Are you struggling to start up your real estate business?
Many people ponder the same exact question.
Figuring out where to start can often seem like an overwhelming task!
That is why you should start the process one step at a time.
With these five simple steps, you will be ready to jump-start the real estate business you have always dreamt of!
Save your time and energy by following this proven, consistent process to start your business.
- How Profitable Is Owning a Real Estate Business?
- What You’ll Need to Start a Real Estate Business [& Associated Costs]
- Why You Should Consider Starting a Real Estate Business As a Side Hustle
- How to Start a Real Estate Business in 5 Simple Steps
- Things to Consider When Building a Real Estate Business
- Inspiration: Real Estate Business Ideas
- Frequently Asked Questions
- Similar Businesses to Consider Starting
- Wrapping Up
How Profitable Is Owning a Real Estate Business?
Real estate is a lucrative industry, and many people find financial freedom by starting their real estate businesses.
In May 2021, real estate brokers earned a median annual wage of $62,010.
The lowest ten percent of real estate brokers earned less than $30,470.
At the highest ten percent level, they earned more than $176,080.
Those in the real estate business have the ability for growth and advancement within their field of expertise.
However, property, real estate, and community association managers earned a median annual wage of $59,230 per year, which amounts to $28.47 per hour.
These occupations are expected to grow by 3% from 2021 to 2031.
Related: an overview of becoming an independent real estate agent
What You’ll Need to Start a Real Estate Business [& Associated Costs]
Having money set aside for your business start-up is necessary for your business’ success.
When forming your business entity, there are a few notable costs.
- LLC & Corporations: Costs will vary depending on your state. Filing fee costs can range anywhere from $50-$500.
- Small Business Insurance: Insurance costs are typically $1,200 per year, but they can range anywhere from $500-$2,000.
- Permit & Licence Fees: Your licensing and training requirement will vary depending on your state, and you may need to pay associated fees that can range from $50 to $700.
- Lawyer Fees: If you choose to hire a lawyer to assist you in your business start-up, you will need to pay an hourly rate typically between $150 and $350 or a flat fee between $500 and $2,000.
- Equipment & Supplies: Common expenses include printers, office furniture, computers, software, internet service, and telephones. Costs are variable.
- Office Space: It is optional whether you choose to operate from a home office, rent an office space, or buy your building. You can expect to pay somewhere between $0 and $5,750 monthly.
- Marketing: It is recommended to keep these expenses below 10% of your total budget.
- Website Development: Hiring an IT expert to design a clear, professional website can cost anywhere from $2,000-$10,000.
- Employee Payroll: If you choose to take on some team members to alleviate some of your overhead tasks, you will need to pay the associated costs.
- Gas: workers in real estate do a lot of driving in their daily tasks, and these costs will vary.
Do I Need a License or Certificates to Start a Real Estate Business?
A real estate license is necessary to start your real estate business no matter where you live.
Specific licensing requirements and fees vary according to your state.
For example, Virginia requires you to complete 60 hours of pre-licensure education, submit fingerprints, pass a background check, pass the real estate licensing exam, find a broker to sponsor you, and complete an application.
Why You Should Consider Starting a Real Estate Business As a Side Hustle
Working in the real estate industry opens the door to many different opportunities that can help you earn some extra income while also offering you the flexibility and independence you desire.
Common real estate businesses that are perfect as a side hustle include:
- House Flippers: You can hire handymen to rehab a house, and then you can sell it for immediate payment and a possible large profit.
- Real estate agents (part-time): Agents set their own schedules and earn a 3% commission or more with every home sale.
- Single-family/vacation rentals: Be your own boss with this popular side hustle! There are various opportunities in the rental industry for individuals to rent out their homes or purchase a home as an investment property.
- Wholesalers: Wholesalers receive a contract from the seller of a specific property and sell it on their behalf.
How to Start a Real Estate Business in 5 Simple Steps
If you are an entrepreneur looking to start up your real estate business, you will take on a few risks during the process.
Costs are going to be quite high.
A well-planned and prepared business grows rapidly!
You will face a lot of competition in the real estate market, and that is why having an organized business model is crucial to your success.
Here are five steps for developing your business:
1. Find Your Niche
Decide what area you would like to specialize in to differentiate yourself from the competition, whether it be residential real estate, condos, vacation homes, rental properties, property management, etc.
