Today I will delve more about services offered by a real estate company and how to plan your business project based on their coverage.
First of all, we must define some of the main approaches that a real estate agency can have, such as:
- Real Estate Brokerage Agency
- Housing Project Development Company
- Real Estate Investment Company
Real Estate Brokerage Agency
The first of the alternatives in this deal It consists of offering different brokerage services through a formal agency that allows your clients to contact you to buy, sell or rent their properties. Fundamentally, this option allows you to negotiate the available properties and in return obtain a commission percentage.
To start a project of this kind, it is usually required to be affiliated with the Chamber of Real Estate Brokers of your locality which in addition to providing technical support will provide you with the ideal support for the professional performance of your services.
You will also need to hire a team of salespeople who are the people who do the field work in everything related to customer service. You can see our topic Steps to Set Up a Real Estate for specific details.
The business model It basically consists of establishing relationships of trust with your clients to promote their properties. For which you get a commission on sales which usually rounds between 4% and 5%. While your costs must be projected in the following way:
- Up to 1.5% for commission from sales consultants
- From 0.5% to 1.5% for advertising and promotion
- From 0.5% to 1.5% for administrative expenses
- From 1 to 2.0% of net profit
Approximate initial investment: $ 5,000 to $ 10,000.
Housing Project Development Company
This proposal consists of the promotion of real estate projects built on your own regularly with the backing of investors. You don’t necessarily have to imagine a 200-house residential project. On the contrary, I know several entrepreneurs who have started their own company building a house or two or a small condo and they have gradually grown.
The strategy can basically be planned from these different points:
- Acquire land for construction and sale of homes
- Acquire homes at auction, renovate them and resell them
- Acquire land for urbanization and sale of lots
- Construction of commercial premises or business offices
- Acquire houses or small buildings for rent of rooms or apartments
In all cases of course the variant for the investment it has to do with the dimensions of the land and / or houses to be built. You can consider an approach that is either popular, or look for an upper-middle market that has a greater ability to pay. In all cases, a basic market study will be essential to determine the chances of success in the sector you want to cover.
This type of business It is based on developing a medium and long-term vision that fundamentally consists of acquiring properties at a very low cost or looking for land that is in places where cities are developing, which is why they can be obtained at very good prices. In addition, of course it is necessary to have a good capital to invest both in the purchase of the properties and in the urbanization and construction of housing units.
You will fundamentally need:
- A good engineer to help you coordinate development and construction tasks
- A good lawyer to help you as Legal Advisor for everything related to procedures, registrations, dismemberment and deed to new owners
- Contacts with banks or finance companies to be able to offer credit options to your clients
- Administrative and IT support staff
- Sales Personnel to ensure the rapid promotion and sale of projects
- Investors. There are many people with available capital who are looking for serious projects to invest in, so it is essential to be able to present visionary projects to attract them.
Real Estate Investment Company
Finally we will talk about investment companies that are usually made up of investors with venture capital to place it in serious real estate projects.
As in everything, it is essential to be very clear that the real estate investments they are a business and therefore carry risks. Risks that can be minimized as the different investment proposals are evaluated by the construction or developer companies. So it is important to answer these questions as part of the investment project:
- How much cash are you willing to invest comfortably?
- What kind of return do you hope to get from investing in real estate?
- How much of your own effort will go into the development of the property or project?
- What is the future of equity that is expected to be achieved through the investment, and what term?
- What type of property is most attractive to you for investment: residential or commercial, social or is it indifferent to you?
Investment modalities
Essentially we can divide the investment modalities into direct and indirect.
The direct real estate investment is related to compare, sell, resell or rent properties. As well as those focused on the construction and development of specific housing projects, thereby obtaining profitability. While the options indirect investment are those where the investor places their money in stocks, titles or letters backed by the management of mortgage loans or by the promotion of a real estate portfolio. And that we could summarize in:
- Investment in Fixed Income. It consists of the acquisition of real estate to recondition and rent them.
- Speculative Investment. It consists of the purchase of a property with the intention of reselling it for a higher price in the future with the respective profit resulting from the capital gain of the property. Ideal for this modality is the acquisition of assets in judicial or hereditary auctions.
- Investment in Construction Developments. With different investment scales and different alternatives for society, this modality has to do with a complete real estate development project that goes from its conception either in small works or if its investment capacity allows it, in large projects.
- Investment in Repairs or Parts. This has to do with the purchase, renovation or repair of a real estate to resell it at a better price. Thus obtaining an important profit in the short term estimated at up to 30% in an average of 6 months.
In addition, just as risk can be minimized, failure can also be minimized and for this it is essential that your investment is always accompanied by an adequate advice by a Real Estate professional. And finally, we must reaffirm that this is a good time for real estate, especially because people always need a roof to live, whether it is their own or rented, especially in our Latin American countries.
You can see the first part of the topic: Steps to start a Real Estate.
Other business ideas:
