Real estate is one of the most popular areas for investing money among entrepreneurs and individuals. All this is due primarily to the price of it, it is stable and growing along with the growth of the dollar and the change of other economic indicators. Often, a real estate business is more stable than banks, because in a crisis they can go bankrupt or you can lose some of the money due to inflation, but a house or apartment, as it was in price, will remain. Having assessed all these factors, many people who want to invest money go to contractors and buy apartments, with the aim of subsequently renting it out and making monthly profit.
REAL ESTATE AGENCY
To become an official intermediary in the real estate market, you must open an agency. In this case, the starting capital may be 2-3 thousand dollars. Over time, an agency of one person can become a growing company.
For a newcomer to the market, the minimum starting capital is at the level of 15-50 thousand dollars (the amount depends on the region). The expenses will go to the office, the minimum staff is 4 people (manager and realtors), a non-staff payroll fund (notary, lawyer), equipment, registration and advertising.
The main section of a business plan from scratch for a real estate agency is marketing. From the promotion of the company depends on the number of customers, reputation and, consequently, profit. The payback of such a project is difficult to calculate. Profits may not be available for the first 4-6 months until a good customer base is ready.
Types of Real Estate Businesses
It is worth noting that a small real estate business can be built in several main formats:
- You, as a private person, buy a property, make repairs there and rent it out. It also includes private contractors in the commercial sector who are building stores and office centers for rent. Leasing real estate as a business is one of the most popular ideas, especially in metropolitan and cosmopolitan cities, where people from different regions of the world come to work. In addition, there are many students who also need housing. All these factors make the market grow, and encourage people to invest in this profitable direction.
- You are a developer who sells apartments, offices or houses. Your goal is extensive advertising and cooperation with real estate companies. This is a business for large market players who have a large start-up capital and their own team of lawyers, economists and experienced builders. High risks, huge investments and a long period of receiving building documents scare away many beginning entrepreneurs. But there is a way out, working in provincial cities, where it is much easier to do this, the main thing is to test the demand for apartments in this region.
- You are an intermediary between the owner of the apartment and the person who wants to buy, rent a house. In fact, you will be engaged in the sale and rental of private and commercial real estate in your city. To do this, you will need to conclude an agreement with both parties, and for the completed transaction you will be paid the percentage specified in the agreement. All newcomers will start from this direction, and often even get a job in a real estate company, gain experience, ability to sell or lease objects, communicate with customers and probe the business as a whole.
Too many Options, but how to work on them?
As you can see, there are many formats for starting a real estate business, and you can really find yourself in one of these segments. It is important to understand that the economic crisis is forcing the constructors and contractors to follow a same design of construction to provide space for maximum customers, a vivid example of a smart apartment is with an area of 10 – 18 sq.m, where all the rooms are located in one space and only the bathroom is separated. The price tag for such residential properties is low and young people are willing to buy such housing. The main thing here is the ability to adapt to the market and collect a base of regular customers with whom you will work.
A win-win option is to buy a property in very poor condition, repair it and then sell it at existing market prices. You can find a similar object by tracking ads in specific publications. Moreover, the worse the condition of the property is, the easier it will be for you to convince the owners to significantly reduce the price, but the main condition is that housing should be located in an area in demand among residents of the city. In the repair, do not use too expensive finishing materials, as well as too bright colors: everything should be worthy, neatly not catchy. Depending on how efficiently you are able to bargain with apartment sellers and find inexpensive building materials for repair, you will be able to earn 30-50% profits of the amount of investment in real estate in this case. If, while you do the repair, the prices on the market begin to rise, then the profit can reach 100%.
Another option on how to make money on real estate is to open a small hostel by converting an office or your home into this type of commercial housing. Now this is the peak of popularity among visitors to major cities. After all, going to a hotel is very expensive, and spending the night at a hostel is cheap.
Most transactions in this segment are carried out through several main channels for attracting customers. Firstly, this is a personal database of clients and communication with owners of apartments, offices and other things. Secondly – this is advertising in the media and message boards. Thirdly, now the most effective tool is the Internet. A website with objects located there, contact information and customer reviews can really effectively attract the target audience. Spin up groups on social networks, all this makes your business more stable and adapted to modern market realities.
Starting a real estate business is often difficult to see from the outside. Once you know how to smartly enter the real estate market, you will understand that it does not require that much amount of money, rather it is just about getting contacts and loads of leads. This post has provided a brief insight about how to start a real estate business for which some ideas have been provided. These were only exemplary ideas and options for their implementation.
It is important to understand the general principle, but do not take everything as an instruction. In one place it will bring profit, and in another it can turn into losses. It is rather an example, a direction for imagination and general recommendations. You can find great options in both residential real estate and manufacturing facilities. You can do anything if you see the possibilities and be able to calculate options. Remember that even the most profitable business can be unprofitable if you do not understand it. And vice versa, even the most risky and disastrous business, in the hands of a professional, turns into a brilliant game, played at best!