Starting A Real Estate Business – Steps And Tips For A Successful Venture

When starting a real estate business, you should think not only of the possible profits you will gain. More importantly, you should know the right steps to take and the tips to follow in order to earn those profits.

Save Money
Even before putting up the business, make sure you have sufficient funds for covering the startup costs. Initial expenses for a business includes rental fee for your office, outlay for office materials and equipment, office sign, website building, marketing and of course, business insurance. Your start up money should also cover the operating expenses for the first 3-4 months after you have put it up.

Acquire Broker’s License
The requirements for obtaining license real estate broker vary on each state. Thus, you should know first what your own state requires from those applying to get their license. In many states, the requirements include taking a course approved by the state, minimum age of 21 and salesperson experience of two years (real estate practice).

Choose Your Office Location
Ideally, any business establishment or office must be located in a place where it will be easily seen and will be easily accessible to people (both your clients and your agents). Other factors to consider are zoning and square footage of the actual office.

Build A Website
Having a professional-looking website will increase the value of your business. A website can also be an effective marketing tool. On your site, you can post and display all listings, both your own and those from other services. A website is very helpful to your real estate business because more and more people are nowadays turning to online resources when searching for homes that they can buy. You need to be familiar, as well, with other related technologies used in real estate business.

Avail For An Insurance
Omissions and error insurance is necessary for your venture. As a broker, you have agents whose actions you should be liable for. In case a disappointed client sues you, the insurance will make sure your business will be legally covered.

Prepare And Agreement
An agreement for independent contractor should be developed and written. This document will outline what you expect from your agent, his/her behavior, individual agent’s commission split, etc. You are an independent contractor so you should not expect your agents to spend required time in the office. However, they must adhere to the code of ethics required of them. You are also allowed to set policies which they must follow in case they need to use space and resources in the office.

Provide Tools And Equipment In Your Office
Your business office should be well-equipped in terms of facilities and tools. There should be a waiting area, a conference room with appropriate furniture, reception desk, copier, fax, phone and computer. You can provide your agents with computers that they can use. You may include in your policies that agents pay for desk fees to compensate operation costs.

Recruit Your Agents
Your agents are your ally in the business. You need to choose established agents whose experiences will benefit your business. New and beginner agents will bring in excitement and energy in the brokerage business. However, they need to be trained so they will not make any legal errors. In recruiting agents, understand that they must also be provided with sales training.

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How to Cultivate Relationships for Your Real Estate Business

To Cultivate Relationships is important for real estate agents.

If you’re here reading this, you’re likely a real estate agent who is looking to Improve your business. As agents, we often watch other agents and get sold on the idea of sending out snail mail, paying big bucks to a lead generation service, or signing up for a generic website. The truth is that sales are about cultivating relationships, sustaining existing relationships, and obtaining referrals. Often as real estate agents, we scramble around trying to find anyone and everyone who might ever want to buy or sell any piece of property ever. This can become frustrating, and many agents wind up feeling like they are spinning their wheels until they finally close a few deals and get a few referrals. Many agents only have a sputtering inconsistent business and often feel they are continuously starting their business over and over again.

What I choose for my real estate coaching students, instead of them constantly reaching out for new business, is for them to cultivate relationships so that their real estate business becomes totally sustainable. When you focus on knowing who you are, who your fan club (tribe) is, and how to have a consistent steadfast marketing campaign, you can create and cultivate a growing fan club that will work with you as well as for you.

Do you have a Core Marketing Plan?

Unwavering core marketing and follow-up will sustain a steady flow of business and the critical element is to cultivate relationships.

You should have a marketing plan in place that can be tweaked for improvement only when necessary. The key to this core marketing plan is that it needs to be continuous for you to have any real lead generation success. Consumers count on consistency and agents that do, win.

A good marketing campaign that reaps tremendous results includes my favorite Top Tier communication. The ideal components in a Top Tier communication includes; person-to-person interaction over the phone or in person, handwritten notes (yes, really handwritten), and having events for those you are trying to attract to your business with appropriate subject matter. It also includes regular communication and interaction with your database. A database can only be a Fan Club if you cultivate it into a community you actually know. Again, the important goal is to cultivate relationships.

