about you know what do you offer an agent it’s like do you have five hours to because I can just talk you know but I love it I prefer it when you have specific questions about what’s important I think yeah and then it helps lead you in providing the information otherwise you are here all day long but I think to your point when you have these questions so and you become a little bit more prepared it’s interesting how brokers will answer them and they were some that were very polished in trying to I almost gave sales presentations like if they want you to come on to their brokers right so they’re like trying to sell you where you were I thought was so uniquely different is just honest mm-hmm right like it wasn’t a it wasn’t snake oil it wasn’t like a promise of you’ll be successful it was just that well here I can help you but you still have to show up but you still have to work and I mean it would they were more I think they were very real and honest answers which is why I decided to come here well the way that those meetings work is interesting because I my personality is just let’s just sit down and talk you know but I say and I mean it I focus on some companies focus on recruiting we focus on retention or I focus on retention and so my goal is to help that the agents that we have be successful and my time is spent on meeting with our agents and helping them be successful not on just how can we get more Realtors to work here but they all say that and they are like they doing well they all go we want to make you successful you know basically give you the story of holding your hand and I had a friend that was a real estate agent still is um and she’s like oh watch out they see these things and then they’re nowhere to be found you’re just kind of you’ll be flying on your own I don’t know they all say that and then I was like my line now but then with you as like no no I think that that’s the difference is that you really true give that hand-holding to help propel them because you show up and how many times I mean I’ve worked head offers I’ve worked with all kinds of agents and I’m like they have no idea what they’re doing they have no they have no clue they’ve never they’re so new and nobody’s helping them yeah and I’m like oh yeah where’s your broker now little Hermann London sales pitch there so another question for a realtor what will all of my expenses be and and I was telling you this before the podcast we used to get people that would call and ask about being a realtor and I would talk and talk and talk and talk to them but then at some point in the call it would come up that they’re gonna have expenses and it started like just to get started and I could hear the wind go out of their breath and I was like wow I just wasted 45 minutes on a call you know and so now if someone calls and asks I like to get that right out up front you’re going to have roughly around 1,500 dollars in expenses just to get started and done none of the none of this money is going to our company it’s going to classes I don’t know exactly how much I think classes are like 300 or some Association so you’re gonna first you’re gonna take your classes a couple hundred bucks then you’re gonna take your test I think that’s fifty bucks or so get your fingerprints done at 65 something like that but then you’re gonna go to the Association of Realtors and that’s where the big charge comes in and that’s to join the Association of Realtors which you want to do because you get access to I hope this isn’t offensive I call it the Holy Trinity right and so by joining the Association of Realtors that’s how you get access to the MLS which is how we find properties and advertise properties get access to your Supra which is the key that you use to open boxes at people’s houses and then you get access to online forms which are all these contracts and stuff that we use and so by joining the Association of Realtors paying them money you’re joining the local the state and the National Association of Realtors then that kind of gives you the the right to now pay for the MLS the Supra and while the online forms is included them yesterday I think it’s really interesting like because I’m like yeah you don’t have to pay that those villagers you don’t have to but if you don’t pay it then you can’t have access to anything yeah so it’s kind of a you know you have to yeah you know I mean you do want to you want you have to have access to soup the Mayoress the MLS and I’m I’m a big fan of the Association of Realtors and the National Association realtors they’re doing a lot of things kind of like behind the scenes not just for realtors but for the public in terms of protecting home ownership and stuff like that you know I was talking about how they you don’t you might necessarily not even know but for example someone presented like a bill or whatever to make it so that in Missouri when you sell a house you have to pay a three percent sales tax yeah that was on me someone tried to do that behind the scenes the Association of Realtors is fighting against that and so you might not have even known someone proposed it you might not have known they spent a ton of money fighting it and ultimately won but that’s the good good so just just upfront you should be saving up at least $1,500 before you even start trying to become a realtor then once you do become licensed you will continue to have expenses any company fees that you might have you’re gonna have somewhere around we’re saying it’s roughly twelve hundred dollars a year and continued realtor fees right so you pay monthly for your super access and you think you paid quarterly for the MLS and yearly for the Association of Realtors yeah man there’s another fee in their tunics for silicates there’s lots of fees so then plus you’re paying for gas to drive your clients around you’re paying for lunches hopefully to you know go out a network and meet people you’re gonna pay for business supplies you’re gonna pay for any advertising you’re wanting to do you’re going to be spending money you know they say it takes money to make money or whatever my perspective is that becoming a realtor is actually one of the least expensive businesses you can start right because you don’t like if I wanted to if I’m a CPA and I want to open my own company right then now I am getting my own big insurance plan getting my own big office you know those signs that you see out in front of an office or retail space those science can be