Starting a real estate business would require a set of procedural events to be fully established. It is an industry that demands great knowledge and one cannot just simply get into it and start operating. The very first thing you will need is knowledge, and this knowledge could be gotten from self-taught endeavors, though in Australia, a level three degree in real estate is needed to be an official agent.
You cannot just launch a real estate business in a country like Australia without having gone through at least two years of development process. First you must be certified as an agent, now an agent in the Real Estate industry simply concerns himself with looking for properties that need to be sold. A real estate agent makes money on the commission he receives from each sale.
After that, he must go through a specialized course and he must pass the exam given in order to be a licensed agent. It is also expected that he works with an already established agency in order to gain some experience in the field.
You see, wanting to do this type of business requires more than just the desire or passion, it requires experience in the art of negotiation, making deals and predicting the events that may affect sales, vast comprehension of property law, great ability to communicate, great at working with people and the ability to work under pressure.
Then of course you would be required to take the necessary exams in order to be a licensed broker. Once you are a certified real estate broker, you can work for few more months or years before choosing to strike out on your own and set up your very own real estate company.
Of course this process is not written in stone, as the real estate business has different aspects you may want to choose to specialize in and some of these aspects of the business may not necessarily require a brokers license.
You need to sort out your budget and do a proper business plan for what you want to do. You would need to have done a proper research of the industry and factored in all financial costs for your new venture. Your ability to raise funds will also be a much appreciated skill once you start of your business as starting this type of agency is financially intensive.
19 Steps on How to Start a Real Estate Business in Australia
1. Understand the Industry
The Real Estate industry in Australia can be split into various asset classes so as to further establish a proper entry point into the field. Offices are the first in the category we will look into; the yields for this particular asset class have remained stable over the years.
Capital growth in this sector is starting to be experienced due to the organizational investment market. Wealth funds, pension funds and big equity players have a growing interest in this sector. With more and more organizations seeking to set up some kind of office to operate from in Australia, it looks like it’s stable status is about to change.
The Retail Market speaks about shopping malls, Centers and Retail Shops and has experienced a slight drop in recent years. This can be attributed to the vast variety of internet shops scattered across the web and the arrival of mega fashion companies into the country. The internet has offered a new playing field for shoppers and suppliers as well.
Now if a person is thinking about going into a retail business, he would rather opt for having an online shop instead of looking for a real estate to lease, rent or buy in order to operate from. Also major international retailers are entering into the country, putting pressure on local retailers.
Industrial Market continues to outshine the others, due to the strong Australian Dollar and a demand for distribution centers and warehouses. It is no news that the mining and manufacturing industries in Australia are a very strong factor in the general Australian economy.
More companies are looking for land spaces to rent out or buy for the simple purpose of manufacturing their products or other purposes surrounding the industry. This aspect of the real estate classes is the one that has experienced the most growth and continues to grow through the years. Speculations are that there will be a more consistent growth rate in this asset class or even an increase in future years.
There seems to be a tightening in the Hotel Market which makes up the third category of assets in Australia’s real estate industry. This particular market is highly influenced by the tourism sector which has grown over the years. As more foreigners come into the country for the tourist attractions, they are more likely to stay at hotels.
Residential Markets record a low performance in recent years because new living apartments have not been approved and the construction of new living apartments has not been consistent with the population growth over the years.
The house price growths are putting a strain on occupants as income growth has not been matched by that of housing. However if more developers construct more affordable housing units across the countries especially it’s inner cities, there can be an improvement to this sector of the real estate market.
Healthcare Market continues to grow over the years in Australia due to the ageing population, high life expectancy and new discoveries made in the medical world. The demand for hospitals remains as a growing experience and this will continue to see growth through the years.
Other asset classes that take a more alternative nature are Student housing, which Is constant in spite the fact that more international students are coming into the country, however the constant income rate and high occupancy coupled with other factors have investors looking at this sector with promise. Car parks are also experiencing slight growth through the years, making it another interesting sector of the real estate market in Australia.
