Starting a Real Estate Business
The real estate industry is very sensitive to economic changes like interest rates and the cost of materials in building houses. Interest rates in particular can easily swing the number of sales that are completed during any quarter of the year. Rising interest rates will slow down the sales and falling rates will aid the sales of real estate. This is an important fact in the real estate business as this can absolutely cause rapid changes in income from the sales that can be made.
With this in mind, the time to buy an agency that comes up for sale may be when the real estate business is in the doldrums. A hot real estate market will make an existing firm worth more, as their income will be higher during this period of time. Of course if you follow this course of action, you will have to wait out the slow down in the markets. Another factor in the purchase or start-up a real estate company is the state licensing requirements.
Most states have serious requirements for real estate agents and brokers. Brokers have a much stiffer requirement in most states than an agent. The requirements include passing exams and a fixed number of educational hours for both agents and brokers. There is also a requirement for continuing education. These state mandated steps to a career in the real estate business would have to be met before an agency could be purchased or started. Since this industry is regulated and has strong legal steps to comply with, this licensing plus experience would be an initial step to being an owner in this field. This is not a business that can be stepped into by just paying out some money.
An agent can have the goal of owning their own firm, but it will take planning and meeting the state rules to make this happen. Once a potential owner has these steps out of the way, finding an existing business to buy will be in order. A quick check of real estate business listings reveals that they are usually found in larger cities and the asking price is significant. There are also resales of franchise companies. Just typing into a search engine, “Real estate businesses for sale”, came up with this quick check. A buyer could also check with business brokers and real estate brokers in their city. Another source worth checking out would be a franchise connection. An in place real estate business is advantages as the name is already known and will get clients due to this. When you start a company from the ground up you do not have this advantage. An existing business with several locations will come with a higher price tag than what you could start your own business for.
Another way to gain ownership would be buying into an existing business. This could work if you have a solid relationship with the current owner. The problem is you will not have the final say in most decisions unless you are buying controlling interest.
Specialty real estate firms
Most people think about a firm that helps with the buying and selling a home. There are several other areas of specialization. A real estate firm could become expert in buying and selling commercial property, farmland and farms, farm product processing plants, rental properties and shopping centers. Actually a broker could cut out a niche market from many that are available in the real estate business. If you have an area of expertise, this could become something that could be marketable and cut out a lot of competition in certain situations. Some real estate firms have unique departments that handle certain types of real estate marketing. The decision you must make is what kind of a firm are you going to own. You may have to start your own in order to make it happen.
You could also get into real estate management and the buying and selling of these rental properties, which is a very unique part of the industry. Shopping center related firms could be in from the start of a project. They can help with the formation of the firm to build and own the property and then handle the rentals and day-to-day management of the center.
The point of all of this is there are areas of real estate specialization that lend themselves to a business that just works in this real estate category.
Finding the money to make your dream happen
You may not have the total purchase price for an existing business. The question is how do you come up with the balance to make the deal. Finding a source to lend you the money is one way to come up with the needed funds. There are businesses that offer loans to new owners of businesses. These can be found on the Internet by just doing a search. Family and friends could be another source of money. One way to get the needed money is to take in a partner for the business. If you have a friend in the business maybe they would be interested in owning part of the existing company. All of these possible money suppliers will have different requirements for paying the money back.
Make sure you can see your way clearly on how you will accomplish the pay back. This business can be adversely affected by interest rates so you would need a second way to make the payments. A person thinking about ownership in this field must remember that it can be feast or famine as far as sales and commissions go. This is not like being in the restaurant business or owning a printing company. Successful brokers can make considerable money in a good market. They can also have periods that are very tight as to sales. The brokers that succeed have a policy of putting away some of their earnings during good times to cover the less profitable times. Doing this just shows the broker has a realistic view of the business.
Conclusions
This business can be extremely profitable during low interest rate economies. The legal and state requirements make the ownership of a brokerage firm more difficult to own than is the case with other businesses. Buying and selling a real estate business is somewhat more difficult due to the restrictions that are placed on the owner of a real estate firm. You must have the appropriate licenses in place before you can begin operation. This is true whether you buy a company or start one up from scratch. Finding a firm you can afford will take some time and research on your part. Hiring a professional business broker may speed up the search.
