How to Start a Real Estate Business?
Introduction to the Real Estate Sector:
One of the booming sunrise sectors in the world is undoubtedly Real Estate. Today, it has been recognized as one of the most lucrative investment alternatives. A good number of individuals irrespective of the demographic facets are seen considering real estate as a serious investment mainly because this is one such sector the value of which is sure to shoot up in the long run.
Moreover, this sector has ended up creating a win win situation for all the stakeholders who happen to hold direct or indirect interest in the same. This is one of the vital reasons that has contributed to the growth of real estate business in general, which is exactly why we see a number of real estate companies and agencies laying base in every nook and corner of the street.
There may be plenty of people out there who are keenly looking forward to establish their very own successful real estate companies. However, they are often confused as to where they should start from. In order to bring an end to the dilemma faced by all such people out there, we will be helping you with a brief blueprint that we believe may end up playing a crucial role in your real estate journey.
The Starting Point – Raise Your Start Up Capital:
One primary requirement for kick-starting a business is to begin by raising the much needed start up capital, the core role of which is to meet the various fixed and variable costs. This concept holds equally true in case of a real estate business. In order to give birth to your dream, you need to begin by locating and eventually investing in the office space, buying the necessary office equipment, designing logos and preparing other marketing material and of-course diverting funds towards insurance. Similarly, you will also require funds to meet the routine operating expenses in the days to come. Once the funds are in place, the first step can be easily met.
Meet Regulatory Requirements:
It is essential for you to note that you cannot really begin transacting in the real estate arena on any day at random. In most of the countries, you need to hold a valid license in order to be able to operate as a consultant. It is advisable for you to get on board a reliable legal counsel in order to better acquaint yourself with the rules and regulations that are prevalent in the real estate platform of your country. Once you have the necessary license in hand, you can begin your operations as a real estate consultant.
Get into Your Hiring Boots:
Next up you will be required to initiate the recruitment and selection processes in order to hire agents to your team. At this point, it is essential for you to draft an independent contractor agreement so as to maintain clarity and transparent communication between you as the employer and your individual agents. The agreement should necessarily house details regarding the ratio in which the commission would be distributed, code of ethics that need to be imbibed by the agents and of-course the general office related policies and procedures.
Fix in Your Mind – Customer is the Whole & Sole:
Once you are through with the above three steps, you need to proceed further in order to build a loyal customer base. In order to survive and succeed as a real estate entrepreneur, a stable clientele becomes a must. You can reap results in this area by investing towards direct and indirect advertising, integrated marketing communication models and of-course a tad bit of public relations. Similarly, you can also lay weightage on joining hands with a Search Engine Optimization company, which is believed to play a critical role in improving your visibility and presence in the market.
The Ultimate Add-on – A professional looking website:
The above elements are basically the preliminary droplets that would end up contributing to your wide ocean of real estate business. Apart from the above aspects, there is yet another component, which if added to your business initiation program is sure to benefit you in a massive way. The building block about which we are talking here is the need to develop and introduce a relevant, innovative and of-course distinct looking professional website for your business unit.
If we were to rely on the statistics, then we can easily come to the conclusion that in the recent times it has been found that over eighty percent of the individuals begin their home search online. This is exactly why a professional website is likely to come handy to your real estate unit. Similarly, a website can also help you survive the cut-throat competition by making your details available to the prospective clients at large.
However, one area that most of the companies end up giving a miss is with regards to the listings. Most of the real estate agents rely heavily on the Multiple Listing Service and fail to recognize the importance of listing out all the properties that come under their basket, on their respective websites. It is quite obvious that only when you offer a holistic listing on your website will you be able to hear your cash registers ringing, which is actually the end result of a wide number of sales.
4 Tips For Making A Good Real Estate Business Plan
The Makings of a Good Real Estate Business Plan
Real estate business isn’t something you dive into nose first and worry about what to do later; that’s a surefire way of failing from the start. On the contrary, it is something which should be approached only once you have a careful and well thought-out plan under your hand. Needless to say, the exact plan which you are going to make will be very subjective, but regardless of that there are some steps which you can take to ease the whole process and at least give yourself some sense of direction as to where to go with your business plan. Here are a few steps which you would do well to go through when making your plan.