five thousand dollars you know so becoming a realtor is really one of the cheapest businesses you can start but you know depending on where your financial situation is it’s it might be kind of expensive and and then once you become a realtor depending on what you do a question we get a lot is how long until I start making money and another question is like what is an average realtor make or whatever how long until I start making money that a hundred percent depends on you and what you do and so we’ve had agents who’ve joined the company and they do three deals in their first month and they make a bunch of money didn’t we had a realtor didn’t he get his license and he had like an offer that I wrote and off for that day I think he yeah very possibly I remember but so me it was in the works yeah I mean a lot of times when you’re getting your license you’re telling people that you are and then you might have a friend or family who’s like oh I want to buy a house and like cool you know give me a couple weeks or whatever you know and so how long until I start making money totally depends on you but the real question I guess is how long until I like regularly make money because even that person who had like three deals in their first month you know then the next month you didn’t have another three deals in the next month another three deals so you might have a couple good ones up front that helps you kind of pay for some of the expenses that you had and really helps boost your confidence but I think that it takes I mean it can take a year or two years or three years I think you ask agents and we have at those thirty under thirty year yeah you know and I would agree with this I think that question came up and it was three years yeah and I would say at year three it really turned I would say for the first few years it really I mean you’re just Klein trying and totally and it depends on what you do right so like our company for example when with our having a big property management department with that comes a ton of leasing and stuff that we do and so you know it’s easy for us to take a newer agent and feed them a bunch of leasing leads yeah yeah so I spent and I think you do it a whole lot faster I went down I did the lis you know did that leasing kind of you know did it for renters and worked with those for a while then I worked with an investor and did that side for a long time so I just trying to get my feet wet and really learning the business and where I wanted to create the focus and where I want to go and how totally so I probably spent more time getting my feet wet and trying to figure out my angle then maybe someone comes in is like no I’m doing you know residential and here I go totally yeah and we we do encourage people to take at least a year of just doing a little bit of everything to kind of figure out what they like because you might come in and say I want to be in commercial I want to sell warehouses okay but you might find out that you really like doing short sales are working with tenants or a property management or whatever and it’s really interesting I really encourage people to come in and and talk and I like to do sort of like a people reading of different personalities but it’s all based on my knowledge of the disc test but this personality assessment and different personalities will be successful in different areas or niches or whatever of real estate and but I think that that’s the benefit of Hermann London too is there’s we have a really large residential we have a great commercial side we have leasing we have a ton of invest investors mm-hmm so it really covers the gamut of it they ask what does the average realtor make and I always I like to kind of give a snarky answer on that and I say zero average realtor makes because there’s so many people that get their license and do nothing right so what now I think what is it eighty ninety percent people will get their license are not active a year later what is that it’s super I I don’t know the statistic but the deal is you know as a self-employed person independent contractor you have to be self-motivated and I found that people like leave their job they get their Realtors license then they are at home and like no one’s making me be at work today like what’s going on like I watched Oprah all day and no one yelled at me right and like I went to the office at 9:30 and they didn’t say you’re supposed to be here at 9:00 and whatever and you have to be self-motivated nobody’s gonna make you do it and a lot of people just don’t have that kind of self Drive or whatever discipline so would you encourage keeping a job while you’re starting your real estate career I do encourage people to keep a job I’ll start in a real estate career even if you have a ton of money like a lot of people save up a bunch of money and they say I for example before I jumped quit my job and became a full time realtor I saved up six months worth of expenses because I knew that it would take me a while to really start making money consistent basis on a consistent basis but what I I don’t think you should necessarily just wait until you have six months of income saved up I think you should also wait to quit your job until you have kind of a pipeline of clients ready to go because what I find is if you quit your job today I’m gonna become a realtor it takes a couple months let’s say even the generous takes to three months before you get your first client who’s really ready to go or first couple clients who’s really ready to go and then it takes another month or so maybe it you know to find them a property and then another month or so before they close right before you get your check so now we’re up to what six months before I’ve gotten my check and so what happens is people they have this kind of savings account and then you know month two they haven’t made any money and they’re spending money service right and then month three they haven’t made any money but they’re spinning when he goes and they’re looking at it right they’re freaking out so what I’ve noticed is around month for their there oh my god my savings account is going way down and although they might have clients ready to go and they know they have money coming they’re panicking so then on month five our month six instead of like focusing on getting more business and following up the people in doing whatever they’re kind of starting to look online for another job yeah and so then month five and six is