How to Start a Real Estate Business?
A real estate business deals with buying and selling, renting, operations and administration or investments of lands and buildings: with increasing population the demand for housing and commercial property is increasing quickly in all big cities as well as in small towns.
A real estate business is a stressful and challenging field but if you are planning to start it with the dream of making a name for yourself, it is surely a good career option and a highly profitable micro business. To start your own real estate agency and become a best real estate agent, you need skills, experience and a good clientele.
The simpler approach is to start with getting hired by a real estate broker first, then learn the trade, polish your skills, gain solid markt experience, build a portfolio and then start your own venture.
The competition is going to come from everywhere. The market for real estate companies is massive in U.S consists of 5.6 million commercial buildings and 87.4 billion square feet of land space. Also, the Association of Real Estate License Law Officials (ARELLO) says that more than 2 million real estate licensee’s active in the U.S. However, don’t be scared of competition, just focus on good planning. Make sure that the foundation of your business is solid so that you can easily grip the tough market surroundings successfully.
Common Questions When Starting a Real Estate Business:
People interested in starting a real estate business may find themselves sunk in a series of questions:
- How to start a real estate business?
- Is the real estate business profitable?
- How much finances are needed to start a real estate business?
- How much money do real estate business owners make?
- How fruitful is a real estate business?
- How do realtors get clients?
- Do I need a license to work in real estate as a realtor or a broker?
- How do I name my real estate business?
- What does a realty company do?
- Should I work with a real estate agent before starting my own business?
- What hours do estate agents work?
- Is a college degree needed to be in a real estate business?
- What are the downsides of being a real estate agent?
- Is being a real estate agent stressful?
- Which can be the best way to get started in the real estate business?
This article will answer all of the above and some more queries you might have regarding starting your own real estate company. Let’s explore the answers to and get your real estate business started up.
Is a Real Estate Business Profitable?
The simple answer to this question is, YES. The real estate market is huge. If you handle your asset intelligently you can earn a huge amount of profit in your real estate business through selling your asset after it increases in value. You can also earn profits from making income through regular payments or rents.
Though a real estate business, over the long term can be extremely profitable and rewarding business. Real estate business offers diversification, a chance for high potential upside with low cost and gives you a variety of ways to respond to market conditions.
How to Start a Real Estate Company on Budget
As discussed above, to start and run a profitable company, you need skills, expertise, and clientele which can only be obtained by working with a good real estate agency first. Yes, you can get into the real estate field with no experience, but to build your own company you must have some experience in hand.
Once you have already worked with an agency for a while and you are confident to start your own real estate company, follow these easy steps below to build your empire.
1- Do the Market Research
A well conducted market research helps you build a more successful real estate business. While starting a real estate business you should understand the real estate market you’re entering. A lot of upcoming work depends on the information gathered from market research so don’t skip this step.
It helps you in finding who your direct challengers are? Who are the top real estate sales agents working in your targeted place? What makes them unique from the rest of the competition?
In market research you will need to find the answer to following questions by talking to your potential customers:
- Which particular localities you will be focusing on as a top priority.
- Which localities will be your second and third priorities.
- Which people will be your potential buyers?
- Where will you find buyers and sellers?
- How easy or difficult it is to reach out to the buyers and sellers in your target market.
- What factors do your potential clients consider when purchasing a property?
- What do they think is working?
- What improvement is needed in their current location?
- What do they like/dislike about the locations they are currently in?
2- Create Your Real Estate Business Plan
Based on your market research you need to create a solid business plan. It’s been scientifically proven that business planning makes you more successful. A good business plan helps you to crystalize your ideas so create your business plan before proceeding further into this business.
This planning will give you assurance in moving forward in a measured way. A business plan helps you to consider how much cash you will need to get started, confirm your idea and helps in setting goals and milestones.
A real estate business plan must include the following details:
- Introduction; who you are, your team, your experience, skills, competencies etc.
- Mission/Vision; what you want to achieve with this business, where you want to see yourself /your business in next one year, 5 and 10 years.
- Scope of the business; based on the market research, what’s your idea of the business, which is your target market and the features of your identified market and what exactly will you be selling to them, i.e. services that you will be offering.
- Competitor analysis; who your competitors are, what advantages they have, what’s your competitive edge etc.
- Marketing plan; a brief about how you plan to reach out to your target market and how you will be making sales.
