All signs point to the real estate market staying red hot in 2022. 2021 saw record home sales, increased home values, and hefty profits from other forms of real estate investment. By any measure, the real estate business is thriving.
If you have been seeing these trends and wondering how to start a successful real estate business yourself, now is the time to get informed. Starting a real estate company is probably easier than you think. Real estate agents, real estate investors, and other professionals that make money from the real estate industry know this already and by the end of this article, so will you.
Read below to learn how to start your own real estate business and the details of various ways you can do it.
Ways To Start A Real Estate Business In 2022
When you think about starting a real estate business, becoming a real estate agent might be the first thing that pops into your head. It’s certainly the most straightforward way to get into the real estate industry, but it’s not the only route you can take.
Rental property owners make monthly income from tenants paying rent. Construction companies make money from building homes. House flippers make money from fixing up properties. Real estate investors buy stocks and mutual funds related to real estate to enjoy hefty profits. The list goes on and on…
Become A Real Estate Agent
Becoming a real estate agent is one of the easiest and quickest ways to start a real estate business. It also requires a very minimal initial financial investment. Read below to learn how to become a real estate agent and think about whether or not it is the right move for you.
Get Your Real Estate License And Find A Real Estate Broker
With a modest financial investment, you can train to become an agent, get your real estate license, find a real estate broker, and start helping clients buy and sell property. This entire process only takes a few weeks or months.
The next question you might be thinking is “how do real estate agents get paid?” The potential income is limitless because you get a percentage of each deal you close. Typically, listing agents get 3 percent of the purchase price, and buyers agents get 3 percent. So, if you help someone buy or sell property with a sales price of $300,000, that’s $9,000 in your pocket. You will usually need to pay your broker a percentage, but the returns are still appealing.
Research the best real estate brokers in your area, interview a few of them and then select the one you want to be a part of. After taking the pre-licensing classes, passing the exam, and getting your real estate license, you can start working under the brokerage you’ve selected immediately.
After practicing real estate for a certain amount of time, (depending on the state you are licensed in), you can get your real estate broker's license. Then, you can start hiring agents to work under your real estate brokerage.
Define Your Brand
Before you get too far into your real estate agent career, define who you are and how you will serve your clients. There are plenty of real estate agents out there, so decide what will set you apart from the rest.
When defining your brand, think about your interests and personality traits. Are you funny? Are you great with numbers? Are you interested in a specific type of property, like old homes? Prospective clients respond to authenticity, so craft your agent brand around what you already love.
Are you adept at dealing with luxury clients? Focus on that market. Do you love horses? Some agents focus exclusively on equestrian properties. Finding a good target market that meshes your personality and passions is a great place to start when defining your real estate brand.
Grow Your Business
Once you get your license and start your real estate agent business, you will need to learn how to grow a real estate business. There are several tips and tricks that successful agents use that you can learn from.Your first priority is learning how to get clients as a real estate agent. The success or failure of your business depends on it. Read below to learn about some of the key strategies you should employ to make your real estate business profitable and enjoy a successful real estate career.
Create A Professional Website
People looking for real estate agents to help them buy or sell property are doing it primarily online. Your website is usually their first impression of you, so make sure it is engaging and provides value.
High-end photography, succinct and interesting descriptions of the services you provide, and a tool for home searches are essential. Find other real estate agent websites that you like and use them as a template for creating your own.
Ask your broker what services they provide for setting up websites for their agents before you go out and hire a website designer. Sometimes they can set up your website at no additional cost.
Focus On SEO
All businesses need to focus on search engine optimization (SEO), not just real estate agents. SEO refers to how well your web properties (website, blog, etc.) rank when people search the internet for topics related to your business.By crafting content that emphasizes the things your potential clients are looking for, you can improve your SEO. SEO tools are readily available, like Surfer SEO, where you can type in keywords and get ideas for the type of content you should put on your website. There are also plenty of companies that will do this for you for a fee.
Customer relationships management (CRM) software is critical for any successful real estate agent business. They allow you to communicate with current and prospective clients while predicting your business's future income.
Features include integrated email marketing, paid social media, mass texting, and various ways to track your business. From lead generation all the way to closing, a customer relationship management system provides the technological support you need throughout the course of each transaction.
CRMs are another business tool you should ask your broker about before buying one on your own. Often, these services are included in the fees you pay your broker.
