For many people, the idea of working on their own and not having to work under someone else’s mercy is the ultimate dream. Most strive to start their own business some time down the line and quit their full time job. Being your own boss has many advantages, the major one of which is that you are in charge at the end of the day. If you are reading this, it is safe to assume that you are thinking of starting your own real estate business and wondering if it is worth the risk.
Before you jump in head on, it is crucial to know what you are getting yourself into and to understand what a real estate business is really like. The basics of having your own business in real estate investing include:
- It is NOT a walk in the park.
- Earning positive cash flow on an investment does not come to you on a silver platter.
- Real estate money doesn’t grow on trees.
With that out of the way, if you are still reading, know that you can run a successful real estate business and reap off the benefits regardless of your age, real estate background or lack thereof, career history, location, etc. Real estate investors or/and agents can make lots of money if they spot a lucrative opportunity and turn it into a profitable investment. How? By buying real estate under market value and earning positive cash flow in return. But, this is not about luck or chance. Do not expect to buy any property and turn it into a successful rental without doing thorough property investment analysis and deciphering the rental property‘s cap rate, cash on cash return, and projection of cash flow estimates. The golden rule is to buy under market value. It might sound a little intimidating now, but it is not, it might only take some time to get the hang of things and get your real estate business off the ground. Mashvisor can help investors or/and real estate agents find profitable properties with positive cash flow returns all across the US. You also get cap rates and cash on cash returns on any real estate property in mind, whether for traditional long-term rentals or short-term rentals like Airbnb.
Real estate business is a great career choice, and with the right hard work and commitment, you will materialize financial rewards in no time. Just remember, you are running a business here, and you have to hustle your way into a successful real estate business that will earn you high income and positive ROI on your rental property or properties.
Related: How to Become a Real Estate Investor While in College?
Advantages & Disadvantages of a Real Estate Business
Advantages
- You are your own boss.
- There is no ceiling on how much you will be making; the sky’s the limit.
- You have flexible hours and can set your own work schedule however you see fit.
- You can choose to invest in any location. You are not limited to work in real estate where you live.
- Building a good reputation among your clients can get you far, and word of mouth is your friend.
Disadvantages
- No one is going to hold your hand and guide you, you have to do the hustle and bustle of real estate on your own.
- Do not expect to see positive cash flow from the get go.
- You have to be available at all times to adhere to your clients’ or tenants’ queries and demands.
- There is a high failure rate for new real estate investors and real estate agents. It is said around 87% of all agents fail at real estate. Ouch!
Related: Tips for Making Money in Real Estate from Famous Investors
Reasons Why Real Estate Investors and Agents Fail
1. They don’t take it seriously and slack off
Work hard pays off big time, and if you are keen to succeed in a real estate business, make sure you invest enough of your time and energy to get your business off the ground.
2. They think it is fast money
It takes time to see positive cash flows on your investments and learning the art of buying real estate under market value. For agents, it takes time to build a reputation. Real estate is a competitive industry and there are many agents fighting for the same client.
3. They don’t save enough money going in
Growing a business costs a lot of money, do not underestimate your expenses. Key rule: always overestimate your expenses and underestimate your income.
4. They have a full time day job
You cannot always work a day job and run a real estate business on the side. You have to make sacrifices to see your business grow.
5. They do not have a vision or long term plan
Goal settings and action plans are a must for any business, and a real estate business is no different.
6. They cannot generate leads
To generate new leads for their business, real estate agents rely on open houses as well as online marketing and social media channels. For landlords, you must treat your tenants as business partners and try to be on good terms with them at all time. Word of mouth doesn’t hurt the business, unless it is a bad word of mouth.
7. They are not people-friendly
Interpersonal skills and good communication skills can get you far in any business including the real estate one.
8. They think the real estate business is easy
It is not, it requires lots of work and knowledge on the ever changing real estate markets and economic trends. You must be able to spot an opportunity to make a profit. No such thing as luck in real estate.
9. They do not know how to cope with poor housing markets
Real estate markets are volatile. Golden rule: Do not get comfortable during a strong real estate cycle. Grow your contacts and power through to handle the tough times coming. If you are a landlord, make sure you know how to mitigate the hidden costs of vacancies and bad tenants.
Related: 10 Important Questions to Think About Before Buying an Investment Property
No Walk in the Park
Real estate business is a great career move for just about anyone, but you need to make sure you are going in for the right reasons and not rushing your decision without weighing your pros and cons. Figure out what is good for you; you do not need to jump into real estate right away. Take baby steps and start as a part timer, learn the trade first and work with real estate agents to get you started. True success is all about small increments, and running a real estate business is certainly no exception.
