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6 Critical Factors in Launching a New Real Estate Startup


What do you need to know, and do before launching your real estate startup?

This is a fantastic time to launch real estate startups. Real estate is easily the best investment and industry to get into today, and looking forward. Market conditions may never have been better for successfully launching a startup. However, with high failure rates for U.S. small businesses, it is critical for aspiring founders to pay attention, and get a good handle on the following six factors:

1. Business Plans

Crafting a business plan can be one of the least fun parts of launching a new venture. However, it is absolutely essential. It can be a reality check, and vital stepping stone that ensures success, and ought to be fun for those casting a big net. If you don’t have the patience to hash out a business plan, you won’t have the patience to stick with it.

The key to the business plan is a great executive summary. This is the introduction, the literal key to getting others interested in your project, either simply as supporters, as well as funding partners. Those that aren’t very confident in their writing abilities can always outsource this step. Just don’t think about skipping it.

Another one of the most important elements in an effective plan is demonstrating the capability of following through. Those that are completely green to running a business or real estate may find this best bridged by enrolling a strong board, whose resumes they can lean on.

2. Market Research

Neglecting market research in starting a business is the equivalent of investing in a property without an appraisal, home inspection and title search. It’s just asking for failure. There is really no sense in rushing forward until research has been done. This will identify competitors, challenges, and previously unseen opportunities. Too many have attempted to skip this step, only to find they have tried to replicate something already out there, that is better, and better funded.

3. Finding Help

Launching any type of venture, especially a new real estate business, is so much better when it isn’t done alone. For those that want to go big, it will be faster and easier with a great team. For some, this may just begin with a good panel of strategic partners and coaches. Virtually all will be best served by recruiting a team. Outsourcing or delegating can speed and elevate success. This applies all the way from initial market research, to business plans, to marketing and day-to-day management. Those with the best talent have the edge, but this doesn’t always mean the most expensive route. Outsourcing platforms can provide access to those at the top of the game in each of these areas, on an as needed basis. This can shave a lot of expense from overpriced firms which simply add a premium on top the same professional’s rates.

4. Technology

According to Inman News, “tech-challenged agents are an endangered species.” The same applies to other real estate professionals and businesses. This doesn’t mean new CEOs have to have a complete understanding of all new technologies, but they should be aware of trends, and know where to leverage help. Tech may not be everything, but real estate companies do need to know how much of a role it will play in their operations, and set aside reserves for updating their tech. Notoriously, as soon as you go live, a new website design trend will come out, or new online marketing tool. So don’t base everything around one technology, and be prepared to develop.

5. Real Estate Marketing

Marketing is a critical part of the survival and success of any enterprise. In real estate, it makes up a significant percent of an organization’s success. It doesn’t matter how great a product or service is if it isn’t presented well, or doesn’t gain enough visibility. This is a key area to master. Even the largest real estate listing platforms frequently lose tens of millions of promotional dollars. The smallest and newest players can compete and win if they market intelligently, leverage proven real estate marketing systems, and get serious about knowing and serving their clients.

6. Fundraising

At some point, most real estate startups will want, or need to tap into additional working capital. More money isn’t always an advantage, but running out of funds is disastrous, and can deplete a company’s edge in seizing on opportunities and operating at better profit margins.

Coverage by Inman shows startup funding hitting a 13 year high in 2014, with $13 billion invested in new companies in just 3 months. The largest private equity and hedge funds have also turned to funding real estate companies and investors with their billions, instead of investing directly in markets themselves. Then there is crowdfunding which is funneling millions into new products, services and companies.

It is critical for new companies to evaluate all the options and determine the best way to raise funds for them. Don’t just take the money because it is offered. There is plenty of cash out there. Think about the strings it may come with, and the additional perks some money sources can add, beyond just cold hard cash.

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