Expenses

[terr]

What is the typical percentage of expenses to income for a one person appraisal shop?

Any details would be greatly appreciated.

Thanks,

Terr

 

[Mountain Man]

Looking back the past couple of years, I have been between 25-30% expense ratio. Off years were for start up, and very large computer or office equipment purchases.

My expenses are generally for:
2 REALTOR/MLS boards.
Subscription to private sales data service. (Kinda expensive, but worth it.)
Advertising & other social things like sponsoring a Realtor Board lunch, fund-raiser golf tournament, etc.
CE classed for me and my father (retired, but still dips his toes in the water)
Phone, Fax service, cell phone, and DSL internet.
Occasional paper purchases ( 99.9% is EDI :wink: )
Laser printer and ink jet printer supplies. Not too expensive if you shop around on the net.
At least one hardware purchase/upgrade every year. I never know what it is, but it seems that something breaks or gives out every year.
Software purchases/upgrades.
Oh, and business development......... country club golf membership.

I think those are the major things, I'm sure I'm forgetting something, but it must not be too big of an expense. As for my office, I work at home. So I don't really have any expenses there, I take the tax deduction.

 

[David S. Roberson]

Don't forget about vehicle & fuel expenses!

 

[Mountain Man]

I don't expense it as a company car, I deduct the milage. I might try the next car purchase that way though, I'll ax my CPA.

But with a Honda Accord, it is very reasonable. Got rid of my gas hog SUV for a smoother ride, and less of a fuel bill shock.

 

[Terrel L. Shields]

Gross vs Net was 10 to 4 ± ratio. Keep in mind I have some subcontractors to pay. I would still think if I discounted those, my gross would fall by about $30-40K and my expenses by 75% and I would venture the ratio would be some thing just below 50%. For practical purposes you will make 1/2 your gross. I would venture that to be quite close in a slow year...those MLS dues, etc. are fixed expenses that do not get cheaper just because you are working less.

Milage, depreciation, captial expenses, etc. are "real" expenses and don't be fooled into thinking the gross taxable on you tax return is not an accurate reflection of your actual financial condition.

ter

 

[Verne Hebert]

Terrell-

You made a comment in a thread last week with regard to you paying 15 % for insurance. This so far as been omitted-I am surprised you missed it. But I didn't!

Health insurance, Life insurance, auto insurance, E &O, workers' compensation insurance.

And yes, rent so far is an oversight.

I think there are few places in the nation that "overhead" expenses are as high as here.

For a one person shop in rented space over 50 %.
For a one person shop at home about 50 %.
For a share office about 50 %.
I don't think one could structure a situation here where the overhead can go below 50 % and still conduct professional business.

I have commented on it before on the forum. Here, one can make far more money with way less grief and commitment:

Doin' nails or working as a waiter/waitress at a decent restaurant or saloon.