Finding out the Why
First off, you shouldn’t be going into this kind of business without having some kind of driving force behind you… something which lights your fire and keeps you going. You need to define your purpose, what you are trying to achieve with this business on a personal level; if you are only chasing money you will inevitably get bored, inattentive, and chances are you’ll slip somewhere and ruin everything.
Marking your Goals
The second step in writing up your real estate business plan is to determine the goals you are going to be chasing after. The surest way to do this would be to analyze your current situation, or what you have managed to do within the year. Have you achieved the goals you envisioned yourself completing by this stage in your life? What kind of progress, or regress, are you dealing with? Basically, you will need to set certain goals (usually people prefer to set goals in terms of money) depending on how things have been going so far.
You should make two types of goals: short-term and long-term. With the long-term goals you shouldn’t really hold back and think big, imagining what you want to attain five to ten years from now. When it comes to your short-term goals, remain realistic and calculated, meaning you shouldn’t expect to become a millionaire in a couple of weeks.
The Plan of Action
This may very well be the hardest part of the plan as you will actually need to put together a method for making your goals reality. The first part in making a plan of action would be to give yourself some value by defining your niche and becoming a specialist in it. Valued proposition always plays a huge role in whether or not clients trust you and should never be neglected.
The next part in making a good real estate business plan is to find a way to generate leads. If you’ve been in this business for some time as an agent you will probably need to fine-tune the ways you already use to generate leads. If you are not, you should definitely consider various types of marketing such article directories, video marketing, or perhaps even commercials if you can afford them.
When making a business plan in real estate it is also extremely important to set up a development plan for the future. Make sure to know in advance what you are going to be researching for your business, which is good if you are looking to try some new and intriguing concepts for your business but aren’t sure they are going to actually work.
Needless to say, you probably aren’t going to be working alone because let’s face it, a lone real estate agent won’t be able to manage this kind of business by him or herself. You will need to have a team with you, and the next step in making this business plan for real estate lies in creating an organizational structure. While it may not sound like much, each member of your team needs to know what he or she is doing and how they fit into your plan.
Keeping Track of Everything
Naturally, in order to make sure that your business is right on track to achieve your goals you will need to monitor it, and one of the first things you should do is schedule expense reviews every year. In addition, you should also look into implementing a production-check plan which would allow you to monitor your progress in regards to your goals on a monthly basis. The easiest way to do that would be to look at the leads and sales generated during the month, not to mention the total profits.
All in all, making a real estate business plan is indeed a lot of work, but if you go at it methodically with a calculated mind and base everything on numbers and calculations, you should be just fine.
Starting a Real Estate Business
The real estate industry is very sensitive to economic changes like interest rates and the cost of materials in building houses. Interest rates in particular can easily swing the number of sales that are completed during any quarter of the year. Rising interest rates will slow down the sales and falling rates will aid the sales of real estate. This is an important fact in the real estate business as this can absolutely cause rapid changes in income from the sales that can be made.
With this in mind, the time to buy an agency that comes up for sale may be when the real estate business is in the doldrums. A hot real estate market will make an existing firm worth more, as their income will be higher during this period of time. Of course if you follow this course of action, you will have to wait out the slow down in the markets. Another factor in the purchase or start-up a real estate company is the state licensing requirements.
Most states have serious requirements for real estate agents and brokers. Brokers have a much stiffer requirement in most states than an agent. The requirements include passing exams and a fixed number of educational hours for both agents and brokers. There is also a requirement for continuing education. These state mandated steps to a career in the real estate business would have to be met before an agency could be purchased or started. Since this industry is regulated and has strong legal steps to comply with, this licensing plus experience would be an initial step to being an owner in this field. This is not a business that can be stepped into by just paying out some money.
