Real estate is arguably one of the best kinds of businesses to get started with. As a business idea, real estate is always going to be relevant and no matter how far into the future you plan because people are always going to need property. Whether it’s commercial property to use as a business location or residential properties to start a family, there’s always going to be room for more realtors in the industry.
However, it doesn’t really follow a traditional business model, meaning that income can be a little different to what you’re used to and that also means you’re going to experience quite a few other differences when compared to a regular job. It’s also quite different to how you would operate or start another business, so in this guide, we’re going to explain some of the basics involved with starting up a real estate business and how you can get a great start to your new business venture.
Planning your real estate business
One of the few similar steps that you’ll encounter with starting up a real estate business and other businesses is in the planning phase. Whether you’re starting a real estate business, a bakery, a tech company or even a non-profit organization, the planning phase is arguably the most important component to any good business strategy. It’s a good idea to sit down and write up your real estate business plan so that you can understand where you’re going with your business, the important components to focus on and also financial concerns that need to be addressed.
The planning process will help you think about some of the crucial aspects of your business such as how much money you’re going to need to get started, how you can validate your idea and also some milestones and goals that you should be setting yourself for the future. You also need to consider what competition you’ll be facing and who that competition is before you set out to start your own real estate business.
Business plans should include basics components such as your value proposition, the type of audience that you plan to aim your services at, an analysis of the competition and also sales and marketing considerations like how you plan to reach a wider audience. You should also think about funding and how you plan to start your business, and also the team members that you will need to hire to run a successful real estate business.
Take time to explore the market and do your research
We mentioned already that the real estate market is going to differ in various regions around your country. Some areas value luxury properties while others are better for commercial, mixed or affordable apartments. The type of area you live in will have a drastic effect on what property is available to you and how you can utilize them to your advantage, hence why it’s very important that you do your market research and explore what’s on offer.
This is where studying in a class can show its downsides. Although it’s great to have a teacher and some books to follow, you need to keep in mind that real-world experience is actually more important due to how drastically trends can shift and change over time. Even if you’re confident in your ideas, you should at least run them through a mentor or someone with good business experience in the field. Do some market research and look at the types of properties that are popular in your area and how you can take advantage of property trends that are unique to your location.
Researching the local market also has another advantage; being able to assess your own skills. A trial and error approach to research is not only an effective tool to help you learn, but it’s better than actually putting your money on the line and failing with your investments. In short, you absolutely need to examine the market and do a bit of research on the trends and also what’s popular in the current month. Trends can change rapidly so it’s best to have a grasp on the current real escape landscape in your city and learn to adapt to it before you start a business.
Create A Memorable Brand For Your Business
People might think that real estate businesses don’t really need branding, but it’s just as important as every other component on this list. Branding is the message and image that you want to portray to your clients, and that’s going to be an incredibly important concern that needs to be addressed as early as possible.
While branding is a complicated and often creative task that demands a lot of trial, error and consideration, we have a couple of tips that can help you create the right brand for your real estate business.
- Your branding will affect your relationships – At the end of the day, the type of image you reflect will not only affect your intended audience, but also other entities that could consider working with you. For example, if your aim is to provide affordable housing then you may receive assistance from the local authorities.
- You will need to carve your own niche – The real estate industry can be profitable, but it can also be saturated depending on where you plan to set up your company. In most cases, you will need to carve your own niche and create your own little space in the industry.
- Set yourself up as an expert – People listen to experts and the real estate industry is no different. Don’t set up your brand as a newcomer that doesn’t know what they’re doing. Instead, portray yourself as an expert that understands how the real estate business works and offer value that goes beyond what other companies offer. For instance, you can utilize social media platforms, YouTube or even a blog that informs your potential clients about the latest property trends or hottest properties in the area.
- Give your company a message – Every company has a message and it’s vital that you think about what your company wants to tell. Does it want to say that luxury houses are affordable, does it want to provide housing for the masses, or are you solely trying to support single adults that want to make it big and become entrepreneurs in the future? There are plenty of niches and plenty of messages to display to your audience.
- Do you provide value or luxury? – Real estate business will often boil down to one of two sides; providing luxury or providing value. Luxury real estate properties are going to cost far more money and will require a lot of investment, but this is an area where people aren’t afraid to pay more for perceived value and it takes a good understanding of luxury property in order to see success. On the other hand, offering value is much easier to understand for most people and can be a better way to start your real estate business.
Dealing With Legalities
Getting started in real estate does require some formal documentation to show that you know what you’re doing. You’ll need to study hard for a couple of months or even close to a year in order to pass the exam needed to start a real estate business. However, do keep in mind that the conditions and exams are different per country, state and city, meaning this is something that will be unique to your location.
In some cases, you may not even need to pass an exam to start a real estate business. Instead, you might be fine just hiring someone that is certified and they will be in charge of overseeing transactions and actions that your sales associates perform. Aside from this legality, you should also consider other legal matters for your business such as setting up your name, registering it and also looking at any relevant tax-related concerns.
Financing your real estate business
As with any business, you’re going to need some capital to get started. You’re obviously going to need some property to sell before you’re able to offer any kind of service to your customers, but there’s a solution that can help you get started; flipping houses.
You’d be surprised at how much you can make flipping houses, and it’s usually one of the first things that a new real estate business does because not only does it require less financing, it’s also very intuitive and easy to do. There are plenty of run-down properties around the world that are in fantastic locations. The only thing stopping them from being sold is the fact they’re neglected, so when financing your business, consider that as long as you have some property to your name, you don’t really need that much money to start. The important thing to consider is cash flow. This is because it can take weeks or even months before you even see any cash flowing into your business after a sale.
However, if you want a real estate business with a physical location then it’s vital that you write up a business plan in order to get investors on board. It needs to be convincing and you need to explain clearly how much money you’ll need to get started. While some people prefer to start with their own money, others find more luck in getting investors on board to assist them.
Marketing and launching your business
This is the final hurdle. You’re going to be looking at marketing your business with promotional campaigns and also finally launching your business to the masses.
Maintaining an online presence is arguably one of the more important ways for a real estate business to stay relevant these days. That’s because marketing with the internet is cheaper and also more effective than most traditional forms of advertising, but do keep in mind that your business still only operates in a city so your marketing needs to be targeted. This is where strategies such as search engine optimization can come in handy.
You also need to remember that a lot of real estate marketing can be done through networking. The people you know are going to make a huge impact on what you can achieve in a shorter amount of time, so make sure you’re always on the lookout to form long-lasting business relationships in this field.
Hopefully, this article has shown you some of the basic fundamentals when it comes to setting up your own real estate business. Whether your goal is to start with flipping houses or if you have big dreams dealing with mansions and luxury apartments, everyone has to start somewhere and this article is a great place to begin.
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