Starting A Real Estate Business - Steps And Tips For A Successful Venture

When starting a real estate business, you should think not only of the possible profits you will gain. More importantly, you should know the right steps to take and the tips to follow in order to earn those profits.

Save Money
Even before putting up the business, make sure you have sufficient funds for covering the startup costs. Initial expenses for a business includes rental fee for your office, outlay for office materials and equipment, office sign, website building, marketing and of course, business insurance. Your start up money should also cover the operating expenses for the first 3-4 months after you have put it up.

Acquire Broker's License
The requirements for obtaining license real estate broker vary on each state. Thus, you should know first what your own state requires from those applying to get their license. In many states, the requirements include taking a course approved by the state, minimum age of 21 and salesperson experience of two years (real estate practice).

Choose Your Office Location
Ideally, any business establishment or office must be located in a place where it will be easily seen and will be easily accessible to people (both your clients and your agents). Other factors to consider are zoning and square footage of the actual office.

Build A Website
Having a professional-looking website will increase the value of your business. A website can also be an effective marketing tool. On your site, you can post and display all listings, both your own and those from other services. A website is very helpful to your real estate business because more and more people are nowadays turning to online resources when searching for homes that they can buy. You need to be familiar, as well, with other related technologies used in real estate business.

Avail For An Insurance
Omissions and error insurance is necessary for your venture. As a broker, you have agents whose actions you should be liable for. In case a disappointed client sues you, the insurance will make sure your business will be legally covered.

Prepare And Agreement
An agreement for independent contractor should be developed and written. This document will outline what you expect from your agent, his/her behavior, individual agent's commission split, etc. You are an independent contractor so you should not expect your agents to spend required time in the office. However, they must adhere to the code of ethics required of them. You are also allowed to set policies which they must follow in case they need to use space and resources in the office.

Provide Tools And Equipment In Your Office
Your business office should be well-equipped in terms of facilities and tools. There should be a waiting area, a conference room with appropriate furniture, reception desk, copier, fax, phone and computer. You can provide your agents with computers that they can use. You may include in your policies that agents pay for desk fees to compensate operation costs.

Recruit Your Agents
Your agents are your ally in the business. You need to choose established agents whose experiences will benefit your business. New and beginner agents will bring in excitement and energy in the brokerage business. However, they need to be trained so they will not make any legal errors. In recruiting agents, understand that they must also be provided with sales training.

Real Estate Investment Tricks and Tips

If you want to become a successful investor in realty in spite of the daunting economy and the disappointing state of the real estate industry, here are several tricks used by the old pros of the game in order to get ahead of the current buying or selling trends instead of just chasing them.

Study Local Pricing: The first thing that you need to study is the list of current price trends in your locality. For instance, a prospective investor should observe if the price of real estate is growing faster in one neighborhood than in others. Afterwards, you should double-check to see if the average home price is more expensive than in other surrounding towns as well. This should give you a good idea of where the largest demand presently resides.

The knowledge you can gain from studying local pricing is particularly useful for clients who want to purchase homes at the lowest yet most value-addled price possible. Real estate professionals and realtors should have a wealth of information regarding this subject, especially when considering their access to the MLS or the Multiple Listing Service. The town hall, the local newspaper, and the Internet should also carry a record of the latest sale prices as well, so be sure to check them out promptly.

Get the Best Brokers: Agents who are able to consistently profit in the realty business despite the economic setbacks and the lethargic market of modern-day real estate are usually the ones who know the industry inside and out. Staying ahead of the real estate investment curve requires agents (or at least agents who are worth their salt) to do their homework, so to speak.

They are aware of what new trends and developments are in store for buyers and sellers across the nation. They educate themselves about the transportation and schools nearest to a given household. They absorb as much information as they can about the area they invest in. They have to literally be know-it-alls in this trade because anything less than that will spell doom for their careers.

Look for a Catalyst: One indication that a place is an up-and-coming hotspot when it comes to real estate leads and investments is the development of new infrastructure. Whenever you spot new schools, buildings, and roads being built on a particular town or subdivision, that's a clear sign that the neighborhood is prepared to have an industrial growth spurt or sorts.

Being able to preemptively invest in a burgeoning community can prove to be very profitable for investors in the long run. Additionally, there certain types of development projects (e.g., shopping centers) that will prove to be supremely appealing to a myriad of homebuyers, with the added bonus of keeping the tax base low to boot.

At any rate, spotting developing areas can be as easy as looking out your car window as you drive by; telltale tip-offs of the beginnings of construction, surveying, and land clearing in and around major highways can serve as pretty big clues too. You should also look for the erection of new traffic lights, the installation of turnaround lanes, and the widening of traffic lanes, because they all indicate an increased amount of traffic flow in that area in the near future.

