Starting a real estate agency or firm is a dream come true for many businessmen and women. However, we all know that you need to be rich in the first place to start dealing with homes and expensive condos business.
Except that it’s not! It’s completely possible to start your real estate business with little money, and today I’ll be teaching you my exclusive tips on how to do it. Stay until the end of this blog post to learn how to do it yourself and also subscribe to my newsletter for more incredible real estate tips like today.
Real estate businesses are some of the most profitable types of business, so it’s obvious that many people would like to be part of them at some point. If you have both the motivation and the talent to help buyers and sellers navigate the process of buying one of the most important things in their life, their home, then this is probably good business for you.
Remember that in every type of business, you need actually enjoy what you’re doing if you’re going to be doing that for a while, and home or any kind of real estate purchase is a very expensive one that usually requires people thinking a lot on where they are spending their money.
The flip side is that the real estate market is one of the biggest ones in the world. According to the National Association of Realtors, 5.34 million existing and 667,000 new homes were sold just in 2018 across the world.
Before you begin growing your real estate empire, there are some things you have to bear in mind. Real estate is very competitive, and there’s a chance that your area has quite a few popular real estate brokers or companies that are already established in the market and growing more every day. Since real estate is so varied, specializing or getting to know one or two specific fields will help set you apart from the competition, especially the bigger firms that have smaller departments in charge of specific real estate areas.
You need to know the towns and the surrounding areas of where you’ll be helping your future customers buy.
Put yourself in the shoes of a client for a moment. You’re moving to a new sector of your country, maybe a different region where everything is worlds apart despite being in the same country. What do you know of it? Probably only what you’ve found from a quick google search, but nothing too accurate really. That’s where real estate brokers come in: they help you make that decision of investing a big amount of money or taking a loan for several years in a sector that you probably have no idea about, but they’ll make sure to get you in the know as fast as possible with the most accurate and up to date information.
Some quick facts you should check about the area where you’ll be managing properties is the average cost of living and rent, the educational possibilities such as nearby schools both public and private, entertainment such as nightlife or nearby activities for kids in families and any other benefits of living in that area.
But really, as a businessman or woman, you need to know what skills set you apart from other brokers. Is it your deep knowledge of the area..? Your persuasion skills? Your ability to spot and score good deals? What’s your unique factor?
Once you’ve established that, you need to find a niche for your real estate business. Maybe you want to focus only on rental property management, or maybe you want to be the resource for landlord or tenant laws in your local area.
Some common niches in real estate include the residential niche, the resort and vacation homes, income properties purchased by real estate investors, condos, property management and rental property. As an agency or broker, you should also decide if you want to be a listing agent and help the sellers specifically, or represent the buyers instead.
Make sure to purchase your business insurance just in case and do so before you even start the business altogether, lest it be late and you incur claims. Business insurance can cover property damage, theft, intellectual property lawsuits, and other incidents. A claim can be very dangerous for a small business, so you need to protect yourself and your business by avoiding all of these. On top of that, transactions in real estate are much different than other businesses, as these include advice and large amounts of money that could bring your business underwater if you don’t have insurance.
Despite starting this business with little capital in the first place, liability insurance will protect you against possible claims, as your clients depend on your management skills and your expertise. Should something go wrong, you might end up with a client suing you and your business falling apart almost overnight.
Next, you should know that real estate business sales are constantly shifting depending on the economy and current world events. You might have great sales on a season and then experience low ones in another. Make sure to understand how much income you need from your business to cover the times when things are grim.
Next, we have the fun part: purchasing properties and making money. You need a lead generation strategy that will bring clients to you consistently. Find clients or agents that are looking for a property and establish your database of interested clients. Search for sellers on the internet and once they are identified, sell your leads to the sellers. That will generate your first profits before purchasing any properties yourself.
You can also benefit from partnering with a real estate investor to open your opportunities for business. Many investors want to invest money in real estate, but either don’t have time or they don’t want to handle all the administrative or managerial works related to property. Partner with an investor and you’ll be able to run your real estate business successfully while the investors focus on investing on the properties themselves.
The next rule is one of the golden standards of real estate investment: other people’s money for purchases. This is known as investment leverage and consists of the investor using borrowed funds put in property deals as their leverage. It can be risky but pull it off and you’ll be able to invest in properties faster if you don’t have the cash to buy them at hand. You can borrow money against the equity of your existing property. You can then invest this borrowed money to buy a new property. This way, you can start your property business by using the borrower’s money and then start profiting from the house itself, be it by rentals or flipping the property.
Another strategy could be selling a developer’s property if you want to start your property state business instead. Remember that housing and residential projects are coming all the time and you can contact the developers and sign contracts to sell their properties, which you can also find online with a quick google search. With this business strategy, even if you have no cash, you can advertise and sell the developer’s properties and earn a commission on each closed deal. The commission or cut varies from project to project and also depends on the type of property sold.
These commissions increase depending on the value of the property at hand, so obviously luxury properties will be much more valuable and provide you with a better commission than a standard property would.
For all of these strategies to work out, though, the common denominator is performing your due research. Investigate what’s trending and what markets you can start investing in your local area to start earning sales soon. If you find out that rental properties are in high demand nearby, then you can implement any of these strategies for rental properties to maximize your profits.
At the end of the day, with enough persistence, motivation and ambition you can turn a small real estate business from your computer into a full-blown agency with management properties.
So, what are your thoughts on these tips for starting your real estate agency with low capital? Let’s start a discussion in the comments: ask me any questions you might have from this article and I’ll answer them to clear any doubts. And if you enjoyed this, make sure to leave me a like, share this with your friends and also subscribe to my newsletter for more great real estate tips like this one. I hope you enjoyed it, and I’ll see you next time!