- Financial plan; details on how much money you have, what will the setup cost, running expenses, when is business expected to start making money and sales forecasts.
- Benchmarking; financial and non financial goals and how will you measure them.
A business plan can be quite a detailed document, however, you might not want to spend much time on a fancy document. Just get the above details in order on a few pages and get started.
3- Get Your Real Estate License
If you have been working with a real estate agency earlier, you should already have a renewable real estate agent license, but if are entirely new to this business, you will need to get the proper license for your real estate business as an official realtor whether you are starting it in New York, California, Texas, Illinois or any other state.
In most states, a real estate license allows you to sell residential property inversely you will need a separate commercial certification to sell commercial property.
To get your real estate license to start working as an official realtor, four basic steps are needed:
- Take the pre licensing course for your state.
- Pass the real estate licensing exam.
- Submit your real estate license application.
- Find a real estate broker to work for.
4- Register Your Real Estate Agency
The most important aspect of starting any business is getting legal and registering your business as per local law is the first step. Though you can do this yourself through a local SBA office, you can always seek help from a business formation attorney for a smooth and hassle free procedure.
5- Create a Strong Brand Identity
Creating a remarkable brand identity is a fundamental element for any real estate business. “Your brand is your company’s public identity. Ideally, your brand should symbolize the best and most important characteristics of your company”. In today’s competitive real estate marketing, a strong brand represents how people know you and your business, and customers perceive yours and your company’ reputation.
According to branding expert Sara Conte of Brand Genie, “You can empower your brand through deliberate logos, entertaining Ad campaigns, carefully constructed press releases or super friendly service. Ultimately, your brand is what the outside world says it is”.
Though, look bigger than you are, attract customers and in general be the first person or company people think of. Basically, your repute is your brand.
6- Build a Website
For 44% of all buyers, the very first step they take in their home research is to look online. In earlier times, building a website required great effort, time and a highly specialized knowledge base but now technology has progressed to create website builders. Anyone can use them to get a beautifully designed website running in a short time.
No matter how much local marketing you do, you must need a web existence to appeal and take part in online leads. It may cost a little money but a solid SEO optimized website is a crucial foundation for every successful real estate business.
Consider Your Goals for Your Website:
Before you begin the actual creation process, consider important specific goals for your real estate website;
- Do you want to give detailed information on a website about you and your company?
- Do you want it to be a smaller platform that pushes traffic to you?
- Do you also want to host other stuff like blogs or vlogs?
- Do you want to capture email addresses and phone numbers from site visitors?
- Do you require visitor’s info to allow access to some parts of the website?
- Which email automation software can be embedded in the site for faster and smoother email marketing.
All of this will make a transformation in the way your site should be designed and work.
7- Start Doing Business
Depending on your business model, this step can vary for different real estate entrepreneurs. If you already have some sellers onboard, you might want to priortize finding buyers and making a sale.
If you do not have enough listings, the priority should be getting listings for which you might want to check with friends and family first and expired yet not sold listings.
Once you have a good number of listings with you and a good buyer base, you can work on growing the business to the next level by having a small team, a dedicated person or even outsourcing your marketing efforts to get more clients, because you should never stop finding more clients.
8- Get Financed
While starting a real estate business, it’s not always necessary to have a huge amount of cash in your hand. However, this doesn’t mean you should avoid taking stock of your current financial standing; you can approach a few financing options like a lender, business partnerships, and mortgage from financial institutions or government loans.
Joshua Jarvis, the owner of Jarvis team realty says “the startup cost to start a real estate business is very low. I used my savings which were less than $1000 but I was able to start. Now my monthly budget is 10 times of this amount, but don’t think that you don’t really need any money to start”
According to Joshua, the real thing to think about is “cash flow”. Don’t just calculate your “startup cost” but also calculate your “carrying cost”. In answer to this question in how many months it will take you to start cash flowing? He says, “in real estate there are a good 60 days or more before you could get paid”.
The Bottom Line
Getting into a real estate business is not as easy as it seems. It is a difficult and challenging field and may bring a lot of competition, pressure and hard times that are difficult to deal with. However, to be successful in the real estate business, you must be prepared to face the challenges, encourage your determination, become focused on your goals and be an organized person, and be passionate and outgoing. You must love working outdoors through strategic planning. Keep in mind that the real estate sector is not about attaining immediate success; it is a long game, which requires you to have a lot of patience.
