Since 2014, the U.S. real estate industry has been growing at a rate of 4.8 percent annually. In 2019, it is forecast to generate $165 billion.
Clearly, the industry is on a steady growth path, especially after the aftermath of the Financial Crisis of 2008. So if you’re looking to start a real estate business, there couldn’t be a better time to jump in.
However, starting a profitable real estate firm is easier said than done. In fact, a vast majority of real estate businesses fail.
Do you want yours to be a success story?
Continue reading to learn how to launch a real estate company that will earn you big bucks.
1. Understand How the Real Estate Industry Works
To succeed in any industry, you need to have a firm grasp of how it works. Real estate is no different.
This means you have to spend plenty of time researching the real estate market in the country. Understand the various factors that affect its growth and identify the most profitable niches.
But let’s face it: If you aren’t already a real estate insider, research can only get yet so far. This is why the best way to understand the industry is to become an insider.
How? You ask.
You can opt to start out as a real estate agent, for instance. Although this will need you to complete some real estate courses and secure a license to practice in your state, it’ll give you the best opportunity to dive knee-deep and understand the industry.
2. Decide What Real Estate Business You Want to Start
The real estate industry is vast, meaning there are several areas an aspiring entrepreneur like you can specialize in. Here’s a rundown of some of the top real estate business ideas:
- Become a landlord/invest in rental property
- Run a property management business
- Run a house-flipping business
- Run a home staging business
- Establish a real estate agency or brokerage
- Run a property development firm
Which idea is appealing to you?
Well, we all want to be landlords, but it’s not always the best or even most feasible idea. To settle on the best one, you have to consider a number of factors, including your expertise, access to capital, and regulatory requirements.
For instance, to invest in rental properties you need lots of capital to buy or build rental units. This also takes time.
On the other hand, if you’re already a real estate agent, you’ve got the expertise to run a real estate agency. Plus, this idea isn’t capital-intensive.
Either way, the idea you pick will go a long way in determining your success as an entrepreneur.
3. Draw a Business Plan
Once you have an ideal real estate business idea, the next step is to draw a business plan. The specifics of your plan will vary depending on the idea, but it should flesh out the following details:
- Executive summary (Brief overview of the business)
- Company goals (Mission, vision, goals)
- Product/service (Such as rental units)
- Market analysis
- Sales and marketing strategy
- Organization and management teams
- Capital requirements and other financial projections.
Even if you’re looking to start a small, low-cost real estate business, it’s important to ensure your business plan is properly drawn up.
If you skip this step or rush through the plan, you’ll only be setting up yourself for trouble down the road. If you aren’t spot on with the capital requirements, for example, you could easily underestimate the amount of money you need to start the business and keep it operational until it achieves sustainable profits.
What if you have no business plan writing expertise? Don’t shy away from hiring a small business consultant to help you out.
4. Secure the Required Capital
Did you know lack of adequate capital is one of the primary reasons many small businesses fail?
As such, you should embark on raising the amount of money you need to start and operate the business. If your capital requirement is $30,000, ensure you have at least this amount before proceeding to the next step.
An effective way to raise the required capital is to partner up with a like-minded entrepreneur. There’s no limit to the number of partners you can have, but the fewer the number of partners, the better. You can then pool funds and start the company.
Another option is bootstrap. If you’ve got money in a savings and/or retirement account, you can withdraw and use it. It’s a risky move, yes, but entrepreneurship is all about taking calculated risks.
Loans are also ideal, especially if you’re planning to invest in rental property. If you have a good credit score and an income, you can secure a mortgage to buy a rental unit.
5. Register Your Company and Set Up an Office
In most states, it’s a legal requirement to register a new business with the relevant local department. You might also be required to obtain specific real estate licenses before you begin operations.
After meeting registration requirements, set up your company office. This involves purchasing basic office furniture and equipment, and you might also need to hire a secretary or office manager.
6. Market/Advertise Your Business
Although the real estate industry is growing strongly, competition can be fierce, depending on your niche. If you have rental units, for instance, tenants won’t just show up. Heck, they won’t even know your property exists.
This is where marketing comes in.
Build a professional company website that can serve as a real estate lead generation machine. Also, set up social media accounts and invest in paid digital advertising campaigns.
Time to Start a Real Estate Business!
The real estate industry is one of the safest places to invest your money, but you have to make smart moves. With this guide on how to start a real estate business, you’re now in a solid position to set up a real estate company that’ll succeed.
Need more real estate tips and insights? Keep reading our website!