This gives you a brief look at the real estate industry in Australia and the various categories to invest in. It will interest you that the general real estate industry in the country is doing well. It will do you well to also engage in further research into more detailed analysis of these different asset classes, so as to be better informed on which class to specialize in.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
When it comes to this aspect, there are various sects to look at, the first set of people to look for are the upgraders, the ones looking to move to a better place than they are at the moment. These ones will be perfect candidates for the more luxury apartments, the apartments that have more class and security. These are usually working class people with a bit of equity or money saved up for just this purpose of moving to a better place.
“First home buyers” already have a solid financial supply system in order to be looking to buy a home. They are usually newly wedded couples with no children at all, or some might have one or two little children. They may be looking for a place to raise their family and build lovely child hood memories.
Renters, most of which are of a certain age group are also another set of people to look into, when focusing on who to direct your services to. Most of these are people just moving out of their parent’s home or students looking for accommodation.
If they are students then they may be looking for a place close to the campus, secure and with a more urban or hip lifestyle. Other folks that can occupy this demographic are workers who are simply looking for a place to rent, lay their head and entertain company. In this regard, they may be looking for a place closest to their offices.
There are also folks who are looking to downsize, they make up folks that are well advanced in age and have no need for a very large house at the moment. Their children have moved out, they may be living alone or with their spouse, they may be looking for a place with more people of similar age range.
Retirees also look for places to either buy or rent to spend the rest of their work free lives. They too, like the downsizers may be looking for somewhere serene, quiet and calm. The aged who need care are also another set of people to look out for when seeking out whom to sell your services to.
In all these, when you look at these types of people and their various desires, you should have an idea of how to pitch your services in order to get profitable returns on your marketing endeavors.
3. Decide Which Niche to Concentrate On
When coming into a business like this, you may want to know which aspect of the business you want to specialize in. There are various aspects you can choose to become a fierce professional in one of which is you can choose to buy a landed property at a certain price and sell it at a higher price, this is called Land Flipping.
There are lots of properties to be sold and you could focus on just this aspect of the business. However this could be a very expensive venture to go into as landed properties are not cheap, but the profits stand to make it worth your while.
You can also focus on purchasing open spaces and leasing them out to those who want to use them as car parks, car wash or whatever else they may want to use your open space for. You can also choose to be a real estate agent or have your own real estate agency; what you do in this aspect is look for properties that need to be sold, advertise and market those properties to potential buyers. When these properties are sold, you get your profits on the commission given.
Property development is another area where you can assert yourself as a professional. However this is the place where the giants in the industry operate, they purchase landed properties in very good locations. They build apartments or office complexes and then sell the entire lot to buyers at very huge prices.
To get into this aspect of the field you need to have a lot of money. You could also build an apartment building or office complex and rent it out yourself, this too is financially intensive, but also very lucrative if your choice of location for any of the two purposes suits the area perfectly.
The real estate business is a very broad one and promises its return on investments, but entering this business and making profits depend on being patient enough to go through the process and climb through the ranks. For example, you can start out as a simple real estate agent and grow into a real estate investor, the possibilities are endless. Or if you have lots of investment capital and want to go big into this business, the same still applies in the area of process, growth and experience.
The Level of Competition in the Industry
As with every business, there is competition and the real estate business is no different. The level of competition in this business is very high, there are lots of real estate agents, who have ranked up amazing track records. They have developed intuition and a solid understanding of the terrain, not to mention the real estate agencies that are scattered around the entire country; you have your work cut out for you if you want to stand above water with all these.
Even if you look to your own niche; you will find a great number of players currently holding the ball in that sector. This is because the amount of profits to be made in real estate is much, big investors make profits in the hundreds of millions and simple agents or agencies could make millions out of one deal.
But do your proper research to find out what you competitors are doing in the specific niche you want to operate in and either do what they are doing better or do something different. This is of course where your persuasive skills come into play; you will have to practically take potential clients away from considering the competition. Of course not by bad mouthing the competition, but by your keen ability to sway the minds of people with proper negotiation tactics.
