Raise The Needed Startup Capital
When looking to start any business, one of the major factors that need to be dealt with is finance from how much is needed, where to get it and how it can be gotten. Without finance a business idea may never come to reality and even if it does, it may not remain in existence for long.
While sourcing for funds isnt an easy task for any entrepreneur, it is not something that can be avoided which is why entrepreneurs are always encouraged to write a business plan as this is what will help convince any external investor or financial institution about the viability of the business idea. Below are some of the options that can be explored when you are looking to start your holding company
- Raising money from sale of personal stocks and properties
- Applying for loan from bank
Have A Website For Your Business
When thinking about how to start your own real estate company, and how to give it a boost, make sure that it has a good presence on the web. Your potential clients make online searches to find out real estate products and services on offer.
But ascertain that your real estate website comes up on the top rankings of the search results on Google. A clear visible website at the top search result will mean that the consumers can reach your website, where you have put all the details of your company and business.
Your social media presence of the business is also part of the overall online marketing strategy. Use various social channels to form customer relationships. But build relationships also offline using a traditional outreach strategy.
To conclude, a real estate business requires a business plan and research of a niche market to find out the target consumers. The business starts with small money but finding out the investors is not difficult with a convincing business plan. Make strategies for a good online presence to drive consumers your way.
But make sure that your website design reflects your real estate business. Your visitors should come to know what your business is all about.
They come to know how your business stands out from competitors. So, include bio and photos of your business. Give high-quality examples of the real estate deals you made with clients.
How To Start A Real Estate Investment Holding Company With No Money
Do you want to start a real estate investment holding company? If YES, here is a 17-step guide on how to start a holding company with no money or experience. A holding company is one that owns valuable investments such as bonds, stocks, gold, mutual funds, silver, art, real estate, private businesses, patents, licenses, copyrights and any other thing deemed valuable in business.
This essentially means that a holding company doesnt do anything but is a conduit that controls and holds the stock or any other thing valuable of underlying businesses. According to factual research, most of the successful companies in the world are holding companies. You might need to engage the services of a business consultant and an attorney to help draw up the papers for your holding company.
If you intend controlling many businesses then it is suitable for you to incorporate a holding company but if you intend to start a small business, it might not be a bad idea to incorporate a holding company as the holding company can help in providing protection for assets either personal or that of the business that are considered to be of high value.
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Decide Your Investment Property Criteria
Your investment property criteria tell you and others what it means to have a good investment. I actually recommend creating a written investment profile that you can share with potential partners, investors, and sources of leads like real estate agents.
Your written investment profile should include descriptions of two major categories:
Your target property will become clearer when you choose a niche within your overall market. A niche means you focus on one smaller segment of the entire market. I discussed that some in Step #3, but you can also explore your choice of a niche with my in-depth article The 35 Best Niches for Investing in Real Estate .
When youve chosen a niche , your basic target property description may look something like this:
Single family houses with 3 bedrooms and 2 baths in the 30263, 30265, & 30277 zip codes. Target full market price range is between $120,000 to $199,000. Ideal properties are on quiet, safe streets convenient to schools and shopping. Ideal properties also include a garage or other storage and a useable yard.
The second category on your investment profile is the ideal terms . I wrote a comprehensive guide called How to Run the Numbers For Rental Properties Back-of-the-Envelope Analysis. This will show you how to quickly determine the most important investment numbers for you.
The ideal terms you choose will depend on the choices youve made up to this point, but they could look something like this:
How Does Real Estate Crowdfunding Work
CRE crowdfunding allows multiple investors to pool their money and collectively invest in larger real estate projects than they could on their own.
As an investor in a crowdfunding deal, you, along with dozens or even hundreds of other investors, purchase a portion of interest in a property or real estate project, similar to owning shares in a company. Capital that is raised goes to the real estate developer to invest in building, renovating or recapitalizing the property, which generates ROI for each investor.
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Work Out A Reasonable Pricing For Your Services & Products
From a quantitative perspective, investing in real estate is somewhat like investing in stocks. In order to profit in real estate investments, investors must determine the value of the properties they buy and make educated guesses about how much profit these investments will generate, whether through property appreciation, rental income or a combination of both.
