(Newswire.net — January 3, 2020) — Real estate can be a highly profitable business to get into. Virtually every other business and entrepreneur relies on it. If they aren’t taking large office spaces in the most prime locations, they are building housing for their massive teams, renting some of the most expensive apartments to be near the action, or exiting their successful startups and buying cabins in the mountains as getaways.
So, how do you get into this highly lucrative industry and how do you put together a powerful business plan?
Define Your Niche
There are many ways to participate in real estate. Which will you choose?
There are mortgages, investments, and brick and mortar property. There is office, industrial, raw land, retail, multifamily apartments, single-family homes, mobile homes, luxury condos, rentals, flipping, and more.
You can do it in a very traditional way or you can bring new technology applications to this space.
The more focused you are on your cross-section of these parts, the faster you can go.
Research
A lot of very intelligent tech-savvy entrepreneurs and huge companies and funds have tried to bring change to the real estate industry after raising initial rounds from sophisticated angel investors and other startup funding sources.
It’s magnetic due to just how massive it is. As well as, how painful it can be as a consumer. Most have failed. As a gross generalization, real estate people don’t get tech. Tech people don’t get real estate. That makes it really hard to change.
Make sure you do your research. Make sure you know how big your share of the market can be, what the challenges are, why no one else has achieved what you want to do, and if there is really a demand for what you plan to offer.
Research and find out what licenses you need, the legal structure you need, what regulations will govern your work, and the taxes involved.
Create Your Business Plan
Writing out your business plan will help you think about your new venture through. It will help you identify your needs, fill in the gaps and connect the dots.
Three of the most important parts of your business plan are:
- The executive summary
- Marketing plan
- Budget and cash flow analysis
If you are planning to raise money to start your real estate business, then you will also want to create a pitch deck.
One of the great advantages of this space is that in addition to venture capital, there is a lot of private individual capital, business debt, and mortgage debt to be leveraged to fund your venture.
Build A World-Class Team
Real estate is a team sport. Even as a solo realtor or house flipper you need a pretty substantial team.
If you plan to build a real business or a fast-growth startup, and one with the power to disrupt, you really need to build a strong team. The best team will win, and there are a lot of people vying to win this market.
If you’re coming from outside of the real estate world, make sure you really have some experienced real estate people on your team, and listen to them. If you have some familiarity with real estate, make sure you are gaining an edge that others don’t have.
That probably includes a team that is strong in technology, venture funding, and M&A.
Setup Your Business
You can’t start putting money in the bank until you’ve got your business setup.
Start by registering your domain name on a site like GoDaddy and business name. Obtain your tax ID number. Open a business bank account.
Make sure you obtain any required licenses. This is often by the state in this business. You may wish to start in one that has low taxes. Then, expand as you hone your model and are really ready to scale.
Location, Location, Location
They say where you invest in property or buy a home is all about location, location, location. This is probably even truer when it comes to starting your real estate business. Your business address and the initial market can make a big difference.
In some areas, there are more licensed real estate professionals and real estate businesses than there are property transferred every month. That means even taking a 1% market share is going to be a lot of work.
Yet, a 1% market share in some destinations and niches may be worth more than 50% in others. Choose your location wisely. Make sure it matches your brand and sets you up for success.
Test, Test, Test
Real estate can be one of the easiest businesses to test your ideas in. There are plenty of low cost and even free ways to test your concept and the market.
Make sure you use them. Instincts can be very valuable, but make sure you back that up with real data.
Prove your concept and that it is profitable. As they say, the golden rule in real estate is to make your money when you are getting in. Don’t make the mistake of simply speculating.
Start Marketing
Whether you are starting to create a buzz with a crowdfunding campaign, are raising equity from active investors in this space, or are going straight to finding buyers or sellers, grab your fundraising coach and marketing team, and make some waves. It is competitive in this space.
Be sure you aren’t just copying others when you aren’t sure what they are doing is working. Test, iterate, and scale.
This is one of the most profitable businesses you can be in if you do your homework right first.
BIO
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and at NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.