REAL ESTATE COMPANY BUSINESS PLAN GUIDE
Have you been having the thought to start a real estate business?
According to Forbes, most of the recognized richest persons in the world are real estate investors. The likes of Donald Trump, Mike Adenuga, Grant Cardone, and a host of others have stakes in the real estate business.
This points to one thing and that is the fact that the real estate industry is a money-making venture where anyone with the right real estate business plan could make a lot of money for himself.
However, starting a real estate business is not a child’s play as it takes a lot of dedication, hard work, marketing, and perseverance. Planning and execution are also very crucial for success in this field.
READ: RE/MAX Franchising
For beginners who tend to start a real estate business, here are some things that need to be known:
- YOU NEED TO GET LICENSED AS A REALTOR
Before you can start a real estate business, you will need to get licensed by the appropriate bodies.
There is a lot of petty real estate businesses around but to distinguish yourself and create a class, you need to get licensed by filling the requisite licensing papers with the appropriate bodies in your state or country.
- GET REGISTERED
If you plan to go big with your real estate business, then, you will need to register it. Registering your business is quite different from getting licensed. Although they may be similar.
You need to register a business name and other necessary information with the appropriate Ministry.
For instance, in Nigeria, the registration is done by the Corporate Affairs Commission (CAC). This also will go a long way in showing the genuineness of your business and will get more people to patronize you.
When you want to start a real estate business, you don’t just rush into it, the real work in real estate starts from researching. You need to research which area you intend to venture into.
In the real estate business, there are various areas you can venture into. Some of these areas are leasing, land and house flipping, property development, office and house rent, general property sale among others.
- Land Flipping
This involves buying land at cheaper rates and reselling them at a higher price to make a profit.
Depending on the choice of area, this aspect doesn’t require millions to begin. All that is needed here is capital and knowledge of the land transaction.
This also is a very lucrative avenue. What it entails is you buying a property and leasing it out for a fixable amount.
The amount you can fix here is discretionary. It is so lucrative in big cities.
- Property Development
This is another area that is a bit similar to Land Flipping.
However, as against the outright sale of land in flipping, the land here is developed into luxury and then sold out at a very exorbitant price. There is no limit to the price the property could be sold.
- Office and House Rent
This is similar to leasing too.
Here, you don’t necessarily need to procure the property, you can act as an agent to the owners to get people to occupy the available space and you get paid a certain agreeable percentage.
- General Property Sale
This incorporates almost all areas. Here, you can decide to sell properties for their owners and get a fixed percentage of the purchase price or buy a property and resell it at a high price.
- GET AN OFFICE
To start a real estate business, you need an office where prospective property buyers would meet you.
This is because only a very few people can give their money to someone they’ve never met or have an idea of where his office is. Therefore, you need an office no matter how big or small it may be. Just go get one.
- HIRE MORE HANDS
If you want to be serious with the business, you will need to hire real estate professionals who are good at what they do. Looking at the business plan, it is not something only you can run around doing.
You need to hire more hands depending on your financial capability. You shouldn’t hire 10 people when in the real sense you can only take care of 5 of them.
This aspect cannot be overemphasized. It is very important and crucial. It is only when you market yourself that people will know you and patronize you. People won’t find you if you do not push yourself out.
Real estate marketing, however, may take different forms. Some of which are;
- Social Media Marketing
As it sounds, it has to do with marketing your real estate business on social networks. According to research, more than 2Billion of the world’s population use the internet and more than 1 billion are registered on Facebook.
Twitter, Instagram, Pinterest, among others collectively share around that amount too. All you need to do is take advantage of that population and market your business on Social media.
- Other Media
This has to do with marketing your brand in the form of jingles and the like on television, radio, and newspapers. You can also get an official website for your brand.
In conclusion, the bottom line is that making headway in the real estate business will not come so easy. It requires dedication, hard work, diligence, determination among other things. In the end, success will be worth the struggles.
