A real estate business can be defined as a business that deals with the investment, operation, management, buying, or selling of buildings and/or land. Real estate can also include all the natural resources above or below the building/land, like water, minerals, crops, etc.
If you want to get into the real estate business, you will have to consider many factors. In this article, we will look into some very basics of how you can successfully take the plunge and start a profitable real estate endeavor.
How Can You Start a Real Estate Business?
Here are the steps that will allow you to start your own real estate business:
1. Pick A Niche
One of the first jobs, once you get into the real estate business, is to pick a niche. You will find various sectors where companies are booming; of course, you will not be able to work on all as it is hardly reasonable.
Some main types of real estate businesses are rental property, property management, condos, income properties, vacation and resort homes, and residential real estate. As mentioned previously, you cannot simply pick all these niches, especially if you are new to this industry; therefore, you need to pick one or two that you think matches your interest.
Keep narrowing down the list until you just have one or two niches remaining. For instance, if you specialize in short sales, you can choose rental property management; alternatively, if you have an experience in the sales of condos, you can opt for the same.
2. Select A Legal Business Structure
Next, you need to select the right legal structure to start a real estate business. There are several types of legal structures available; however, not all of them will suit your requirement.
When it comes to legal structure, there are four types – the sole proprietorship, partnership, Limited Liability Company (LLC), and Corporation.
A sole proprietorship is a business structure where you will run the company single-handedly. This means that you will be responsible for the debts, profits, and losses of the company as well.
If you want to join hands with one or several business partners, the company will become a partnership. All the partners are equally responsible for everything that happens in or with the company.
In the case of a Limited Liability Company, the company's owner can limit personal liability. Finally, a corporation is a business structure where the corporation will have contract deals, pay taxes, and own property; in short, a corporation is a separate entity from its owners.
Overall, you need to select the right business structure. It is suggested that you keep in mind the company goals of your real estate business before you have the final choice.
3. Get Done With Your Research
Like all other businesses, you will have to get done with your market research if you want your new real estate business to work. Additionally, the research will also provide you with new ideas on how you can position your company in the market in the niche. Even if you are unable to do the research, you can hire a separate agency to work on your behalf.
There are many advantages of getting your research done. For instance, you will be able to save a lot of money and time by not having to do some extra work if you are already prepared. Additionally, you will also understand whether you have the right skills to move ahead in this industry. If you want to know more about your business niche, experts recommend that you look for a mentor to guide you.
4. Planning Is Everything
Similar to other types, the real estate business includes many aspects. Therefore, you will have to come up with a business plan even before you can start with your real estate business.
Having a business plan will allow you to move ahead clearly. You can also start creating a business name and logo for your company in this planning process. With the proper planning, you will be able to operate with a clear view of whether everything goes as it should.
Additionally, you need to remember to keep your plans realistic. There are several small business development centers you can visit and talk to experts to help you formulate a business plan.
5. Create A Sales Plan
When you start a company, you need to look for ways to sell your business. Your overall success will only depend on your relationship with your ideal customers. Apart from generating leads, you will also have to learn how you can seal the deal with your clients.
This means that you will have to meet up with potential clients; while you do have the choice to talk to them online, virtual meetings are not very successful. You also need to decide whether you will be able to meet the clients' expectations if you want to save time. All these should be a part of your sales plan.
6. Setting Up Shop
Once the planning part of the business is done with, you need to start looking for a location where you can set up your company. Unlike most other businesses, real estate agents do have the luxury of working from their own homes.
While setting up a physical location is important, you first need to focus on selecting a target market. In case you do not have the budget to set up a shop, you need to look for ways to work without hiring employees or a proper storefront.
Finally, you should not get rigid or choosy when it comes to the location of your store. Ensure that your plans are flexible to be able to adjust whenever you need.
7. Consider Your Finances
Another important aspect of setting up a real estate business is assessing your finances, honestly. You will have to keep track of your commissions and sales. Your overall goal should be to ensure your business is successful and profitable.
When it comes to financing, you have a lot of options available. You need to keep assessing your business to understand how you can procure the finances for growth and expansion. If you cannot picture the numbers, you will not be able to sustain your business in the long run.
8. Hire a Business Lawyer
If you plan on getting some help for your business, you will have to hire employees. However, you must first always hire a lawyer. The lawyer's job is to ensure that the deal between you and your customers is per law, genuine, and legal. The lawyer can also help you set your business structure within the confines of the law. If you have co-founders, the lawyer will help split the ownership interest.
Once your business has legally been set up, you can start your operations. Ensure that the lawyer is experienced so that you will get help in overcoming obstacles that usually happen when you start a new business. Do not let the lawyer's fees stop you from hiring the best so that your real estate business can flourish and succeed.
As you can see, starting a new real estate business does not have to be difficult. There are many aspects of running this business that is the same as other industries, like email marketing, hiring the right people, etc. The most important is to get done with your research to select the best niche where you can succeed. Do everything in your power to stand out from your competition.