In the early centuries, people could only stake claim to a property depending on the defense they could give to the land from other tribes. However, their ownerships only short-lived. According to Investopedia, Lords and Kings were dominant in real estate ownership before because lands were the commoners’ means to pay for their security. Today, human rights are given the utmost importance. Nobody wants to be a nomad anymore. This is the reason why the real estate industry is continuously booming in the economy. People nowadays invest in properties all the time, which is why it is a smart idea to start a business in real estate! In this article, we will discuss the ways and strategies you will need to succeed in this venture.
How to Start a Real Estate Business
Here is a checklist of the steps to take in starting a real estate business.
Refine Your Idea
The real estate business is complicated. It has different branches, such as residential, commercial, industrial, and vacant land. You need to focus on the branches that most fit you. To do that, know what skills make you stand out from other real estate professionals so you can play with your strengths. What do you want to achieve out of your business? Do you want an active or a passive income? How much money for capital do you have? What kind of lifestyle do you want to get out of it? The answers to these questions are keys to effortlessly finding your niche.
Find a Niche
Choose a niche that you’re passionate about. There are several real estate niches to choose from. These are residential, luxury homes and resorts, income properties for leasing, condos, and commercial properties. If your strength is management, then go for property management as well.
Do Market Research and Idea Validation
Know the market you’re entering to gain an insight into how far your business can go in your chosen area. Your market research should consist of a study on your target customers and competition.
Identify Target Customers
For the useful market analysis, identify target customers by surveys, questionnaires, groups, and one-on-one interviews. Know what factors your clients consider when purchasing real estate. What are their preferences? What are their views about the pros and cons of being in their location? The data you collect from these are good references for your business decisions.
Know the strengths and weaknesses, opportunities, and threats of your competitors to know your area of advancement. Existing businesses are suitable bases for your growth and survival.
Decide Your Business Legal Structure
Aside from sole proprietorship or solely owning your company, there are other types of legal structures you can consider—especially when you prefer having partners. The decision of you and your business partners on your legal arrangement will impact on how you pay your taxes, your paperwork, liabilities, and ability to raise money.
If you want to buy and sell real estate as a corporation and protected from personal liability, then this Limited Liability Company is perfect for you. This means that you and your investors can conduct businesses in the name of the entity and not as an individual.
If you want to pay yourselves salaries and receive dividends from the corporation profits, then S corp would be ideal for you. The S corporation doesn’t pay tax as a separate entity. The owners will pay the fees based on the profits you make from the corporation.
The C corp pays tax based on its income as a separate entity. This means that you will pay your tax separately as an individual, and the corporation entity pays its tax based on its profits individually too.
Write a Business Plan
Business contains a series of ups and downs, and that is entirely normal. However, your business plan will serve as your anchor throughout your real estate venture. It will also prove that your business is feasible and has growth potential. This plan contains a series of documents, such as financial and operational outlines. Your business plan should have sections in their order. These sections are the industry overview, market analysis, competitive analysis, sales, and marketing strategies, management, operations, and sources such as appendices and exhibits. Last but not least, wrap up your plan with a business summary.
Obtain Required Licenses and Permits
To have your business run legally, obtain the licenses and permits required by the government. To work as an official realtor, you have to take the pre-licensing course for your state. Pass the real estate licensing exam and submit your license application to your real estate board. Associate your license with a real estate broker to work for since it is necessary. For the brokers, you will need your real estate license, experience, and education. You also need to pass the broker’s exam and pay for the application and other fees.
Name, Logo, and Branding
Your brand is the overall impression you give to the people. Create a strong brand identity by naming your business and making a logo that suits you. One of the vital branding tips you should practice is basing them on the concepts that you have for your business, such as the real estate identity you want to project, your target customers, what makes you stand out, and your brand values.
Build a Website
Build a website to improve your online presence. Potential clients check real estate websites as a reference for deciding whether they do business with real estate professionals or not. So make sure your website is professionally presentable. Invest in a website design that is compatible with your brand. By looking at your site, visitors should know who you are, your qualifications, and a good reputation.
Organize Your Finances
When everything is properly planned out, and you’re ready to operate, prepare your real estate capital. Create a personal and business budget. This also means closing your existing debts to avoid being burdened with them. Calculate your startup costs accurately. It’s better if you can cover your business expenses for six months without depending on credits or debts. Lastly, track your expenses and manage your money by using apps and tools for easier work.
The real estate industry has many open opportunities for business-minded people like you. Choose one that best fits your capabilities by knowing your strengths, weaknesses, opportunities, and threats. You will learn these by thorough market analysis. Also, decide on what type of ownership you want for your business to thrive. Your market analysis will type of ownership decision will make your business plan more organized. Once you can operate legally, build a brand that will stand out. Lastly, always manage your finances to avoid business pitfalls. By doing the steps given above, you will not operate smoothly. You will also gain the business growth every entrepreneur wants.