TOP 5 WAYS YOU CAN MAKE MONEY INVESTING IN THE REAL ESTATE INDUSTRY
There are lots of ways we can make money by investing in real estate using little capital or huge funds. Investors have lots of options such as long-term rentals, vacation rentals, fix and flip, and so on, to choose from.
Some investors prefer investing in real estate with long-term rentals and fix and flip with REITs, and some prefer flipping homes (while many others won’t mind doing everything).
Some investors love long-term rentals simply because they offer great returns. And those great returns continue to pay them as long as they own the property.
Also, some love to flip homes because of the money that could be made. Altogether, emphasis should be put on the fact that a great real estate investment offers a splendid return on investors’ money (without too much effort).
And realistically speaking, we should know that each of the different methods one can invest in real estate has different levels of risk, different levels of return, and different levels of time commitment.
After we’ve seen the way one can make money investing in real estate, we will see that an investment method such as fix and flipping is more of a full-time job than an investment (while some like REITs take almost no work).
Now, let us see 5 ways investors can invest in real estate.
1. LONG TERM PROPERTIES
For many investors, long-rental properties are their favorite way to invest in real estate. Of course, this investment type can require lots of upfront cash; nevertheless, if an investor buys right and is patient, the returns are so high.
When investing in real estate with long-term rentals, an investor must focus on cash flow. But, what is the best way to get cash flow? The best way to get cash flow is to buy properties at below market value and make repairs to increase value and choose homes that will give high rent to purchase price ratios.
2. INVESTING WITH FIX AND FLIPS
Fix and flipping is another fabulous way one can invest in real estate. However, though it is a nice method, it takes lots of time. The investor is required to do such things as finding deals, managing contractors, keeping track of accounting, and most importantly getting homes sold.
Another thing is that, although hard money can be an option to reduce the cash that is needed; it takes a lot of money for down payments and also repairs.
3. WHOLESALING PROPERTIES
What do we mean by the term ‘wholesaling real estate? Wholesaling real estate is simply when an investor buys a home (or gets a home under contract). Then, the investor immediately sells the home to another investor who is buying. This will be sold without making any repairs whatsoever in the home. At times, the investor selling the home might not even buy the home before selling it. Yeah, some real estate investors are wholesaling on a full-time basis and are making lots of money each month.
Someone can wholesale a house without buying the house. Simply by getting them under contract and then assigning the contract to some other investor. Wholesaling real estate has good advantages. One prominent advantage that is associated with this real estate investment method is that the investor doesn’t have to make repairs on the home and he can sell it very quickly. Additionally, it should be added that the majority of the properties that are wholesaled are bought through direct marketing.
4. INVESTING WITH A PERSONAL RESIDENCE
An investor can use his or her residence to invest in real estate. Since they aren’t bringing in any rent or income, some people may not consider a personal residence a way to invest in real estate. However, there are ways one can make his residence a great investment. An investor can buy a personal residence that he can turn into a rental property.
5. INVESTING WITH REITs
REITs stand for Real Estate Investment Trusts. Real Estate Investment Trusts are purchased like stocks or mutual funds. Some investors have purchased a few of them and get good results. In case you don’t know, Real Estate Investment Trusts are large funds that invest in real estate, and then they pass on dividends and profits to the shareholders.
Real Estate Investment Trusts are known to invest in large commercial projects and industrial buildings (and even land and government buildings). The fact about REITs is that it is the easiest way one can invest in real estate.
How to Start Investing in Real Estate with Little Money
There’s a misconception that an investment in real estate requires big capital. This guide will show you how to buy and sell real estate with little money.
On the contrary, this isn’t always the case. There are ways you can invest with little money. This article aims to show you how to begin your journey with limited capital.
If you’ve wondered how to go about this, simply relax and read on.
We are confident you’d find practical ways to kick start your real estate investment journey.
Consider Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts are mandated by law to remit as much as 90% of earnings per year! But what are Real Estate Investment Trusts?
These are essentially real estate investment corporations. A Real Estate Investment Trust will either own properties or mortgages.
You also have the freedom of investing in multiple REITs.
However, since we’re talking about limited capital, you’d have to look for those below your investment sum.
Operating an Airbnb
This is an investment option you can start with little capital. You don’t need to own a large property to start.
You only need a room or a couple of rooms. These rooms (either single or multiple) can be put into good use by becoming Airbnb landlords. The good part is your personal effects are insured by AirBnB.
So, can you tolerate strangers? If yes, then this real estate investment option may just be the perfect choice for you.
House flipping has become a reliable way of adding value to distressed properties. Distressed properties are properties under the foreclosure order.
How does this work? It is a fact that distressed properties cost much less. House flipping, in turn, adds value to such properties to resell them. By ‘value,’ we mean renovation.
Although it will cost you to renovate such properties, your investments are recouped with interest after selling such property.
Your renovated property gets to be sold at a higher price. This is typically more than the cost of the property and investments combined.
House hacking has increasingly become an attractive real estate investment option. An added advantage is that it can be started with limited capital.
So, how do you go about it? You need to buy a small multi-unit rental property. A multi-unit rental property is preferable because you only get to live in a single unit. Now, the other units can be rented out.
This is a great idea because you get to recoup your investments with the rent you earn.
As your investments grow, you can move out to make way for more tenants. House hacking can be scaled up to larger multi-unit apartments with time.
This form of real estate investment is ideal for investors with limited capital. Through this arrangement, you get to attract higher investment capital by working with an investor or group of investors.
However, there need to be concrete structures that guide your business relationships. This should involve written agreements that will help avoid or resolve conflicting interests that will likely occur.
With partnerships, your limited capital goes a long way when combined with those of other investors. Through this, you get to become a part-owner of shares that result.
In partnerships, your share of returns is calculated from the capital you contribute.
This, in a way, is similar to house flipping. Yet, there’s a major difference. This is in the fact that with wholesaling, the property is bought not with the purpose of renovation.
In other words, you only buy to resell. Distressed properties are cheaper to purchase. After purchasing such properties, you can resell them at a higher rate.
Wholesaling is a great way to invest with little money with significant returns.
Crowdfunding is a great way to commit your limited capital to viable earning opportunities.
As a result of this, such a pool of investments from many other investors is channeled into major real estate projects.
Consequently, your earnings are relative to the money invested. This idea is a great way to grow your investments. You don’t need a large capital to invest and earn interest in real estate.
Home Equity Loans
Sometimes, there are situations where you owe payments on your property.
As a result, you’d need money to pay or cover the cost of such property. In such situations, there are smart ways to pay off as well as earn from your home.
However, this is only possible if the value of your property is more than what you need to pay for it. This is where home equity loans come in handy.
If the value of your home is higher than what you owe, then you can apply for a home equity loan. This offers you a credit line to offset the down payment required for the entire property.
Explore the Hard Money Lending Option
Limited capital may require exploring the hard money lending option. But what is this all about? It consists of persons willing to lend you money. But, the problem is interest charges may be high.
However, this can be overcome when you factor in the total rates to be paid on the money received. This, in addition to your little money, will go a long way in enabling you to invest in higher, yet valuable real estate investment opportunities.
We’ve seen and discussed the different ways to start investing in real estate with little money. These options have been tested several with a positive outcome.
As a result, such opportunities offer hope and any of these can be chosen. We are confident that with the right approach, you’d be able to attract good returns on your investments.
Here are some real estate based plans:
- Real estate syndication business plan
- Home staging business plan
- Property management business plan
- Flea market business plan
- Rental accommodation business plan
- Construction company business plan
- Demolition company business plan
REAL ESTATE INVESTMENT BUSINESS PLAN EXAMPLE
Here is a sample business plan for starting a real estate development agency.
For any type of business you intend to run, a business plan is a basic requirement you should not overlook. This document charts the course of the business as it enables you to have a clear plan of what to do at every point of the business. A successful business is never run by guesswork. By eliminating all forms of ambiguity, the chances for success are greatly increased.
