How To Create A Winning Real Estate Business Plan

More and more people it seems have been getting into the market for real estate investing, but the most successful will be those who can create a winning business plan.

This type of business will serve a number of different purposes, and it is important for any would be real estate investor to understand just how important such a plan can be.

And use this plan in a manner to help your business.

Attracting Capital To Close The Deal

On the one hand, a well thought out, professional and strategy will help the real estate investor to attract the capital he or she needs to close those once in a lifetime deals.

The secret to success in the world of real estate is that so many of the transactions can be done using other people’s money, and that is where a strategic plan comes in. It will detail to all those would be investors and money lenders just how the business is destined to succeed.

Using Your Business Plan To Help Guide The Business As It Grows

In addition, a well written strategy can also serve as a blueprint and a guideline as the real estate business moves forward.

It can be quite difficult to get such a business off the ground, especially when a slowdown in the market makes the world of real estate a bit more challenging. Having a organized plan at hand will help to guide the business as it grows.

Getting Help From Qualified Professionals

Preparing a high quality plan is well within the means of most investors, but it is a good idea to ask for help from qualified professionals when preparing such an important document.

For instance, having an accountant or other tax professional take a look at the strategy can provide some much needed insights.

In addition, having it reviewed by a qualified real estate or business attorney can ensure that the document is legally sound and that it contains no errors or omissions.

After all, this real estate business plan will form the cornerstone of the new enterprise. It is important that it be a quality document.

If any bank or other lenders are going to take you seriously, your plan should be professionally done. It should include all of the elements that a business plan should have included in it.

After it is reviewed, then and only then should you submit it to a lender for their consideration in your future financial endeavors.

Starting a Real Estate Business

The real estate industry is very sensitive to economic changes like interest rates and the cost of materials in building houses. Interest rates in particular can easily swing the number of sales that are completed during any quarter of the year. Rising interest rates will slow down the sales and falling rates will aid the sales of real estate. This is an important fact in the real estate business as this can absolutely cause rapid changes in income from the sales that can be made.

With this in mind, the time to buy an agency that comes up for sale may be when the real estate business is in the doldrums. A hot real estate market will make an existing firm worth more, as their income will be higher during this period of time. Of course if you follow this course of action, you will have to wait out the slow down in the markets. Another factor in the purchase or start-up a real estate company is the state licensing requirements.

Most states have serious requirements for real estate agents and brokers. Brokers have a much stiffer requirement in most states than an agent. The requirements include passing exams and a fixed number of educational hours for both agents and brokers. There is also a requirement for continuing education. These state mandated steps to a career in the real estate business would have to be met before an agency could be purchased or started. Since this industry is regulated and has strong legal steps to comply with, this licensing plus experience would be an initial step to being an owner in this field. This is not a business that can be stepped into by just paying out some money.

An agent can have the goal of owning their own firm, but it will take planning and meeting the state rules to make this happen. Once a potential owner has these steps out of the way, finding an existing business to buy will be in order. A quick check of real estate business listings reveals that they are usually found in larger cities and the asking price is significant. There are also resales of franchise companies. Just typing into a search engine, “Real estate businesses for sale”, came up with this quick check. A buyer could also check with business brokers and real estate brokers in their city. Another source worth checking out would be a franchise connection. An in place real estate business is advantages as the name is already known and will get clients due to this. When you start a company from the ground up you do not have this advantage. An existing business with several locations will come with a higher price tag than what you could start your own business for.

Another way to gain ownership would be buying into an existing business. This could work if you have a solid relationship with the current owner. The problem is you will not have the final say in most decisions unless you are buying controlling interest.

Specialty real estate firms

Most people think about a firm that helps with the buying and selling a home. There are several other areas of specialization. A real estate firm could become expert in buying and selling commercial property, farmland and farms, farm product processing plants, rental properties and shopping centers. Actually a broker could cut out a niche market from many that are available in the real estate business. If you have an area of expertise, this could become something that could be marketable and cut out a lot of competition in certain situations. Some real estate firms have unique departments that handle certain types of real estate marketing. The decision you must make is what kind of a firm are you going to own. You may have to start your own in order to make it happen.

You could also get into real estate management and the buying and selling of these rental properties, which is a very unique part of the industry. Shopping center related firms could be in from the start of a project. They can help with the formation of the firm to build and own the property and then handle the rentals and day-to-day management of the center.

The point of all of this is there are areas of real estate specialization that lend themselves to a business that just works in this real estate category.

Finding the money to make your dream happen

You may not have the total purchase price for an existing business. The question is how do you come up with the balance to make the deal. Finding a source to lend you the money is one way to come up with the needed funds. There are businesses that offer loans to new owners of businesses. These can be found on the Internet by just doing a search. Family and friends could be another source of money. One way to get the needed money is to take in a partner for the business. If you have a friend in the business maybe they would be interested in owning part of the existing company. All of these possible money suppliers will have different requirements for paying the money back.

Make sure you can see your way clearly on how you will accomplish the pay back. This business can be adversely affected by interest rates so you would need a second way to make the payments. A person thinking about ownership in this field must remember that it can be feast or famine as far as sales and commissions go. This is not like being in the restaurant business or owning a printing company. Successful brokers can make considerable money in a good market. They can also have periods that are very tight as to sales. The brokers that succeed have a policy of putting away some of their earnings during good times to cover the less profitable times. Doing this just shows the broker has a realistic view of the business.

Conclusions

This business can be extremely profitable during low interest rate economies. The legal and state requirements make the ownership of a brokerage firm more difficult to own than is the case with other businesses. Buying and selling a real estate business is somewhat more difficult due to the restrictions that are placed on the owner of a real estate firm. You must have the appropriate licenses in place before you can begin operation. This is true whether you buy a company or start one up from scratch. Finding a firm you can afford will take some time and research on your part. Hiring a professional business broker may speed up the search.

Deciding early on if you want to be a specialist will set other decisions in place. Niche areas that you are an expert in will help cut the competition somewhat. A general real estate business will have the potential for more clients, but will need and ongoing advertising campaign to gain listings and clients looking to buy. The start-up is cheaper to open, but will have little cash flow like an existing firm. Money flow is the one huge advantage buying an existing business offers to the new owner.

Should You Get Into The Real Estate Business?

Various stories can be heard about the Real Estate Business. Some had been unfortunate enough to lost significant sums of money. On the other hand, those who have dealt with their cards wisely are now living comfortably, reaping the rewards of their company. So if you are thinking about a career in the Real Estate Business, you must understand that you will need more than just a set of good selling tactics. There are a lot of things you ought to learn to make it in the business.

Real Estate, or immovable property, is a legal term that defines a land and anything affixed to it. The properties can be classified as residential and commercial. Consequently, Residential Real Estate Business deals with homes, while the Commercial classification is involved with properties used for business purposes.

Although both types of Real Estate Businesses offer huge profits, one is riskier than the other. In Residential Real Estate, the clients basically want the same thing — a nice and comfortable home. Since you are also a homeowner, you would most likely have an idea of what your clients are looking for. You can then make use this fact to your advantage. This sense of predictability, however, is lacking in the Commercial Real Estate Business, as the field is more competitive and the demands are more diverse.

Relentless investigation is necessary to succeed in the Commercial Real Estate Business. It could involve leasing, owning or selling of any commercial property. Real Estates involved in this side of the business are commercial buildings, condominiums, apartment complexes, and other business-related establishments, either for industrial or agricultural purposes.

The company, therefore, thrives on the existence of other companies. Knowing what are currently in demand and weighing the pros and cons serve as preventative measures against pitfalls. Some companies have been driven to bankruptcy because of one major drawback. This aspect of the business is what makes it so perilous. Be that as it may, the compensation is worth all the risks.

Aside from the financial benefits, the Real Estate Business also provides other tempting incentives. First and foremost, you can be your own boss. In other words, you can make and follow your own schedule, and have absolute control over your company. You can also take a break whenever you like, and not worry about company policies on sabbaticals.

Having total authority over the company also holds you responsible for both its success and its failure. For that reason, having a reliable marketing strategy is important in the Real Estate Business. The talent of persuasion, combined with a good attitude and work ethics, can take your company to greater heights. On the contrary, one wrong move around a corner can drag your business down the drain. That is why it is essential to create contingency plans for every possible pitfall. It is one way of protecting your — and your clients’ — interests.

Establishing a career in Real Estate Business needs a lot of effort. Surviving in the industry is yet another story. Nevertheless, the key to success lies in your ability to adapt. If you are up for the challenge, then getting into the Real Estate Business may suit you well.