One of the hottest professions that withstands the ups and downs of the market is real estate. This career helps people become their own boss, break away from the monotony of a 9-to-5, and realize their dreams of financial freedom. While there are things to put in place to be successful, establishing a real estate business can be a lucrative investment of your time and energy. Let’s start at the beginning.
What is a real estate business?
When you hear the term real estate, most people automatically think of a real estate agent. While this is the most popular area of real estate, there are quite a few areas that fall under the real estate umbrella. Here are just a few to consider:
- Home Stager
- Lecturer for courses
- Marketing solution
- Property manager
- Vacation rental host
There are a lot of other professions within the real estate industry that can be used to create a thriving real estate business. All of these involve buying, selling, managing, or investing in properties. If you are looking for a solution to help position you for early retirement, or secure your retirement nest egg for the future, this is one of the best avenues to make it happen.
While these professions sound like it will be easy to become established in the marketplace, it takes work. In fact, starting any business without the proper guidance can lead to disaster. Once you have the tools in place and implement them correctly, you’ll be well on your way to success.
Starting a Real Estate Business
Once you’ve determined which area of real estate you want to focus on, it’s time to create a plan. Here are the steps involved in successfully getting the business up and running.
One of the first stages of planning is setting up goals. Consider what you want the real estate business to do and how long it may take to get there. Setting up goals and objectives can help establish a timeline for getting things done. You’ll have the focus, drive, and determination to achieve them. A plan with no action goes nowhere. Once you have short and long-term goals, you’ll be able to build a roadmap and infrastructure that works.
All too often, people jump into starting a business without doing research on the industry or area. Real estate is a niche market that has broad areas of development. You won’t go into a test without being prepared, so why would you do that when starting a business? Learning what you need and finding out information on the market and industry helps point you in the right direction. You may have wanted to focus on being a real estate agent but may find that your skill set works best as being a home stager or marketing solution. A business takes time and dedication, so make sure you’re choosing a niche where your gifts can shine.
Create a Strategy
Your research should provide enough information that you can create a sound strategy based on your goals and objectives. Creating a business plan to see everything in real-time is the next step. While the thought of writing a business plan seems overwhelming, it doesn’t have to be. Many people don’t move past this phase because they are too caught up in the different areas of the plan. Putting together a simple business plan to start and revisiting it as you build also works. The goal is to put your plan on paper to make it real.
Set Up Your Business Structure
Setting up a business has a few upfront costs to get started. While branding the business comes later, you must choose a name that fits what you are doing. Take your time in choosing your business name because it sets the standard now and in the future. Major brands use naming documents to ensure they select names that reflect their goals and intentions. Doing a quick online search can help you in this area. Once you have the name in place, it’s time to choose and set up the business structure. Real estate has many legalities associated with it, so operating without the proper paperwork could be detrimental.
While there are a few business structures, many real estate businesses are limited liability companies or LLCs. An LLC is a business structure in the U.S. that is easy to establish. It has the tax advantages and flexibility of being in a partnership while providing the same personal liability protection as a corporation. In an LLC, every owner is called a “member.”
All about LLCs
When establishing an LLC, there can be one or many members. The beauty of this is that members don’t have to be individuals. They can also be other businesses and there is no limit to the number of members an LLC can have. This is very attractive to most people establishing real estate businesses because their personal assets are shielded from any legal actions or creditors.
There are many benefits of having an LLC besides the protection of your personal assets. During tax time, any profits are passed along to the members to pay taxes on them through their personal tax returns. This makes filing during tax time a lot easier, and the tax implications are lessened if the company loses money.
The paperwork required to start an LLC is much easier to complete, along with the fees. While each state has its own process to follow, getting started is usually easier than in other business structures. If you follow the rules outlined by the state department, you should be fine. Getting advice from an attorney, accountant, or business service may be a good idea to make sure things are set up correctly. There are annual fees associated with maintaining legal standing for the LLC.