Deciding early on if you want to be a specialist will set other decisions in place. Niche areas that you are an expert in will help cut the competition somewhat. A general real estate business will have the potential for more clients, but will need and ongoing advertising campaign to gain listings and clients looking to buy. The start-up is cheaper to open, but will have little cash flow like an existing firm. Money flow is the one huge advantage buying an existing business offers to the new owner.
Author: Bill Henthorn
Article Source: EzineArticles.com
How To Create A Winning Real Estate Business Plan
More and more people it seems have been getting into the market for real estate investing, but the most successful will be those who can create a winning real estate business plan.
This real estate business plan will serve a number of different purposes, and it is important for any would be real estate investor to understand just how important such a plan can be.
Attracting Capital To Close The Deal
On the one hand, a well thought out, professional and polished real estate business plan will help the real estate investor to attract the capital he or she needs to close those once in a lifetime deals.
The secret to success in the world of real estate is that so many of the transactions can be done using other people’s money, and that is where the real estate business plan comes in. The real estate business plan will detail to all those would be investors and money lenders just how the business is destined to succeed.
Using Your Business Plan To Help Guide The Business As It Grows
In addition, a well written real estate business plan can also serve as a blueprint and a guideline as the real estate business moves forward.
It can be quite difficult to get such a business off the ground, especially when a slowdown in the market makes the world of real estate a bit more challenging. Having a real estate business plan at hand will help to guide the business as it grows.
Getting Help From Qualified Professionals
Preparing a high quality real estate business plan is well within the means of most real estate investors, but it is a good idea to ask for help from qualified professionals when preparing such an important document.
For instance, having an accountant or other tax professional take a look at the real estate business plan can provide some much needed insights.
In addition, having the real estate business plan reviewed by a qualified real estate or business attorney can ensure that the document is legally sound and that it contains no errors or omissions. After all, this real estate business plan will form the cornerstone of the new enterprise. It is important that it be a quality document.
Author: Shaunta Pleasant
Article Source: EzineArticles.com
Tenant Screening – Ten Rules to Always Follow
It is your house. Maybe it was the family home that you inherited, and now you are renting it out. Maybe you purchased it as an investment and plan for it to be a big part of the retirement fund.
And now, you want to rent it out to some people who you think are really nice. They told you a story about what hardships they have gone through and you, being a nice person, want to help them out.
Well, maybe they told you the truth. Maybe. But then, maybe they are people who will tear up your lovely house, cost you thousands of dollars in damage, damage your reputation, and perhaps even drive you into bankruptcy.
Protect yourself. ALWAYS, ALWAYS, ALWAYS screen your tenants. And NEVER EVER violate tenant screening rules numbers 1 through 10!
Rule number 1: Screen your tenants.
Rule number 2: Screen your tenants carefully.
Rule Number 3: Screen your tenants thoroughly.
Rule Number 4: Screen your tenants even if you think they are OK.
Rule Number 5: Screen your tenants always.
Rule Number 6: Screen your tenants without fail.
Rule Number 7: Screen your tenants under all circumstances.
Rule Number 8: Screen your tenants especially if they wave money under your nose.
Rule Number 9: Screen your tenants even if they seem clean and well educated.
Rule Number 10: Never ever ever violate rules 1 through 9.
Because it does no good to tell you to screen, without telling you HOW to screen, here is how you screen a tenant.
First, make them fill out an application that asks for, at a minimum, the following:
(1) Full Name;
(2) Social Security Number;
(3) Current Address;
(4) Time at current address;
(5) Current Landlord’s name and phone number;
(6) Employer;
(7) Employer’s phone number;
(8) Their income;
(9) ALL – that means EVERY – address they have lived at for AT LEAST the last 3 years, with landlord names and numbers, and dates they lived there;
(10) Names of EVERYONE to occupy the rental Read more
The Best Time to Become A Landlord
When is the best time to invest in property and become a Landlord? What if the interest rates were to go up, or for that matter, go down?
In the short- or medium term there will be fluctuations in property prices. They may plateau or even decrease at times. Seasonal changes may also come into play, for example in winter the property market may be slower. However, it is a simple fact that there is a general rise in property prices in the long term.
So, the best time to be come a landlord is: As Soon As Possible. An oft repeated adage in property investment is – do not wait to buy property, buy property and wait.
