5 Steps to Follow to Start Your Real Estate Business
By Brett Shapiro March 21, 2023 Update on : March 21, 2023
Learning how to start your real estate business is one of the most fulfilling moves you can make in your career. Most people desire to become homeowners and you can set up a real estate business to help them find their dream homes.
The industry is also quite profitable with the National Association of Realtors reporting that 5.64 million existing homes and 822,000 newly built homes were sold in 2020.
These numbers are impressive and prove that the real estate market is enormous. But how do you set up your own business and claim a piece of the real estate pie?
This article explains everything you need to know about how to start a real estate business so you can take the next step in your career and become your own boss.
Let’s get started!
Step 1: Choose a Niche
The first thing you need to do to start a real estate business is to pick a niche. The real estate industry is vast and your new business can’t operate in all the available niches right from the start.
Here are some niches you can consider for your real estate business:
- Residential real estate
- Vacation homes
- Rental or lease properties
- Commercial real estate
- Property management
Choose one or two niches to focus on. The best way to do this is to choose a field where you have some experience.
For instance, if you had previously worked at a residential real estate company, it’s a good idea to start a real estate business that deals with residential properties since you understand how things work.
Step 2: Choose a Legal Structure for Your Real Estate Business
After identifying your niche, the next thing you need to do as you figure out how to start a real estate business is to choose a legal structure for your business.
You need to formally register your business with the state to operate it legally, and choosing a business structure lets you fulfill your legal obligations. The four main legal structures you can consider for your real estate business include:
- Sole proprietorship
- Limited liability company
The legal structure you choose will depend on how you want to handle your taxes and if you want liability protection when running the business.
Because of how complex these issues are, it’s advisable to engage a business formation service provider like Incfile to help you choose the right legal structure.
Take a look this GovDocFiling Incfile review to determine if this is the right business formation agency to help you register your real estate business.
Step 3: Create a Business Plan
With your business registered, you can now start operating and finding clients for your real estate business. But before you do that, you first need to create a business plan that will guide your outreach efforts.
A business plan is a document that outlines your business goals and the measures you need to implement to achieve them.
At this stage, you don’t need a long plan. Instead, create a brief plan that captures your vision and the things you need to do to bring in the first few customers.
As the business grows, you will gain more knowledge about the industry that you’ll use to create a detailed business plan.
Some of the key details to include in your business plan as you work on how to start a real estate business include:
- Executive summary – A brief description of the business and its purpose.
- Market research – Analysis of your target market and how you intend to reach them.
- Competitive analysis – A breakdown of your competitors and how they meet the needs of your audience. You should also highlight how you will differentiate your services from those of your competitors to attract clients.
- Marketing strategy – Your plan for promoting your business to your target customers.
- Management – This section describes the leadership structure of your real estate business and the key managerial staff.
- Finances – Explains how you will raise funds to start your real estate business. It also describes how you will use the funds to achieve your business goals.
Step 4: Get Your Real Estate Business License
In most states, you will need a license to start a real estate business. If your business is based in a state that required realtors to have a license, then you need to acquire one.
The process of acquiring a real estate license is as follows:
- Take the pre-licensing course that covers topics like property ownership rights, fair housing laws, fiduciary responsibilities, and more.
- Pass the licensing exams by answering at least 70% of the questions correctly.
- Submit your license application to your state’s licensing board.
- Get a registered broker so you can associate your license with a registered real estate brokerage firm.
Step 5: Build Your Brand
With everything set, you can now start building your brand and connecting with your target customers. To get more clients to buy your listed properties, you need to establish yourself as a trustworthy brand worth their investment.
You can achieve this by:
- Interacting with potential clients and building a relationship with them.
- Setting your business apart from the competition.
- Building an online presence so potential customers can find all the information they need about your business.
- Establishing yourself as an expert to solve your customer’s real estate problems.
With these measures, you will establish yourself as a reliable brand that customers are happy to buy from.
Real estate is one of the most profitable business sectors. Whether we are in a buyer’s or seller’s market, there’s a lot of money to be made in real estate.
I have highlighted the steps you need to follow to start a real estate business. Be sure to choose a specific niche and research the market to succeed as a real estate professional. All the best!
Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.