Have an idea for a real estate niche? How do you test it and secure your success before you start?
Having a niche is important for all real estate businesses, entrepreneurs, agents, and investors. Even real estate giants that appear to market to everyone actually have their own niches, or started with one. Zillow’s niche began with appealing to those that wanted a fast and easy way to estimate what their homes were worth. Today it focuses on real estate brokers willing to pay premium prices for online ads. Warren Buffett’s Clayton Homes focuses on manufactured homes that can be shipped to buyer’s own lots. Lennar builds homes for those that want to live in new home communities with properties that sport the latest trends. Fundrise tries to appeal to non-accredited investors that want a way to invest from their mobile devices, but that aren’t really concerned about what they invest in, or who with.
Everyone needs a niche. Some are common and proven. For example; being the local condo expert for your city, or specializing in investment property sales. Others are far more aggressive. Like green home building was until recently. So how can you test out your idea for a niche, before diving all-in?
Any venture in real estate requires research if there is to be a reasonable expectation of success. Without research it is just a blind gamble.
Specific factors to research include:
- Level of competition
- Size of market
- Best practices
You may have an amazing idea, but it may not be a success if you are going directly head to head with much better funded competitors, the market is too small to reach your financial goals, the profit margins are too thin, the legal costs are too high, or there is simply no demand. These are things you much know for yourself, need to be able to answer for others, and especially must be able to present to potential partners and investors.
It is easy to be biased, and overly optimistic when running this research and making assumptions and projections. So how can this be tested?
Get a Second Opinion
It always pays to get a second opinion. Most consider it smart to get a second opinion on buying a car, having mechanic work done, going ahead with dental work, or a medical procedure. For most their real estate business decisions will be the most important they make in their lives. They will determine what cars they can afford, if they can afford to have their cars fixed, if they can afford to have their teeth done, or afford urgent health care. So it could easily be argued that it is even more important to get a second opinion here.
A real estate coach, mentor, or consultant with deep and broad expertise is a great choice for seeking out a second opinion. They can see potential issues you can’t, and can add value in seeing opportunities to add success and take it up a level.
Friends and Family
Friends, family, and coworkers can all make great focus groups. They may not always have real estate or business expertise, or may not be right, but they are worth consulting. Float your ideas by them. Get their input. If your ideas are good they’ll tell others. Do it over dinner, lunch, or coffee, or shoot them an email.
The Real Estate Community
The real estate community of your peers can be a great forum for getting feedback too. Some may be brutally pessimistic, but look at that as an opportunity to preempt issues and polish your idea. Online real estate forums, industry social networks, LinkedIn, Google+, and Facebook groups, and even meetup events can all be ways to do this.
Test the Market
Test the demand, buy-in, support, and whether people will really take action with live pilot tests. The previous methods of testing may result in a lot of positive feedback, but there can be a big difference between talk and moral support versus putting money on the line.
This can be done with pre-registering users, pre-sales, tracking action from social media ads and blogs, and landing pages.
Refining Your Real Estate Ideas
Compile all of your findings from above, tweak and recalibrate, and test again. Note that not everyone has to get it, or love it for it to work for you. But market needs to be big enough, and prime prospects need to get it easily, and buy in. In some cases you’ve got to ahead anyway. From the internet to mobile phones, to green building, we’ve got plenty of crazy ideas that are now standard. So decide how important this is to you, how much you’ll invest to make it work, define what success is to you, and run with it.