Building a real estate business can be a great way to earn rental income, benefit from tax deductions and perks, and potentially profit from appreciation over the long term. If you want to be a real estate entrepreneur, though, you’ll have to be willing to do the research and take on the risks of investing in real estate.
There are a lot of different ways to make money with real estate, and there’s no right answer to which way is best. However, you’ll find that most successful real estate entrepreneurs have a growth-oriented and entrepreneurial mindset, have committed to learning as much as possible, constantly look for opportunities, and have built a strong team and network.
If you want to build a real estate business, there’s no such thing as doing too much research. You’ll want to gain a solid understanding of every nook and cranny of the industry to the best of your abilities. On top of that, you’ll want to get to know any of the specific trends in the location(s) where you are planning on investing.
It might sound like boring advice, but the more research you do, the better able you’ll be to make sound and thoughtful investment decisions. On the other hand, the less you know, the more you are essentially gambling when you buy a piece of property with the purpose of turning a profit one way or another.
There are a lot of different ways that you can learn more about being a real estate entrepreneur and the real estate industry in general. Some people might choose to get a business degree from a college or university, while others might take an online course from a trusted expert.
It’s worth noting that you do not need to have a college degree to become a real estate entrepreneur, and how relevant a university business program will be for your goals is going to vary greatly depending on the program.
Depending on your strategy and style as a real estate entrepreneur, you might even choose to take the required courses and exams to become a licensed real estate professional in your local area.
Becoming a real estate entrepreneur can be an incredibly satisfying (and lucrative) endeavor, but it’s important to think about what could go wrong before you decide to follow this path.
No matter where you are investing your money, there are risks involved. Real estate investing is no exception; you’ll want to be fully aware of these risks to help you make informed decisions.
Some of the risks that you face as a real estate entrepreneur include:
There are a number of ways that you could end up losing money as a real estate entrepreneur if you aren’t careful (and sometimes even if you are careful). Not only can the real estate market be unpredictable, but there are a lot of other moving parts that can impact your success simultaneously. Whether you have problem tenants, are dealing with a high vacancy rate, found hidden structural problems, or are simply a victim of the unpredictable real estate market, there are a number of different ways that things can go very wrong if you aren’t prepared for every possible scenario.
Whether they realize it consciously or not, most real estate investors have a niche they focus their attention on. Some rental property owners might focus on single-family homes in college towns, while another might specialize in high-rise luxury condos in vacation destinations. Others might focus on investing in properties to turn into Airbnbs.
Maybe you want to focus on purchasing properties that need some TLC for below-market value, fixing them up, and reselling them. Maybe you're interested in buying foreclosed properties and breathing new life into them. On the other hand, you might decide that you’d rather purchase well-maintained properties and rent them out to high-quality, long-term tenants in locations with low vacancy rates.
Choosing a niche rather than being a jack-of-all-trades can help you focus your energies in one direction rather than being pulled in a number of directions at once.
In addition to picking a niche, you’ll also want to think about your style and strategy.
For example, one thing you’ll want to think about is how hands-on you want to be. Some real estate investors buy properties that need a lot of work, and they break out their toolboxes to do the necessary repairs and renovations themselves. Others build a team of professionals in their area and hire out all of the work in order to focus their energies in a different direction.
Similarly, some people choose to hire out property management when they own rentals, while others deal with tenant selection and interactions, rent collection, repairs, etc., on their own.
There are pros and cons to all of these different styles, and you'll ultimately want to think about what makes the most sense for you.
When you’re building a real estate business, you’ll want to do what you would for any other business you’re starting: create a business plan.
This is a document that outlines how you plan on creating a successful real estate enterprise and what your goals are. You will want to include:
Making a business plan means you are creating a roadmap that you can follow and consult during your real estate investment journey.
There are a number of different people you might want to hire as your real estate business grows, including an accountant, a lawyer, and a real estate agent.
While you might be tempted to try and save money when you are first starting out, having the advice and help of professionals you trust can be incredibly valuable.
One step toward becoming a real estate entrepreneur you don’t want to skip is building a network of contacts. The people in your network can include:
When you have a healthy network, it means that it’s easier to find the right properties, borrow money, and fix up your investments in a timely and cost-effective manner.
To build your network, you have a lot of different options. For example, you can join networking groups, attend industry events, participate in online forums, or connect with potential contacts through online directories or social media.
The real estate market is always changing, and you’ll have the best chance of succeeding if you have a growth-oriented mindset rather than a fixed mindset. Rather than assuming you’re a real estate expert that never needs to learn anything else about the industry, always be willing to learn more and expand your understanding of your local market. This can mean attending seminars, taking online courses, or staying up to date with industry news.
On top of that, you might choose to find a mentor that can help offer you advice and guidance.
A person that creates a successful real estate business always has their eyes open for opportunities. They don’t get complacent, and they don’t get lazy. While it’s good to have your style, strategy, and niche under your belt, that doesn’t mean your gears aren’t always turning, thinking about new potential opportunities and ways to expand.
Anyone who tells you you’re going to get rich overnight as a real estate entrepreneur is most likely lying to you. Building a real estate empire with a strong foundation is going to take time, and you’ll want to practice patience. That’s why it’s important to have your business plan and treat it like a roadmap so you can stay focused on your goals regardless of the ups and downs you face along the way.
Planning is absolutely key when you’re considering building a real estate business. When you’re first starting out, it’s easy to get tempted by a specific property and jump on the opportunity before you’ve done your research, built your team, or deliberately chosen a strategy.
If you go this route, there’s a chance you will luck out and be successful. If so, good for you!
That being said, you are mitigating your risk the more research you do. Rather than buying the first property you see, step back and build a machine that you can rely on to generate income and help you build wealth over time.
When selecting rental properties to purchase, it’s essential that all of the numbers add up in your favor. You can use our rental property calculators to help you take a look at all of the most important metrics for any property you own or a rental you’re considering purchasing.
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