Starting a real estate business can be an exciting endeavor. Most new real estate entrepreneurs are anxious to get their business off the ground but certain concepts have to be in place to ensure the business is set up properly and legally. Starting a new business takes effort and planning to ensure long-term success.
Evaluate Your Choices
To start a real estate business, you must evaluate your business choices. Determine the type of real estate business you would like to own and operate. You have the option of starting your own independent real estate office or buying a real estate franchise. You also have the option to partner with an established real estate endeavor. Before buying a franchise or merging with an existing operation, evaluate your initial investment costs as well as your money making potential with each. If you decide to start your own independent office, determine a name for your business, research office locations and begin the process of hiring a staff to support your business.
Write a business plan before opening your real estate business. A real estate business plan should answer specific questions about how you want to carry out your business. In writing your plan, first determine what type of real estate market you want to be in. Decide if you want to work with residential or commercial properties, new construction or resale properties. Also, include the state of the real estate market in your plan. This information will help you pinpoint the size of your market, annual sales and average home prices. Include a detailed analysis of other real estate businesses in your area to assess your possible competition. Information regarding your own company’s strengths and weaknesses should be included in your plan to prepare you for future changes
One of the most important steps in starting a real estate business is to get licensed in the state or states where you plan on doing business. You must be licensed to complete property transactions or hire a licensed broker to execute real estate transactions. Each state has a real estate department that administers licensing exams to prospective real estate professionals. To prepare for your exam, you can enroll in a training course that outlines the competencies covered in the licensing exam. Courses are available through home study, in classrooms and online.
To start a real estate business you need start-up capital. Using your business plan as a guide, determine how much you will need to pay for start-up costs and ongoing expenses. If you will employ agents in your business, determine how much they will be paid and the commission structure you will use. Other factors that will affect the start-up capital for your real estate business include the cost of your facility, initial marketing, licenses and insurance. Set aside start-up capital for real estate technology, such as software, mortgage calculators, demographic statistics and neighborhood information.
Market Your Business
Marketing is an important aspect of your real estate business. A marketing plan ensures that every dollar you spend on advertising is accounted for and is targeting customers who are most likely to use your real estate services. For example, you can target local advertising specifically to agents and brokers within your ZIP code. You can also market your services to mortgage partners who help clients within your target area secure funding to purchase real estate.