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How to Start a Real Estate
Business

The world of real estate is an exciting one to get into.
Whether you want to help people purchase their dream
home, invest in and develop real estate,or specialize in
commercial or industrial properties, there are plenty of
opportunities to make great money and love your job
while owning a real estate business.

The world of real estate is an exciting one to get into.
Whether you want to help people purchase their dream
home, invest in and develop real estate,or specialize in
commercial or industrial properties, there are plenty of
opportunities to make great money and love your job
while owning a real estate business.

In this guide we’ll explore everything you need to do to setup your real estate business and maximize your chances for success. We’ll cover:

  • Understanding the world of real estate
  • Questions you should ask to see if you’re ready to start a real estate business
  • Choosing the best legal structure for your new organization
  • Basic rules and regulations you may need to follow
  • Information on taxes and finances for your real estate business
  • Hiring employees, marketing and administration
  • Resources for your real estate business
  • And much more

Understand the World of the Real Estate Business

Let’s start by exploring the world of real estate and understanding what the opportunities are.

Key Real Estate Business and Background Data and Statistics

$220T

Nearly estimated value of property globally.

nearly three times the yearly U.S. GDP. Around three quarters of this is residential.

$160B

The combined annual real estate business revenue

From the U.S. market research

1.1M

People employed in real estate businesses in the US

$50K

The average annual salary for real estate in the U.S.

And can go as high as $80,000

  • The industry has been growing by 9% year on year over the last five years.
  • The sale and rental of residential property accounts for around 72% of real estate business income in the US.
  • High corporate profits are increasing opportunities in commercial and industrial real estate
  • Rising home prices directly contribute to better commissions for realtors
  • Revenues in the real estate business market are expected to continue to grow over the next few years
  • The Bureau of Labor Statistics has a wealth of information on real estate businesses

This all points to the real estate industry being ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your real estate business. Incfile is here to help you form your real estate business and understand the ins and outs of owning a real estate company.

There are two main ways you can take advantage of real estate business opportunities.

Start a Real Estate Business Helping Others to Buy, Sell, Rent, or Manage Property

There's plenty of opportunity in this space, from a residential, commercial or industrial realtor to property management, rental and leasing specialists. You can explore your local market to find niches you can capitalize on.

Invest in Real Estate as a Way to Make Money

Your other option is to invest in real estate. This might be through buying a property, renovating it and making improvements, then selling it on at a profit. Alternatively, you might buy up a number of units and rent them out or make money in some other way such as vacation accommodation or AirBNB.

Understand Your Real Estate Market

If you want to get into the real estate business yourself, you need to decide the specific part of the industry where your business could be most successful. You have a few different choices:

Sale and purchase of residential property

Helping new and existing homeowners find and transact for a new property

Leasing and rental of residential property

Arranging for the rental of residential property as a rental agency or individual landlord

Sale and purchase of commercial or industrial property

Working with other businesses to locate and arrange for transactions on property for profit-making purposes

Leasing and rental of commercial or industrial property

Arranging for the rental of business property

Real estate property development

Building or upgrading existing residential or commercial property to resell at a profit

Real estate property investing

Investing in commercial or residential property and making income from rental or resale.

Real estate property management services

Carrying out real estate property services like financing, maintenance, dealing with tenants and the like

Once you know the type of real estate business you want to run, you need to identify the size of the market and number of customers in your local area. Explore how successful and volatile the property market is and establish the likely number of individuals or businesses buying or selling real estate on a yearly basis.

See how many competitors there are in your local real estate markets — a lot of competitors isn’t necessarily a bad thing; it could mean there’s plenty of demand. Get involved in local real estate discussion groups and ask questions about your regional market. You can even offer to take other real estate agents or real estate business owners out to coffee to ask them questions about what it's like to run a real estate business in your region.

This initial time spent fact finding will make sure you're pursuing a viable business opportunity.

What Your Real Estate Customers are Looking For

When it comes to real estate, your customers are spending a lot of money on their property and your commission. You need to demonstrate true value; here’s how to do that:

Provide a complete, end-to-end package

Keep everything as simple as possible for your client.

Be very proactive in your communications

Buying and selling property is very stressful for most people, so active communication from you will give them peace of mind.

Offer extensive local knowledge

A good realtor will have an excellent understanding of their local market, including desirable areas, pricing and more.

Deliver exceptional value

Clients are looking for quality, accuracy, speed and reassurance when it comes to dealing with property.

If you can get these in place and explain your unique selling points, you'll have a good chance to stand out from the crowd.

Questions to Ask Before You Start a Real Estate Business

Is Real Estate Entrepreneurship For You?

Running a real estate business isn't for everyone - it can be a stressfull experience! You will need to combination of resillience, deal-marking salesperson skills and the ability to deal with multiple clients and high-pressure deadlines. You always need to know what's happening in your local market and you'll spending a lot of time on the road.

You will often be working long hours or on weekends, especially as you're starting your new business. You need patience, chutzpah and the ability to juggle multiple tasks to succeed. Plus, you have to be prepared for the income to come in all at once, or sometimes not at all. After all, all your income could be based on whether or not you're making a sale.

