Real Estate Business Plan
The real estate venture is the most lucrative business in the USA and the entire world at large. Choosing to venture in the same is a bold move and a wise decision. It is the best decision because, with an appropriate real estate business plan, one can craftily, leverage through beyond the limits.
However, before diving deep into this business, you need to know the compelling facts about real estate. Below is the comprehensive list of necessary truth:
- By the end of the year 2019, the USA had 139.64 million household units. Of these houses, 43.28 million are occupied by tenants while 80.68 million by owners.
- A total of 5.34 million homes were sold in 2019. There is a likelihood of selling about 5.52 million homes in 2020 and 5.57 million homes in 202.
- The home ownership rate in the USA, which is the proportion of occupied households stands at 65.1 in 2019. That is a slight growth from 64.2 of 2017, and 64.8 of 2018.
- The leading home builders in the USA have revenue in millions of USA dollars. In Miami, Florida, Lennar Corp led in 2019 with 20.56 billion USA dollars and closely followed by D.R. Horton with 17.378 billion USA dollars.
- There is a projection of an increase in home prices. For instance, home prices are to be 3.5 per cent higher in the fourth quarter of 2020 than in the fourth quarter of 2019.
In summary form, there is a growing market for homes. Yet a slower increase in household units and an ever-growing tendency to own homes. Also, a diminishing renting habit among Americans. Buying a house with tenants lets you begin collecting rental income right away
Putting all the facts on a scale, it is plausible to conclude that the real estate business is the most thriving. And also, less risky. The sale rates for homes are steadily increasing across the years, a more promising fact.
Therefore, to leverage through these hard facts and become successful demands appropriate planning. For that, we give you answers to the most compelling real estate questions.
The answers concern planning, starting, and growing your real estate business.
How do you write a real estate business plan?
Real estate businesses bring out the agency’s mission, goals, and origin. It is majorly aimed at informing all stakeholders and employees about the direction of operations.
Generally, it should serve as the business blueprint. Therefore it is not easy anyway because it must be factual, precise, consistent, and up-to-date. Yet it is essential to business.
Because of the above, you need to know the guidelines for preparing a real estate investment business plan. Here are the surest nine steps.
Step 1. Assess your target market
Assessment of a target market involves studying the market. In the process, establish its cultural, demographic, and financial factors. It is a preliminary requirement since it impacts on buying and selling. Also, it influences the choices for the new real estate agent business plan.
During this process, the following must be done.
(a) Create a market overview
Compounding historical facts about the real estate business is essential, especially for predicting the business’s future. The primary projections to look at includes the performance of real estate over the years. Also checking the demands versus the sales and supply rate is mandatory.
Most reliable sources for market research information are:
- Realtor.com housing research
- United States Census Bureau
- Department of Housing and Urban Development (HUD)
(b) Establish market segmentation
At this stage, you need to ‘sift chuff from the grains.’ To that effect, critically get a clear overview of your potential buyers. A process that can be done through checking out on the opportunities foregone in real estate.
(c) Know customer demographics
After demarcating the business territory, you need to study the audience in the target. The audience seeks to know their family status, age, marital status, income, employment, and education. Then you can be able to generate a real estate development business plan effectively to suit the population’s needs.
(d) Know the competitors
For a clear definition of your unique selling proposition (USP), you need to study competitors. Their study also presents an opportunity for self-evaluation to get the right differentiation. Also, it allows you to capitalize on the competitor’s weaknesses in the real estate brokerage business plan.
In the abstract, the PESTEL model is the right tool for the same. Utilize it effectively to know the competitor’s political, economic, social, technological, environmental, and legal frameworks. Then you can get the opportunities to manoeuvre through them.
Step 2. Create an executive summary
An executive summary is a presentation of services/products, purpose, audience, and location in a brief prose. The brief should be in point forms for a quick scan. Often, use about five bold points to introduce your business.
Step 3. State the mission and visions
A mission statement also referred to as the “why” statement, gives the purpose. It is a buildup on the brief in the executive summary.
- It should be exhaustive enough to answer the following questions:
- Why do you start the real estate business?
- Why did you find passion in real estate?
- What effects will the business have in society?
Step 4. Conduct SWOT analysis
A Real estate business can accrue either gain or losses, just like any other business. The realization of profit or loss rely on the firms’ internal and external factors. To get a clear picture of these factors, you can utilize the SWOT analysis in your real estate agents business plan. It highlights strengths, weaknesses, opportunities, and threats to the business.
Step 5. Define the company’s goals
Goals are the specific milestones leading to the achievement of the overall mission of the real estate business. They must be streamlined according to the personal ambitions, results of competitors, and realistic growth. They must also enumerate the critical performance indicators (KPIs) of your real estate.
Step 6. Give an outline of the structure of management and order of operations
Within this section, the business planner seeks to provide critical staffing positions. Alongside the areas, there is a definition of their roles and span of activities.
Operations in a farm should be given a clear picture of the daily workflow in the various offices. Such breakdown helps Create an image of the potency of given offices. But also, it highlights the missing staff positions in business plan for real estate.
Step 7. Create a financial plan
This section contains all financial projections for the real estate business. They give out details about financial requirement breakdown, the cost implications of operations and activities, as well as sources of the finances.
The section should answer the questions of:
- How much money is required to successfully establish and carry out operations of the real estate business?
- What are the cost implications of activities in the business?
- How will the business meet the cost of operations?
