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There’s no doubting that real estate is big business. Whether we’re in a buyers market or a seller’s market, there’s one consistent way to make money from real estate. That’s by starting your own real estate business. If you don’t already work in the industry, you may have never considered a real estate business as a career option, but it can be extremely profitable with the right knowledge, tools, support and people around you.
It’s not as simple as leasing a shopfront and putting signs out, however, because a lot of work goes into building a real estate business. You’ll need appropriate certifications and licenses which can take time to obtain. You’ll also need to do a considerable amount of business planning and get your finances in order. However, when done right, you can build a highly rewarding business in the real industry. Here’s everything you need to know.
What is a real estate business?
A real estate business is a company that handles all types of real estate matters. These include buying, selling, managing and investing in real estate. Some agencies handle all of these things, while others specialise in buying and selling homes. You can also become a real estate broker, which involves advising customers on their real estate investments and helping them through the purchase process
If you’re wondering how to start a real estate agency of your own, you’ll need to be prepared for some hard work. Due to the requirements of obtaining the appropriate licenses, you could spend two years or more planning your business before you get started.
Is a real estate business profitable?
A real estate business is definitely profitable, provided you have the skills, experience and knowledge of how to successfully run a business. Many people make great real estate agents because they have people skils, are knowledgeable about the market and have a knack for sales. But, that doesn’t necessarily make you a natural businessperson.
Most agents work on a commission basis, even when working for another agency. So, the payment structure doesn’t change much if you branch out on your own, except that you keep the entire commission for yourself. However, you’re also liable for all of the expenses associated with running the business.
With the right advice, planning and business tools at your disposal, you can certainly build a profitable real estate business in Australia.
How to start a real estate business
1. Get necessary licenses and certification
Firstly, if you want to operate as a real estate agent in Australia, you’ll need a licence. The requirements vary in each state, however, there are a few common criteria.
Generally, you’ll need to have some qualifications behind you. This could be a Certificate IV in Property Services, whereas states such as South Australia, Northern Territory, Western Australia and Tasmania require that you complete a Diploma of Property Services.
In most states, you’ll also need industry experience, which means working as a property manager or agent’s representative for 1 or 2 years prior to obtaining a license. There is also a requirement to prove you’re a fit and proper person to hold a license, so this usually includes a police check and may even extend to sharing evidence of your financial circumstances.
Check for the full requirements in your state before planning your real estate business.
2. Create a business plan
A business plan is always recommended when starting any new venture. Whether you want to open a real estate business or start selling handmade crafts at a market, you need to map out the risks, the costs, expected income, your pricing structure, what you need to get started and much more. Your plan should consider everything, down to the tools you’ll use for invoicing customers.
A good business plan provides a clear picture of the feasibility and projections for your business, so it’s a great document to keep you on track. However, more than being just a personal ‘to-do list’, a business plan is an important document if you intend to seek finance from lenders or investors. They will want to see that you’ve done your research and planned accordingly, which is why the finance section of your business plan is so important.
3. Conduct market research
Most businesses benefit greatly from market research, and it’s an ongoing process throughout the life of the company. You can use market research to find opportunities, areas of improvement and ways to increase your revenue or market share. But in the early stages of business, research is all about testing the feasibility of your real estate business.
During market research, you’ll look at who your target audience is. You’ll consider how many competitors are offering the same services. How does your business differ from what’s already out there? What would make consumers choose your agency over already established real estate companies? Market research fuels you with all the data you need to determine if your business is viable.
The great thing is, all the research you conduct now can later form part of your marketing strategy. You’ll already have the data you need to start promoting your business through the right channels, targeting the right people.
4. Organise your finances
You don’t necessarily need a lot of capital to start a real estate business, aside from the appropriate industry fees you may be required to pay. However, consider the other things a successful real estate agency requires. An office space, certainly. Perhaps a professional vehicle? Furnishings for the office space, insurance and egal representation. You should also consider branding and signage and r website.
You may consider a business loan, seeking external investors, going into a partnership or several other ways to finance the setup. When you approach banks, lenders or investors, you’ll need you business plan we mentioned in step 2.
5. Choose the most suitable legal entity
There are different types of company structures you can use in Australia, and each has its pros and cons. In theory, you could start a real estate business as a sole trader, which means all of your business and personal income and expenses remain in your personal tax return. However, if you require finance or investors, you may need to set up a company.
Becoming a company is also a way to separate your legal responsibility from that of the business, meaning you’re not personally liable if something goes wrong. There are more compliance and tax obligations required, however, so you’ll also need to comply with those.
Alternatively, a partnership may also work if you’re going into business with another person. There are different types of partnerships, so it’s worth researching them thoroughly before going down this path.
6. Get business insurance
The insurance side of running a business can be difficult to navigate if you’ve never done it before. For a real estate business, you may need multiple types of coverage, including:
Professional indemnity
- Cyber and crime
- Public liability
- Management liability
- Worker’s compensation
- Business insurance
When determining how to start a real estate agency, consider the cost of all the necessary insurance types. There are companies specialising in real estate insurance, so it may be worth seeking them out and asking for a quote.
7. Choose your business location
When working in real estate, it’s a lot more effective if you can contain your work to a specific geographic location. Preferably this would be close to your home because it makes those after-hours walk-throughs much easier. You also have a personal connection and insight into the local area. Reducing travel frees up time and reduces expenses. So, it’s best to choose a location that has alot of real estate activity or gaps in the market. Your early market research may give you some insights into this.
8. Develop a marketing plan
It’s one thing knowing how to start a real estate business, but it’s another to actually market it effectively. Again, your market research will inform some of the decisions you make about marketing, but it’s worth exploring all options.
Naturally, you’ll have industry tools such as realestate.com.au, but you’ll need to get the word out there with more than online marketing. Marketing plans involve all types of activities, including:
- Social media
- Search Engine Optimisation (SEO)
- Pay-per-click (PPC) advertising
- Signage
- Brochures
- Radio/TV advertising
- Video marketing
- Cold-calling
- Email marketing
This list isn’t exhaustive, but it shows you all the avenues you have at your disposal to capture your audience’s attention. When planning your marketing, consider how much you can automate or outsource, such as email marketing.
9. Build a website
Your website is going to be crucial for your real estate business because it’s one of the best tools you have to attract potential sellers and generate interest from buyers. A high-performing website isn’t always cheap, however, there are ways to get yourself set up with lower costs.
Services such as Square Online allow you to create a website easily, and you can also sync it with other Square products and third-party software tools.
10. Utilise popular sites such as realestate.com.au
Finally, you’ll need to get familiar with the most-used industry websites for selling. If you’ve worked in the industry for a while, you should have a good understanding of how these websites work.
The most popular websites in Australia are:
There are certainly others for niche markets, so make sure you explore all of your options. With the right tools, knowledge and a solid business plan, you can start your business faster than you think!
