Starting A Real Estate Business

Starting A Real Estate Business - Background Info:

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Starting your own real estate business is on the higher end when it comes to investment, but you still have a lot of options to help save costs. It really all depends on what kind of real estate business you're looking into.

If you're comfortable just making a living rather than being a real estate business mogul, you can buy foreclosed houses and fix them up while living in them before selling them at their new and improved value. If you want to start up your own real estate agency, your start up fees will be considerably lower, as well. It's all up to you, and below, we'll list a few of the more popular methods for getting involved in the real estate business.

A generally safe investment for your real estate business is to start by buying foreclosed homes or homes with generally low value, and fixing them up while living in them before reselling. The downside to this real estate business plan is that you may see years go by before you turn up much profit. This real estate business route requires some degree of carpentry skill as, even if you intend to hire a crew, it's a good idea to know what needs to be done and how it's being done.

Property development is a great way to get investors and banks on your real estate business's side, and, possibly, catch some tax breaks and such. Nearly every town has a neighborhood or two that the city government would love to have a real estate business develop.

By fixing up old commercial buildings and such, and then renting the shops out to businesses, your real estate business can help to improve the community. For this reason, many investors and city officials will be eager to help such a real estate business plan along.

The good news for beginning real estate business owners is that, even though the investment capital for the real estate business is kind of high, real estate business is relatively low risk, because people will always need a place to call home and places to do business.

In fact, if you've ever tried to find a place to stay in a new town, you know as well as anyone that there's always a market for real estate business. It really takes a bad, bad business plan, or a lack of dedication to completely fail at the real estate business.

The real estate business can be a lot of hard work, but that hard work will generally yield results, as long as you've done your research.

Starting A Real Estate Business - Tasks And Skills Needed:

Business Specific Tasks:

If you are planning to do all the business tasks or hiring or subcontracting tasks, here's a list of tasks that need to be attended to when it comes to the business side of running a real estate business:

• Bookkeeping
• Set appointments
• Follow up contacts (phone, email, etc.)
• Recordkeeping

Industry Specific Tasks:

Same as above if you plan to do everything yourself or get help, here are some of the tasks necessary to operate a real estate business:

• Show homes and commercial/industrial properties for sale
• Close sales and do all paperwork
• Help customers qualify for a home purchase
• Advise homes and office areas that are expected to return high dividends
• Track the home sales market trends
• Track commercial real estate market trends
• Attend meetings, network
• Continue courses to stay current in the real estate business

Starting A Real Estate Business - Approximate Daily Hours Needed:

General Hours of Operation: - When your business is open - Generally, realtor office hours are standard retail hours: 9 a.m. to 5 p.m., however, it isn't unusual for you to work the most during after-business hours and on weekends.

Hours Needed to Prepare - Before Opening and After Hours Activities - Find homes that match client requests and schedule showing(s), work with lenders and bank institutions to close deals, follow up all calls and contacts.

Number of Employees Needed To Run A Real Estate Business:

Minimum Number of Employees -During the Start Up Phase: You can start this business yourself on a full-time basis.

Number of Employees - Once Your Business is Up and Running Successfully:

• Website maintenance
• Record/Bookkeeping
• General office
• Customer Service
• Mortgage filing, paperwork
• Loan qualification
• Home showings
• Open house hosting

Here some of the skills necessary to run this type of business other than the necessary business skills:

• Love working with people
• Have a keen interest in the real estate market
• Ability to find properties that match the owners
• Patience
• Ability to adjust and gauge finances during lean times
• Ability to handle money well
• Good negotiation skills
• Good sales and marketing skills

Starting A Real Estate Business - Licenses:

The first step to starting a real estate business and becoming a new agent is, of course, to get your real estate business license. To do this, you can jump right into educating yourself on the real estate business and take your license test, though it may be wise to apply for work as a realtor's assistant. This way, you can gain experience in the real estate business while making contacts.

Approximate Minimum Start up Cost:

Bare essential: - The average startup cost is $3,000-10,000.

