Research & Refine your Business Idea
If you have excellent people skills and want to make a name for yourself, the perfect career choice is to enter the real estate market. But, how to fulfill your dreams in such a competitive market? Don’t worry, you’ll find all the answers in this article.
When starting a real estate business, you should focus on building a solid foundation by planning, researching, and refining your business idea. Foundation is critical if you want to survive in this harsh market environment.
The first step is to do extensive market research. This will let you know whether your idea will work in the current market and which specific niche will be a good choice for you. Once you have done your research, you’ll be able to pick a niche, preferably a low competitive one.
Your niche could be anything that’s within the framework of real estate. For example, you may specialize in any type of homes like downtown, country, single family, townhouse, suburban, vacation homes, condos, etc. Alternatively, you can focus on commercial properties or the trendy green and eco-friendly properties.
The niche you’re in will determine your target audience and help you become an expert in that specific market. This will eventually lead to more potential clients since you’ll be the one in town to contact for that particular type of property.
Next thing you should think about is your real estate office space. Regarding this, you have two options: rent an office or make a home office. Budget-wise, you may want to start at home, and then, once you build a good reputation, you can find yourself a real office.
Creating your Business Website
Did you know that almost half of the buyers first look online when searching for a home? – Maybe yes, maybe not. But, I’m sure that you don’t want to lose 50% of your potential clients just because you don’t have a website for your business. Hence, online presence plays a huge role in becoming successful in the real estate market.
Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.
And, remember that if your budget allows you to have an actual office and you decided to open one, include Google Map address of it on your website. Thus, when a prospective buyer looks you up on the Internet, he/she can easily find out your location. To include a map on your website, all you need is a simple WordPress Plugin that will display a map on any page you want.
Marketing Your Business
Now that you’ve created your business website, it’s time to start marketing your business and attract your targeted audience. Fortunately, there are plenty of advertising strategies that will help you achieve your goal.
Social Media marketing is probably the most effective strategy you could apply since, as we already mention, people do search online and they spend hours on social media too. For that reason, you’d better create business accounts on several social media networking sites and post your listings there with a link back to your website.
However, just posting isn’t enough. Focus on sharing informative and relevant content accompanied by high-quality photos. Remember that even an untrained eye can tell the difference between a professional photo and a quick snap.
Another way to use your website to advertise your real estate business successfully is to add live chat. Being available when your potential clients need you will help you build a reputation. This will also help you grow conversion rate on your website. With live chat, you’ll enable visitors to ask questions and get real-time answers. Thus, you’ll build a relationship with your prospects and improve their user experience.
Next, you can use print marketing such as business cards, flyers, brochures, and even newspaper advertising. Which one to choose usually depends on your budget, especially the newspaper advertising because it can be quite costly. Regarding the others, you can print and distribute them around town. For example, you can put them on bulletin boards in popular places like business centers, restaurants, cafes, shops, etc.
Setting Goals and KPI’s
Key performance indicators, as you can guess by the name, are metrics that will help you gain insight into the performance of your business. In other words, by following and understanding these metrics, you’ll be able to set realistic goals and know what do you do well and what you should improve.
The real estate industry’s most critical key performance indicators are:
- Average commission per sale
- Commission margin
- Number of properties advertised
- Sold homes per available inventory ratio
- Year-to-year variance on average sold price
- Number of days on market
- Number of visits per real estate sale
- Percent difference between asking and selling price
- Number of conversations over a number of website visits
- Top conversion page exit
- Traffic source percentage
Plan your Finances
One of the best things about starting a real estate industry business is that you don’t have to have a huge amount of budget when getting started. Simply put, the startup cost to launch in real estate is quite low. In general, your starting expenses will include only marketing and an office rental if you chose to have a customer facing office.
On the other hand, the disadvantage of starting without lots of money is not being able to start cash flowing immediately. It will usually take you about a couple of months before you get paid. This means that if you want to go all-in at first, you should have some money aside.
However, if you don’t have your own money there are several options to explore when it comes to funding your real estate business:
- Angel Investment – Groups of people or individuals who invest their own money for an equity share are called angel investors. Luckily to you, they are likely to invest in startups.
- Bank Loans – In general, banks do not invest, but they can give you a loan or an overdraft. Loans are more secure while overdrafts tend to be more flexible.
- Crowdfunding – This is similar to angel investment, but doesn’t always have to be equity-based. However, you should usually pay a flat interest to the crowdfunding platform.
Still, even though you may get the finances needed, it doesn’t mean that you should succeed. Namely, when people start making money, they are quite likely to mix business with pleasure which won’t lead to increased revenue.
Hence, it’s crucial to open a separate bank account for your business only and divide your personal and business money. This will allow you to make successful business plans because you will have a detailed report on what your monthly expenses and incomes are.
What’s more, many tools may help you keep track of and manage your finances efficiently, such as:
Adopt an Entrepreneurial Mindset
You’ve set up your business and now what? Expect that you will make money just like that, effortlessly? No, that won’t be the case for sure. Indeed, you should always try to improve yourself and enrich your knowledge if you want to become a successful entrepreneur.
Several sources can help you adopt an entrepreneurial mindset. For example, here’s a list of the best entrepreneurial books to help you grow and keep focused:
- Think & Grow Rich – Napolean Hill
- The ABC’s of Real Estate Investing by Ken McElroy
- The Challenge by Robert G. Allen
- Real Estate Loopholes by Dianne Kennedy, Robert T. Kiyosaki & Garrett Sutton
- Build a Rental Property Empire by Mark Ferguson
- The Millionaire Real Estate Investor by Gary Keller
- The Book on Rental Property Investing by Brandon Turner
- More Than Cashflow: The Real Risks & Rewards of Profitable Real Estate Investing by Julie Broad
- Real Estate Finance and Investment Manual by Jack Cummings
- Commercial Real Estate Uncovered: A Handbook for Real Estate Finance and Investments by Jay Rollins
and also some podcasts:
- Kevin & Fred’s Next Level Agents Podcast
- Harvard Business Review Ideacast
- Hack the Entrepreneur
- The Gary Vee Audio Experience
- Tom Ferry Podcast
- Unlisted with Brad Inman
- Bigger Pockets Podcast
- Caravan Confessions
- Agent Caffeine
- Real Estate Coaching Radio
Other things to consider when starting your real estate business
One of the most convenient things when it comes to starting your own real estate business is that you are only an exam away from it. In other words, in most states, you should just pass one exam to become a real estate agent.
So, once you get your qualifications, it’s time to make your business legal. First, you need to choose a name and register your business in your town/ city so that you can operate and apply for a Federal Tax ID.
At this point, you should also have chosen your ideal business structure from the several options like Sole Proprietorship, Partnership, Limited Liability Company, Corporation, etc. Maybe you’d like to consult a law expert before making this decision.
Accounting & Bookkeeping:
In the end, you should also think about accounting and bookkeeping. A great option is to use the accounting software Xero which is extremely easy to use and offers numerous benefits:
- Accessible from anywhere
- Offers up-to-date view of the business
- Paperless, decluttered desk and office
- Efficient invoicing, reporting, payroll, etc.
And, another great thing is that being a real estate agent is a single man job. However, if you do need an assistant, once you’ve built a reputation and a brand of your name, you can always find ambitious and qualified people on Upwork.