Is Starting a Real Estate Business Right for You?

0

Is Starting a Real Estate Business Right for You?

Is Starting A Real Estate Business Right For You?

Before you start your real estate business, there are a few key areas you need to focus on. You will need to establish if there’s a demand for your real estate business services, look at potential benefits and pitfalls, understand how your business finances might look and ensure everything is in order.

In short, you need a business plan — here’s how to think about your real estate business idea.

1. Analyze Your Real Estate Business Idea to See If It’s a Good One

Think about your real estate business idea, the skills you have and whether you can transform your concept into products and services you can sell. You can start doing this by carrying out a SWOT analysis — look at your strengths, weaknesses, opportunities, and threats.

  • Strengths — your skills, experience, expertise, insight and anything else that can drive business success. If you’re an excellent negotiator or have a background in real estate, that’s a great start.
  • Weaknesses — any areas where you lack skills and experience or you believe there may be an internal issue with your real estate business idea, products or services. Take a long hard look at the skills a real estate entrepreneur needs and see if there are any gaps.
  • Opportunities — areas where your real estate business can grow, get new customers or deliver products and services your clients are likely to need. We covered some of these services above, but there are plenty of other unique opportunities out there.
  • Threats — external threats from competitors, changing marketplaces, rules and regulations. Your biggest issues are likely to be the current and future state of the real estate marketplace in your area and the number and quality of your competitors.

A SWOT analysis is an excellent way to start thinking objectively about your business. Here’s a great guide and worksheet for performing your own SWOT analysis.

2. Do Market Research and Validate Your Real Estate Products and Services

Before you launch your real estate business, you need to understand if there’s a demand for what you’re selling. That means carrying out market research and “validating” your products and services. Here’s how to go about it:

  • Look at the many market research reports for real estate businesses — locally, regionally or nationally. Zillow is a great place to start.
  • Look at who your competitors are in the space — having competitors is a good thing as it shows there’s a market. Find out who the most popular realtors are in your area and see if you can emulate and improve on their services.
  • Talk to clients — speak with potential customers to understand what they want from your real estate products and services. Find out what they are not getting from other realtors.
  • Identify your business’s unique selling points (USPs) — these are the area that will set you apart from competitors and encourage customers to come to you. You might have better commissions, a higher-quality service or some other special feature.
  • Get involved with business communities and discussion groups — ask questions about the local real estate businesses. You can find links to some excellent discussion groups later in the article.

3. Understand Your Real Estate Business Model and Financial Projections

All businesses need a business model — the way you will generate sales, provide services and make money. Think about your business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

You will also need to look at financial projections for your real estate business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself and others?

If you can, try to plan your revenue out for the next month, three months, year and two years. Real estate revenue is highly tied to property prices and interest rates, so you will need to look at macro-economic trends.

4. Write a Business Plan for Your Real Estate Business

Finally, you should put your business plan together. Business plans do vary slightly, but they should cover the following areas:

  1. An executive summary with the most important points from your business plan
  2. Your goals and what you hope to achieve with your real estate business
  3. A description of your business, background information, and context
  4. A market analysis and likely demand
  5. An overview of how your business is structures
  6. Your business model
  7. How you will market and sell your offerings
  8. Financial projections, revenue, and profitability
  9. Appendices

We’ve got the perfect guide to writing your business plan.

Want to Know All the Steps to Start Your Biz? Download Our Free Checklist.
0
Paper List

Like What You're Reading?

Get fresh monthly tips to start & grow your LLC.

Related Articles

  • 32 Side Hustles from Home That Pay More Than $100 an Hour
  • 15 Items You Can Easily Flip for $100-$5,000 in Profit a Month
  • A Giant List of Self-Employment Ideas
  • 11 Out-of-the-Box Side Hustles for Women to Make an Extra $1,000 a Month
  • How to Pay Yourself as an LLC Owner
  • What Is an LLC? Super-Simplified Infographic
  • So You Moved? Follow This Guide to Moving Your LLC to Another State
  • If You're Not a U.S. Citizen, Can You Get an EIN for Your Business?
  • Understanding DBAs and How They May Be Beneficial to Your Small Business
  • 15 U.S. States with the Lowest State Fee to Start a Business Today
  • Are Non-U.S. Residents Allowed to Own a Corporation or LLC?
  • Need a Physical Address for Your Business?
  • 5 Virtual Address Services for Your Small Business
  • How to Create and File an LLC for Free
  • LLC vs. S Corp: Which Is Right for Your Business?
  • S Corp vs. C Corp: Differences and Benefits of Each
  • ​Do LLCs Get a 1099 During Tax Time?
  • Series LLC vs. LLC: Which One Do You Need?
  • PLLC vs. LLC: What You Need to Know
  • 7 Home Business Ideas That Double as Tax Write-Offs