- What are the key sources of finances in the business?
Step 8. Structure marketing plan
The most central section of the business plan is the marketing structure. That’s because the section gives the approaches used to leverage the entire potential market for the real estate business.
Therefore, the section contains details of the marketing plan and chains of distribution. Also, it has all to do with the service/ goods production and pricing required for reliable customer relationship management (CRM).
Notably, this is the last section of your plan.
Step 9. Review the plan
Even though you already have a plan in place, you ought to do a sequential review of all the business plan sections. Just in case of omissions, unnecessary bias, or even typing errors.
MOST FREQUENT QUESTIONS AND ANSWERS
Ques 1: How do I start a real estate business?
Earlier statistics indicate that the real estate business is among the most lucrative venture. However, like any other business, it has its tricks and secrets to overcome the challenges that come with the business. And also, tactics to realize more profits.
For that, you deserve knowledge and skills of the house commercialization. But more so, you need the complete manual to follow when investing in real estates for the first time.
Steps to starting your own business
Generate your real estate business idea. They are so plenty. From realtor to brokerage, select that which fulfils your dream and venture in the best niche. Complete list of real state niches include:
- Commercially zoned properties
- Income properties (homes purchased to generate income through rental or leasing)
- Property management
- Rental Property
- Resort and vacation homes
Development of a new real estate agent business plan
At this juncture, you should have your plan ready lest someone else takes up that opportunity that took you longest to develop. It could be easy if you had a real estate business plan template. Then you just modify as par your missions and visions for new real estate agent business plan.
Your real estate investment business plan is the determinant of the type of license you need to have. You can either be in a realtor business or brokerage. All these niches require varied kinds of licensures.
If in relator business, you need to do the following most basic steps before getting legal registration and licensure in the USA.
- Go to your favourite state and enrol for real estate pre-licensing course.
- Seat for a test and pass the examinations
- Tender in the application for real estate licensing
- Get brokerage. Choose either a boutique or a franchise broker.
But if you are in brokerage, a lot more is necessary. That’s in addition to the above requirements for a realtor, you need:
- Experience of 2 to 4 years as a realtor
- Acquire and complete the pre-licensing education
- Sit for the examination and pass.
- Finalize your application by paying the levy fees to the right authorities—the States prices for the same range from $150 to $200 in different states.
Aside with the documents, you also need a trade license for the business. To acquire one, follow the complete legal procedure for registration of a company in the USA.
Design the business
With legal documents, get the design of business from the plan. Put in place the physical location of the office and critical materials to start you off.
Insurance purchase subscribes to insurance to cover your business against risks. Common risks in real estate include the following:
Get the business name and logo or trademark. They are necessary for uniqueness and identification. They should be registered for protection from theft.
At this juncture, your business is in place an almost complete. But you still need to network as it is the norm with real estate. Start by having a website in place. After that, begin leveraging through social media and other websites.
Grow your business
Bravo! You have a business in place. But wait, do you know that 20%, of business, fail in 2 years of operating? Also, by the end of five years, 45%collpase while 65% before the tenth year. So you should not relapse but even strategies more to grow your business.
Plough back profits, source more capital, and technological advancements. Then, you can find your way above the rest.
Ques 2: How much does it cost to start in real estate?
For any newbie in real estate, these questions must come up right at the beginning. However, you needed to learn about it after knowing everything else about the business so that you can make an informed decision.
|Expenditure||Costs in US dollars ($)|
|Pre-licensing real estate classes and training||Above $300|
|Real estate licensing application fee||$25|
|background check and fingerprinting||$100|
|state exam fee||$50|
|Real estate broker fees||$25–$500 per month|
|The real estate membership fee||Above $200 a year|
|Marketing costs||Above $1,000 a year|
|Continuous real estate education||$50–$300 in a year|
You can approximate the required amounts to start you off from the facts in the above table.
Ques 3: How do I write a real estate business plan?
Format for writing a business plan is basically the same. That makes it possible to use business plan templates available to customize yours. However be keen to avoid copy-pasting. It is the main drawback leading to poorly developed plan.
Ques 4: How do I succeed in the real estate business?
To be price, you have all that you need in order to start and grow your business. But that is not enough. You need to know the tricks that will see your business rise above and beyond average standards. If you are really passionate about real estate, please do the following:
1. Don’t focus on selling; make it sale
As a newbie, the first intention is to sell and make that money. That way, real estate business becomes more involving. Especially as you try to be pushy and highly persuasive. Instead, you can brand it so that it just goes fastest.
Do all necessary showcasing to the potential buyers. Use excellent photographs alongside catch descriptions. Give it publicity through the right channels and wait for the potential buyers.
2. Think big act small
Treat real estate like a small sole proprietorship. You have all the powers over your business. As such you have to strategize on growing as a person.
3. Work with a business plan
You know quite enough about the business plan. Maybe, you just don’t know that it has to be updated now and them to accommodate growth and changes in the business. Use an up-to-date plan in your business.
4. Avoid assumptions and work with facts
Use comprehensive statistics always. Market trends, projections, and history should be rubric within which you make decisions.
5. You don’t have to list to last.
There is always a starting point in life. Beginnings are always humble, and so is yours. That’s is okay; you can still be successful even without listing. History tells it all in black and white.
Lastly, get out of cocoons of fear and start your real estate business today. You are the core author of the success of whichever real estate business you choose. So get out and write your story today.