There is a lot to think about if you want to take the leap and start your own successful real estate business rather than merely treating real estate as a job while working for someone else. There are numerous positions available in the real estate market, many of which would be excellent starting points for a real estate business.
Here’s everything you need to know to plan, start, and grow a profitable real estate business—we’ve included all of the crucial insights and actions to get you started.
What is a Real Estate Business?
A real estate business is a company that deals with the buying, selling, managing, or investing in real estate. The Balance defines real estate as “the property, land, buildings, air rights above the land, and subsurface rights below the land.”
Today, many people face an awful reality: according to the US Census Bureau, less than 5% of persons who reach the age of 65 have enough money to retire or are “financially secure enough.” To meet your own financial goals and ensure a stress-free retirement, it may be time to explore starting a real estate investing business.
Starting a real estate investment business will not be easy, but with proper planning, it will be well worth the effort. The best part is that there are numerous resources on small business systems that may make the learning process easier and more efficient. Read over our guide below; after all, it is intended to assist you in succeeding.
How to Start a Real Estate Business
- Purchase a CRM.
- Create your ideal personal plan.
- Align your business plan.
- Create a consistent marketing plan.
- Create a website.
- Consistently prospect.
- Nurture produces leaders.
- Have good time management skills.
#1. Purchase a CRM.
A business is, at its core, a system.
A CRM is a Customer Relationship Management system that aids in the organization of contacts and the generation of actionable insights. You can use it to guide leads through relevant nurture campaigns based on the source of the lead or to automate the complete transaction process.
Because the house buying process is so lengthy and involves so many different processes… amplified by many agents and many more leads and clients… this is extremely useful in real estate.
#2. Create your perfect personal real estate business plan.
Before you can set the correct financial goals for your business, you must first establish clear financial goals for yourself.
Commissions are nice, but let’s be honest: we all came into this business expecting something greater and better than what we now have. Take some time to consider your perfect life, whether it’s the 187-foot boat of your dreams or the flexibility to leave the job at 2:00 p.m. to pick up your children from school.
Consider the following:
- When do you want to start working?
- When do you want to finish?
- What do you want to feel like every day?
- What kind of money do you wish to make?
Do you want to retire at the age of 65? Pay for your children’s college education entirely? Determine how much money you need to set aside each month to make it happen. When you know exactly where your profits and commissions are going, it’s a lot easier to keep picking up the phone.
#3. Align your real estate business plan.
It’s time to speak business now that you’ve put pen to paper to figure out exactly what your biggest, most anti-paycheck-to-paycheck life looks like.
Start developing your business plan, paying special attention to the aspects that distinguish you from the other real estate companies in your area. Give it some real thinking. This is where your personal and professional identities may truly merge to create profit-generating magic.
Consider the following before you start creating your real estate business plan:
- What impact does selling real estate make for you, your prospects, and even the world?
- What are the guiding ideals and concepts of your real estate business?
- What distinguishes them from the real estate business next door?
- What are the three to five things in the business that you will entirely own?
- Who will look for the rest?
Even if you’re only trying to relieve administrative burdens by employing your first virtual assistant, it’s vital to build that big picture vision to keep your team motivated and avoid repeating mistakes.
#4. Create a consistent marketing plan.
Initially, it was all about passing your licensure exam, finding your best-fit brokerage, and expanding your database without coming across as “salesy” to your Sphere of Influence’s friends and family (SOI).
However, one of the biggest mistakes new agents make is kicking back and coasting as soon as the referrals start coming in. Whether you aspire to be the next Facebook ads genius or a master of Zillow conversions, the only thing you really need to know about marketing is that it is the one aspect of your business that never sleeps.
Train your brain to think strategically about what’s going on in your market and be prepared to deliver something of value to your leads, regardless of where they come from.
Consider the following before you start creating your real estate business marketing plan:
- What value does your distinct approach and personality bring to your prospects?
- What do you have to offer that no one else does?
- What are the most recent trends in buying, selling, and price in your market?
- What are some novel approaches to discussing these patterns (including data) with prospects?
First, define your distinct value offer. This will be the driving force behind all of your future marketing.
#5. Establish a website.
The very first step in 44 percent of all purchasers’ home searches is to explore online.
You need a digital presence to attract and engage online leads, regardless of how much local marketing you undertake. A good, SEO-focused website that allows you to integrate IDX listings and shepherd those leads directly into your CRM may cost a little money up front, but it is a critical cornerstone of any successful real estate business.
Once you’ve established this asset, you can start implementing a consistent blogging and social media strategy to create more leads.
#6. Prospect frequently.
Shiny object syndrome is a major issue in real estate. However, the most consistent agent always wins, so choose and stick to your prospecting system.
It’s never a bad idea to optimize your SOI in the early stages. In fact, the Atlanta-based Graham Seeby Group turned a list of only 279 connections into $90 million in property sales in just four years by continually marketing to their previous clients and sphere.
#7. Develop leaders.
When a lead contacts you, they expect a response.
Long-term lead conversion requires a follow-up system. I informed my agent that 70% of people will not buy for another 180.5 days. If you wait for those fresh leads to buy, you’ll only close 3% of the time. That will provide you with enough money to get by for the next six months and beyond. You have to follow up to get to those folks; you have to establish that pipeline to get to those people.
