Starting a business is a big decision. It takes courage and planning to go out on your own and try something new. The decision to start is just one of the many decisions you’ll make along the way.
Luckily for you, the first two big choices have been made. You’ve decided to start a business, and you’ve decided that business should be in real estate. That’s a good move because financial experts consider real estate the best investment you can make.
Now, it’s time to make some more good choices. There are three more decisions you need to make before officially starting your real estate business.
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You know you’re starting a real estate business, but what type?
Do you want to own rental properties? Or do you want to flip houses? You have to know exactly what type of real estate business you want to start so you can grow your small business. You can take guide from real estate business institute – REBI.
Rentals are a great source of profit. Everyone needs a place to live, so it’s easy to find potential tenants. They do, however, require more responsibility on your part.
With a rental, you must maintain the property and fix any problems that arise. That puts you on the hook if a water pipe breaks at 2 AM. You can get a property manager to handle the daily tasks for you, but that will quickly eat into your profit.
If you don’t want to take on being a landlord, you might be suited to house flipping. In a house flipping business, you buy cheap homes, renovate them, and resell them at a higher value. The goal is usually to make a 70% profit. Like a millionaire real estate agent business plan.
A house flipping business will require a lot of research, fix and flip loans, and a willingness to take on new projects. Give these and other options some thought before making a decision.
The main thing to consider when deciding which type of real estate business is for you is how hands-on you want to be. Are you the type of person who can handle a renovation if you decide to flip a house? Sure, you could bring in professionals, but that will destroy your budget.
If learning some new skills doesn’t scare you, becoming a house flipper could be the right move. You’ll pick up all the tips and tricks before you know it, and unlike owning a rental property, you only have to fix things once.
Owning rental properties is even more hands-on. As we discussed earlier, your commitment is ongoing in this situation. There’s no option to fix something once and then move on forever, at least not without losing your tenants.
If you’re not a hands-on person, you may want to consider other forms of investing. Anything that involves you owning a physical property is going to require some effort unless you have the money to pay someone else to do it for you.
If you’ve decided what kind of real estate business you want to start, it’s time to move on to deciding how to fund it. Let’s say, for example, that you’ve chosen house flipping. You need start-up money to buy and renovate your first house so you can get started.
There are a few ways you can do this. You can use personal savings, ask people you know to invest in your business, or you can get a loan. All of these are viable options, it just depends on what you’re comfortable with.
The easiest option if you want to get started now, and don’t have a ton of savings, is to contact loan providers about a fix and flip loan.
This type of loan is designed specifically for house flippers. It gives you the necessary funds to buy and improve a house, so you don’t have to worry about a second loan to cover the remodel. You’ll have anywhere from nine months to two years to repay the loan, depending on the terms of your agreement.
The average flip takes about 180 days, so you should have more than enough time regardless of which terms you choose.
Once you make these decisions, you’ll know which type of real estate is right for you. You can start your business knowing you’ve considered all the options, and you’re ready to take on the challenges.
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