If you are looking to start a real estate company, then you will be glad to know that the steps involved are very simple. Real estate business can be an extremely profitable venture, if you follow the recommended rules and procedures. However, exploring the world of realty can be a daunting task and may require years of planning.
Franchise or self owned business?
Before doing anything else, you will need to decide whether you want to hire a broker or become a real estate broker yourself. Regardless of what you choose to do, a broker is always in charge of the real estate end of the business. Another decision that you will be required to make is whether you want to start your own company or purchase a franchise. Your marketing and advertisement expense can be reduced significantly if you purchase a franchise.
Next, choose a great location to set up your office. If your company is away from the busy streets and markets, then you are likely to lose a lot of potential clients and therefore it is advised to get an office with high visibility, so that people pop into your office on the spur of the moment.
Without a business license, you will not be able to operate as an authorized agent in your region. Licenses can be obtained by sending your application to the state office. Take your time when gathering information for your license, as failure to attach all the requested documents can result in refusal from the state secretary and unnecessary delay.
Members of the local board of realtors have a better chance of building strong relationships with clients and therefore you must contact the local board and join as a member. This will also help you stay up to date with latest regulations and laws in the real estate industry. Do not forget to join local agent tours as this is likely to enhance your reputation in the industry. Become a member of the local chamber of commerce and start hiring real estate agents. It is recommended to hire real agents with same work ethics and goals as you do.
Listings and Marketing
Prepare listing of all properties to be sold and start marketing your company. If possible, prepare a detailed marketing strategy, including publishing magazines, distributing brochures and leaflets and social media campaigns. Hire a web developer to make your business website. Get omissions insurance to secure your assets. These steps may take some time, but will ensure peace of mind at the end of it all.
Real estate businesses — especially those involving investments — represent a substantial amount of risk. There are a lot of “what ifs” in real estate investment, including: What if someone gets hurt on my property? What happens if I fall behind on the mortgage for one property but stay current on the others? What are the tax obligations if I take out a mortgage under my own name?
The primary reason to set up a business entity like an LLC or corporation is to protect your personal assets against a lawsuit. Incorporating your real estate business offers several other advantages, however.
If you operate your business in your own name, you will be financially liable if someone files a lawsuit against your business, or if you face expenses you can’t pay. When you incorporate, your personal assets will be protected if the business runs into trouble.
Rather than obtaining a mortgage for a property under your own name, you can get a loan under the name of your business from the bank. This offers even further protection as the LLC or corporation will own the property — not you — especially if you form an LLC or corporation for each property you purchase for rental purposes.
For even greater protection, you can take the further step of holding each property in its own corporation or LLC. This further limits liability to the specific investment. If someone sues you for an injury on Property A, the liability ends with that LLC and it will not involve companies that hold Property B, C and D.
As a sole proprietor, you can deduct many business expenses associated with your real estate company, including mortgage fees and interest, building materials, maintenance and more. There are many operating expenses you cannot deduct, however, unless you form an LLC or incorporate. This includes employee salaries and many types of insurance you will need. When you turn your real estate business into a corporation, you can deduct 100% of these business expenses from your profits before allocating income to yourself and any other owners.
If you sell or rent properties, the people who do business with you will want to know they are dealing with a legitimate company. As silly as it may sound, the word “incorporated” or “LLC” in your name makes your company appear more reputable and attracts higher-quality customers.
You Can Sell Your Business
Once your business is profitable, you have the option to sell it if you like, but only if incorporate. If you operate as a sole proprietorship, you are the business. If you plan to ever sell your company, you must set up a separate entity that can be transferred or sold and continue to do business.
If you operate your business as a sole proprietor, you will be taxed on all profits, even if you choose to reinvest them into the business. If you incorporate, the company is now a separate taxpayer that pays a lower tax rate. You can choose to take a small salary and leave the rest of your profits in the company to lower your income tax rate.
Multiple investors, such as investment clubs, should also consider forming an LLC or incorporating. If you do not incorporate or create an LLC, all investors in the project are considered partners, which means all will be liable for the actions of the others. If you form a limited liability company, you will have greater flexibility in management, too, as the operating agreement can grant and limit obligations, powers and rights for each owner.
The Bottom Line
Real estate is a tricky business. Why increase your risk any more than you need to? Consult with a corporate service company and an attorney to determine if forming a business entity is the right decision for you.
