A real estate business can be your pathway to economic success and personal fulfillment.
But this dream hinges on setting up your business correctly from the start.
It is a long and often challenging journey to owning a successful real estate business.
Still, it is doable with dedication, strategy, and patience.
I put together this guide to help you learn everything you need to know about starting a real estate business.
The Easy Parts of Starting a Real Estate Business
Getting into the real estate business is relatively straightforward. The particulars vary from state to state, but the process involves taking a pre-licensing course, passing your licensing exam, and filing a real estate licensing application.
You’ll also likely have to join a brokerage firm before going into business on your own. While this will delay setting up your own company, it will help you gain valuable experience and expertise. In addition, you’ll be able to transfer your newly acquired skills and knowledge to your business. This makes it far more likely that you will succeed in your venture.
Setting up your real estate business is equally straightforward. You’ll need a business name, business address, employer identification number, and file Articles of Organization. The entire process can take as little as a few hours, provided you have all your documents and requirements in order.
Finally, creating a professional website is equally easy. With content management systems (CMS) such as WordPress and Wix, the process is easier than ever. You don’t even need any design or coding experience to set up a professional website. These platforms will even handle the technical aspects, such as acquiring a domain on your behalf.
The Difficult Parts of Starting a Real Estate Business
Some parts of starting a real estate business are more challenging to accomplish. For one, many people have the misconception that real estate agents have a lot of free time. The truth is, running a real estate business requires juggling many tasks on any given day. Typical duties include showing properties, drafting contracts, and marketing your business. New agents also need to work weekends to drum up new business. You’ll likely spend at least full-time work hours working a real estate business, if not significantly more, especially when you’re just getting started.
The real estate business is also cutthroat. The business has relatively low barriers to entry, meaning that there is fierce competition in the industry. As a result, it can be difficult to consistently develop new strategies and ideas to help you stay relevant. You’ll also need a value proposition that your competition isn’t offering, which can be difficult to identify, especially initially.
Finally, building and managing a client pipeline can be challenging, especially in the beginning. But customer relationship management (CRM) can help you handle various aspects of your client pipeline, including generating leads, managing client inquiries, developing and rolling out a marketing campaign, and providing after-sale services.
While most CRMs work for any type of business, Wise Agent is specifically designed with the real estate market in mind. This CRM comes jam-packed with useful features, including lead generation, contact management, transaction management, marketing automation, and team features.
If you’re still interested in getting into the real estate business, here’s how to go about it step-by-step.
Step 1 – Get the Technicalities Out of The Way
There are a couple of things that you’ll need to get out of the way before you can dive into creating your real estate business. These include business licensing, and legal requirements to complete before you can start setting up your business.
Fulfill Licensing Requirements
You’ll need a real estate license before launching your career. The time, cost, and qualifications of acquiring your real estate license vary from state to state. You can consult your local real estate bureau to find out about the local requirements.
You will most likely need to take a pre-licensing course. Additionally, you’ll need to take a licensing exam. Most states also require you to work with a brokerage firm for two or three years. Then, you’ll be free to start your brokerage firm. After that, you’ll be able to rent, sell, or broker real estate for clients under your own company and brand.
Join the National Association of Realtors (NAR)
Although not mandatory, you’ll need to join the National Association of Realtors if you’d like to call yourself a REALTOR®. But first, you will need to join a local real estate association. The REALTOR® designation will help prove to clients that you are qualified to process their transactions fairly and ethically.
Additionally, the NAR grants you access to the Multiple Listing Services (MLS) database. This database contains property information, rules and best practices, and networking opportunities with other real estate agents and brokers. This step may take a little while, but it’s worth adding to your career and business goals.
Take Care of Legal Requirements
You’ll need to fulfill several legal requirements before you can start your real estate business. These include filing for a state and a local business license and designating your firm as a business entity. For example, will your business be an LLC, S-Corp, or C-Corp?
Most people prefer to form a limited liability company (LLC). The company helps to protect personal finances and protect against personal liability. However, you may need to hire a legal advisor to help you navigate the legal terrain of starting your real estate business.
Additional legal requirements for setting up your real estate business include:
- Choosing a unique business name
- Filing Articles of Organization
- Creating an operating agreement
- Applying for a tax identification number (TIN) with the IRS
Your lawyer can also help you identify additional permits and requirements for setting up a real estate business in your state or local area.
Step 2 – Get a CRM
The typical real estate transaction is drawn-out and has multiple steps. Keeping an eye on every aspect of the journey can be overwhelming. This task will only become more complex as you acquire more clients. Customer relationship management (CRM) software will help you to handle your business more efficiently.
The software may even eliminate the need for hiring non-essential staff. You may want to look into a CRM specifically designed for the real estate business. Such a CRM will have specific features that you need to run your business efficiently. You’ll also be able to use some of these features in the following steps.
Sign Up For Wise Agent
While there are a few dozen CMRs out there, I highly recommend Wise Agent for this step. It comes with all the features you need to handle clients. These features include contact management, lead automation, transaction management, marketing, landing pages, time management, and conversations.
Wise Agent has three pricing structures costing $29 per month, $299 per year, and custom pricing respectively. The basic plan gives you access to all of Wise Agent’s features. The only difference is you pay a monthly subscription. The next plan offers a 14% discount by choosing annual billing. The first two plans should be good enough if you’re just setting up your business.
These plans come with:
- Drip marketing campaigns
- Team-friendly calendar
- Lead automation
- Free 24/7 support
- Unlimited training
- Transaction manager
- Contact manager
- Social media enhancement
- Reporting tools
You can also try any of the packages for free for 14 days if you aren’t sure of the right plan for you. Additionally, your plan comes with complimentary one-on-one onboarding. You don’t need to worry about learning to use the software from scratch. You’ll have a dedicated rep to take you through the entire process.
Set Up Your CRM
Setting up Wise Agent is incredibly easy. First, you’ll be prompted to fill out your profile information. Then, you’ll also have to fill in the same information for any team members. You’ll also be able to customize your emails and flyers with your brokerage logo.
Step 3 – Craft Your Business Strategy
You’ll need a roadmap for how you’d want your business to operate. For the most part, you’ll be looking three to five years in the future. However, you can later take a long-term outlook, up to fifteen years into the future. Strategizing for the short term will help identify the immediate steps you need to hit the ground running.
Create a Personal Plan
You’ll need to have a personal plan if you hope to see your business through to success. A personal plan highlights your reasons for getting into the real estate business. It also covers what you’d like to accomplish with your business. Some of the areas to consider include your income goals, ideal working hours, what success looks like for you, and personal fulfillment from your company.
Find a Niche
Again, it is tempting to cast a wide net with the hope of landing many clients. But, a niche will help you deliver a unique value proposition. Moreover, this approach gives you the best chance of edging out the competition. Some of the real estate niches to consider include:
- Residential real estate
- Condos
- Resort and vacation homes
- Property management
- Rental properties
- Commercially zoned real estate properties
It also helps if you can target a specific segment of the population. These may include first-time home buyers, retirees, or expanding families. It is worth creating a buyer persona at this stage. A buyer persona is a profile detailing your ideal clients. Be sure to include details such as age, income, education, location, family situation, and pain points in your buyer persona.
This profile will help you quickly identify your target clients. Additionally, you’ll be able to connect with their goals, fears, desires, and pain points. This personal touch may be your edge over larger firms that tend to take an impersonal approach to their clients.
Conduct Market Research
You now have a well-formulated idea of the kind of real estate business you want to set up. But you’ll need to see if it’s viable before moving forward. Market research is crucial for identifying any gaps in your business idea.
Start with the neighborhoods you wish to offer your services. Are the properties desirable? Do the prices provide a good profit margin? Also, look into the neighborhood’s resources, including shops, schools, recreational offerings, and entertainment venues. All these factors play a part in determining the location’s prices and desirability.
Also, look into the demographic and economic trends for your desired location. Are there opportunities to serve your target market? For example, Millenials are currently settled in their careers and becoming more economically stable. As a result, they may be more willing to spend on starter homes. On the other hand, baby boomers may be more inclined to downsize or look into properties supporting senior living.
Create a Business Plan
A business plan will help you to outline your businesses’ operational and financial goals. Here, you’ll plan how to actualize your business idea. Your business plan doesn’t need to be extensive at this stage. You only need to focus on the crucial details.
Some of the areas that your business plan should cover include:
- Executive summary – Most people write their executive summary last. This section is a summary of the entire plan. It’s crucial for giving potential investors a quick look at your business plan.
- Industry overview – This is an overview of your industry. Subsections may include industry trends, key players, and estimated industry sales.
- Market research and analysis – Covers the details of the market you plan to serve. The details may include a breakdown of the market segments, your customer’s needs, and your market’s geographical location.
- Competitive analysis – Outlines your direct competitors. Be sure to include a section of how your competition meets the market’s needs. Additionally, it is a good idea to outline how you intend to differentiate your products or services.
- Financial plan – This is crucial if you are looking for investors. This section covers all financial considerations. First, include the estimated startup cost. Other essential financial documents to include in your financial plan are the income statement, cash flow statement, and balance sheet.
- Operating plan – Lays out the practical aspects of your business. Some critical considerations here include location, equipment, and the employees you’ll need to hire.
- Management plan – Outlines your staffing needs. This section also includes your legal and management structure.
- Sales and marketing plan – Describes how you plan to promote your business. This section includes your market strategy and your value proposition.
It may be worth speaking to an experienced entrepreneur for guidance when creating your business plan. At the very least, get an expert or seasoned entrepreneur to review your business plan and offer recommendations.
Step 4 – Build Your Brand Identity
One of the most satisfying aspects of starting your own business is building a brand identity. Aside from your logo, colors, and typography, your brand conveys your company’s best attributes to the public.
Additionally, a strong brand will help you to build recognition, credibility, and trust with your customer base.
Define Your Brand
Ideally, your brand should portray what makes you different from the competition. In a fiercely competitive market, your brand identity will help you to stand out. Think through what makes you different. It could be your passion, your legal background, expertise, or personality. Use these aspects to create the foundation for your brand.
There are additional considerations when building your brand. These include:
- Your target market
- The identity you’d like to project with your real estate business
- Your values
- The unique value proposition your business offers
- The essential aspects of your customer’s experience
Use these factors to choose a unique business name that accurately defines your business. These factors will also help you choose a unique company slogan that accurately describes what you have to offer.
Build a Business Website
According to the National Association of Realtors, 51% of buyers found their homes on the internet. Therefore, having a business website is a must in today’s digital age.
In most cases, your website is the first point of contact with potential clients. Thus, you’ll need to create a professional website that embodies the best your brand has to offer. Include crucial information such as who you are, your reputation and qualifications, and the services you offer.
Also, consider that clients aren’t just purchasing your services. They are also investing their money in a relationship with you. That being the case, ensure that your personality shines through your website. This may include details about your values, your personal approach to real estate, and anecdotes about your experience in the industry.
Wise Agents lets you easily create landing pages. Landing pages refer to where your customers land when they click your link. The CRM will even assign you a domain for your landing pages. Alternatively, you may choose to use your domain. You can use these pages for open house sign-in sheets, marketing call-to-action, or single property websites.
Build a Social Media Presence
A social media presence is equally vital for connecting with potential clients. Most of your website traffic will likely come from your social media pages. Consider the platforms where your target audience spends most of their time.
For example, LinkedIn is perfect for connecting with professionals. Millennials, on the other hand, may prefer Twitter. You may also choose to cast a wide net and create profiles on different social media platforms.
Step 5 – Launch Your Business
In most cases, starting a real estate business doesn’t require much investment. You might not even need an office location. The initial stages of your business primarily consist of gaining experience and building a reputation in your niche. With a CRM like Wise Agents, you may not even need to hire staff until business picks up.
Market Your Business
Your web presence and social media profiles may take some time to yield leads. But, you can start immediately with your existing network. This network primarily consists of family, friends, acquaintances, and former colleagues. Speak to them about what you’re doing. Your network will prove indispensable in meeting new people and creating new connections with potential clients.
Additionally, your CRM will prove indispensable in creating your marketing campaign. With Wise Agent, you can:
- Send mass personalized emails
- Set up drip campaigns
- Create real estate newsletters
- Send text messages to potential clients
- Create and send real estate postcards
Find a Mentor
Leverage your connections to find people with expertise in real estate. This might be a realtor adept at social media, an agent who’s effective at closing deals, or someone with a brand you admire. Shadow your mentor and arrange for regular breakfast or lunch meetings to learn all you can about the business.
You can never be in business long enough to uncover all the secrets of the trade. Mentors can also offer advice and guidance about your challenges and pain points. There is a high likelihood that they’ve been through the same challenges.
Additionally, networking events are terrific places to meet seasoned industry players. These connections can help build your reputation and credibility. Consider focusing on quality connections rather than quantity. Prioritize on aligning yourself with realtors and brokers that you trust and admire.