Starting any business, including the real estate investment one is never an easy task. While some people did make a lot of money investing in real estate without having any prior knowledge or experience, the number is so low that it can be accredited to luck. Of course, most of these reckless investments in real estate have ended up in failure.
So, if you are interested in starting a real estate investment business, here is what you need to know so that you don’t go under in your first month. We have a lot to talk about, so let’s just jump into it.
First and foremost, you need to get to know your competition. Before “opening shop” you need to assess how tough is the real estate competition in your area. Real estate is not a new industry, and the chances are that you will be up against some already established real estate investment businesses.
So, your goal should be to carefully inspect their services, and see what they are and aren’t offering. If you want to stand out from the competition and succeed, you need to bring something new to the market; you need to attract clients with something that is currently not available. Otherwise, you will just be buried by the already established businesses.
Next, you should choose your investment strategy. This usually boils down to your finances. For example, if you want to buy and hold a property until the price rises to a more profitable level, then you will have to have quite a bit of cash at your disposal. This type of investment is a huge upfront expense. However, if you manage to buy a promising piece of land, you can return your investment multiple times.
Another example of an investment strategy is rehabbing a property. With the right house, you can rehab and sell a property in a relatively short period. This type of investment is much more approachable to new businesses, but it comes with smaller earnings.
Regardless of the type, creating an investment strategy is a crucial part of every real estate business. Going in blind and not knowing what your strategy is will do you no good. Plus, when asking for loans from the banks, they will want to know your strategy for returning that money. Therefore, you should definitely create a detailed investment plan.
Once you decide on your investment strategy, you need to start thinking about your marketing approach. As you may already know, real estate is a numbers game; the more leads you have, the better are the chances to sell your property.
Fortunately, today there are many ways to reach potential clients and generate leads, ranging from traditional marketing, like TV commercials and newspaper ads, to modern marketing like social media ads. However, it’s hard to nail the best marketing strategy. For example, newspaper ads could generate leads for you, but do nothing for some other business. That means you will have to experiment until you strike gold.
Most new businesses go under because they bite more than they can chew. If you are new to the real estate investment game, you should start small. Pick a small and safe-bet property, and try to rehab and sell it. Sure, you won’t make a ton of money, but you will get to experience the investment process from start to finish.
Another popular solution, especially in Australia, is to hire a buyer’s agent. For example, a well-connected buyer's agent in Brisbane can help you find an investment property in your area and devise a strategy for the best way to acquire that property. Buyer’s agents will help you search for the property, inspect it, negotiate the price, and finally, seal the deal. This is a great way to learn all the ins and outs of the real estate investment industry.
Finally, you should put together a team of professionals. While at the beginning, you can get by with outsourcing, later on, you should put together your own team. The only way for your business to grow and progress is to hire people that have experience in the real estate investment industry. For starters, you will need a lawyer, banker, and an accountant. These three positions are essential for any real estate business, so pick through candidates wisely.
That is it for our guide. As you can see, there is quite a bit you need to do before you can start your first real estate investment business. On the other hand, that is the deal in any other industry as well. Just remember to evaluate your competition, build a strategy, and most importantly, don’t be afraid to ask for help. After all, nobody is born knowing everything.