You should also choose the type of real estate business you want to go into. Will you focus on a transactional real estate business as a realtor or rental specialist, or will you go into real estate investing? This will likely depend on your skills and approach, together with how much capital you have to start your business.

What Are the Main Skills, Expertise and Experience to be a Successful Real Estate Entrepreneur?

If you want to be successfull in the world of real estate, here's what you need.

  • Excellent interpersonal skills: You will need to deal with clients, buyers and sellers all the time. Great interpersonal skills and the ability to handle clients well are essential.
  • Powerful time and task management: You will likely be juggling multiple viewings and deals together with managing your business. You must have a good way to manage your time, tasks and appointments.
  • Strong talent for negotiation: Negotiating house price offers is an art. You need to have great deal-making and negotiation skills and understand exactly what the buyer and seller want to get out of the real estate transaction.
  • Range of background skills and experience: You will also want an excellent knowledge of your local market, an understanding of the legal nuances of buying and selling and relationships with mortgage providers and other real estate support professionals.

What Are the Main Challenges for a Real Estate Entrepreneur?

Your main challenges will likely involve dealing with real estate property negotiations, managing a very busy schedule and keeping your clients happy. You will likely have a very full voicemail and email inbox and will need to put aside plenty of time for communications.

You will also need effective marketing, especially if your local real estate market is very competitive. Look into partneringwith other related businesses for mutual benefit.

What Does a Day in the Life of a Real Estate Entrepreneur Look Like?

Each day is going to be different, but you'll likely be doing the following:

  • Reviewing new property listings for sale or rent
  • Looking at recent transactions and property pricing trends
  • Dealing with calls from buyers and sellers
  • Negotiating deals between different parties
  • Arranging for contracts and legal formalities
  • Dealing with viewings and offers
  • Running your business such as taxes, bookkeeping, scheduling, emailing and more
  • Talking to lawyers and advisers
  • Arranging listings on websites like Zillow and Trulia
Check out our additional guidance in understanding if a real estate business is right for you. If this blog post, we'll help you analyze if your real estate business idea is a good one, conduct market research and build a business plan.

Choose the Right Business Structure and Register Your Real Estate Business

Now that you have all the background information for your real estate business. That starts by choosing the right structure or "legal entity" for your business. In the U.S.., there are four main business structures. They are:

Sole Proprietorship

This is the "default" business
structure and is what your
business will be if you decide
not to create a more formal
structure. We don't
recommend this type of
business as it doesn't give
you the legal protections you need.

Limited Liability
Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your real estate

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

This is a more complex type of
business and isn't generally
recommended for smaller
organization.

C Corporation

These are the largest and most
complex types of businesses
and are far more than the
average entrepreneur or
business owner will need.

Special Considerations for Setting up a Real Estate Business Entity

As a real estate entrepreneur, the standard or Series LLC is probably best for you. They do not have a lot of administrative overhead, and still provide you with good liability protection. Remember that if you are operating your business across state lines, you will need to setup an LLC in any state where you do business. If you're in business with other real estate agents, it's vital to have a good operating agreement to ensure ownership, profits, decisions, and control are all documented and agreed to.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide. If you've still got questions, we've answered them to help you choose the right business structure.

In most cases our recommendation would be to create an LLC, We've got a complete guide to everything you need to do and we can set one up for your digital nomad business. LLC formation dose vary from state to state, but we've got you covered, wherever you are.

Setup & Maintain Your Real Estate Business

Once you've legally created your real estate business you’ll need to get some other things in place.

Business Location

Where are you going to run your business from? Will you work from home, get an office, use a shared working space or something else? As a realtor, you will almost certainly need a “shop front” where clients can come and see you.

Permits & Licenses

Running a real estate business comes with certain rules, regulations and legalities you need to be aware of. Incfile can conduct a Business License Research package for you, or you can take the time to do the research yourself. Check out our blog post on real estate business legalities to follow for more information.

Finances & Taxes

What kind of bank account will you get? And how will you pay your business taxes? These are all important things to consider so your real estate business stays in the green.

Marketing

Do you need to build a website? Should you have a logo designed professionally? Will you need business cards? A realtor is likely to need all of these things.

Equipment

What equipment do you need to manage your real estate business? What about transportation or specialized equipment? Make sure you understand exactly what you need to spend so you can write it off against business expenses.

Processes

What business processes are you going to use to run your business efficiently and effectively? You should come up with good processes for negotiation, managing legal details and more.

Employees

Do you need to hire employees to help you out? Read our 10 must-know tips for hiring for your business.

Software

Is there software that can help you manage and market your business? Focus specifically on scheduling, customer relationship management, document management and task management.

Business Maintenance

— Most states require businesses to file an Annual Report report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. And, your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.

Our Start a Business Checklist will also help you get your real estate business going in the best possible way.

Conclusion

There you have it — our complete guide to starting a successful real estate business. We hope this has given you all the information you need to think about, plan, start and manage a successful venture. Remember, we can help you with creating and maintaining your real estate business

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