Minimal exposure - There are several ways to advertise for free; however, most realtors work for an office-based realty company. The parent company, therefore, takes care of most of the advertising in various media types and outlets.

Necessary Equipment Necessary to Run A Real Estate Business:

Necessary Start-Up Equipment & Supplies:

• Computer
• Printer
• Cell phone
• Website
• Fax
• Camera
• Software (MLS) and bookkeeping and listing software

Supplementary Equipment: - Equipment or helpful products that you can acquire to once your business is off and running:

• Digital camera with ability to upload photos to the internet
• Camcorder for 3-D videos of homes for sale
• Performance portfolio; i.e. awards, recognition for sales
• Van for taking potential buyers to homes and office areas for sale

Monthly Expenses To Consider:

• Wages
• Phone/cell phone
• Internet access
• Permits, licenses (maintenance)
• Advertising/Marketing
• Electricity

Special Requirements and Considerations For A Real Estate Business:

• Find out all you can about the trends in the industry. Know your competition, in particular, their strengths and weaknesses. This will help you identify your competitive advantage. In other words, this will help you figure out what you can give your customers that they’re not getting from the other businesses. And keep from emulating the competition’s strategy. Instead, make the most of your own advantage points.
• Working from home as a real estate business owner can get a little cumbersome, so you're probably going to want to invest in some office space.
• A lot of the startup money to setting up your own real estate business in the form of an agency is going to be spent on advertising.
• Make sure your real estate business is listed in the phone book and get your name out there any way you can, through magazine and newspaper ads, and even billboards and television commercials, if that's in your budget.
• Even if you'd rather jump headfirst into running your own real estate business, it's a good idea to make friends in the real estate business, to attend seminars and conventions and such to talk with others in the real estate business, share tips and strategies, etcetera.

Pros And Cons of Opening A Real Estate Business:

The Pros of Running a Real Estate Business:

• You can set your own hours
• Real estate can be a very lucrative business
• Many real estate companies offer free training for licensing

The Cons of Running a Real Estate Business:

• Income can fluctuate dramatically according to the economic climate.
• It can be a 24/7 job
• Deals can be difficult to bring to fruition

Type of Customers You Need to Attract:

Seek out people and businesses considering relocating along with people who are looking to sell their homes to step up or down, or move to an area more economical and closer to their place of employment.

Real Estate Business Statistics:

Realtor.org provides up-to-date information on a variety of real estate statistics.

Sales of new single-family home rebounded strongly from May’s record low, an indication that the after-effect slump from the home buyer tax credit impact may be over.

While historically low mortgage rates are enticing, high unemployment keeps potential buyers on the other side of the fence. The future of the housing market depends on job growth.

New home sales inventory conditions improved as home builders had earlier cut back on building.

Mortgage rates continue to trend lower. The average 30-year fixed rate in the past week at 4.54 percent. This generational low rate is unlikely to remain for a long time. NAR believes it will top 5 percent by the year end.

A Real Estate Business Revenues:

The seasonally adjusted annualized New Home Sales level in June rose to 330,000. The number is 23.6 percent higher than the revised data for May, but is 16.7 percent lower than the same month one year ago.

Price growth is critical to the housing and economic turnaround. Stable prices enable homeowners to refinance and allow banks to lend the money that grows the economy and employment. This morning’s release suggests that price stabilization has a firm footing.

Real Estate Business Resources:

Industry-Specific Websites:

Realtor.org

Courses:

Real Estate Business Guide

NAR: About NAR: Careers in Real Estate

Equipment and Supplies:

Sanzo

Grace Real Estate Supplies

REMS

Real Estate Superstore

Britton

Business.com

Forums:

Real Estate Forum

Agents Online

Real Estate Discuss

Franchises:

Just Real Estate

About.com

GMAC

Associations:

National Association of Realtors

Books:

Amazon Listings

Software:

Agent Office

JadeTools

Web Content Solutions

Other:

Rental Software

Businesses To Related to a Real Estate Business:

• House-warming gifts
• House-warming parties (planning)
• Property research (demographics)
• Relocation service
• Hospitality industry
• Promotional item sales

12 Steps To Starting a Real Estate Business

Before You consider a Real Estate Business, see 16 Questions to Consider Before Starting a Business

1. Ensure A Real Estate Business is for You!

You have a choice as to what business you're going to start, so start one that's right for you. Getting into the right business can dramatically increase your success. Get into the wrong business and your success rate drops. Read Five Secrets to Getting into the Right Business for more information.