Equity valuation is typically conducted through two basic methodologies: absolute value and relative value. The same is true for property assessment. Discounting future net operating income by the appropriate discount rate for real estate is similar to discounted cash flow valuations for stock, while integrating the gross income multiplier model in real estate is comparable to relative value valuations with stocks.
How Is A Reit Different From Crowdfunding
REITs and crowdfunding may seem like virtually the same thing. The investors provide capital, the REIT or crowdfunding sponsor purchases real estate, and the investors earn a return on their investment.
One of the main differences, however, is that investors typically are investing in a specific deal with crowdfunding. The sponsor raises money for that deal, the investors all get a piece of the cash flow, then, once the property is sold, the investment is over. Each deal is a separate transaction.
REIT investors, on the other hand, are typically investing in a portfolio of properties. This portfolio will usually change over time as the REIT’s management team will dispose of poorly performing properties to invest in properties with a higher return. They also usually continue to add more real estate assets to their portfolio as more investors purchase shares.
An investor’s capital is usually tied up for several years when they invest in crowdfunding. The same is normally true with private REITs. However, publicly traded REITs can be bought and sold whenever the investor wants
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Prepare A Detailed Cost Analysis
Tough it may be relatively simple to enjoy short-lived profits, developing a viable real estate investing business that can last for the long-term requires additional skill and effort. Whether focusing on apartment buildings or commercial property. Listed below is a detailed cost analysis of starting a small scale real estate investment business.
- Management team $15, 000
Total = $542,700
The cost of starting a real estate business might be big but its profit when managed well can be overwhelming. From the well researched cost analysis above it will cost a staggering $500,000+ to start a small scale real estate investment, showing how intense and rich the industry is!
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What Is A Real Estate Investment Group
People spend their lives learning how to analyze and negotiate real estate deals. Real estate investment is no different than stock investing or any other opportunity with huge returns. Chasing these deals is a whole industry of analysts and real estate companies.
So how are regular people like you or me supposed to compete? How do we find the best deals and put together a real estate portfolio with a chance to succeed?
The answer is to form a real estate investment group with other investors. There are different forms your investment club can take, from actually pooling your money to buy properties to just talking about how to find rental investments. The common bond in all real estate investing groups is that you help each other compete against the big money players to get the best returns.
Real estate investment groups benefit by bringing together people who can bring their expertise, including investment analysts, accountants, lawyers, negotiating and closing specialists, and contractors.
Real estate investment clubs used to be exclusively in-person, a group of five or ten investors getting together each month. With social media and the internet, just as many groups are formed online as live groups.
While there are options to join existing real estate investor groups, there are a few important reasons you may want to start your own.
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Real Estate Investment Business Plan Summary
Putting together a business plan for your real estate investment company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the real estate investment market, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful real estate investment business.
Form Your Business Entity
Before you can secure financing, youll need to establish yourself as a legal business. This will allow you to borrow money in your business name rather than your personal name. While some real estate investors operate their businesses without formally setting up a business entity, I dont recommend that strategy. With the right business structure, youll have greater legal protection and tax advantages.
Choose your business structurecarefully. Here are the options:
Sole Proprietorship or Partnership
In a sole proprietorship or partnership, there is no legal distinction between the business owner and the business. While this business structure is nearly effortless to set up, I rarely recommend it for real estate investors because it offers no financial or legal protection for your personal assets. If you choose this business structure, youll avoid business income tax, but youll be subject to self-employment tax.
LLC
When first beginning as a real estate investor, I typically recommend structuring your business as a real estate LLC. The LLC structure is easier to set up than a corporation and offers greater protection to your personal assets than a sole proprietorship or partnership. Youll still pay a self-employment tax as an LLC owner, but there are multiple tax deductions you can take to lower your taxable income.
Corporation
Once youve chosen a structure, youll need to:
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Purchase Money Mortgage/seller Financing
The first proven way to invest in real estate with no money is through seller financing. When buyers are unable to secure a loan from financial institutions, they may opt to seek real estate financing from the sellers. With conventional real estate transactions, the buyers will provide the sellers with the cash, to gain ownership of the property. However, with a purchase money mortgage, the seller extends finances to the buyer. The buyers will then repay the sellers, for the agreed terms.