Real Estate Investing Strategies and Tips For The New Economy

This economy has produced one of the hardest hit foreclosure markets ever. However, to a real estate investor, this means opportunity. In this report, I will cover several different strategies used by real estate investors to profit in this market. They are in order from least risk to the greatest.

Bird Dog

This is an excellent strategy to use with no experience and no money out of pocket. There are a ton of potential deals out there but investors and buyers just don't have the time to find them. A new investor can make easy money by putting the "feelers" out there and located deals to refer to other investors for a small referral fee of usually $500 or $1,000. This is the least riskiest strategy when starting and really only takes time and consistency. Bird dogs will usually drive around neighborhoods looking for distressed homes. They will contact the owners about selling and then refer them to their "investor partners" to do the deal. The bird dog will usually receive a referral fee when the transaction closes.

Buy and Flip Wholesale

One strategy that provides for quick cash is to buy and flip at wholesale prices. Investors using this strategy will make tons of offers on bank-owned and distressed property. Once a property is under contract, the investor will quickly line up another cash buyer and immediately flip it for a small profit. For example, Investor A will get a house under contract for $50,000 and then immediate sells it to investor B for $55,000 either as a double closing or assignment. Investor A makes $5,000 fast and Investor B gets a good deal on a house worth $90,000.

To use this method, investors must by homes at 65% or less of their retail value to ensure enough potential to make a profit while still giving someone else a good deal. This requires investors to valuate different types of property, make a large amount of offers, have proof of funds that you can close cash when making the offers, and have another buyer or exit strategy lined up when you get an offer accepted. Where investors get hurt is when they are not able to close on a house because of no money or they cannot find a buyer to wholesale it to because the home was not priced right. The most successful investors can flip the homes without using any of their own money! I recommend as a real estate professional and investor, that anyone using this strategy for the first time should limit their risk by partnering with someone who has the experience and has flipped homes before. There are several investors who have money to fund a deal or have a list of buyers to flip it to.

Buy and Flip Retail

This strategy is somewhat similar to the one before. An investor will purchase a home that needs repairs and then rehab the house to move in condition. The investor will then list the house for sale at a good retail price and sell it to a buyer who wants to move in. From the last example, Investor B (who purchased the home from investor A for $55,000) might spend $10,000 fixing up the home. After repairs, Investor B will have spent $65,000 total from purchasing and repairing the house. He will then find a first time home buyer or maybe a retiree to purchase the house for $85,000 therefore making him a $20,000 profit.

More potential profit usually equals more risk. This strategy requires investors to have enough cash reserve to pay for repairs and holding costs, like taxes and insurance. Also make sure to check with the local building and code enforcement as there might be problems with the property that are not disclosed during the sale. Title companies usually don't check for code violations unless it's a lien and some houses have up to a $10,000 dollar fine! Another major pitfall comes from selling the fixed up home to a buyer using financing. Financing guidelines have become very strict due to the lack of common sense and bad loans used by the banks in the past. These loans are complex enough as is but another element of difficulty is added when dealing with flipping a home for profit. Investors can have major problems with appraisals coming in too low. Again, this strategy is for experienced investors. Please find a partner or mentor to help when trying this the first time!

Buy and Flip using Creative Financing

This takes a higher level of management and time commitment then the previous strategies but can result in higher profits and potential cash-flow. To be successful, an investor will purchase a home for cash, repair the home if needed, and then find a buyer for it. However, instead of the buyer using a normal bank loan or paying cash, the seller will provide the financing by either holding a mortgage from the buyer or allowing the buyer to rent with an option to buy at a future date. There are other ways to do it as well but these are the most common. The buyer will give the seller a large amount down to show good faith and pay monthly until they refinance or purchase the house.

To be successful, an investor must be prepared for the long-term commitment. These deals can take anywhere from 1 to 30 years to complete. There is also the risk of the buyer defaulting and having to foreclose, which could take months in St. Lucie county from the large amount of filings every day. Make sure to have a good attorney helping with these deals and be prepared for anything to go wrong. Also be careful of any long-term deal due to falling home values.

Buy and Hold Long-Term

Most are familiar with this way of gaining long-term wealth. The investor purchases a home with cash or financing, and then rents the home out for positive cash-flow every month.

This is a proven strategy for growing long-term wealth. This is also a fast way to lose a lot of money and make investors go crazy if not done correctly. This depends on the monthly expenses and condition of the house, and also the quality of renter. Back in 2005, investors would purchased homes with expenses way above what the rent would bring in. They were losing $200 to $1,000 every month and justified this loss because of the rising values of homes. As a result of the downturn in the market, they could not sustain this amount of loss and went into foreclosure. The renters in these homes of course had to move and typically lost their deposits. Investors should always purchase these homes at a discount to ensure positive cash-flow and also allocate money to vacancies, repairs, and unexpected items. However, some of the distressed homes are extremely under-priced to the point that you can make all your initial investment back in less than 5 years!