How to Get Started in Real Estate Investing – Writing an Effective Real Estate Business Plan

An effective business plan, for most business, can help you think about the business and get to know it fully. It also helps you to strategically plan for the different aspects of the business. Such plans let the investor know what will be pursued as well as provide a clear road map for the management to follow.

Savvy investors always put together a business plan for each property investment. It is important therefore, that you take your time to plan each real estate investment you make.

In writing your plan, you have to identify the areas for improvement and the strategies for increasing the value of the property.

For first-time investors, it is important that you ask the following questions before writing your plan:

1 Why am I going into real estate business?
2 What challenges are involved in real estate? Can I handle them?

Taking time to answer the questions may prevent you from making costly mistakes which make this type of investment a disaster for many people.

Real estate investment comes with its own challenges and it is important that you know them and have a plan for resolving each of them. For most that are bringing in investors to look at your plan, the investors will want to see that you have experience in acquiring and managing real estate – strong enough to face the challenges involved. They want to know if you are emotionally and financially capable of handling tenants who do not pay and refuse to leave. They want to know if you are capable of handling the maintenance of the property and the contractors involved.

Strengths and competitive advantages are also points you should note though they are less important in real estate than in other businesses. You many want to talk to local brokers who know the market and can give sincere and honest advice.

What about insurance and tax reporting? You must be able to source for the right insurance coverage on your property. You must make sure all dues are paid in taxes and your accounts balanced. If you are not very good at this, you may consider getting if done through consulting.

Partnership is also an important issue in real estate investments. If you consider bringing in partners or investors, you have to look at securities law issues and investor communications. You must be ready to provide the reports and financials at intervals determined by the investors,or state laws. Most investors like to see quarterly financial reports.

Writing an effective real estate business plan, even when you know about the business, helps you to know it better. Put yourself in the investors’ shoes when writing your plan. Think about what they want to see and hear and address such.

Above all, writing an effective real estate plan requires getting all the available information you need in putting the business together.

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Fundamentals When Building Your Real Estate Business

If you want to be successful in a real estate business, the first thing that you need to do is to be familiar with the basics. The reason why there are a lot of people who are getting into real estate business is because once you purchased a property, the value of it will continue to appreciate. Aside from this, you will also be able to build a strong passive income that can generate thousands of dollars every year. However, you still need to make sure that you know the basics, because your investment could be wasted if you weren’t able to follow the building blocks of real estate business.

The first and probably the most important part of a real estate business is looking for a reliable realtor. We can say that they are your partner in business, because they will be the one to look for the property that you can purchase. Aside from this, you will also be able to receive advices from them regarding the best way to invest in the real estate market. If you were able to find a reputable realtor, we can say that your business is almost guaranteed to succeed.

If you are a person who would love to take risks, the best property that you can purchase are the ones that are in short sale. The reason why you need to look for these properties is because they are being sold for a price that is much lower than the mortgage rate. However, you still need to be very careful because there are several reasons why the owner wasn’t able to pay for the mortgage. Nonetheless, it is still a good investment because the price that you have to spend for it is lower than its market price.

If you want to build apartments for rent, it would be better if you are going to look for lots for sale. Since there are no establishments placed on the lot, you don’t have to spend a lot of money for it. Aside from this, you will also be able to save money since you won’t have to demolish an existing building just to have your building built. If you want to determine whether the place is a good place for apartments, you can ask your realtor because they are well-aware of the things that should be considered before building your property.

If you are just starting to build your portfolio of real estate properties, it would be better if you are going to start buying small houses and have it rented by other people. This will cover the money that you have to spend for the mortgage, and you won’t have to think about anything. The good thing about this is that after you’ve finished paying the mortgage, the property will be yours and the income that you are generating from the rent could be used to invest in a new real estate property. Just make sure that you are going to consult your realtor when getting into such investments.

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Set Yourself Up for Success With Your Real Estate Business

So you’ve decided that you want to invest in real estate. It might be that you are still working a full-time job or you are running a business that right now takes up most of your time. Don’t make the mistake of treating your new venture as a side hobby. Diversifying and building your wealth with real estate is one of the best things you can do for your future.

Buying investment real estate is an activity that should be treated as a business and not a hobby. The mistake that many newbie investors make is that they are just making it up as they go along and are not taking the time to do their homework on how to set up their business before they start looking for properties.

It is important to not only structure your business well before you go out buying properties, but also to make sure that you put forth the most professional image possible. There are a lot of aspects to doing this well that I share with my clients, and I will share just a few simple strategies with you here.

First, every new business should you have a name. Choose a name that reflects your investing goals, the industry, and be sure to stay away from words that might have legal implications (ex. “Realty”). Also, be sure to check the availability of the name with your local Secretary of State. This is an important first step, because this is the name you will use with everything from registering your business with your state to opening your bank account. You don’t want tenants making payments made payable to you personally.

That leads us into my second recommendation. Now that you have a business name and have ideally registered it with the state, you will also want to keep your business expenses separate from your personal expenses. The easiest way to do this is to open a business bank account separate from your personal bank account, and make sure to have all income and expenses for your properties and other business related expenses flow through it. Don’t make the mistake of mixing your personal and business expenses, because should you ever be audited by the IRS you could lose some if not all of your legitimate business expenses.

When I started investing some years ago, one of the first things I did was create a name and open a bank account. It gave me a professional appearance to all of the vendors and customers I came into contact with, and an easy way to start accepting payments and tracking expenses.

Lastly, I recommend meeting with an attorney (real estate or trust & estate) to determine the best legal entity for your personal circumstances. Many real estate investors use a Limited Liability Company (LLC) because of the limits on their personal liability in the event of a legal suit. Again, check with your attorney to determine what will work best for you, but make sure you do not own your investment properties in your personal name.

Using these simple strategies, you are well on your way to setting up your new real estate business for success.

Wishing you much success,

Jewell Staley
Real Estate Investing Mentor

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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.

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