Here are Some Examples of Top Tier Communication. I for one, love the kinds of communication that make it as personalized as possible:

One on one phone calls – (Know your fan club database personally) Make sure to connect with common interests when you know them, ask questions, let them talk. People love to talk about themselves.

Personal emails – Again, the more personal the details the better. If it looks like a form e-mail with someone’s “firstname” filled in, it’s not Top Tier Communication.

Personal notecards – This is one of my favorites. There’s nothing more personal than a hand-written notecard! The best part about these notecards is that people feel bad about throwing them away so they’ll keep them around and it will remind them of you every time they look at it. Your personal note may be the only one they received, this year, that wasn’t a preprinted one. Check it out, even family sends holiday cards that are preprinted. Believe me, they are emotionally hungry!

Educational Events – You should have regular educational events, such as first-time homebuyer’s seminars, Mold classes, and social media education for people in your database network. This will help them realize that you provide service and value.

Other Events – Other events, such as social events, holiday gatherings, and customer appreciation parties can make clients feel like they are appreciated as well as remind them that you are the resource in real estate.

Of course, don’t forget about the other tried-and-true methods of communication, although it may not exactly be as personal:

Direct Mail with a Call to Action – Direct Mailers are often an effective way to remind people that you’re out there and you’re looking for new business. You can try making a mailer that might be useful to certain people, like a Football team schedule or a calendar, so that they’re more apt to hang it on a wall and think of you every time they use it.

Social media – You definitely should be up to date on social media networks. Try Facebook and Twitter to start, and then perhaps try adding in LinkedIn, Pinterest, and Instagram when you reach pro levels on the other two. The key is that you be up to date, if the last post on your Facebook page is from 2014 we have a problem, as it doesn’t look like you’re an active agent. 58% of marketers indicate that their social media efforts have generated leads. Social media produces almost double the marketing leads of trade shows, telemarketing, or direct mail.

Facebook Ads – Facebook ads, if you’re unfamiliar, can be posted from your Business Page. If you don’t have a business page you need to have one to differentiate your personal life from your business life on social media. Once you get a page going, you can run a Facebook ad, which is super cheap, starting at only about $5, and it’s ultra-effective. Content marketing costs are 62% less than traditional marketing and generates about 3 times as many leads.

Video – This is the wave of the very near future. Try using Facebook Live to record and exciting one-minute blurb about a new restaurant, an upcoming event, or even an open house you are having. The sky is the limit on this one. You can download this and use it in other ways as well. The wonderful news is that Video is trending, and Facebook algorithms push your video to the top of people’s news feeds, so by simply posting a video you’re already increasing the chances of it being seen over your other methods of communication by almost 3 times as much.

Blogging – If you want them to follow your blog, be a resource. Provide relevant information that showcases your knowledge and post it on LinkedIn as well as your blog. The search engines love new content and this will set you apart as a noted expert in no time at all. Everyone wants to follow the expert. 88% of business buyers say online content plays a major to moderate role in vendor selection, yet just 9% of respondents think of vendors as trusted sources of content; the most influential types of content across both the awareness and evaluation phases of the buying journey are third-party validated research reports and studies.

Newsletter – Your newsletter can include a lot of things, such as business recommendations, a featured resource story written by you, an editor’s corner showcasing a testimonial or story that causes people to follow you, and other relevant information. The more informative the better, people will be more inclined to keep it and share it if it provides important information. Also, when you send out your newsletter using a source like Constant Contact, Mail Chimp, Service for Life, or ConvertKit (blogs), be sure to have the analytic features activated. This will tell you who opened or didn’t open the newsletter, who clicked on the links and who didn’t, and how long the average person spent reading your newsletter. You’ll be able to use this information to call those who liked it and find out if they have any businesses or individuals that they can recommend that may appreciate the newsletter. For those who didn’t, you can call and make them aware of its value so they will open the email. Additionally, the Constant Contact program and others have a feature where you can send out a repeat e-mail blast to remind people to open something that they haven’t previously.

Agents should focus their short and long-term business on referrals. Your database should be built with a sustainable fan club of loyal followers in mind. This is an important key to any business, but especially to businesses revolving around sales. You should be reaching out to people constantly to add to your database, but the most important thing is to continue to cultivate those people who are already in your fan club. Remember, they know 200 people that you probably don’t know.