But what about the interest rates?
If the interest rates are rising, fewer people enter the property market, which results in an increase in rental demand. The experienced landlord sees this as an opportunity to expand his/her property portfolio. The landlord may also be able to increase monthly rentals, provided they stay market related. This means the shortfall between rental income and the mortgage and other expenses will be reduced.
More properties will become available on the market due to buyers, who overextended themselves initially, and can no longer afford the increased mortgage repayments. This can be an ideal time to buy property at a good price. The landlord need not concern himself with a temporary reduction in property prices – the property investor does not take a short-term view.
If the interest rates were to go down, more people can enter the market as buyers. This may mean a lower demand for rental property, especially at the high end of the market. When you become a landlord, your main focus should be on entry level properties, for which there will always be a good demand for rentals. Read more
Five Tips for Renting a Property Quickly
Renting a property can be a tedious task. A task that can either make or break any small landlord. Ensuring that ones properties get rented quickly and efficiently is the key to generating and sustaining healthy profits. For this reason, five tips for renting a property quickly and painlessly are discussed in the remainder of this article.
1.) Send out an “Intent to Return” form – One of the most powerful techniques, sending out a form asking current tenants if they intend to stay another year allows the landlord to prepare for a possible vacancy. If feasible, send the letter two months before the current tenant’s lease is due to expire. If the tenant is planning on leaving, this will give the property manager plenty of time to find a replacement.
Including a self-addressed stamped envelope along with the letter ensures that the tenant will mail it back within a reasonable time period.
2.) Give Incentives for Staying – Offering the current tenant a rent-deduction for a month or two shows the tenant that the landlord cares. Everyone loves a little extra money, especially those renting a home.
3.) List your Vacancy on the Web – If the local community has a web site that allows people to post listings for their rental properties, take advantage. Times are changing, and computer savvy people would rather browse through properties online than spend hours driving through local neighborhoods. These sites are especially useful and popular in communities that have local colleges and universities.
4.) Offer Referral Money – If the tenant is leaving for sure, offer them money if they can locate a new tenant. This is a win-win situation because both the tenant and landlord receive a financial benefit. Read more
Creative Real Estate Finance Made Easy
With the real estate market evolving, there are fewer banks approving mortgage loans as a result of the change in qualifying factors. For individuals with less-than-perfect credit or not enough cash for a down payment, the doors have been closed for them and many individuals wishing to become homeowners. Because fewer people are able to qualify, investors had to develop non-traditional ways to help these individuals get into homes. This has led to some creative real estate finance strategies.
There are a number of ways that individuals can obtain their dream home without necessarily going the traditional route to secure financing. Rent to own and lease purchase options are two popular ways to do this. Read more
Showing Your Property To Get The Most Rent You Can Out Of It
As every property owner knows, the single most important moment of your interaction with a prospective tenant is during your walk through. It is the time for your property to shine and for the prospective tenants to fall in love with the place, just like you have. But no house or apartment building is perfect. Every living area, no matter where, has positives and negatives to it. So how do you exemplify the positives and downplay the negatives without misleading your tenants? Here are a few tips on wowing tenants during their walk through.
Many large apartment buildings simply choose to keep one suite empty at all times and have it as the “walkthrough suite”. Of course there are small problems with that idea if the suites in question don’t all conform to the same floor plan or square footage, but if they do, then this can be a great tool. This way, you can decorate the suite with furniture, art on the walls, appliances and even personal touches like pictures or delivery menus stuck to the refrigerator door. You can let the tenants walk around while you point out the suites amenities and explain to them that their suite will be exactly like this, only bare.
If you are managing a building where floor plans vary too much or it is not in your best economical interest to keep a perfectly rentable unit empty just for show purposes, there are small touches you can do to make a suite more welcoming. Try to keep the walls a nice, neutral color so that people aren’t instantly off-put by the space as soon as they see it. Also, visit the suite before you bring tenants there and do some last minute cleaning up and dusting/cleaning, just in case anything was left behind after the last tenants moved out. Open up any blinds so that as much natural light can come into the unit as possible. Change any lightbulbs that need fixing and make sure everything that comes with the apartment, such as a fridge or stove, is in perfect working order. Read more
Clever Ideas To Attract Tenants To Your Rental Property
As anyone who has invested in real estate can tell you, it’s a dog eat dog world out there. It doesn’t matter if you are trying to rent out a single family home or if you own a large apartment building, the competition is fierce and in the right economic circumstances, it can get downright nasty. But there are some things that have been proven to work to attract renters by the hundreds. Let’s take a closer look.