Hire Employees For Your Technical And Manpower Needs
A holding company is one that has no day-to-day role in any of its investments as the company basically provides executive oversight and sets risk management parameters for companies. It is essential that accurate accounting records of all transactions are kept.
The accounting records for the various entities as well as that of your holding company must be kept separate in order that a legal distinction can be made between them. When it comes to the decision of either renting or buying a space to run your holding company from, the decision will depend on your budget and the size of business you intend to run.
If there is enough capital, you can decide to locate your company wherever you want especially if you do not intend to be directly involved in running the subsidiaries under you. If you intend running your holding company for a long time, then you should consider buying the space which you intend to use so that you can engage in long term planning, structuring as well as expansion.
The kind of business structure you intend to build for your holding company will depend on how large you want the holding company to become. Also, another thing that you will need to take into consideration when looking to employ suitable hands for your holding company is finance, as you should only employ those that you can comfortably pay.
The Service Delivery Process of the Business
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How To Make Smas Accessible For All
SMAs were invented in the 1970s to accommodate the needs for high net worth individuals, whose investment objectives didnt fit well into standard mutual fund strategies. But that was then and this is now!Recent history shows that SMAs actually hold more wealth than either ETFs or mutual funds. One study found that they comprised 35% of U.S. equity assets in 2018, while ETFs held 34% and mutual funds came in third at 31% of equity wealth.1The steady growth that SMAs have shown may be about to get much higher as well. Another study suggests that demand for SMAs may double by 2023.2Download our ebook to learn more about the benefits and roadblocks to using SMAs and how you can make them more accessible to all your clients.
2https://www.tradersmagazine.com/departments/fx/separately-managed-accounts-expected-to-double-in-three-years/
Be Cautious Of Starting Small
It seems wise, at least on the surface, to start small and grow bigger in the real estate business, but this may not always be the best option. Generally, single unit rental properties and small single family homes are the most attractive to newbie investors, as they usually cost less to purchase. However, the profit from these properties is often swallowed up by the mortgage, renovation budget, and maintenance on the properties.
As a result, it may be a better idea to partner with a wealthier individual or to secure more financing in order to purchase a more profitable property. This isnt to say that you should ever over-extend yourself, but beware that properties requiring small initial investments often offer small profit potential. Take this and all of the other factors described above into consideration before signing on the dotted line of your first investment property.
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What Are The Different Types Of Real Estate Investment Strategies
Real Estate Investing involves purchasing property whether it is a house, commercial property, or land to sell or lease. There are many types of real estate investing strategies, all with varying processes and requirements to start. Many of these strategies can be done with little to no initial funding. Below are the most common real estate investment strategies:
How To Do Real Estate Investment Analysis
I started after college as a commercial real estate analyst and still do freelance analysis for a few property developers. Finding good real estate investments isnt like researching stocks but thats a good thing.
Where investors scramble for a couple percent extra return on stocks versus the market, put together a solid process for real estate investment analysis and you can easily make double-digit returns each year.
Direct real estate investment is far from a passive income strategy though it can be a great business and can boost your returns through sweat equity. Investing indirectly in REITs removes a lot of the management hassles but also reduces the returns. Investing in crowdfunding real estate can be a happy medium with great returns but managed properties.
Real estate analysis starts with researching the market, the city or region where the property is located. A lot of this is going to be included in the investment proposal on real estate crowdfunding sites but make sure you double-check the numbers.
Once youve found a couple of good markets for investment, you can start looking at individual property. Again, most real estate crowdfunding deals will have detailed analysis in the documents but someone in your real estate investment group should be tasked with checking the numbers.
At minimum, start with an estimate of rental income over the next three to five years. Are the developers estimates for vacancy and lease losses similar to your market research?
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Write A Marketing Plan Packed With Ideas & Strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a real estate development business, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well known brands that determine the market direction for the real estate investment industry.
These are some of the marketing ideas and strategies that you can adopt for your real estate development business
- Introduce your real estate development company by sending introductory letters alongside your brochure to households, estate managers, corporate organizations, businesses and other key stakeholders throughout the city where your real estate development company is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your services
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