Finding the best deals for investment in real estate is the most challenging part to most first-time investors. It is very important to have sufficient money to invest in the business. You should have a business plan before investing into it as it may lead to immense losses once poorly planned.
Buying properties for business in real estate entails taking risk and making important decisions to avoid losing your money. You have to find contractual laws and the right procedures for buying and selling of properties.
Steps to Start a Real Estate Business
1. Establish Your own business Niche
Many options are available, from which you can choose. Therefore, your interests and financial capability should guide you on which one to choose. Among the many available options are; rentals, commercial real estate, wholesale purchasing of properties, investment in foreclosures, owned properties, among others.
2. Get a real estate attorney
This is to make sure that you fully understand your state’s rule and regulations concerning the business. The attorney should conduct deals on assignment of contracts and double-dealing matters.
The attorney should help you understand the laws and right legal procedures. He or she should also help you choose the best business structure and contracts to favor your interest and financial position.
3. Conduct a market research
Carry out a market research in your local area. Through the research, you should be able to get the best rates, demographic factors, foreclosures, and market prices. You should also compare the properties you intend to sell with others previously sold in the neighborhood. This will help you gauge whether your investment will be profitable or not.
4. Raise Sufficient Funds
Buying of properties requires money. You therefore need to have enough money to buy the properties of your interest. Since the business entails taking risk, you should be careful of your sources of funds. Among the many sources that you can get financial assistance, include fundraising, loans, private investment among others.
5. Find an agent
Agents have connections to properties available for sale. Therefore, having connection with them guarantees you of business success. They should also seek potential customers to buy your property. They should also have access to the public and private businesses for them to be effective.
6. Hire Staff and management Team
The team should oversee your properties and monitor its performance in the market. They can also act as property owners for your property and correct rent on your behalf in case of rentals. They should also carry out maintenance problems, which hinder business progress.
Transaction Management Software for Agents and Brokers
With advancement in technology, most businesses have started operating using software technology which helps them automate most key processes, achieve greater accuracy and save significant amount of time and money. Until now real estate businesses were all about maintaining records on paper, keeping track of multiple ongoing transactions manually, getting important documents signed the conventional way and referring paper documents to take a look at property listings. However, this is not the case anymore. Property agents and brokers can now heave a sigh of relief as software technology has penetrated the world of real-estate too!
Real estate transaction software help property agents and brokers go digital and say goodbye to office stationery and piles of folders and documents. Real estate software automate and digitize several key of land operations such as archives maintenance and access, transaction management, setting up of check-lists and reminders, document management and getting important signatures on essential documents.
Benefits of Using Real Estate Transaction Software
The benefits of using transaction management software for agents and brokers instead of conventional manual labor are many. Firstly, it saves considerable amount of time and effort. Since most key processes are automated and digitized, agents and brokers do not have to spend precious time and effort searching documents and maintaining records; they can access any document anytime and anywhere using their laptops, tablets, desktops and smartphones. Since documents can be signed electronically, agents and brokers do not have to fret and worry for missing signatures at the last minute. Secondly, this software mitigates the need to spend on expensive office stationery, thus saving money and helping a business go eco-friendly at the same time. Lastly and most importantly, this software suite comes with features of security and backup, ensuring that all the data stays safe and organized at all times and risk of data loss is significantly minimized.
There are several real estate management software suites available in the market but the one that stands out impressively and is used by several reputed real estate firms is SkySlope.
SkySlope is an efficient and reliable paperless ducument management for agents and brokers who wish to take their businesses to higher levels of discipline and profitability by using power software technology to organize their businesses. SkySlope can be availed on a monthly or yearly subscription basis and embeds powerful security firewalls to make sure that all data stays completely secure and confidential. Authorization checks are used to limit access to essential documents and all keys real estate processes are integrated seamlessly to allow maximum convenience of usage. A free trial offer is also available for interested users!
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84% of the real estate agents are using Social Media to market themselves and gain more clients, according to the recent research by Postling, a leading social media management enterprise. According to the report, nearly 80% of real estate agents are using Facebook to buy and sell properties faster as well as market their practice. It is essential that you understand how to use this social platform to your greatest advantage.
How Other Real Estate Agents Are Using It?