In addition to enthusiastic blogging and website optimization, monitor the competition to see what’s occurring on the ground in terms of follow-up. I sign up for a lot of different websites. I do not provide them with a real name, but I do provide them with a real phone number. And I can tell you, I don’t get many calls.
Be the agent who is always there, and you will always defeat the herd.
#8. Be adept at time management.
If you’re like most of us, having more time and energy for the things that really light you up is a large part of the dream.
However, most agents who set out to start a real estate business do not plan for this. They wind up with a rotating door of team members and must roll up their sleeves to solve the business problem of the day. But this does not have to be the case.
Real Estate Business Examples
There are numerous positions available in the real estate market, many of which would be excellent starting points for a real business. Here are just a few examples of different real estate businesses:
- Wholesaler
- Bird Dog in Real Estate
- Repair and Resell
- Purchase and Hold
- Owner of a Vacation Home
- Manager of Real Estate
- Developer of Real Estate
- Appraiser of Real Estate
- Home Examiner
- Agent for Real Estate
- Real Estate Agent
- Provider of Home Maintenance
- Home Staging
- Contractor in Construction
- Lender of Last Resort
The alternatives listed above are only a few of the many options for starting a real estate business. Remember, there are numerous options available; all you have to do is discover the proper fit.
The Top 5 Advantages of Starting a Real Estate Investment Business
The advantages of investing in real estate are practically limitless. Not only do you have the chance to make a substantial return on each transaction, but real estate is also proven to be a strong hedge against the stock market and inflation. Other assured benefits of starting a real estate business include, but are not limited to:
#1. Tax advantages.
Who gets to keep more after taxes if you make $100,000 per year at your 9 to 5 work and I make $100,000 per year from my rental property? My rental property is taxed at a considerably lower rate because the government favors rental property owners. The government also provides lower tax rates on long-term profits, as well as other perks such as depreciation and exemption from self-employment tax.
#2. Flow of funds.
Real estate investors can generate significant cash flow through consistent wholesale or rehab agreements, but they can also ensure a continuous monthly revenue flow with rental property deals. The nicest part about rental property cash flow is that after all of your bills are paid, the extra money is considered passive income. You will receive a monthly salary while operating the remainder of your investing business.
#3. Appreciation.
The value of the property you invested in is increasing or appreciating while you are paying down the loan on that property. While recessions and market volatility are unavoidable, it is safe to predict that the value of real estate will improve over time. However, any home purchased now will be worth significantly more in 30 years; however, with a fixed-rate mortgage, you will always pay the same dollar amount.
#4. Control
The sense of control and pride that comes from owning what you built is arguably the most significant advantage of starting a real estate business. Your destiny is not tied to a Wall Street office or the CEO of your company; it is solely yours. Real estate investing puts you, and only you, in control of your financial future. However, in order to maintain control, investors must learn how to moderate their appetite for unexpected conditions; or, as Roy Morejon puts it, entrepreneurs must “be comfortable with being uncomfortable.” Morejon, the president and co-founder of Enventys Partners and a serial entrepreneur, is well aware of the emotional control that entrepreneurs must practice. “You have to be okay with the thought that you won’t always know where you are financially for a time period,” says Morejon, regardless of your own experience.
#5. Security.
Of course, any type of investing will always involve some level of risk. Building a real estate portfolio consistently over time, on the other hand, implies securing your own future. Unfortunately, far too many people today have no precise plan for securing their retirement. Real estate investing is not only the fastest way to get out of debt, but it is also an undeniable technique of building several streams of income for yourself that will last well into your retirement years and can even be passed down to future generations.
It is not advisable to enter the field of real estate investing without first adequately educating oneself. You must learn how to discover deals, advertise yourself, negotiate, and finance deals; nevertheless, once you’ve mastered those skills, you’ll be well on your way to running a successful business. So my CT Homes colleagues and I compiled a detailed list of the most often asked topics for you to research before commencing on your investing journey. Start at the top and work your way down; once you’ve thoroughly evaluated each question, you’ll be well ahead of your competitors.
How Much Does It Cost To Start A Real Estate Business?
It’s difficult to say how much money you’ll need to start a real estate business, but $5,000 to $10,000 should get you started. The fees for forming an LLC are substantially lower, ranging from $40 to $500 depending on your state. The remainder of the startup capital, on the other hand, will cover any material prices, the time required to attend events and create a network, any office supplies (such as a laptop), design fees for a website and logo, and other expenses. While you do not have to spend money on any of these items, they can help you become more serious about your business. Plan your own budget, taking into account each of these costs, and see what you come up with. Many investors can even start wholesaling with little money.
How To Start a Real Estate Business FAQs
What are the best ways to start real estate?
- Buy REITs (real estate investment trusts) REITs allow you to invest in real estate without the physical real estate.
- Use an online real estate investing platform.
- Think about investing in rental properties.
- Consider flipping investment properties.
- Rent out a room.
How much money do you need to start a real estate business?
Placester in the United States thinks that you’ll need at least $10,000 to start a real estate brokerage, while Investopedia estimates that you’ll need $5,000 or more to engage in an industry investment partnership or pool.
Is real estate better than stocks?
Over time, investment in the stock market outperforms investing in real estate. Simply said, traditionally, real estate investments yield just three to four percent per year, but stock market investments earn around ten percent per year.
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