wasted by them just looking for another job and I kind of have given up on real estate already and so if you have some sort of part-time job you know like whatever it is you know bartender or whatever whatever this part-time job is it offers you flexibility then you have income still coming in and so you won’t have that kind of panic when you see your bank account that keeps going down plus a lot of realtors who start off in the business you know they’re selling real estate to people that they know friends and family and a lot of those people that they know are from their past job you know I ended up getting a lot of business from my old accounting job nice and so if you if you do have a job maybe you can get some business out of that yeah and so and I think that that’s another thing too it depends on how many but you know if you have friends and family here if you grew up here you might have a sphere of influence that you can kind of tap into I’m not from here I was working in the corporate world where I traveled all the time so I didn’t even have friends here yeah so it’s a you know you come at a point where it’s a little harder to get started if you don’t aren’t from here and know you never worked here either yeah and you have to keep that in mind you’re your daily kind of like the things you’re gonna do on a daily basis will be different than somebody who went to high school here went to college locally or whatever is on a softball team a kickball team has all these friends their day is gonna be probably like socializing going to the party whatever yeah their day probably had to be more doing advertising doing networking calling people working in a city integrate into it like finding those things to do now that I live here you know full-time here and in either case both both of the different paths those people have to take some time to let their their sphere or whatever know that they’re in the business then build their their spheres trust by seeing that they’re having some success and that they’re doing it because people don’t generally want to work with a realtor for their very first deal I mean I you know you don’t want to work with a realtor that’s never done a deal before generally yeah there’s I think that that’s the really good thing about you too is that you’re not gonna let someone just walk on you know fly on their own like you’ll you walk them through that and then yes you might have to find a patient client mm-hmm but I actually think it’s fine yeah we do like to like a new agent we like them to bring us along essentially on their meetings and stuff like that so that they’re you know because we want their client to feel taken care of and be taken care of and have all their answers our questions answered and all that kind of stuff and as far as the contracts and stuff like that walking him through that so they everything’s done properly and in the best interest of the clients well so for anyone has any other questions comments wants to meet wants to talk whatever just reach out to us but everyone I know has really been waiting to hear about Shannon’s newest listing yes so I have a listing coming up it’s you learn it will be on the market what’s ooh Lord yeah in the city also known as you know the French quarters of St. Louis it’s where Mardi Gras is so wait are you gonna have the system when Mardi Gras is happening you know it will probably yes and so anytime there’s a listing and soulard there are no showings during Mardi Gras can we get the box off of the property is during Mardi Gras yeah okay I was thinking maybe like a special party or something like that but one of the yeah we do I mean I always take the lock boxes off and I know probably other agents that do that as well just so that agents like you know you aren’t just stopping by to look at the house yeah yeah okay go on sorry I’m gonna go no no I just think this house is really unique I mean the city houses are unique in of themselves and this does retain a ton of character but what I think is very interesting about this property that’s kind of not new to me even is for one it has solar panels which is you know maybe a good thing maybe not a good thing you know you kind of go I don’t know it late and then it has he’s really kind of techie he has emergency lighting kind of throughout so it has these LED strips of lighting in rooms throughout the house that’s all wired down to this battery that’s in his workshop Wow and so my lights go out late it happens but I’d never thought of doing emergency lighting all the light lights are automated so when you walk in lights start popping on you’re like hello yeah and so and even as you walk through the house they start popping on and it’s it’s that’s cool you know what honey what I’ve what I found is when we’re walking through a house with the buyer I think we might have mentioned this last time is that if they get the feeling that the seller is kind of a detail-oriented person then they like the house better because they feel like they’ve probably taken care of things if they get the feeling that the seller was not taking care of things or let the rehabber was just trying to do things quick and cheap then they automatically don’t maybe like the house as much and so you walk through there and you get the feeling that the seller really took care of ya and even on the second floor there’s like this greenhouse type room that’s sunroom it’s all kind of glass and he has an automatic mister on there like so to miss the plants I’m going so even having to go over there just even trying to get some learnt I had to learn and have him just kind of walk me through these things I’m like I don’t even know how that works and I wouldn’t even know how to convey that so I think I’ll even have to walk the new buyer through and explain what these things are how they work where love it so if someone is interested in a house and soulard or that that area in general how do they get ahold of you so you can call or email Shannon my email is Shannon@LivingTowerGrove.com phone number three one four five eight three zero zero seven zero or of course you can just find me online social media Instagram Facebook gram yeah cool so thanks everybody for listening like as always we really want to hear from you we’re really trying out this Facebook live thing and hoping to get more feedback from people so thanks for listening thanks for watching please reach out give us a call and have a great day thank you bye okay