If you are thinking of starting a real estate investment business, you are on the right track to financial independence. A recent report by the Home Buying Institute shows that the US housing market is expected to get more robust. However, while investing in rental properties could be a great way of creating a passive stream of income for real estate business owners, it is not for the faint-hearted. Research has shown that a large percentage of investors fail within the first two years of real estate business. However, with proper preparation and a few great tips, you can succeed in starting a business in real estate.
How to Start a Real Estate Business: 15 Tips
If you have been wondering how to get started in real estate, here are some tips:
1. Establish your goals
The first thing you need to do when starting a real estate business is to prioritize and evaluate your plans for the future. This will require thinking through your financial, professional, and personal goals before buying your first rental property. Where do you want to be in the next five or ten years? How much money do you want to make? When do you want to retire? Thinking about what your ideal life would look like after starting this business will help you start on the right footing.
Related: Set Your Real Estate Investment Goals the Smart Way
2. Conduct extensive research
Once you have established your goals, conduct a thorough real estate market research to identify a specific market area, niche, and potential competitors. Look at things such as cap rate, rental prices, median home values, cash on cash return, and neighborhood amenities.
You should also consider which real estate investment strategy would work best for you and the location where you plan to invest. Buy and hold, rehabbing, and house wholesaling are some of the options you can look at. For example, if you wish to invest in the Dallas real estate market, a combination of the buy and hold strategy and renting out can be very profitable. Research market trends to determine which strategies work best and select one that aligns with your goals.
When starting a real estate business, you can learn about real estate investing through online research, getting a mentor or attending networking events.
3. Form an LLC
When starting a real estate business, you might need to create a limited liability company (LLC) to separate your business costs from your personal finances. This way, you can buy and own an investment property without incurring any personal liability. The regulations and fees involved in creating an LLC vary from one state to another.
Related: Forming an LLC for Your Investment Property
4. Write a real estate business plan
A real estate business plan creates a clear roadmap for your business and makes it easier to secure funding. When writing your business plan, think about what makes your business unique compared to others in your area. Here are some questions to ask yourself:
- What principles and values drive my business?
- How will selling or buying property impact my community?
- What makes my rental property business different from the rest?
5. Explore different investment property financing options before settling on one
When starting a real estate business, real estate investors can get a mortgage from a government loan or a financial institution. This could be an FHA loan, VA loan, piggyback loan or a home ready mortgage. Alternatively, investors could opt for non-traditional financing options such as business partnerships and private money lenders. Crowdfunding is another great idea, especially for people wondering ‘How can I start my own real estate business with no money?’
6. Build a real estate website
It is a fact that most investment property buyers and even potential tenants begin their search online. Having a real estate investor website will make it easy to attract and engage prospects. Make sure the site is optimized so as to rank higher in search engines. To keep visitors coming back, update the website with relevant content on a regular basis.
7. Have a strong online presence
Besides having a website, you need to build a strong online presence for your business on social media channels such as Twitter, Facebook, LinkedIn, and Instagram. This will help form strong relationships with prospects, improve your search engine rankings, and open up a world of real estate investment opportunities for you. Potential tenants may even start to reach out to you through social media if your online presence is strong enough, helping to boost occupancy rates.
8. Have a marketing plan
Having a website and online presence is not enough when starting a real estate business. You need to have a solid marketing plan to continue finding new investment properties and tenants. Marketing can be done via direct mail, email campaigns, social media campaigns, networking, and even signage on properties.
9. Nurture leads to find off market properties
Off market properties can be a great addition to your rental property business. For this strategy, you will have to find and reach out to property owners often. When you get in touch with a lead, be sure to nurture the relationship until they are ready to sell their property to you. You can try email campaigns to help with lead nurturing.
Looking for off market properties and property owner data? Here is a tool the pros use!
10. Build your real estate brand
Branding basically involves creating a perception about yourself and your business in the minds of prospects. Having a strong brand will enhance your credibility and build trust with tenants and other real estate professionals in the industry. When it comes to branding, one of the first things you need to do is have a professional and unique logo design. In addition, always project yourself as an expert when starting a real estate business.
11. Build a strong support network
Success in real estate is not a one-man show. You need to have a strong support network comprising of real estate agents, contractors, and property managers, among others. Building such key relationships will make starting a real estate business smoother.
12. Get a CRM
With all the tasks involved, starting a real estate business can be very stressful. You can make your work easier by using Customer Relationship Management (CRM) software. This software will streamline your activities and allow you to work from anywhere.
13. Manage your time properly
To avoid getting overwhelmed by your tasks, be sure to have a timetable. Before starting a new day or week, decide what you want to accomplish and write it down. This will help you get more done.
Related: Top 9 Traits of Successful Real Estate Investors
14. Get a real estate license
You don’t need a real estate license to invest in real estate. However, it can be an asset when starting a real estate business. For example, you will get full access to the MLS which can help you find real estate deals or list investment properties on your own. The costs, qualifications, and timeline for obtaining this license vary from one state to another.
15. Be patient and persistent
Overnight success is a myth in real estate. When starting a real estate rental business, you will definitely encounter many challenges along the way. Don’t give up no matter what. Keep pushing and eventually, you will enjoy the fruits of starting a real estate business.
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