Building a successful agency doesn’t happen by accident. Use this guide to create a real estate business plan to generate a 7-figure income. According to The College Investor, approximately 90% of the world millionaires are involved in real estate.
A great career choice and one that offers attractive rewards.
But be warned.
Success in real estate doesn’t come on a silver platter. It’s estimated that 3 out of 4 agents fail within the first 5 years. Still, many have aced it and you can do it too. This guide will help you start and build a real estate business from scratch.
1. Write a Real Estate Business Plan
Like all other businesses, you’ll need a solid plan to start a real estate business.
The purpose of a real estate business plan is to set goals and direction. Your real estate business plan should define your operational and financial goals and provide specific information on how your company will achieve those goals.
Moreover, if you need financial help to keep your business up and running, lenders will insist on seeing your business plan before they can consider your request.
2. Do Extensive Market Research
Before you jump into forming a company, it’s important to first understand the real estate market you’re entering. Your research should be able to answer the following questions:
- Who are your competitors?
- Who is your target audience?
- What type of houses will your customers like?
It’s important that you don’t skip this stage, as it will provide you with all the data you need to make informed decisions.
3. Decide Your Legal Business Structure
One of the best things about real estate is that for most states, you only need to take one exam to get the license.
However, getting a real estate license doesn’t grant you the right to set up or own a brokerage. You’ll first work as an independent contractor under the umbrella of a licensed broker. To open a brokerage, a special type of real estate license is required.
Brokerage seeking entrepreneurs generally choose one of the four legal business structures: sole proprietorship, partnership, corporation, or an LLC. Once you’ve settled on your preferred legal structure, be sure to register it with the government and the IRS.
See our guide on Business Structures 101 to pick the right option for your business
4. Set Up Your Real Estate Business
Now that you have your business registered, the next thing to do is to find a good location for your real estate shop.
But, if you’re on a tight budget, it’s advisable to carve out an office space in your house.
As your business scales up, you’ll have enough resources to find a storefront, hire employees, and set up the right technology. Speaking of technology, transaction management software is a great tool to start with, especially if you’re considering hiring a transaction coordinator.
With a team in place and more clients, you don’t want to rely on paper checklists and manual processes that haphazardly get the job done. Instead, you may want to use software to automate your time-consuming processes and put your most essential tasks in one place.
For example, rather than creating paper checklists for every deal (which is hectic and time-consuming), your agents may want to set up custom transaction coordinator checklists that apply automatically based on deal type.
5. Work on Brand Building
Branding is essential to create credibility in the eyes of potential customers.
It’s all about creating a perception about your business—something that will distinguish it from the competition. To achieve this, the first thing you’ll need to do is create a real estate website that conveys the feelings and emotions you identified in your branding process.
Next, implement the marketing strategies identified in your business plan. These include opening social media accounts for the business and devising a content marketing strategy for each.
Lastly, look to build relationships with relevant parties and major stakeholders. These include bankers, surveyors, lawyers, and other real estate agents. Networking and attending local and industry events can go a long way in helping you build lasting relationships and a successful real estate business.