The primary reason for the increased use of Facebook is that real estate agents can promote their brand and their listings freely, easily, and efficiently. Real Estate agents are using Facebook primarily for:
• Marketing open houses
• Notifying other agents and the public about price drops
• Advertising additional incentives
What Facebook Can Offer You?
In addition to offering cost-effective methods of promoting properties, Facebook further offers a range of new opportunities you can use to grow and cultivate a robust community of prospective buyers and sellers.
How to Use Facebook for Marketing?
The following practices will greatly boost your real estate marketing efforts:
Creating a Business Page
Social media makes it easier to make a fast and personal connection with people you meet. With Facebook, you have access to thousands of house buyers in your targeted area – and millions in your state. The platform gives you a softer way of connecting to people instead of sending them an email from your business address. Connect to them on a more personal level and in the process invite them to your business page.
Some real estate agents find that they can garner the same result from using just their Facebook profile. In the long run, this may become tedious for you and frustrating for your clients as your personal posts and your business posts might get tangled in a mess. Keep the whole process streamlined and manageable by creating and maintaining a separated page.
Wearing Your Real Estate Badge Online
The days when a monthly newsletter was enough to keep your network updated on your business deals are long gone. With Facebook, real estate agents continuously stay top-of-mind of their potential clients on an ongoing basis. Once you have a business page you can easily create telling content and post twice a week e.g. once with relevant article or latest happening, and second with a listing. Furthermore, you can update your page’s banner regularly with the recent fast house sales.
Introducing Facebook Into Your Marketing Plan
You can easily integrate Facebook with your other real estate marketing practices. If you are blogging, set it up so the new blog posts are automatically posted to your Facebook page. You can use Facebook apps (e.g. Constant Contact) to send monthly newsletters to your fans. Given the amount of mail people regularly get and that newsletters are prone to be stuck with spam filters, an FB update is a far better option.
A good way of marketing a particular property across multiple channels e.g. Facebook, email and listings, is to use different lead pictures. Each of your Facebook post and ad can show a different view for the same property. Hence, a person who was not attracted to one element of the property might be attracted to another.
So go ahead, design and maintain your Facebook business page and boost your real estate business.
There’s a fact that is worth considering: 80% of home buyers search online while researching for a real estate and that more than 95% of them are looking for local property agents. There’s been a multifold increase in Google searches in past 5 years pertaining to this sector. In other words, you can’t afford not to be visible locally as these are your real consumers thus, making it imperative to take advantage of powerful Google Places. Today businesses spend tremendous amount of resources in terms of time and dollars to gain marketing advancement on real estate website design, paid search and organic search strategies while, overlooking and often underestimating Google Places.
Google Places was launched in 2009 as a free online yellow pages to facilitate businesses to create online office addresses in their native places of operation to be found on Google Maps. Using Google Places, businesses in a particular area will be ranked to appear in search results if the user is in the same general area searches for specific keywords. If a business has registered on Places with their relevant information, it will appear as a pointer when a relevant search query is entered in Google Maps.
Following are the ways to use Google Places for your real estate business:
Listing your Real Estate business: The initial step is to create your listing and presence on Google Places. This is fairly simple: Log on to Google Places with your Google account, submit pertinent information about your real estate business, facilitate the required documents to verify your business identity (like website, business card etc.), and then Google will take some time to review and approve your listing.
Optimization of your listing: Content that you write while listing your business is an important aspect and must be dealt strategically. You have to make sure that you make it relevant and use appropriate keywords. This effort will come handy to improvise on the organic search rankings for your real estate business.
Business Images: Images are very important aspect of a business listing as it adds to the business credibility, help business target right audience, gain interest of online browsers and make listing relevant. Therefore, wisely choose your business images with plenty of photographs and videos, describing your real estate business.
Reviews Matter: As you are aware that positive customer experience and reviews is the best thing that can happen to any business and such experience can’t be generated only from your real estate website design. Clients usually build an opinion about a business online and hence customer reviews are a great way to promote your business. Your Google Places listing allows for your customers to write and post reviews to your space therefore, use this wisely to create a healthy environment for your real estate business.
Small Things Matter: While setting up your listing, fill out the each minute detail including company phone number, business categories, hours of operation etc. Therefore, 100% completed profile gives you added advantage and goes a long way to complement your overall marketing campaign.