If you’ve binge-watched every episode of Property Brothers and can’t get enough of Selling Sunset, starting a business in the exciting world of real estate just might be your ultimate dream job. There are many types of businesses in the real estate market, each offering numerous, exciting opportunities. With the current housing boom characterized by record-low mortgage interest rates and record-time home sales, exciting opportunities like the 10 ideas below await those who want in on the action.
For those with a deep knowledge of construction and sales, the lucrative market of flipping homes is something to explore. Home flippers purchase homes that are undervalued, then fix them up and sell them at a significantly higher price than the purchase price, typically in the same 12-month period. The majority of flips are self-financed, meaning that buyers pay cash rather than finance through a lender.
To succeed, one has to have money to invest, resourcefulness to find experienced contractors to do the work, time and patience to manage the process, plus an understanding that resale at the right price doesn’t happen overnight.
Real estate brokerage
In 2020, 88% of home buyers purchased their homes through a real estate sales professional. Despite market fluctuations, real estate sales can be highly lucrative, and transitioning from an agent to a broker is the path to greater independence and profitability. Brokers typically start as agents at a firm and spend at least a few years developing their expertise and clientele. Then, they can become qualified to sit for the brokerage licensing exam and go out on their own. Requirements vary by state but once licensed, you can establish your own firm. You can then operate as a broker-owner, earning your income exclusively through the sales of your hired agents, or a broker-owner who participates in selling.
In most scenarios, brokers make more than agents, as they take a greater share of commissions. One factor to consider on the road to success: hone the ability to specialize in a market segment, such as vacation/second homes, condos or income-generating properties.
Busy real estate investors who own rental properties often find themselves with little time or ability to manage the day-to-day operations and tenant needs of their residential or commercial spaces. Instead, they hire a third party to market vacancies, vet prospective renters, take care of repairs, collect rent and oversee property maintenance — typically for a percentage of the monthly rent that is collected. This could be a great business opportunity for someone with great communication and managerial skills who is also detail-oriented, highly organized, and depending on the state, holds a real estate license or a property management certification.
The key to finding properties to manage is to build relationships with reputable real estate agents and contractors who are connected to local landlords, and who offer a referral fee for leads that convert to clients. You may also want to leverage the power of Facebook groups and run a paid search campaign online to advertise your services to local property owners who are looking for a manager.
Real estate appraisal
A fundamental step of the real estate buying and selling process is the appraisal. Most real estate transactions that require a lender are subject to an appraisal to help determine the value of land or property. Appraisers base these estimates on a number of factors like the property’s amenities, upgrades, needed repairs, as well as selling prices of comparable properties and market trends.
Starting an appraisal business is something to consider for the analytically-minded, as the industry is seeing significant growth. There is no barrier to entry; however, most states require that you begin as an appraiser trainee and follow a strict certification process that includes hundreds of hours of on-the-job experience. The effort is valuable, though. Independent appraisers work for themselves, and the more experienced appraisal professionals have the potential to earn upwards of $100,000.
Independent appraisers work for themselves, and the more experienced appraisal professionals have the potential to earn upwards of $100,000.
Real estate photography
Whether you’re a professional photographer looking to build a niche business or a hobbyist with aspirations to turn pro, real estate photography is a lucrative business. It’s estimated that homes with quality photography sell 30% faster, proving to be a valuable tool for sellers and real estate brokers alike. The key to entry is an impressive portfolio that showcases your understanding of the nuances specific to this field of photography as well as networking with as many influential players in your local real estate market as possible.
To get the money shots, you will want to invest in good equipment including a camera, a wide-angle lens and a tripod at a minimum, plus good photo editing software to perfect your images.
Short-term rental business
If you have the cash flow to purchase a property in a desirable destination, investing in short-term rental real estate could generate significant income. In a post-pandemic world, rentals have broad appeal, especially among vacationers, remote employees who can work from anywhere, and homeowners in need of a temporary residence during renovations. And the demand is only growing. Those who find the greatest success in the short-term rental market offer properties that are aesthetically pleasing, fastidiously clean and provide a concierge-like customer service experience.
You don’t have to live near the property, but you do need to be a very responsive host and have good relationships with local maintenance and repair companies. To market your rental, you can leverage the support and audience of existing platforms like Airbnb and Vrbo, or you can utilize the help of other proprietary short-term rental management tools.
Real estate app development
Apps built for individual brokers can close the loop on the sales process with greater speed. Sixty-eight percent of home buyers actively use mobile apps, proving that it’s a highly valuable tool that is likely to become more common. If you are a skilled app developer with user experience and content strategy expertise and are looking for an exciting niche, consider the world of real estate.
Communication and customer service are the foundational pillars of the broker-client relationship because these help build confidence, trust, respect and success between the parties. There is great value in providing these two key players of the real estate game with a platform that fosters this relationship. Such apps can share information about listings, as well as facts and statistics about neighborhoods, schools, places of interest, in addition to documents and important two-way notifications. If the real estate sector is appealing, there are many app ideas to consider as you decide who will be the target audience of your tech expertise.
Real estate wholesaling
So you want to get into the real estate game, but you lack the capital. There are still some viable options for you, and wholesaling could be one to contemplate. It is much less costly than flipping properties, and essentially involves identifying and contracting a property — typically a distressed property that is below market value — and selling the contract to an interested buyer at a higher price; the difference between the two transactions goes in your pocket.
It’s a short-term selling strategy that doesn’t actually require you to make a purchase outright or pour money into renovations. Building up a list of interested sellers and buyers is paramount to success, as you want a steady flow of both property inventory and individuals who are ready to take on the contract before it closes, so you have no financial exposure.
Commercial or residential cleaning service
Pre-pandemic, Americans were estimated to spend an average of six hours per week cleaning their homes. In a post-COVID world, the demand for cleaner, safer, more sanitized spaces has never been greater. The return to work and surge in the residential real estate market has spurred an unprecedented demand for commercial and residential cleaning services. The global household cleaning market is expected to reach $40 billion by 2025. And in 2019, worldwide commercial contract cleaning services were valued at $292.6 billion with projected growth through 2027 at 6.1% CAGR.
Niche and specialty cleaning services are also on the rise, from carpet cleaning and foreclosure cleanouts to pre-move-in deep cleaning services. As eco-consciousness continues to rank highly in consumer values, consider a green approach to products and processes that will resonate with eco- and health-conscious home and business owners.
Estate clean-out company
An estate clean-out company typically handles the difficult task of decluttering or completely removing the belongings of a loved one who passed away, or for those downsizing and need their property to be prepared for rental or sale. It’s a business in which a great deal of sensitivity is required, as is a savviness about the sorting, appraising and handling of valuables like antiques and collectibles.
In many cases, once clients have gone through all the items they want you to remove and haul away, you have an opportunity to resell or donate remaining furniture, home goods, clothing or other items. Others may request help organizing and managing an estate sale. And still, others may want assistance with cataloging items and working with appraisers. The keys to this subcategory of the real estate industry are resourcefulness and becoming specialized in a niche area. This way, you can offer your expertise to those who really need it, which will help you stand out in the competitive market.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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Event Recap: Scaling a Business
Watch the replay from our latest Roadmap for Rebuilding event, where the panel discusses ways to expand your customer base into new markets and use technology to grow.
Published July 26, 2021