Leverage And Expand Your Network
You may not think you already have a pool of potential clients when you start out as a real estate agent, but you do. Your family, friends, former coworkers, and everyone else you come in contact with is potentially going to buy or sell a home in the future.
Start letting them know you have decided to get into real estate and what you have to offer them. Nurture them by continually communicating about real estate topics relevant to each individual prospect.
Grow that network as much as you can by joining local organizations, volunteering in the community, and simply striking up as many conversations as you can.
Invest In Social Media
Facebook, Instagram, TikTok, and a plethora of other social media platforms have prospective home buyers and sellers that need your services. Get out there and find them. Post on your business and personal pages often to remind everyone you are ready to handle all of their real estate needs.
In addition to posting on your various social media accounts, consider paid advertising as well. There are plenty of templates and ideas out there to choose from. Often, your CRM has this integrated so that you can create online ads across several different websites and social channels, all from one place.
Social media strategy and implementation is something you can outsource as well. There are a variety of social media firms you can pay to take care of everything for you.
Email, direct mail, and other forms of direct marketing are great ways to build your client base. Start with all of the personal email contacts and grow your list from there. Send email updates about your business, the real estate industry, and other information prospective clients might like to hear about.
If you have a listing, send a postcard to all the homes in that neighborhood to let them know about the new house you have for sale. They may know about a potential buyer, and they might consider using you to list their home if they decide to sell in the future.
Don't be afraid to pick up the phone either. Direct calls to your sphere of influence can often result in future sales. Ask people if they have been thinking about buying or selling in the near future or if they know anyone who is. You’ll be surprised how many deals you’ll find.
Listings, Listings, Listings
2021 was a seller’s market (high buyer demand and low home inventory), and 2022 is shaping up to be just the same. That means it can be challenging for buyers to get their offers accepted in such a competitive market.
For real estate agents, a buyers market means showing your buyer clients more homes, often losing out to other offers, and spending a lot of time trying to get them into a house. On the flip side, when you list a home for a client, it usually gets sold quickly.
Given this trend, it's a good idea to focus on getting listing clients more than on getting buyer clients. Understanding how to get listings as a real estate agent should be your number one priority in 2022.
Not only are listings easier to get sold, but they also provide an avenue for picking up new buyer clients. For example, when you hold an open house for one of your listings, a flood of potential buyers come into the house. If they don't have a buyer’s agent already, they might end up working with you.
For Sale By Owner (FSBO)
If you are having trouble getting listings, consider reaching out to FSBOs. These are people trying to sell their home on their own without the services of a real estate agent. They often end up finding out that they need an agent and positioning yourself as their agent of choice can help you get the listing.
Ask them if you can tour the property to see if you might have any buyers who are interested. When you are there, listen to why they decided to sell on their own. Usually, you can explain the benefits of using an agent and get them to reconsider. Make sure you let them know what marketing strategies you will use to get their home sold quickly. Even if they don’t commit to letting you list the house right away, they might in the future if they can’t sell it on their own.
Many people don’t realize that real estate agents can help people find places to rent in addition to helping clients buy and sell property. The amount of money you make on a transaction is usually lower than a home sale, but it can lead to home buying and selling clients in the future.
The typical agent commission for a rental property is half of one month's rent. So, if you help someone find a rental that costs $1,500 per month, you get a check for $750 when they sign the lease. In addition, most renters eventually purchase property. If you do a great job finding them a rental and continue to communicate with them, you can become the real estate professional they turn to when it’s time to buy.
This can work for property owners looking for tenants as well. You can list the property for rent and collect half of one month's rent once a lease is signed. In addition, having a rental listing means potential renters are calling you, which can be a pipeline for new clients.
Create A Referral Network
In most cases, real estate agents can only help clients buy, sell, and rent real estate in the state they are licensed in. That means if you have a client moving across the country, you can’t be their buyer’s agent for their new location.
You can, however, refer them to a real estate agent that is licensed in the state they are moving to and get a cut of the commission. The usual referral fee for agents is 20 to 30 percent of the total commission. Not bad for making a few phone calls and sending an email or two.
Continue Your Real Estate Education
To be successful in any industry, you should never stop learning. This is especially true when it comes to real estate. You need to take a certain amount of continuing education credits each year to keep your license active, but that’s not the only reason.
Real estate markets fluctuate, effective strategies change, and technology disrupts. Being on top of the latest changes in real estate will help you bring value to your clients every day.
