Thinking about a career in real estate but not sure how to dive in? If you’re ready to explore the potential of leaving your 9-to-5 job and achieving financial freedom, then this guide is the perfect starting point. Starting a real estate business isn’t a walk in the park, but the rewards are definitely worth the effort.
What is a real estate business?
So, first things first, let’s break down what real estate really means. It’s not just a piece of land; it’s the whole package—land, buildings, crops, minerals, water, the works. Real estate falls under the category of real property, different from digital or personal property. It covers the ground and anything attached to it, be it man-made or natural.
Now, a real estate business is essentially a venture that’s somehow involved in the buying, selling, operating, managing, or investing in real estate properties. It’s a diverse field that encompasses various aspects of dealing with the world of real estate.
Are real estate businesses profitable?
Let’s start with the basics, shall we? Nobody really wants to kick off a business that’s not making money. The quick response to whether real estate businesses are profitable is a definite yes. Getting into real estate is a fantastic choice because, in Ryan’s words, “As long as one house can sell another, there will always be a demand for more real estate agents.
Real estate agents earn their keep through commission, which is a cut from the sale price of the home. Usually, this commission is divided equally, 50/50, between the buyer’s and seller’s agents. However, the specific percentages can vary based on the roles each agent assumes. Now, if you happen to be both the buyer’s and seller’s agent, congratulations – you get the whole shebang.
How much a real estate agent pulls in really hinges on the market they’re working in. Take New York City, for instance – where the average home price hits around $1 million. Now, compare that to the rest of the country, where it’s more in the ballpark of $300,000. Sure, it’s significantly lower, but then again, so is the cost of living outside the Big Apple.
How to start a real estate business in nine step
Thinking of diving into the real estate business? Well, get ready for some research, crafting a solid business plan, showing real dedication, and, of course, a good dose of courage! Here are nine essential steps that can guide you in confidently kickstarting your real estate career, no matter which market you’re stepping into.
Get your real estate license
Alright, first things first – you’ve got to snag that real estate license. Now, every state has its own set of rules and regulations, but no matter where you are, everyone’s got to tick off these basic steps to get their real estate license and dive into the world of being a real estate agent.
To kick things off, you’ve gotta enroll in the real estate pre-licensing course tailored to your state. It’s a must-do before you can tackle your state’s real estate exam. These courses don’t just dive into your state’s laws and regulations but also give you the lowdown on the federal real estate laws that apply across all 50 states.
After that, you’ll need to go through and ace your state’s real estate licensing exam. Typically, you’ve got to get around 70% to 75% of the questions right to make the grade in most states.
Write a business plan
If you decide to venture into the real estate world as an agent and grab your brokerage license the next move is putting together a business plan. Your plan should map out the financial and operational goals you’ve got for your business, along with a strategy to make those goals happen.
Looking for assistance in setting goals? Consider your strengths and weaknesses and how you can leverage this insight to foster success in your business. Then, ask yourself the following questions:
- What unique skills do I possess?
- What is the purpose of the business I want to start?
- Who do I want to provide service to?
- What can I spend to start my business?
- Do I need outside capital? If so, how much?
- What kind of life/work balance do I want to have?
- What are the expectations I have for starting a real estate business?
Keep your business plan short and honed in on the crucial details. No need for a hefty 217-page document. Simple is the way to go. Once your plan is ready, seek out a trusted mentor to go through it and provide feedback.
Hire an attorney
The optimal moment to bring in an attorney is before diving into your real estate business. Don’t skimp on selecting the right attorney. Cost shouldn’t be the sole deciding factor. A lower retainer often translates to less experience.
When picking an attorney, ensure they’re well-versed in real estate laws and the ins and outs of the real estate business. A top-notch attorney is worth the extra cost, especially when you require solid representation.
Assess and plan out your finances
Understanding the ins and outs of your finances, including sales and commissions, is crucial when kicking off a real estate business. You’ve got to be able to crunch the numbers to strategize how you’ll fund and foster the growth of your business.
Watch out for overspending. The temptation to deck out your office with fancy equipment to kick things off is real, but just because it’s new and flashy doesn’t mean it’s a must-have! Some purchases are vital for building your business, while others are not. Overspending can spell doom for your business. Don’t find yourself in that tough spot.
Many agents can kick start their businesses without the hefty price tag of all the fancy extras. Once you’ve built up a roster of clients, you can invest more in equipment and supplies. For instance, a lot of marketing and sales material can be sent in digital form, cutting down on printing costs.
Once you’ve got your finances sorted, get a bookkeeping and accounting system in place to help you stay on top of your cash flow, expenses, profits, losses, capital expenditures, and tax information.
Don’t forget business insurance
Business insurance can protect you from property damage, theft, intellectual property lawsuits, and other unexpected incidents.
As a real estate professional, it’s crucial to safeguard yourself from potential claims with liability insurance. There’s always the chance that a dissatisfied client might consider legal action if things go awry. Business insurance offers a sense of security, allowing you to carry out your work without the worry of losing everything due to an unhappy client.
Develop your personal brand identity
Crafting your personal brand is what makes you stand out from the crowd. Consider your core values and visual identity. How you integrate these aspects into your marketing will shape the tone and message you aim to convey to your potential clients.
You are your brand, and your brand is your public identity. Make it distinctive. It should encapsulate the finest and most vital aspects of your company. Your brand conveys, “I know my business, and I am the best at it.” Aim for your brand to be robust and memorable, so people are still chatting about you, even when you’re not around.
Build a strong online and social presence
The internet is the information superhighway. To thrive in real estate and establish a successful business, you gotta be present online. Social media is crucial too.
When someone’s looking to buy a home, your website is often their initial encounter with you. Their opinion of you begins to take shape based on what they find. Nail that first impression with a finely crafted website and a strong social media presence. Remember, folks aren’t just buying your services; they’re investing in a relationship with you.
Establish an online presence that enhances your brand and reflects your style and approach. Don’t hesitate to infuse it with your personality and flair. Clients who are putting their trust in you want to feel assured of your reliability.
Hire the right team members
When growing your real estate business, it’s essential to bring on board the right people for the job. Trust is a key component in a working relationship. You’ve got to ensure that you can collaborate daily and handle any disagreements in a professional manner.
Bringing on individuals with diverse strengths and expertise in various areas is crucial for constructing a well-rounded business that can tackle whatever challenges come its way.
Scale
After laying down the foundations of your business, it’s time to take it up a notch. Next on the agenda: building a network! Making connections and carving out a name for yourself is pivotal. Make sure to prioritize quality connections over quantity.
Word of mouth is an excellent way to drum up leads. Make sure to deliver a top-notch experience with every client to up the chances of them recommending you to others. Offer post-sale customer service that truly impresses them. And don’t hesitate to ask for referrals from clients, friends, family, business associates, or folks in your social networks.
Conclusion
The real estate business can give you the life you’ve been yearning for. When you equip yourself with the know-how to dive into small business ownership, you can handle the highs and lows of being a business owner without the constant fear of losing it all. In fact, you can thrive.
If you’re wondering how to get a leg up on your competition as you start a real estate business, you can discover the tools you need to generate leads, make deals, negotiate contracts and more.