Real estate is a broad term often used to define the market for commercial, residential, or industrial property. This can include a developed structure, a pocket of land, or even a combination of both. So, by definition, you would be working in one of these segments if you want to build a real-estate business.
Now, what type of strategies you can deploy in your business would largely depend on the type of operation you are running. Generally, these are the types of businesses associated with the real estate industry:
1. Sell-Side: These are major real-estate development companies that buy or lease pockets of land, take the capital risk, and construct an 'estate.' The idea is to borrow a large portion, add a small portion from the company's balance sheet, and once the project is overuse the proceeds from the sales of each unit to pay the interest & principal and keep the rest as the profits. This is the capital-intensive side of the business. Companies like Lodha Group in India, Alliance Residential in the USA, and Unibail-Rodamco-Westfield in the EU are some of the biggest names in this segment globally.
For commercial and residential real estate, the development companies often hire real estate agencies responsible for bringing leads and converting them for the developer. Sometimes, even real estate agencies tend to employ several independent contractors to help them generate and convert leads. While these companies are important for the market's functioning, they generally do not bear any risk if the developed project is not sold with 100% occupancy. The Corcoran Group and Sotheby's are two of the biggest real-estate agencies globally.
2. Buy-Side: This generally tends to include investors and lenders who are providing capital to the project. Traditionally, the list was populated by bankers and private lenders. Now, major firms like Blackstone Group and Brookfield actively invest in real estate projects via equity and debt routes.
3. Intermediaries: There are the General & Sub-Contractors, Architects & Interiors Designers, Planners, Decorators, etc. who provide services as per a fixed contract to the developers.
If you plan to enter the real-estate business, you can begin as an agent or a broker. You would be allocated a certain inventory of 'units' or houses/offices, depending on whether you are working in residential or commercial real estate.
Here are the strategies you can deploy to become successful in the real estate industry:
1. Get Licensed and Registered: Sometimes, individual brokers who are just starting tend to use their social relationships to get into the business, i.e., they know someone who is already doing it and join her/him. A better way to do just this would be to get registered as a licensed broker in your state/country. And then, join a professional association like the National Association of Realtors in the USA. It has over 1.38 million members globally. This will help you get recognized as a licensed professional, give you access to the initial resources you need to get started, and later help in keeping your services standardized.
2. Find a Niche in Your Local Market: If there are a dozen real estate agencies in your area – it is probably already a crowded market. Find a niche you can dominate, like waterfront properties, club-house properties, farm properties, equestrian properties, etc. Find a segment that has some supply but is seeking more buyers. Then, your entire job starts focusing on bringing in the buyers for that particular segment.
3. Locate Your Buyers: You can achieve this by running campaigns in the newspaper or local radio or even demographically targeted ads on social media & Google. But, you will need a more focused approach. Find people who have recently acquired a lot of liquidity – retirees, divorce settlement winners, fund managers, executives, etc. A lot of this information is publicly available, and if you tailor your approach, you might get some conversions.
Successful real estate agents are a part of the social scene in the city. VIP birthday bashes, corporate celebrations, local events – they are a part of everything. Such places can be great for generating cold and warm leads. Once you start converting a few – ask them for references in their circles.
You can also develop lead generation channels by forming relationships with wealth managers, luxury vacation operators, luxury automobile dealers, etc. They are selling products & services to your target market and might be of tremendous help in generating several dozen leads in one go.
4. Establish Good Relationships with Intermediaries: Architects, interior designers, furniture sellers on one side and lawyers, bankers, accountants, appraisers on the other side – establish strong relationships with these people. They will help you locate good properties in the market and might even understand who the HNIs in your market are, ready to make investments. The better relationships you have with these intermediaries, the lower transactional costs you would be paying to acquire leads.
5. Build a Brand: Barbara Corcoran, who rose to fame with Shark Tank, sold her real estate agency for over $60 million. Her agency is still active and operating with the same name – Corcoran Group. So, early in the business, find distinct features that differentiate your brokerage operation – special services like on-demand tours, virtual tours, transaction advisory, etc. Package it together and brand it with a memorable name.
To conclude, these strategies should help you get into the top 10% real estate players in your market, as long as you are consistent with everything else. There is no unified playbook to ace the real estate market. But, the entry barriers are next to none, and you can practically grow at the pace that suits you!