Invest In Real Estate
Becoming a real estate investor might seem like a daunting task, but it’s not. Real estate investing can take many forms and starts with many different amounts of money. Learning how to invest in real estate is a great way to build long-term financial wealth.Read below to learn about various ways to invest in real estate, devise a sound investment strategy, and understand why real estate investing is usually a good idea.
Buy Rental Properties
One of the most common ways to become a real estate investor is to buy a property and then rent it out. There are many ways to acquire a rental property, including paying cash, getting a loan, or finding an investment partner.
Finding the right property starts with analyzing various locations. Areas with population and job growth are good candidates. More people and more jobs mean more possible tenants for you to rent to. Areas with expensive homes are good as well, as this means there will be many people who can’t afford to buy and are forced to rent.Before purchasing a rental property, make sure you understand the total cost of renting it. Things like maintenance costs, taxes, and the interest you pay on the loan need to be accounted for. Use this rental property calculator to run the numbers and see if a specific rental property you are considering is a good investment.
Buying homes, improving them, and selling them at a profit is called house flipping. This process might not be as easy as it seems on T.V., but it’s not something you can’t tackle with the right business plan.
Local real estate market research is the first step in house flipping. Look for areas with rising home values. Like any investment, you want to buy low and sell high if you can. Most of the profit will come from the improvements to the property you make, but a little property appreciation from a hot market doesn't hurt either.
Next, don't look for the nicest house on the block. You want the fixer-upper. The more potential value you can add with renovations, the better. For example, if updated houses on the same street are going for $400,000, you want the old, outdated one listed for $250,000. Let’s say it costs you $75,000 to renovate it. If you sell for $400,000, that’s $75,000 in profit.
Become A Wholesaler
If you want to invest in real estate without buying property, wholesaling is worth investigating. Wholesalers find a homeowner willing to sell and sign a contract with them that includes an agreed-upon purchase price. Next, they find a buyer willing to pay more than that price before the closing happens.
Once the new buyer closes on the home, the wholesaler keeps the difference between the final purchase price and the initial price they agreed upon with the seller. This creates a nice profit for the wholesaler without ever purchasing the property.
Property owners looking to sell quickly and at a price below market value are good candidates for wholesaling. This can include people facing foreclosure or other financial hardships that have put them in a position where they need cash fast.
If you already own a home, house hacking is a way to turn it into an income-generating property. This involves renting all or part of your home to short or long-term tenants.
Websites like Airbnb make it easy to market available space in your home to possible renters. Some are looking for a room for a night, and others are looking to rent an entire house for a weekend.
If you live in an area with a major tourist attraction, like concerts or sporting events, you might be able to rent your home out for a weekend or two and cover your entire mortgage for that month.
Another way to start a real estate business without buying property is to invest in a real estate investment trust (REIT). REITs pool the funds of many different investors to purchase real estate. They make money for their investors by collecting rental income on the properties and selling them at a profit.
REITs can be public or private. Publicly traded REITs can be purchased like any other stock, are listed on a stock exchange, and are regulated by the U.S. Securities and Exchange Commission (SEC). Private REITs are not available on a stock exchange, require a special broker for investment, and are not regulated by the SEC.
Real Estate Crowdfunding
Real estate crowdfunding has made starting a real estate business through commercial real estate deals open to a large swath of people. Deals previously only available to high net worth individuals and corporations are now available to everyone.
Simply search an online real estate crowdfunding site for deals that might appeal to you, and start investing. The price points vary greatly, so you can invest as much or as little as you want.
Buy Real Estate Stocks And Mutual Funds
If you are familiar with buying stocks, you can start a real estate business in a matter of minutes. Simply purchase stocks and mutual funds offered by real estate companies.
Real estate brokerages, construction companies, and other companies operating in the real estate industry are usually sound investments when it comes to buying stocks and mutual funds.
Other Real Estate Businesses
A hot real estate market doesn't just mean more money for real estate agents, brokers, and investors. Several other businesses serve the real estate industry that you might not think of first when starting a real estate business. Read below to learn about different businesses that benefit from a hot real estate market.
With home inventory so low in 2022, new builds are more popular than ever. For buyers, searching online for available houses for sale, only to get into bidding wars and miss out on the ones they like, is exhausting.
Many are turning to buying land and building themselves or buying homes newly built by developers and construction companies. This increase in demand has been a boon for the construction industry. If you have ever thought about starting a construction company or joining one, there’s no better time than right now.
Architecture And Design
More new homes being built means more demand for people to design them. Architects and designers are in high demand right now, so the prices for their services are increasing.