Focusing on a specific demographic can further narrow your scope within your target market.
For example, focusing your business on millennials looking to buy their first home requires specific marketing techniques.
2. Set Specific Expectations and Goals
Map out any ground rules and plans to prioritize.
This means setting specific financial, professional, and personal goals.
These goals will influence all your future decisions.
Set expectations of where you want to see your business in one year, five years, and even ten years.
Then, set short-term goals that will enable you to achieve your long-term goals.
Come back to them every so often to keep yourself accountable.
3. Map out Your Business Plan
Before formulating a business plan, conduct extensive, in-depth research surrounding your target market.
Learning the principles of starting a business is crucial to your success.
Research your local competitors and discover successful business strategies.
Then, write a business plan that utilizes any resources you plan to employ.
It doesn’t have to be long, but it could include a summary, business description, market research, management and personnel, and financials.
4. Organize Your Finances
Ensuring your finances are in order will help you build a solid foundation for your real estate business to grow.
Gather information on your credit report and financial history before approaching your lender.
Talk to your lender about which financing route will work best for your business and become familiar with your options.
Budget your daily business expenses, set aside savings for unexpected expenses, and formulate your marketing budget.
5. Choose a Legal Business Structure
There are four main types of business structures: Limited Liability Company, Sole Proprietorship, Partnership, and Corporation.
If you do not choose to form an LLC, you will default to a sole proprietorship.
You may want to form an LLC because it will protect business expenses from interfering with your personal finances.
This business structure safeguards you from personal liability when owning and purchasing real estate.
Things to Consider When Building a Real Estate Business
To hit the ground running, there are a few aspects of building your business that you should familiarize yourself with.
You can certainly run your real estate business yourself depending on which business type you choose to pursue.
However, if you wish to expand your business to take on more responsibility and tasks, you will need some extra help.
These responsibilities include:
Creating a Marketing Strategy
Getting your business name out into the community is crucial to your business launch and growth.
You should develop a website to form an online presence.
A clear, professional website will help your clients build a positive first impression.
Online marketing through social media, email, and SEO techniques will get your business name into the public eye.
Building Your Network
Building a network with both your clients and other local businesses will help your business attract good, recurring clients.
You can also use posters, direct mail, and community events to grow your network.
Partner with local businesses in community projects to establish credibility. Hand out your business card in social spheres to attract new clients.
Inspiration: Real Estate Business Ideas
Addressing your target demographic in your business name will help you attract the right clients.
Here are a few ideas for you to consider:
- Rental Management Company: A business that manages property owners’ rental units, whether they be commercial or residential (short or long-term). Business owners receive a cut of gross revenue for managing maintenance, tenants, and payment processing.
- New Listing Photography: A business that provides photography services for new homes on the market. Photographers set their own schedules and work at their own pace.
- Airbnb Home Staging Business: A business that provides elegant, stylish furnishing to aid hosts as they prepare their Airbnb. Stagers express their artistic ability while helping hosts attract clientele.
Frequently Asked Questions
Here are a few of the most common questions about starting a real estate business and their answers.
Is it Hard to Start a Real Estate Business?
Starting a real estate business requires minimal education and training.
A real estate business is one of the easiest businesses to start.
Even though housing is costly, financing is typically fairly easy.
Housing is always in demand because it is an essential part of life.
What is the Most Profitable Real Estate to Own?
Some of the most profitable investments are also the most common.
They include commercial real estate, fixer-uppers, and residential rental properties.
Owning multiple rental properties allows you to receive consistent passive income.
Similar Businesses to Consider Starting
There are many different profitable businesses that might be right for you.
It may be worthwhile to ask your local business owners questions regarding their industry to investigate what type of business you like.
Here are some to consider:
- How to Start a Trucking Business: If you love driving trucks and coordinating complex operations, owning a trucking business may be right for you.
- How to Start a Boutique Business: Owning a clothing and accessories boutique is for those who obsess over fashion.
- How to Start a Laundromat Business: Laundromats receive year-round business from a diverse customer base.
Starting a real estate business can be done in only five simple steps.
These steps and considerations will help you construct business goals and cultivate relationships with your clients.
Show your clients you care by serving their real estate needs and providing excellent experiences with your business!