You’ve probably heard and read that real estate businesses are the #1 millionaire makers. That is true but not everyone can be successful at it. And still, you’re enticed to start one on your own. Get your pen and notebook ready. Close all your browser tabs or set your phone to “Do not disturb” mode because you’re going to need a lot of focus to absorb the lessons in today’s article.
What Is A Real Estate Business?
A real estate business involves buying, selling, investing, or managing real estate properties. There are a lot of types of real estate businesses. You have residential, commercial, industrial real estate, and land.
With each type of these real estate businesses, you have several subtypes like house-flipping for residential real estate. For commercial real estate, you have rental offices and retail booths. Industrial real estate involves the manufacturing of buildings. Land is about farming, ranches, or just buying vacant undeveloped land to be sold at a higher price in the future.
The beauty of the real estate business isn’t just a one-size-fits-all venture. You have so many investment paths to choose from depending on your skill, lifestyle, goals, and management preference.
Is A Real Estate Business Profitable?
Yes, it is. And just like any other business, real estate is highly profitable provided that you do study the local housing market and laws well. Because it’s hard to invest if there’s no demand for your investment type or if local laws put a significant disadvantage to your investment plans.
For example, if you’re thinking of diving into dormitory rentals, you can’t just buy a property and build a dormitory in an area where there are no jobs with a high concentration of bachelors and bachelorettes. That would be financial suicide.
If you’re doing real estate, you must make sure that there are people in the area who are interested in buying your property or renting it. You must also make sure that whatever property you buy, its value will increase in the future whether you’re building, renovating, or not.
This is called appreciation and to determine the appreciation rate of your future property, you have to be observant of what’s happening around its area. The more amenities like parks and necessities such as markets and schools are built or to be built near it, the more its value increases over time.
Steps to Start a Real Estate Business
1. Set your business goals
Follow the SMART goal formula. Make your goals Specific, Measurable, Attainable, Realistic, and Timely. A good SMART goal would be “To earn $750,000 in five years through house-flipping.”
2. Conduct an in-depth research
As mentioned, study the present and future of the local market for demand and opportunities of appreciation for your investment strategy. Ask other real estate investors about the business. Network with them. Read articles. Listen to podcasts. Watch Youtube tutorials. Read books.
Get familiar with local real estate laws, what’s needed to be a successful real estate investor, what investment strategy is right for you, and what business structure is best for your investment strategy. Because without a plan, you will still lose a lot of money. Cash-ready or not.
3. Organize your finances
You can get into real estate without sums of cash on hand or in your savings account. But that doesn’t mean lenders won’t check your credit score and financial history for a mortgage. So pay your debts, save cash, and review how much you have if it can support your business plans and every day living.
4. Craft your business strategy
Depending on the real estate investment type you’ve chosen, you must make a step-by-step plan on how to do it. For example, when fix-and-flipping, you must make a plan what kind of house to buy, which renovation materials and design to use, and hiring which contractors to work with.
5. Plan your business marketing
The next thing you’ll need is a plan on how to market your business once you’ve executed your strategy. Marketing is about making your potential buyers and tenants know that your business and services exist.
You can choose to put your property into a listing, advertise it on Facebook, hand out flyers, create newsletters, or market it through email.
6. Execute your plans without fear
This is the hardest part of starting your business when you have made plans – fear. We’re talking about real estate here. Large sums of money will be involved so it’s normal to have second thoughts. But you must learn to take the first big step forward without looking back.
And even if you’re on a mortgage, you should also have the guts to put your plans into action. The more courageous you are, the more efficient and successful you’ll be as a business owner.
Real estate investing isn’t easy like small merchandising businesses where your capital is flexible and goods are traded in volumes. It involves a lot of market and law research, planning, guts, and patience because stakes are higher, properties are few, and time is the major factor in increasing property value.
But remember this: Once you’ve started a real estate business, save your profits to buy new properties, get familiar with the latest real estate trends, improve your business model, and keep on learning to be a successful real estate business owner.
Recently, I’ve been a guest at the GOOD DEEDS NOTE INVESTING podcast with the episode title: Flavia Berys: Exploring The Professional Work Of A Real Estate Lawyer. Along with hosts Chris Seveney and Jamie Bateman, we talked about various topics regarding real estate such as exploring the work of a real estate lawyer and strategies on how to protect your assets from lawsuits. Click the link from the podcast episode title above to gain more real estate knowledge.