2. Understand How A Real Estate Business Operates

How can you run a Real Estate Business if you don't know much about the business? What if you run into an issue that you can't or won't deal with? Then what? You're in a business that you hate working in and that's a problem. See Understand How a Business Operates for more information.

3. Make Sure There Is a Profitable Market for Your Business

What's the use of starting a Real Estate Business that is not profitable? You'll be putting all your effort in something that can't support itself or you.  There are a variety of issues when it comes to setting the stage for profitability. See Tips for Identifying a Profitable Market.

4. Create A Business Plan For Your Real Estate Business

A business plan is a must for any size business because it helps you stay focused, see the big picture, and get funding. It's something that you create when you start your business and then update as your Real Estate Business evolves.  Read our free online guide on How to Write a Business Plan

5. Set up Your Business Team

Setting up your team includes finding the right employees and professionals that will help you run your Real Estate Business. 

You don't need to employ everyone you work with, but you will need a team of people you can depend on, which could consist of a lawyer, accountant, banker, and consultant, as well as professionals in your industry. See Creating a Business Team for more on this subject.

6. Get A Small Business Loan if You Don't Have the Money to Start

If you don't have the money to get started, then you'll need the necessary financing or you won't have the opportunity to start your Real Estate Business. This can be done as a small business loan, a personal loan, or other small business financing options.

For more on financing your Real Estate Business see our guide on Financing Your Small Business

7. Legalize Your Real Estate Business

In order to run your Real Estate Business legally you'll need to abide by government rules and regulations on the state and local level.

You'll need to do your research, determine what type of business (sole proprietorship, corporation LLC, etc.) to register, create and register your business name, and register your Real Estate Business with state and local authorities.

To go through the business registration process, see Chapter 6: Making Your Business Legitimate, starting with 6 Easy Steps to a Good Business Name.

8. Get Equipment for Your Real Estate Business

In order to run your Real Estate Business successfully and efficiently you'll need to acquire the right type of equipment. How can you run an online business without a computer? You can't! This is an important issue. See Acquiring Equipment for more on this topic.

9. Set up Your Accounting System

Running a Real Estate Business requires you to collect taxes, and report your earnings. So it's best to set up an accounting system in before you start your Real Estate Business. See Setting Up Your Accounting System for more on this topic.

10. Acquire Customers for your Real Estate Business

In order to exist, every business needs customers. Getting customers is one thing you'll need to be good at. If you can master the tasks of getting customers, it's just like turning on a cash machine almost any time you want. See  Acquiring Customers for more on this topic

11. Prepare To Accept Money

You'll need a way to accept money, you can't depend just on cash or checks. You'll need to accept plastic: Visa, MasterCard, and American Express. To do that you'll need to apply for a merchant account. See Setting Up a Merchant Account for more on this topic.

12. Insure Your Real Estate Business

Make sure you have the proper insurance for your Real Estate Business. Without the right coverage you could lose everything you've worked for. For tips on insuring your Real Estate Business, see our free online guide:  Insuring Your Small Business.

Real Estate Business Issues:

Estimating Startup Costs - Find out if you're forgetting something

Business Location - Choosing A suitable one For Your Real Estate Business

Build or Buy A Business? - Buying an existing Real Estate Business

Business Builders For Your Real Estate Business:

Starting A Business - Free Online Guide

Business cards for Your Real Estate Business

Business Plan for Your Real Estate Business

Business Insurance for Your Real Estate Business

Small Business Loans Finance Your Real Estate Business

Small Business Marketing For Your Real Estate Business

More Business Ideas:

Business Ideas