Succeeding in a business comes with its own set of benefits and financial freedom is right on top of the list. In case you are planning to start on your own business, a real estate is a good option. Although there is some tough competition to deal with, if you base your groundwork on sound planning, your chances at succeeding improve manifold.
The median gross income of a realtor in 2018 was a healthy $41,800 in 2018, according to NAR (National Association of Realtors). This is just the median income; there are realtors known to make upwards of 100,000 in a year. Looks like the business is financially viable.
Having made up your mind, it is time to look into the specifics of getting into real-estate. This write-up seeks to address the aspiring entrepreneur and spells a step-by-step approach to starting a real estate business.
Approach to Starting a Real Estate Business
Step 1: Start with an Idea
You have to begin with the knowledge you possess about the real estate business. This means – the existing competition, areas where you want to operate in and understanding how the current realtors approach the market. With these components, you have to evaluate your strengths and how your services can be unique from others already in the market. Going further, instead of spreading yourself too thin, begin with a niche market to get a leg-up in the market and expand categories as you grow. Pitching yourself as a specialty receives the attention.
Step 2: Layout of a Business Plan
This will help you get clarity on various financial and operational goals of your business. It will define the objectives and will give out the specifics about achieving them. Your business plan need not be too long. A short and concise document does serve the purpose.
A traditional business plan is likely to contain the following headings: a summary, industry overview, market research, competitive analysis, sales, and real estate marketing plan, operating plan (facilities, location), and financial plan. The critical constituent among these is market research. It will involve primary (on-field survey) and secondary (research on existing data) research and give a fair idea of the competition’s nature before venturing into the market.
Step 3: Get an attorney to put a legal structure in place
The best time to hire a reasonable attorney is before you start a real estate business. Do not cut corners, hire a lawyer experienced in matters related to real estate. They would help you find the right business structure for the business and will help split ownership among the founders (partnership) while protecting everyone’s interest.
Among the other business structures that can be set up for a real-estate business include sole proprietorship (single owner), Limited Liability Company (LLC – limits personal liability), and a Corporation. Tax obligations and licensing requirements tend to differ with each entity.
Step 4: Assess your Finances
This step pertains to how you are going to fund your business and how it will grow. Knowing your numbers well will help you build a profitable and sustainable business. Be careful with your funds, and avoid overspending. Incidentally, most realtors need not start with a considerable sum of money at the beginning. After building a book of clients, you can spend more on equipment and supplies.
Step 5: Get a Real Estate License
You would be required to take up an exam to qualify to be a real estate agent. Once you have cleared the exam, you would be qualified to sell only residential real estate. To sell commercial real estate, a separate certification is required.
After obtaining the license, you would have to work in a brokerage for 2-4 years before you become eligible to become a broker. This also involves qualifying an exam that promotes you from an agent to a licensed real estate broker. Thus you start the real estate journey by being a real estate agent under a brokerage.
Step 6: Develop a Strong Brand Identity
A brand represents how people know you and your business. It helps build a reputation for the company and the values associated with it. Your brand will reflect your beliefs, ideals, and what your business represents in terms of services and customer experience.
Develop a unique logo and possibly a tag line and implement it across marketing collaterals that you use frequently. You need not spend a considerable amount on getting a brand identity crafted; there are enough inexpensive avenues available online (try freelancers).
Step 7: Build an Online Presence
Every home buyer starts with an online search and contacts a realtor only after the initial research. This makes a digital presence necessary to compete in the real estate market.
Your website becomes the primary touchpoint your prospects encounter, and making a good impression should be a priority with a well-designed website. Ensure that the website truly embodies the values you represent. An excellent idea to gain traction is to add text to video on the home page.
Essentially, your website should make visitors understand who you are and what services you offer. Don’t forget to add a photo and a brief bio mentioning your credentials; it enables visitors to know the person behind the website.
Step 8: Join an Existing Realtor Agency
As mentioned earlier, you start your real estate business journey as a real estate agent, working your way to becoming a broker. Starting on, you could join a franchise brokerage or a boutique brokerage.
The former comes with an established name, allows individual franchisee ownership, and will pay you a percentage of every deal closed. A small company usually owns the latter. The size enables them to deal with every agent on a personal basis through extra attention and direction from experienced agents.
As you grow as an agent in a brokerage, you will be eligible to start your brokerage in time. The final decision rests with you on how to chart-out your path in the real estate business; there are advantages and drawbacks in each brokerage mentioned above.
Step 9: Grow Your Business
Once you have set up a shop, you would have to network and create connections to make opportunities happen actively. Also, establish a system to track your leads and start contacting them on a priority basis.
Before contacting, do your homework to understand their needs and be prepared to answer pertinent questions. After you have cracked a deal, make it a point to ask for a referral, a review, or testimonial that will serve you well in the long-term.
This is the gist of the kind of steps involved in getting started with the real estate business.
In the beginning, there are fewer variables to deal with. Still, as you grow – you are met with increased responsibilities, such as accounting to keep track of the finances and tax obligations. Moreover, as a real estate agent, you would have to be good with numbers, interpersonal skills, and a knack for using the right words in business & social conversations. You never know when you have to make the next sales pitch. Overall, success is a combination of planning, hard work, and luck that comes along when you are well prepared.