I have multiple real estate related businesses: I own 20 long-term rentals, complete 20 to 30 house flips a year, own a real estate brokerage, write books about real estate and have a YouTube channel and blog about real estate. I love real estate; it can be a ton of fun and extremely lucrative! There are many misconceptions about the real estate business and what it is really about. It is not about buying houses and hoping they go up in value or driving people around in your car hoping they buy a home.
Getting into the Real Estate Business
There are many ways to start a real estate business, from flipping houses, buying long-term rental properties, buying nonperforming loans, becoming a real estate wholesaler, or even becoming a real estate agent. Besides starting a real estate business, there are many businesses that cater to the real estate industry like photographers, home inspectors, appraisers, stagers, lenders, title companies, and contractors. There are many opportunities to start a business in the real estate field.
Why Choose Real Estate
Real estate offers a ton of opportunity for people looking to start a business. It is one of the easiest businesses to start because it involves housing which is relatively easy to buy and sell. Even though houses are very expensive, they are usually fairly easy to finance. We all have experience with housing as well since we must live somewhere. Because real estate is easy to leverage, it is possible to control a very expensive asset with very little money. This can provide some huge returns for people if done right. If done wrong, it can also lead to disaster.
What are the different types of real estate businesses?
Here are some of the ways to start a real estate business in the investing field:
You buy houses for well below market value, repair them, and sell them. It sounds easy, and sometimes TV shows make it look easy, but it takes work. The tough part is finding the deals, finding the lenders who want to loan on flips, and finding contractors. I did 26 flips last year, and you can make a lot of money in the business.
You buy houses well below market value, repair them if needed, and rent them out. A good rental property should make money every month after paying all expenses, including the mortgage. The trick with rentals is finding great properties, finding great tenants, and financing rentals once you have more than ten. I have 20 rentals that are both commercial and residential.
You find great deals, get them under contract, and then assign the contract or sell the property very quickly without doing any work. The trick with wholesaling is finding amazing deals because you are usually selling to other investors who need room to profit as well.
You find notes or loans that are for sale on properties. Buy the note, and you become the bank. You do not own the real estate but may end up owning it if the owners don’t make payments. The trick is taking possession of the property through foreclosure if the owners default.
Real estate service business
Besides investing in real estate, there are many ways to start a business that caters to investors or home buyers.
Real estate agents
Real estate agents can make a lot of or very little money. Some agents make hundreds of thousands of dollars a year while they have a team do most of the work, and some agents struggle to sell any houses while they do everything. Being an agent is a great career if you are self-driven and motivated. I have been an agent/broker for 17 years.
Real estate brokers
Real estate brokers own a real estate company or are the managing brokers who are in charge. Some states, like Colorado, call agents associate brokers, but for this article, I am calling them agents. The brokers take more training and are responsible for the agents who work under them. I am also a real estate broker. Brokers must be agents for a certain amount of time before they can become brokers.
Most people are buying or selling the most expensive asset they will ever own when they complete a real estate transaction. They don’t want to screw it up, and that is what title companies or attorneys are for. They handle the closing or sale of the home and make sure all the paperwork is done right.
Real estate lenders help buyers get loans to buy properties. They may work for banks, credit unions, or be mortgage brokers, in which case they have their own business and find the best loan for buyers. Most lenders work on commission like real estate agents.
Appraisers value real estate to make sure the lender is making loans that are more than the property is worth. An appraiser must have a college degree, go through training, and be an apprentice for a number of years. There is a high demand for appraisers in most areas.
Home inspectors inspect properties to see what condition they are in. Most home inspectors have a vast knowledge of construction, but not all. In Colorado and other states, there is no license or requirements for being an inspector. Anyone can do it.
A surveyor measures land, creates ILCs (improvement location certificates), creates surveys, and can verify lot lines. In most states, you must pass an exam and be an apprentice for a number of years with another surveyor before you can become licensed.
Structural engineers inspect buildings, foundations, and help design structures as well so they do not fail. Most structural engineers must have a degree in engineering (usual civil), work experience, and pass an exam.
Contractors and subcontractors work on the houses. There are different licensing requirements in every state for contractors. A general contractor will oversee the entire repair process, while subcontractors specialize in one trade like painting, electrical, or plumbing.
Property managers rent and look over rental properties. One misconception about being a landlord is you have to take calls and replace toilets at 2 a.m. I have not seen most of my rentals for years or even know who the tenants are. My property managers take care of everything for me. Property managers usually get a percentage of the rents and a leasing fee.
Other real estate services
There are even more businesses that involve real estate.
- Home staging
- Drone photography
- 3D photography
We can go on and on about businesses that involve houses in one way or another. The point is that there is a lot of opportunity in real estate. There are direct businesses, many career opportunities, and many businesses that support the real estate industry.
Real estate is one of the most popular niches to start a business because you are dealing with high-dollar profits where there is room to make a lot of money!
How hard is the real estate business?
While there is a lot of opportunity in the real estate world, it is not easy. Many people jump into it thinking real estate is simple when it is actually extremely complicated! Every house is different, every piece of land is different, and every location is valued differently than another location. Real estate is hard to value, can be hard (and expensive) to sell, and there are a lot of scams that involve real estate.
With many of the real estate professions we talked about, you need a license or an apprenticeship. It can take many years to be able to work on your own and have your own business. This is not something you can jump into overnight.
Why I Love Real Estate
I love real estate because there are so many ways to make money, and I am in control of everything. I have made money as an agent, broker, landlord, flipper, blogger, author, YouTuber, and more, all because of real estate. I get to make my own schedule, and I have tons of freedom. It does not hurt that I have been able to buy a Lamborghini, Aston Martin, Lotus, Porsche, and a few more cars all because of real estate.