For persons interested in venturing into the real estate business, this article provides you with a general idea of what is needed. Let’s get to business, shall we?
Noble Realtors LLC is a young and growing real estate company that seeks to provide top-notch services to our clients by bringing expertise and experience to bear on the job. Our workforce is made up of people with a proven track record of excellence in the real estate industry with a combined experience of over 90 years in the business.
We seek to offer real estate services that include residential and commercial/office buildings to our target market within the Austin Area of Texas. We will offer a full range of real estate and mortgage services to our esteemed clients.
Our mission at Noble Realtors LLC is to provide exceptional and competitive real estate and mortgage services to our clients within the Austin area. This is driven by a desire to take part in the resurgent real estate industry that offers huge opportunities for investments with a promising return on investment.
Being a new company, we are not deterred from our goal of providing quality real estate services to our clients. With the competent hands-on board, we will bring the experience of our workforce to bear towards achieving our desired goals.
With an operational headquarters located at Bee Cave in Austin, Noble Realtors LLC will be a Limited Liability Company registered in the state of Texas and established for the sole aim of providing quality and affordable real estate services to clients within Austin Area. Founded by J. Clarkston a structural engineer with over 20 years of experience in the real estate industry, Noble Realtors is poised to compete favorably with other more established real estate businesses.
The best hands for the job will be hired. Highly experienced hands (at least 10 years of experience) are targeted to fill each position as we seek to provide innovative services. Our target market consists of young families who are the most active real estate/mortgage participants.
Funding for this business will come from two main sources. These include a savings of $500,000.00 kept aside for this purpose by Mr. J. Clarkston as well as a debt financing agreement entered into with Wells Fargo who will be providing the sum of $2,500,000.00. The debt is to be repaid within 10 years and would include an interest rate of 2.5%.
As mentioned earlier, we are targeting young families as they are considered the most active segment of the real estate market. They present an opportunity that we seek to exploit. Hence our services will include purchasing and selling real estate to residents within the Austin area. This segment of the market is considered to be responsible for the growth of the industry within the last decade.
The real estate industry is one where there is intense competition. This consists of major players as well as the smaller player group to which we belong. However, we do not intend to sit on the sidelines and watch. We will leverage our many years of experience in the industry to provide exceptional services to our clients. A strategy we will adopt is to study the weaknesses of our clients and improve on them while also maintaining our areas of strength.
While studying the buying patterns of our clients, we will also try to understand or know their main attractions as well as their preferences. These are all directed towards gaining an edge in the marketplace.
Our Range of Services
Our clients will be provided with a variety of services such as title transfer, quotes, planning, moving consultation services, getting a comparative market analysis, property preparation, and several others. All of these services will be provided in addition to our core services.
Within the first 2 years of our operations, we plan on becoming a hub for every real estate-related matter. Also, our services will be moderately priced. This strategy is meant to make our pricing competitive, thereby attracting more clients.
Our Keys to Success
To ensure continued relevance, we seek to develop adopt several strategies that will enable us to attain our goals within a specific time. Hence, residential real estate listing services provide a great avenue for partnership. Also, we do not see the relationship with our clients as short-lived.
By giving them the best offer, we will encourage them to spread the word about our services to friends and acquaintances. They may also require moving in the future, therefore our relationship with these clients is mutual as we can also be of help should they need assistance.
We have researched the market and arrived at a healthy conclusion that the future looks bright for our business. This has resulted in a 3-year growth projection that shows impressive results from the time of commencement of business operations. This is summarized in the table below;
- First Year $3,000,000
- Second Year $3,900,000
- Third Year $4,500,000
This real estate investment business plan sample has unveiled the basic requirements for writing your business plan. Using these as a guide, you can supply information unique to your business for the best results. However certain areas of your business may require legal advice. Therefore seek the services of a legal expert for guidance.