Starting an architectural and design firm is a great way to get in on this hot real estate-related business. If you are an architect, great. If not, you can still start an architecture and design business by recruiting talent and investing some capital.
Things like office space, employee salaries, and marketing aren't cheap for an initial investment in this type of real estate business. However, if you have the funds to get started, the demand for services and prices you can charge can result in big profits.
Interest rates were low in 2021 and are staying that way so far in 2022. This has been great for lenders, as more and more people are applying for mortgages to take advantage of low rates. The low-interest rates have also resulted in more home equity lines of credit (HELOCs), and more mortgage refinances.
Starting your own mortgage company might seem like too large of an endeavor, but becoming a private lender is pretty straightforward. You simply find people who don’t qualify for traditional lending options and lend them your own money to buy a home. To make a profit, you can charge upfront fees or interest over the term of the loan.
A hot real estate market means more deals are getting closed. For deals to close, they usually need a title company. A title company researches property titles on behalf of the purchaser of the property and the lender. This includes determining the entire history of the property’s ownership and if there are any issues with the title.
To ensure the property can change hands seamlessly, a title company charges fees paid at the closing. This is usually about one percent of the purchase price of the property. Starting a title company in a hot real estate market where homes are being sold in record numbers for record prices is a pretty smart way to get into the real estate business.
Real Estate Agent Services
Real estate agents rely on various other professional service providers to help their clients buy and sell homes. If you want to start a real estate business but don't want to be an agent, there are various other ways to get involved.
Photographers are a critical part of any successful real estate business. Agents hire them to take professional photos of their listings, usually paying around $150 to $250 per house. Extra services like drone video and virtual staging can generate even more revenue.
The biggest priority for any agent is generating leads. Starting a real estate business that caters to this need can be very profitable. You can create a social media consulting company, a cold calling company, a google ads company, an email marketing company, or any number of other services that help real estate agents find new clients to serve.
Make A Plan With Goals
No matter what type of real estate business you decide to embark on, it has to start with a plan. A real estate business plan starts with asking yourself lots of questions. Will you need office space? What education and licensing do you require? What time of business equipment is necessary? Can you do it yourself initially, or will you need to hire employees right away?
Envision your end goal of having a successful real estate business and map out how to get there. Read below to learn about some of the steps you will probably need to take no matter what business you choose to start.
Get Your Finances In Order
Very few real estate businesses can be created without any funding upfront. Make sure you have the savings you need to get started. This might mean a large amount of cash to purchase your first rental property or a few hundred dollars to get your real estate license.
Estimate your start-up costs and monthly expenses. If you don't have the funds to get started on your own, look into lending options. Whichever path you take, don’t spread yourself too financially thin. It’s better to start slow and grow your business as more revenue comes in instead of spending too much too quickly and going too far into debt.
Market Your Business
Once you have your business up and running, don’t forget to spread the word about it. A professional website, online ads, direct marketing, and many of the other topics we covered earlier for becoming a real estate agent apply to most businesses.
Define your brand by answering this question floating in the minds of potential clients: “What makes you different from other real estate companies that provide your services?” Once you determine your differentiators, use them in your marketing materials and client communications.
Nurture Your Leads
When your marketing brings in a possible client, nurture them. Provide valuable information about your business and how you can help them achieve their goals. Even if they aren't ready to do business with you right away, positioning yourself as their expert of choice is an excellent way to get them to consider you when they need your services in the future.
Once you convert a lead to a client, the relationship doesn't end after working on something for them. Keep in constant communication about what other services they might need and who they may know that might benefit from engaging with your real estate business.
Focus On Operations
A good real estate business grows to meet the needs of the clients it serves. If you find yourself bringing in more clients than you can handle, that’s great news! However, it also means you will need to focus on how your real estate business operates to ensure you can continue to bring a high level of service to your customers.
Consistently re-evaluate staffing levels, supply chain management, marketing, lead nurturing, and all of the other aspects that make your business move in the right direction. Consider whether you need to ramp things up in a specific area or take your foot off the gas when business slows down.
Starting a real estate business in 2022 is a great idea to consider and is probably easier than you think. The real estate market is on fire, so why not take advantage? You could become a real estate agent, buy investment properties, start a construction company, join a REIT, or explore any of the other many options outlined above.
Find the real estate business model that fits your passions and goals, make a plan, continually improve your business, and start making money from real estate in 2022!