Owning a real estate business is exciting and rewarding. However, with thousands of real estate firms and realtors across the U.S., succeeding as a real estate investor can be challenging. If you are looking to start a real estate business, it is vital that you take every step cautiously.
Here are the six steps that you can take to set up your real estate business:
Six steps to setting up your real estate investment business
1. Primary market research
In-depth market research will involve identifying the market trends, specific niche, potential competitors, and the areas you want to focus on. One of the crucial things you need to know before investing in real estate is whether it is the right time to invest. The most recent real estate market statistics show that the U.S. housing market is witnessing a record demand. Factors driving the market growth include the low mortgage rates, new construction, and the large Millennial population getting into the first-time home buying stage. Real estate services in the U.S. are expected to grow at a rate of 7 percent between 2021 and 2026. Home prices and sales volume are also steadily registering a year-on-year growth. Despite the pandemic, home sales went up by 43.2 percent in 2020 compared to the previous year’s figures.
To refine your real estate business idea, you will need to get first-hand knowledge of the market trends including property value, quality of construction, demand for homes in a particular location among others. It is also vital to be deeply familiar with the locations where you will carry out your real estate investment business.
Knowing the towns and neighborhoods where you will assist people in buying and selling real estate is the key to running a successful real estate business. Do your market research and look at the approach your competitors in the area including real estate companies and realtors are taking. Examine their business strategies, customer engagement methods, target audience, and the way they present themselves among other things. One way to do this is to follow your competitors on social media and observe how they engage with customers.
2. Determine your strategy and niche
There are multiple ways to invest in the real estate business. Some investment strategies include:
- New property construction
- Buying and selling properties
- Rental investment properties
- Fixing and flipping
- House hacking
- Real Estate Investment Groups
- Real estate crowdfunding
You will also need to identify if you will invest in commercial or residential properties apart from finding your real estate niche. These include:
- Residential real estate
- Vacation and resort homes
- Luxury villas
- Income properties
- Commercially zoned properties
or specialize in condos, single-family homes, apartments, or luxury villas. Determine if you will go solo as a real estate investor, set up an LLC or partnership.
Consider what niche and strategy are ideal for you based on your investment goals and your financial situation. For instance, if you have limited finances, wholesaling real estate may be the right strategy. If you own a multi-family home, renting out some parts of your home can be a good strategy.
3. Identify your target customers
When you identify the specific area and strategy you will focus on, you will also be able to identify your target customers. For instance, if you are looking to specialize in single-family homes, you will need to target families. If you want to concentrate on a specific location in the city, you need to find buyers who are looking to settle down in the area.
Think about the potential customers you want to target such as new couples looking to buy their first dream home or working professionals relocating to a city. You may want to target those who want to rent a property or people who are looking for luxury villas or apartments. Going over these factors will help you refine your approach and make it more streamlined and strategic.
4. Identify the resources you need
The next step in investing in the real estate business is to evaluate the resources you currently have and are going to need. Do your research to know how much money is required to start the real estate business. If you need licensing, you will need to factor in the cost of licensing fee. Other costs to think about include broker fees, marketing costs, business expenses, and transportation costs. If you want to establish your online real estate business, you will need to invest in a professional website.
Think about how much money you are looking to make in one year or over five years. For instance, you may want to earn a monthly revenue of $50,000 in one year by wholesaling 5 properties a month or fixing and flipping ten properties in a year. Determine the revenue model while ensuring it is sustainable.
5. Write a detailed business plan
The business plan acts as the roadmap for your real estate business success and includes specific steps you will take to achieve your goals. Ensure your business plan features these key details:
- Executive Summary – A precise summary of your business plan.
- Industry overview – Include the latest housing market trends, the industry prospects, business niche, key competitors, and other relevant details using the findings of your in-depth market research. Describe the different market segments, locations, and areas you want to focus on.
- Competitor analysis – Give details on your competitors including realtors and real estate firms.
- Your services and USP – List the services you will provide and the niche you will focus on. Describe how you will differentiate yourself from your competitors in the real estate business.
- Marketing strategy – Outline your marketing and sales plan including the strategies you will employ to promote your business.
- Financial plan – Include the amount of financial investment you need if you are seeking a business loan.
6. Invest in the top real estate investing program
While real estate investing for beginners can involve a steep learning curve, a real estate investing coach can help accelerate the learning process. Enrolling in the top real estate investing program designed by seasoned investors is the best way to acquire the required knowledge you need to run a profitable real estate investment business. With an insider perspective, the real estate investing coach can help you gain insights on:
- How to choose your niche and the areas to invest
- The best ways to find off-market properties
- Analyzing deals
- How and where you can find qualified buyers
- Creating a virtual online real estate business