Some companies will choose to do business under a different name. This is called a DBA or doing business as an entity. There are additional costs when filing a DBA with the state.
When establishing an LLC, the Articles of Organization must be filed. Depending on the state you file, they can be called something different, like a Certificate of Organization or Certificate of Formation. The filing fees and costs for filing these articles differ. When setting up the LLC, you must have a registered agent. This is someone designated to accept legal documentation on behalf of your business. There must be a legally registered address, and in most cases, the person must reside in that state and be over 18 years of age.
Once you have completed all the paperwork, the next step is to obtain an Employer Identification Number (EIN). This number is issued by the Internal Revenue Service and is very important. Consider it the social security number of your business. You can apply for it online, by mail, or by fax. This number is needed to open a business bank account, file your taxes, and work on other legal areas of your business.
Now that you have the LLC paperwork in place, you should apply for a local business license. Additionally, depending on the type of work you will be doing in the real estate niche, you may have to take classes to obtain a real estate license or some other occupational license before you can legally operate as a real estate agent or do business in the niche you’ve selected.
Depending on the requirements of your state, you may have to get a sales tax registration certificate, establish registration with worker’s compensation and unemployment, and more. Always check your state and local regulations to make sure you are compliant. You should also look into getting business insurance to protect your business from any additional liability.
Now that you’re up and running, it’s time to set up a business account. This account should be used to handle all transactions dealing with your LLC. One of the best ways to ensure your funds are not co-mingled is to use accounting software specific to your industry.
Branding and Marketing
Now that the business is established, it’s time to get the word out and establish a tangible presence. Branding is one of the most important elements of your business. It helps give a persona to your business and lets people know who you are. Building a brand is not as easy as it may seem. It takes time, energy, and, of course, money.
How will you set yourself apart from the competition? It’s time to refer back to the research done at the beginning of your journey to understand your market and competition. This is also the time when you create your logo and establish your business colors, tagline, and other assets. Working with a branding specialist may be a good idea. This helps establish your brand voice and how you will speak to your audience. This helps in building credibility, visibility, and brand loyalty.
Creating your own space within this niche is key. Your marketing plan should include objectives and tactics on how you will dominate the space and become the authority in this area. Here are a few things your business will need:
Every business entity needs a website and an online presence. That’s the first place people go when they hear your business name or see something related to your business. In any real estate niche, visual content is a must. There are many low-cost website providers where you can create a simple, yet attractive website. This domain, or URL, is one of the most important assets you can have. Use it to provide value and all the content your audience wants to consume so they will continuously return.
In addition to having a website, you must have a social media presence. There are many different platforms, but knowing where your audience is can help your business grow. For instance, LinkedIn is a good place to network with other professionals and businesses that could become potential clients. If you’re showcasing homes and properties, Instagram and Tik Tok are great choices because they are all about being visual. If you want to have conversations and drop golden nuggets, Twitter may be a platform where you can shine. And of course, Facebook remains the go-to for every audience. Once you have established a presence, you can launch paid advertising campaigns for brand awareness.
Getting in front of your ideal audience takes work. As a new business, you must exhaust all avenues to get the word out.
- Direct mail is still one of the best ways to reach businesses and potential customers. This is one of the most popular ways real estate professionals get noticed.
Email is also a great way to build awareness. When all else fails, a strong email list will prevail. Use your website and social media platforms to gather leads, then nurture those customers with content like newsletters, eBooks, videos, and other content they want. The goal is to give them what they want and the things they need without them having to ask.
Joining industry organizations can provide exposure. Once you establish a few strong connections, they can send business your way. Go to community events and start getting to know people. The more they see you, the more you build the know, like, and trust factor. Don’t be afraid to put yourself out there. Sign up to do a workshop or host an event. This will help establish you and your business as a trustworthy entity.
While this may seem like a lot of work to get yourself established, it can be well worth the time and effort involved. It all starts with proper research and a positive mindset. By following these steps and outlining your goals, you have the potential to enter a new niche that can set you up for a financially promising future.