An agent can have the goal of owning their own firm, but it will take planning and meeting the state rules to make this happen. Once a potential owner has these steps out of the way, finding an existing business to buy will be in order. A quick check of real estate business listings reveals that they are usually found in larger cities and the asking price is significant. There are also resales of franchise companies. Just typing into a search engine, “Real estate businesses for sale”, came up with this quick check. A buyer could also check with business brokers and real estate brokers in their city. Another source worth checking out would be a franchise connection. An in place real estate business is advantages as the name is already known and will get clients due to this. When you start a company from the ground up you do not have this advantage. An existing business with several locations will come with a higher price tag than what you could start your own business for.
Another way to gain ownership would be buying into an existing business. This could work if you have a solid relationship with the current owner. The problem is you will not have the final say in most decisions unless you are buying controlling interest.
Specialty real estate firms
Most people think about a firm that helps with the buying and selling a home. There are several other areas of specialization. A real estate firm could become expert in buying and selling commercial property, farmland and farms, farm product processing plants, rental properties and shopping centers. Actually a broker could cut out a niche market from many that are available in the real estate business. If you have an area of expertise, this could become something that could be marketable and cut out a lot of competition in certain situations. Some real estate firms have unique departments that handle certain types of real estate marketing. The decision you must make is what kind of a firm are you going to own. You may have to start your own in order to make it happen.
You could also get into real estate management and the buying and selling of these rental properties, which is a very unique part of the industry. Shopping center related firms could be in from the start of a project. They can help with the formation of the firm to build and own the property and then handle the rentals and day-to-day management of the center.
The point of all of this is there are areas of real estate specialization that lend themselves to a business that just works in this real estate category.
Finding the money to make your dream happen
You may not have the total purchase price for an existing business. The question is how do you come up with the balance to make the deal. Finding a source to lend you the money is one way to come up with the needed funds. There are businesses that offer loans to new owners of businesses. These can be found on the Internet by just doing a search. Family and friends could be another source of money. One way to get the needed money is to take in a partner for the business. If you have a friend in the business maybe they would be interested in owning part of the existing company. All of these possible money suppliers will have different requirements for paying the money back.
Make sure you can see your way clearly on how you will accomplish the pay back. This business can be adversely affected by interest rates so you would need a second way to make the payments. A person thinking about ownership in this field must remember that it can be feast or famine as far as sales and commissions go. This is not like being in the restaurant business or owning a printing company. Successful brokers can make considerable money in a good market. They can also have periods that are very tight as to sales. The brokers that succeed have a policy of putting away some of their earnings during good times to cover the less profitable times. Doing this just shows the broker has a realistic view of the business.
Real Estate Business – A Smart Game!
Real estate as a career option can be very rewarding if you are a person willing to take risks in life and have a knack for business. There is no pre-requisite degree or a must have certificate to be in the field of real estate. Anybody can choose to deal in this business. Real estate transactions can be any, like renting a house, or buying or selling a house, property, leasing a shop, or helping someone invest in a land or property etc. The real estate business includes a number of transactions, involving big money and legal documentation. Therefore, it also requires the service of attorneys, insurance company agents, bankers, tax experts, and many others besides the broker, the buyer and the seller.
Each year innumerous people try their luck in real estate. Some burn their fingers, while some make good money and grow further. Thus, one has to understand, business is not everybody’s cup of tea. You have to be wise, practical, and understand the market trends. Being friendly with people and having a wide contact list does not help in any business. Any business needs an initial capital to bank on. Sometimes a property in hand looses its value after purchase. Sometimes, you may have to wait for a longer period to find a profitable buyer.
Thus a positive attitude and patience is important in this field. One must also have a back up plan and alternative idea in any deal. Many a times in this business as a broker, meeting the clients’ expectation becomes a daunting task. Showing the client the property or houses after houses makes it an exhausting job, besides burning ones finances. As a real estate broker, it is important to understand the client and his needs and motivation behind the deal as well.
In real estate business marketing skills plays an important role. Understanding the psychology of the client, the seller, what is important to them, and what impresses the opposite person, what to highlight in a conversation etc helps strike a deal. Prompt customer service, easy and smooth legal transactions and paper works leaves behind a good impression. Like every business, here too, referral from past clients’, by the word of mouth really helps earn a good name and trust amongst clients.
Many people love the field of business, for they are their own boss. You have the freedom to work the way you wish to, and develop your own working style.