The National Association of Realtors calls real estate one of the widest career selections in the business world. By entering this industry, you can work with individuals or businesses and set up your headquarters almost anywhere in the world.
While owning a real estate company is a flexible way to become an entrepreneur, like any business, there are many steps you need to take to get there.
First, and foremost, you need to know why you want to start a real estate business. There will be obstacles, even when you know all the steps to take. With a strong “why,” you have something to come back to when the going gets tough.
With that, it’s time to get started. Use these tips to help make your real estate brokerage business a reality.
1. Draft a business plan for your real estate brokerage
A well-thought business plan can guide you through the launch process and ensure that every aspect of your real estate firm is budgeted for. Your business plan can be as extensive or simple as you feel is needed, but consider all the areas of a complete business plan as you begin to craft it, including the following:
- Business objectives and personal goals
- Products and/or services
- Market opportunities
- Sales and marketing
- Competitive analysis
- Operations and management
- Financial analysis
Some of these plans are several pages long, but you can use an online tool as a starting point to map out your business.
2. Choose your legal business entity
There are multiple business entities that you can operate as when establishing your real estate brokerage. The four most common are:
- Sole proprietorship: a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business.
- General Partnership: A general partnership is the simplest variety of partnership, and created automatically when two or more persons engage in a business enterprise for profit. No state filing is required.
- Limited liability company: A limited liability company (LLC ) is a business entity that offers limited liability protection and pass-through taxation..
- Corporation: A corporation is a separate legal entity owned by its shareholders, thereby protecting owners from personal liability for corporate debts and obligations.
Depending on which business entity type you choose to operate under, you may need to register your business with the IRS and secure an employee identification number (EIN). With your EIN, you can then open a business bank account to separate your professional and personal assets.
In addition, you may also need to file a beneficial ownership information (BOI) report with FinCEN (Financial Crimes Enforcement Network). FinCEN is a bureau of the United States Department of the Treasury. As a part of the Corporate Transparency Act, LLCs and corporations are required to provide ownership and company information to FinCEN unless they qualify for an exemption. (Most small business LLCs and corporations will not qualify for an exemption.) To see if your business may need to file a BOI report, take this quiz.
For more information, visit: Beneficial Ownership Information Report.
3. Obtain business licenses, permits, and insurance
You need to be licensed in order to become a broker and have a real estate license to take on customers. Evaluate the licensing requirements in your region and start studying for any tests or industry exams to earn your certification.
Don’t forget that you are still obligated to get the necessary licenses and permits that are required for all types of businesses as required by your local jurisdiction.
You will also need business insurance for office space, business liability, and any employees you bring on. Insurance needs vary by state and business type, so working with an agent is the best way to ensure you are fully covered.
4. Create an operating budget for your firm
Once you have your licenses secured and registrations completed, you can start to focus on setting up your firm. Draft a budget for your expected costs associated with operating your business. These can include rent for office space, monthly utilities, insurance, lead generation, marketing expenses, staff, and relevant technology and software subscriptions.
The cost of opening your own real estate brokerage firm will vary depending on your goals and needs. For example, you may be able to save money by operating out of a co-working space if you are a sole proprietor.
However, you would want to expand your income opportunities by taking on employees and buying your own space as you grow.
To develop your operating budget, consider a few key questions:
- Will we need a business loan to become operational?
- How much income will we need monthly to cover expenses?
- Will we be solely commission-based or will we have other forms of business?
- What will our prices or income models be?
5. Market your real estate business
Once you have your real estate firm established and ready for business, you’re ready to market it. There are many marketing options for you to consider, including:
- Paid advertising: Launch a dedicated paid search campaign to drive direct and targeted traffic to your website or landing pages.
- Offline marketing: Promote yourself with flyers, events, and radio. Make sure your branding is consistent across all channels.
- Networking: Connect with potential clients and partners at networking events. Don’t forget your business cards to further connect with people you meet.
- Social media marketing: Create business accounts on the social channels where you’re most likely to connect with potential clients.
- Email marketing: Start building an email list that you can use to promote your business, share real estate tips, and more.
Don’t forget to develop a high-quality, SEO-optimized website, so your customers can easily find you. Later, as your business grows, display positive testimonials.
6. Establish good habits for lasting success
The first year opening a real estate brokerage is primarily focused on learning the ropes and establishing your brand. As you grow, develop habits that will help to ensure your success. For example, make it a habit to check in on expenses each month to make sure you’re spending wisely.
Don’t forget that as you take on employees and partners, you need to train them on your brand and the level of professionalism you expect. They represent you and their actions reflect your business.
Take steps to build a good foundation for your business
While you don’t need an extensive business background to open a real estate firm, it helps to approach your company with an eagerness to learn and grow. A basic understanding of finance, marketing, and even law can help you build up your business and make strategic decisions as an owner. Use your knowledge and curiosity to propel your real estate business forward from the very first day.
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