Founding your own business to invest in real estate is not a simple matter, but if you prepare yourself correctly the rewards can be immense. There are many resources available for small business owners that can help you to learn the ways you can avoid the pitfalls and maximize your profits. The tips below have been created to help you become successful in the real estate business, from planning to establishing to expanding.
What does a real estate business do?
Real estate businesses are concerned with the purchase, sale, management, running, and/or investment in land and/or buildings
Starting a real estate business
If you’re thinking of starting your own real estate business, you must be aware that it is not a simple matter. As with starting up any other business, you really need to put in the work to do your research properly and come up with a detailed workable business plan before you begin to put your plans into action. You should follow the steps below and don’t be tempted by shortcuts.
Establish your business goals
Before you set off on your journey, you need to think about where you want that journey to go. You must consider what you want to achieve personally, professionally, and financially, because your goals will have a significant influence on the way you establish and expand your business investing in real estate. A good place to start is by thinking about what position you want to be in in five years, in ten years, and in fifteen years. Once you have established that, start to think about the strategy you can implement now to help you reach these goals. This is one of the most important parts of the establishment process. Having targets will keep you focused and inspire you to take effective action.
Do your research
You cannot hope to be successful in business if you don’t research your chosen industry in the most thorough way possible; you need to identify your market, the place you will occupy within it, and who your competitors will be. There are several different strategies you could use: some first timers choose to go down the wholesale route, which gives some experience before making property purchases. Nevertheless, a buy-and-hold or rehab strategy could be a good option, depending on your targets.
Look around the neighborhood you are planning to work in, find out about its amenities, and investigate median home values and rental costs. If the neighborhood isn’t suited to your plans, there’s nothing wrong with looking elsewhere. Do your research online, go to networking events, and maybe see if someone is willing to mentor you. The key point is that every hour of research undertaken at the start will save you weeks of work as you launch your business.
Get your finances organized
There are several ways you can enter the real estate market without committing any capital, but you should still review your financial position before you begin. When you start to talk to a loan company, they will want to know about your financial standing and history. You need to know how to answer any questions that they may ask. Get a copy of your credit report and look over all your existing accounts and/or investments. You should remember that whatever your financial status, there is always a way that you can enter the world of real estate investment.
Design a business strategy
Having done all the research you can possibly do, you will be ready to begin thinking about the precise ways in which you are going to make your business successful. Create a business plan that incorporates all the tools and resources that you are going to need for success.
Establish a real estate LLC
A limited liability company (LLC) is a business entity created to ringfence a business enterprise so that the costs of business will not mix with the personal financial position of the investor. This allows you to purchase and hold real estate without taking on personal liabilities. There are different costs and rules about establishing LLCs in every state, although they all follow much the same process:
- Make sure you know all the regulations pertaining in your state
- Create your own business name – this must be unique
- File an Article of Organization
- Design an operating agreement for your endeavor
- Publish an Intent to File declaration (if your state requires it)
- Ask the IRS for a tax identification number
Having created an LLC, you may need a number of additional permits to allow you to start operating as a business. Check the regulations in your state and once you have all the necessary documentation you can start thinking about looking for deals.
Create a marketing plan
You cannot hope to be successful in real estate investment if you don’t have a solid marketing plan behind you. What is it that you are offering the market that others aren’t? Finding the answer to this question will show you how to create a business brand that you can use in all your marketing. In addition, when you start out, you need to think of your logo, your central values, and your mission statement. Having these elements in place will show you how you can access the market and the elements your marketing material should contain.
Once you have laid the foundations for your business, you need to launch your initial marketing campaign. Some of the most effective ways of marketing are listed below.
Email campaigns: Emails are an excellent way of contacting potential clients, providing you can obtain or create a database of good contacts. As it’s not as easy to obtain email addresses as it is to acquire property addresses, it could take some time and patience to build up a good contact list. However, once you have such a list, email is a very effective and economical way of contacting purchases and vendors.
Social media: social media is an excellent way of publicizing your business because it is completely free. Build your profile on LinkedIn, Instagram, Twitter, and Facebook, and try to update as often as possible. If you want to go a step further, paid for advertisements on social media can be highly effective.
Networking: Networking is the lifeblood of the real estate business; many people have got their first break in the business by effective networking. Look on Facebook and Meetup.com to find out local real estate events and attend them. Joining your local Chamber of Commerce could be a good way of meeting contacts as well. Once you’ve established a network of contacts, you could start to think about hosting your own events.
Bandit signs: Wherever you go in the US, chances are you will see bandit signs at intersections, the posters for real estate businesses. The reason you’ll see them everywhere is because they are highly effective and cheap too. However, make sure that they are legal in your local jurisdiction – you don’t want to lose goodwill or get in trouble with your local administration.
Website: It’s essential to have a website for your business: many people looking for a home go straight to the Internet as their first point of call. It’s easy to design an effective website with all the tools available now, but if you are lacking in confidence it’s a worthwhile investment to pay someone to design a really professional looking website for you. Keep it updated (adding new content is one of the best ways of getting to the top of search engine listings) and make sure you publicize your URL in all your publicity material.
Whether you choose one of the marketing methods above or decide to use all of them, make sure you are consistent in your marketing and always show a solid professional image.
One final but essential thing: if you are going to start your own real estate business, you must invest in liability insurance. Real estate insurance coverage can be economical, with different plans available to suit your business, but it could be a lifesaver. If you make an error, or even if you have to take the consequences of somebody else’s error, if you don’t have real estate insurance coverage, you could lose everything you worked so hard to create. Go to this site to learn more about your options for business insurance for real estate.
*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.