The real estate business has to be one of the top five favorite professions of all time. The reason is simple. It does not need a specific qualification and/or experience. Yet, the returns can be lucrative. But, nothing comes for free. One has to work hard in the right direction to bear the fruits. Here are some suggested pointers to consider before you make a move.
1. Acquire the necessary skills
To excel in any business, the first step is to have a thorough knowledge of the basics. In the case of real estate, you must have the know-how in construction and property management. Negotiation and people handling skills are also very important. Last but not the least, you should remain up to date about property related policy matters and tax issues.
2. Build a strong network
The need to have a strong network cannot be over-exaggerated. In the property business, the leads generally come from the word of mouth. It is vital to keep yourself responsive within your social and professional circles. You may never know who could be your next potential client. This will help you to maintain your contacts and keep them growing.
3. Engage via social media
You need to have a presence on social media. You should engage people through at least three platforms. Facebook, Twitter, and YouTube tend to bring out good results. But you can always engage via other platforms or develop your own website. The options are endless. Keep on trying till you find a perfect fit that works best for you.
4. Implement a winning strategy
Here are a few strategies, you can execute one or more:
- Buying and selling (lump sum or installment basis). You can buy properties and sell them for a profit. The idea is not to make any value additions on the same. A classic example is buying a piece of land or other kinds of new/old properties. Often, there is an option to pay the dues in installments which is good from a cash management point of view.
- Vacation rentals (seasonal income, high rates, housekeeping). This is a modern concept. It can give a boost to the existing income of a household. You can rent out a part of your house. As an alternate, you can have an “Out Building” for the guests. It is possible to run this kind of business with little or no investment. The injection of funds together with continued housekeeping can increase revenue and profit. The downside is that there is no guarantee for a regular stream of income. Yet, it attracts higher daily rentals as compared to fixed monthly arrangements. Tourists also prefer vacation rental places from a convenience and cost point of view. It is a win-win situation for all.
- Long duration rentals (fixed/regular income, low maintenance). Renting properties on a long-term basis is a traditional method to earn money. It provides a fixed income to the owner. Rental income @ 5% per annum is an international benchmark. It is a good return on investment (ROI) on the total property value. Anything more is a bonus.
- Refurbishment projects (decent profits, short lead time). Properties needing a makeover is a great avenue for generating lucrative profits. There are three parts to this business model. The first is to buy property at a lower price than the existing market. The second is to give it a good finish at a low cost. The third is to sell the property above the market value. Making all three ticks is a recipe for success. As an alternate, outperforming in one of these areas and the rest on a normal scale can also bring in profits.
- Construction projects (high profits, long lead time). A Construction project is the most time-consuming business model in real estate. The cycle starts with the acquisition of land and ends upon handing over the keys to the new buyer. There are a lot of stakes in this business model. Critical ones are budget control and liaison with the contractors. But, if you fulfill these prerequisites then this method may be a great fit for you.
- Brokerage services (commission based work). A laptop and a cell phone are all you need to run this kind of business. It is good to have an office but it is possible to network from the comfort of your home. You can share the details of the properties over email or smartphone applications. One or more visits may be all you need to zip the case. This is how property deals take shape these days. Buyers and sellers are in different countries. Yet, no hiccups involved.
- Property valuations (non-traditional field). It is a specialized field in the real estate business. It deals with the value estimation of a property. The experts take into account several factors (age/condition, size/usable space, no. of rooms…etc.) related to the property. The idea is to arrive at a ballpark value closest to the actual market before sale negotiations.
5. Partner with a team of professionals
You need a team of professionals that you can rely on.
First, there are real estate brokers. These are the people that drive the real estate industry. They provide a direction about the current market situation and future projections. These are the business partners who make a good liaison between the buyers and sellers.
Second, you have to have experienced contractors on board. They will help you to check the worthiness of the renovation properties. In the case of construction projects, work can be sublet to them to get the work done as per timelines and budgets.
6. Decide on a budget
To run a successful property business, you need capital. You need to spend money on acquisition, renovation, and construction. But, you should divide resources into marketing, business operations, and social media activities.
7. Develop your niche
After the strategy, you need to develop your specialty. This is important to determine your customer base. You need to decide on the location that you want to focus on. Decide one or more cities where you want to serve clients. It can be more than one country in case of a big establishment. But, to achieve this, your presence is necessary (self or representatives). Last but not least, you can specialize in projects you want to pursue. Make sure there is a growing demand for such projects from the clients.
No need to spin your head to hit a unique idea for a startup. Rather, go for a classic business, add your personal touch, and leave your footprint.