The first thing you need to do is to gauge the local real estate market and how much inventory is available. If the market is completely saturated and there is tons of inventory available then you’re going to need to get creative when it comes to attracting new renters. But if the market is tight, you probably won’t need to do anything more than place a simple ad in the newspaper and you’ll have renters flocking to you. You can gauge how clever you’ll have to be depending on the state of the local market.
They say that the quickest way to a man’s heart is through his stomach. That’s why a big, old-fashioned barbeque is one of the best ways to attract people of all kinds to your property. A small ad in the local paper followed by some flyers that can be mailed out or slid under doors advertising your open house and BBQ are a great way to attract people that might not have noticed your property otherwise. On the down side, you’re bound to get a number of people that are only there for the food and are not serious about renting from you, but you have to take the good with the bad.
Another good way to use clever marketing is simply offer something that no other property in your area does. If at all possible, you can make a comprehensive list of every amenity that surrounding buildings in a 5-square mile radius offer and then make a second list of amenities that are affordable that you could add, and from then on, push that one thing to the forefront of your advertising. One of the most desired amenities these days in a wireless Internet connection free throughout the entire building. Many businesses like coffee shops and most hotels offer this and it costs surprisingly little to set up and maintain. You’ll also appeal to a higher-end clientele who would need an Internet connection on a daily basis for work. Read more
Protecting Your Assets – Rentals
Playing the real estate game has made more people more money than almost any other industry in America. However, those that have been successful have learned how to protect their personal assets and property while maintaining a strong investment portfolio. Keeping investment properties in your own name can lead to legal problems if there are any issues concerning them. These kind of issues arise when renting properties and can be disheartening as well as financially straining. For this reason it is a good idea to organize a company or business to deal with your investment properties exclusively.
The best way to set about this is to start a land trust. A land trust protects not only your financial assets but the actual properties as well. If you are only renting a single property or a part of your actual home then this step may be a little drastic for a single property, but if you are planning on owning several properties then it is something that you may want to investigate. The process of forming a land trust essentially conceals your ownership from public record, with the added bonus of protecting your land assets from any judgments and or asset claims.
Another thing that is essential for successful renting of properties is a detailed contract that clearly states all the terms and conditions of the rental and what happens in any situation where the terms and conditions of the contract are violated. Make sure that the contract clearly and concisely defines these terms, ambiguous language can be a real downfall if the contract ever comes into question. Taking the time to ensure the protection of your assets and interests is perhaps the best investment you can ever make when establishing a presence in the world of real estate. Read more
When is the best time to invest in property and become a Landlord? What if the interest rates were to go up, or for that matter, go down?
Do you own rental property? Are you a real estate investor? Have you had problems getting your tenants to pay the rent? This article will cover some important policies that you need to conduct the financial business of collecting residential rent.
Rent pays the mortgage and the expenses of a property, even if you lease a single-family house. If you are an investor, a monthly positive cash flow is critical to owing investment property. Therefore, collecting the rent is a major part of your property’s success. Collecting rent is a business, because it is what pays for the long-term maintenance of your building. It should be your priority. You may believe that you have your current collection efforts under control. Still, as long as you rent apartments, at some point in time, you will have a rent collection problem.
Today, there are strong state laws that govern, restrict, and outline how, why, and when you can collect your rent. For example, many rent control laws dictate how much rent you can charge, and the methods by which you can collect your rent. Evictions for non-payment of rent can be avoided if an owner develops and follows a few basic policies and procedures. The more consistent you are in maintaining your policies, the better your rent collections will be paid monthly and on time.
My advice is to review your expectations about how and when the rent is paid before you give your tenant the keys. Even if you use a lease, there is no substitute for an eye-to-eye discussion about how you want your property to be treated, and when the rent should be paid. It is important to have a meeting of the minds before you commit your apartment to a person or family that may intend to violate your rules. Read more
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