For both aspiring entrepreneurs and veteran businessmen, the real estate industry is an alluring opportunity when it comes to profit. Once they do the math, the possibility of building a fortune becomes not only feasible, but it also feels like it’s a fingertip away.
However, while there’s no doubt about its profitability, starting a real estate business is not as easy as it looks. After all, any business that provides huge profits will most certainly come with a high risk. It takes a lot of planning, experience, and exceptional skills to make the most out of such a high-risk business. On the other hand, once you know the trade secrets, making a profit becomes a matter of time. To help you get started, here’s everything you need to know about the real estate business.
Types of Real Estate
While the meaning of “Estate” covers all real and physical property, there are different speculations when it comes to the meaning of “Real”. Perhaps the origin of the “Real” terminology comes from the Latin root res (things), or maybe it stems from the Latin word rex (royal), referring to how all land was once exclusively owned by kings. However, as of today, real estate refers to all property, land, buildings, air right above the land, and even underground rights below the land. To make a long story short, there are four types of real estate: residential, commercial, industrial, and land.
Residential real estate covers both constructing a new residential property or reselling previously constructed homes. The most common form is single-family households, such as condominiums, townhouses, duplexes, penthouses, and other high-value homes.
As the terminology suggests, these types of real estate properties are constructed for commercial use. They include shopping malls, medical centers, educational institutes, offices, and hotels. This category even includes apartment buildings, as these housing units are often used for their commercial value.
Industrial real estate refers to all property used for manufacturing, research, storage, and distribution. As such, this category includes factories and warehouses, although sometimes such property will be included in the commercial segment. Understanding the right categorization is crucial before investing in a certain category, since handling the zoning, construction, and sales of each property will differ accordingly.
Finally, the land is the last category of real estate, which includes the value of the land, air rights above the land, and underground rights under the land. Farms, vacant land, and ranches are all examples of land real estate.
What Makes a Successful Real Estate Business?
Just like every other business, there is no one-size-fits-all strategy in order to succeed. However, there are some basics that every business needs to cover as a cornerstone for success, and the real estate business is no different. You can’t run a successful real estate without the following cornerstones:
1. A Plan
The degree of your success can be predicted by the strength of the plan you devise, long before you take any action. A real estate veteran can take one look at your plan and give you a forecast about your future profit or loss. While such predictions may look like groundless fortune telling for an amateur, an experienced eye understands that this is the most important foundation for any kind of business. When it comes to real estate, understanding how to profit from different kinds of properties and devising a plan to overcome competitors is crucial. For instance, the business structure and operations you develop will completely differ based on the revenue stream you target; investing in property and going after their appreciation value is completely different than renting a property or selling for commission.
2. A Website
In today’s digital world, there’s an undeniable need for businesses to establish a strong online presence. This factor is the downfall for many hardworking businessmen who fail to realize that their online presence, specifically a high-tech website, is the single most important factor in attracting their target customers. As the Idaho-based real estate agents at Stewart Realty explain, in order to succeed in this highly competitive market, your website has to provide a suburb user experience that offers valuable information and urges the user to become your customer. Take the time to analyze your target group and provide them with all the information they need. In doing so, you can effectively earn the trust of all your curious visitors.
3. Nurturing Leads
Attracting visitors is only the first step in closing any deal. Once you grasp the interest of your visitors, the real customer acquisition journey begins – and this makes all the difference in any sale. A strongly built website will ensure you get the leads you’re looking for, but it’s up to you and your team to nurture those leads and provide the service you’ve promised with your prospects.
4. A Business Mindset
What makes a good businessman is not the strength of their technical skills as much as utilizing the resources they have to their utmost potential. In other words, it was never about knowing how to do everything on your own, it’s about gathering the resources you need to achieve the results you’re seeking. To make it even simpler, you don’t need to have the capital or expertise or provide the resources yourself. On the contrary, you just need to find those willing to provide the capital, seek those with expertise, and gather around those with resources to finalize your deals. Simply put, the real estate business is all about being the middleman who moves the chess pieces until the deal is made. While it may seem simple, it’s the hardest and most important role to play.
5. Establishing Your Business
The final step is to establish your real estate business based on the foundation you’ve created. This step includes getting licensed, registering the business, and gathering the resources. These resources include the manpower you’ll need, or your team, as well as a mentor to guide you through the ins and outs of the trade.
There’s a reason why real estate is as appealing as it is for everyone looking for easy profit. There’s nothing easier than making a passive income from a property you own. However, running a real estate business requires a lot of planning, understanding market fluctuations, and playing a superior game of chess, so be sure to do your homework before rushing into anything.