Are you curious what real estate business is all about? Maybe you’ve been a real estate agent for years now and you want to learn how you can start your own business. Any type of property, whether it’s residential or commercial, it’s a great investment opportunity. However, understanding the complete pros and cons of investing in real estate properties is crucial so that you can make the right investment decision that’s right for you.
Before we tackle the pros and cons of real estate business, let’s take a look at what it needs to achieve this success. There are two main integral parts of real estate business, connections and communication skills. After the 2007 mortgage collapse, the number of loan programs was immensely reduced, but over the past few years, they began to return.
- Do you have the skills to help your clients with financing from a traditional source such as a large bank or credit union?
- How are you going to acquire real estate financing as a first-time buyer from traditional lenders?
- How are you going to deal with a client whose credit score is not in a good or higher range?
- Can you guide them with a construction loan as a large line of credit or other loan made for motivations of developing the real property?
Pros of Having a Real Estate Business
Pro #1: You Are the Boss
The nicest part of running your own business is being your own boss. You’ll be the one identifying how your time is best spent and setting your own priorities and your own schedule. What’s great about this is that you create plenty of freedom and flexibility, which is really quite beneficial. Setting your own schedule can be particularly favorable to young families.
Pro #2: Set Your Own Brand
Remember the times when you were still a real estate agent? We know how you’ve disliked the brokerage’s messaging, marketing approach, design, logo, and etc. If you are running your own business, you have the right to choose how you want to be represented in the community, how your brand will be perceived, and how you will work to get referrals. You can design and incorporate your own taste on the website and create your own social media messaging.
Pro #3: Accumulate the Entire Commission
This is one of the main reasons why real estate agents consider opening their own brokerage, they can get the whole commission instead of just a portion of it can be enticing.
Cons of Having a Real Estate Business
Con #1: Big Responsibility
The drawback of being your own boss is you need to be the boss of anyone working under you. You’ll be having more agents working under you, and you have a big responsibility to handle all of the paperwork that relates to that.
Also, it is sure that you’ll be needing a receptionist, accountant, secretary, or cleaning service at your physical office, you are required to manage salaries, payroll, and benefits for each of these people. You are the person in charge of keeping the details from slipping through the cracks, so when no one else can do it, it falls to you.
Con #2: Pay Marketing Efforts
Running your own business may need you to pay for all the costs related to marketing. Working on your website may require hiring a graphic designer, plus, you may also need to hire an expert team in online marketing that would work in acquiring the right social media presence.
You’ll be the one to decide which marketing channels to be utilized in order to get the right return on investment for you to continue to use them. It’s pretty exciting yet overwhelming to learn the wealth of options available to modern business.
Con #3: Responsible for Operating Expenses
Although you are collecting the entire commission, you are also considering the operating expenses. Here is the list of what that can entail:
- Tax liabilities
- Marketing costs
- Benefit costs
- Office supplies
Having some agents under you who are constantly successful in bringing sales, then their commissions may be enough to cover your overhead, in which you can maintain your entire commission. However, if their commissions aren’t sufficient, the operating expenses are primarily your own responsibility.
On the Note
Remember that not everyone is made to own and run a business, particularly if it’s estate business. But if you are able to juggle multiple roles, willing to work two jobs, and is willing to constantly learn, then you might turn out to be great. Just make sure that you have realistic business plan and budget before you start.
Author Bio: Ivandrea Ollero is a resident writer for PAAL Kit Homes, one of Australia’s kit home leaders that offers a range of flexible kit house designs options. She researches and writes custom content about home improvements, finance, law, travel, fashion, and beauty. She graduated from St. Scholastica’s College, Manila, with a Bachelor’s Degree in Broadcast Journalism in 2016.