You can continue to cultivate your growing fan club by:

Personally engaging with your Fan Club database – Send them e-mails and call them whenever appropriate and possible. You can send them birthday cards as well, or even anniversary cards from when you sold them their last piece of property.

Being active on Social Media – You should post at least once a week at a bare minimum. 60% of marketers create at least one piece of content each day. It’s acceptable to post several times a day. As long as it’s either interactive, useful, or entertaining, you can’t really go wrong posting it. What people don’t want to see is too much personal information (like your granddaughter’s dance recital pictures) or repeated requests for them to buy or sell something. Sales is about name recognition and annoying consumers will result in the opposite of what you are trying to master. 71% of consumers who have had a good social media service experience with a brand are likely to recommend it to others.

Having a Facebook Group – Having a Facebook group is a really good way to share information with people who want information from you. On your Facebook page, you’re sharing with people who follow you but may not necessarily need a lot of updates or information, but if you set up a group for people who need and have requested information, it’s easier to post more frequently without feeling that you’re bothering them. You can even set up different groups like “Bob Smith’s Facebook Group for First Time Home Buyers” for example, to target different audiences within your network.

Farming a demographic or geographic location. – Pick an area that you’re very familiar with and that you love. It could be somewhere you grew up, a place you visit often, the neighborhood where your family resides, or just an area of town that you are passionate about. It could also be a community with the most potential for growth. Suggestions for farming a geographic location are utilizing your MLS for tax records, finding expired or withdrawn listings in that area, or even buying call lists or zip codes in that area. You can drive around and look for rental signs or for sale by owner signs as well. I have a friend who contacts any property owner with a piece of land that is overrun or overgrown, or desperately in need of repair. Contacting local businesses like nail salons and hardware shops could be a great way of building yourself in an area. Not only are you able to reach the local business’ customers, but you establish yourself as someone who’s helpful and willing to do what it takes to help their business grow and build. You can become active in the PTA or neighborhood association, make Facebook ads or other social media ads that target alumni of a certain popular university or club, buy a billboard in that area, or place an ad in the church bulletin to achieve demographic farming success. Also, selecting a prime location that has a rental room or a club house that can host your events is a wonderful idea and can be used for both geographic and demographic farming depending on how you advertise. Education is the window into a consumer’s ability to trust you as a reliable source. By establishing yourself as a resource, you no longer are viewed as a salesperson but as a community partner. Find out if the area you want to farm has an active monthly newsletter. If not, offer to do one for them. If they already have one, build one that is unique and fun that doesn’t conflict with the existing community newsletter.

Low or robust listing inventories won’t matter any longer as long as you have a referral generating business building strategy.

You also want to make sure that your consistent with the way you brand yourself and the way you approach your marketing. If you’re a down-to-earth funny guy, and you like to make jokes- you should have that come through on all of your branding. If you’re a very serious and detail-oriented woman, that should shine through in your statistics and market analysis. What you shouldn’t do, is confuse people. It’s okay to be a person who likes scuba diving one day, attending a football game the next, and then going to work the following day, but that’s your personal life. It’s okay to be multi-dimensional in your personal life, but being multi-dimensional in your marketing can confuse people causing you to not be taken seriously and ultimately discarded. Be yourself, just be consistent. Many successful companies say that “the 3 Cs of customer satisfaction” are “consistency, consistency, and consistency.”

The bottom line, is that you can choose any strategy that works best for you, but the key is that you do it consistently. If you hit one method of communication hard and then forget about it for days, weeks, or even months at a time, your fan club and tribe will not be as receptive to future communication. You want to be as dependable and responsible when it comes to marketing as you are when it comes to taking care of a listing. Slow and steady wins the race here, no one wants someone who posts a hundred times and then forgets about their cause. Be consistent and helpful and you can’t go wrong in generating referrals, and sustaining your successful real estate business. Cultivate Relationships and then never stop following up!

The Real Estate Business can be hard as any kind of career in sales. Does it have to be? The answer is NO. Cultivating relationships is about building a long term database that ultimately becomes your Fan Club if you are willing to do what it takes to get there and sustain this level of consistency.

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Real Estate Business Without Pleasure

Here’s a short list in which many investors are utilizing to close the deal on real estate investments day in and day out. Would you like to get your hands on it? Well below you’ll find the list in which many potential investors would kill for or you ready to do the same?

Winging It – virtually every real estate course made available online or in the offices of real estate investors advises potential investors to practice the “fake it, ’til you make it” strategy and to just go with the flow even without a plan. This is one of the many ways so many people are swindled out of hundreds and thousands, and sometimes millions of dollars. You never want to go into a business without a plan.

The Absence of a Professional Team – if you’re seriously considering breaking into the business of real estate; good luck. The important thing to remember is to not go at it alone. It’s important that you build a team of professional that have your best interest at heart. This may be difficult from the offset but with research and information it can be accomplished.

Breaking the Bank on a Deal – never enter into a business deal with the intent of purchasing a home without first knowing the worth of the property. There’s never a bad time to invest in real estate regardless of what the media is saying.

Building Business Entities without Your Name – to many people end up losing everything they own for this very reason, don’t become a victim of this. If you’re in the business of gambling, it would be best to go to Las Vegas. It’s important that you do extensive research in order to get a better understanding of how corporate entities work.

The Wild, Wild West Mentality – if you’re under the impression that you can do whatever you like when facing homeowners in dire need, it would be best to take a look in the mirror and rethink your assumptions. It’s all about following the rules if you want to be successful in this line of work.

Title Researching or Not – this can lead you into an abyss with no possible way of getting out. Title searching is important and should not be taken lightly, so it would be smart of anyone investing time, money and life into real estate to learn how to search titles wherever necessary.

Cash Reservations – in the real estate business it will always be about the money, no matter what. It’s not always about using your money to find deals, land deals or close deals; however, it will always take money to make money in real estate regardless of what anyone may say.

Your Education Should Not Go Ignored – education has always been the gateway to success and it doesn’t change in the business of real estate, and education should not be based upon some infomercial you saw last night. Educating yourself can come in various forms but don’t waste money on education that you could be using for handling deals. Too many people spend hundreds and thousands of dollars on real estate classes only to have nothing to show for it. Let your education speak for itself through the closing of MASSIVE DEALS.

Crunching the Numbers Correctly – this is one way many people learn the hard way about real estate investing because they end up misjudging either their purchase figures or their fixer up and/or holding cash. This is one mistake that could end your career before it even gets started.

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Set Yourself Up for Success With Your Real Estate Business

So you’ve decided that you want to invest in real estate. It might be that you are still working a full-time job or you are running a business that right now takes up most of your time. Don’t make the mistake of treating your new venture as a side hobby. Diversifying and building your wealth with real estate is one of the best things you can do for your future.

Buying investment real estate is an activity that should be treated as a business and not a hobby. The mistake that many newbie investors make is that they are just making it up as they go along and are not taking the time to do their homework on how to set up their business before they start looking for properties.

It is important to not only structure your business well before you go out buying properties, but also to make sure that you put forth the most professional image possible. There are a lot of aspects to doing this well that I share with my clients, and I will share just a few simple strategies with you here.

First, every new business should you have a name. Choose a name that reflects your investing goals, the industry, and be sure to stay away from words that might have legal implications (ex. “Realty”). Also, be sure to check the availability of the name with your local Secretary of State. This is an important first step, because this is the name you will use with everything from registering your business with your state to opening your bank account. You don’t want tenants making payments made payable to you personally.

That leads us into my second recommendation. Now that you have a business name and have ideally registered it with the state, you will also want to keep your business expenses separate from your personal expenses. The easiest way to do this is to open a business bank account separate from your personal bank account, and make sure to have all income and expenses for your properties and other business related expenses flow through it. Don’t make the mistake of mixing your personal and business expenses, because should you ever be audited by the IRS you could lose some if not all of your legitimate business expenses.

When I started investing some years ago, one of the first things I did was create a name and open a bank account. It gave me a professional appearance to all of the vendors and customers I came into contact with, and an easy way to start accepting payments and tracking expenses.

Lastly, I recommend meeting with an attorney (real estate or trust & estate) to determine the best legal entity for your personal circumstances. Many real estate investors use a Limited Liability Company (LLC) because of the limits on their personal liability in the event of a legal suit. Again, check with your attorney to determine what will work best for you, but make sure you do not own your investment properties in your personal name.

Using these simple strategies, you are well on your way to setting up your new real estate business for success.

Wishing you much success,

Jewell Staley
Real Estate Investing Mentor

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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.

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