4. Know Your Major Competitors in the Industry
There are those in the industry already, those who have established themselves as players in the industry; some have even entered the status of giants in the industry. What you would have to face is most prospects calling one of these names as their preferred choice of the service you want to render.
But you should not let that affect your resolve, learn from them, grow with them and find out how to gain from their successes and failures too. A few of these brands are listed below;
- Elders Real Estate
- L J Hooker
- Harcourts Group Australia
- Barry Plant
- Richardson and Wrench
When you think of what you want to achieve at the end of the day, then your manner of approach would determine how economical it will be for you or not. However you cannot escape the courses you would have to take to obtain your agent’s license or your broker’s license. Assuming you simply want to hire folks who have already gone through all of these training and development, it is still going to cost you a lot financially.
The financial investment needed to be a property developer is very high, it is also similar in costs to buying a land, building a structure and letting it. The finances involved in property management are also on the high side. Real Estate business is capital intensive and requires lots and lots of money to kick off the ground and keep running at an optimal level.
Do your research properly, identify areas you will be able to leverage from, understand the terrain, feel the business, cross your tee’s and dot your I’s before getting into this business.
5. Decide Whether to Buy a Franchise or Start from Scratch
Purchasing a franchise is by far more financial intensive than starting from scratch. First of all, this is already a business that demands great finances to operate properly. Whoever must have started a company you want to buy must have looked into all the money he put in to develop a strong network.
You are not just buying a company; you are buying the network of partners and associates the company has developed through the years. You are buying their agents, brokers, accountants and so on. They have worked so hard to build a client base, and people already know them. The profits they have made over the years have put them in a place to possibly continue to make profits.
With all these put into consideration, purchasing a franchise will be very costly. On the other hand, you may be looking for a brand that is currently suffering, almost getting out of the market. They have lost their drive and ability to stay afloat in the real estate enterprise.
A company that has suffered great losses over the years and is looking for a way out may be a cheaper option than one who is currently at the heights of success. Even if this is the case, it is still going to be more expensive, maybe not as expensive as buying a successful franchise but still very expensive when you consider starting from scratch.
Starting from scratch may not be as expensive compared to buying a franchise, but it offers you so much value if you are patient. You can build through the ranks and establish a name for yourself, develop your skill set and become a strong player in the industry.
6. Know the Possible Threats and Challenges You Will Face
There is a type of vulnerability to economic downturn in the Australian Housing industry; this of course affects real estate professionals directly. One of the threats is the high level of house hold indebtedness, in a bid to own houses many have entered into debts, raising the question to those in the business as to how to get payments on that.
Large interest bills may threaten your business, when potential buyers are looking for the credit deal that best suits them. When running a business like this one, you must always look to the political policies that provide a guideline for your work.
Governmental policies also pose a threat to the business, so make sure your company is complying with every law there is in the state where you choose to practice. Make sure you have all the licenses and permits that allow you to operate your business without any problems.
7. Choose the Most Suitable Legal Entity
There are few legal entities available to the person that wants to operate in Australia and the first we are going to discuss is the Pty Limited Company, this is the proprietorship Private Company. This company is limited by shares, if you want to establish this type of entity in Australia; at least one of the directors must be resident in Australia and must be above 18 years of age.
You may employ two or more employees to assist you in running the business. Now of course if you are the one in Australia by yourself, you could choose to register your agency under this legal entity.
8. Choose a Catchy Business Name
- Harry and Harry’s
9. Discuss with an Agent to Know the Best Insurance Policies for You
Insurance is good news when things don’t go according to plan, it is a safety couch for those who have slipped and fallen. And in a business like real estate, there are many occasions to slip and fall. So as a real estate agent, what insurance policies are available to you.
Professional Indemnity Insurance is the choice insurance for real estate agents, it covers all legal costs that may come from an unsatisfied customer and protects the agent from any damage payable. It also protects the agent from any financial loss as a result of the claims. The real estate agent is always open to these types of issues; it only makes sense that he be insured.
For one looking into setting up a real estate business, other insurance policies may be applicable like;
- General Insurance
- Business Insurance
- Workers Compensation Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
No one would like to get into trouble for stealing another company’s intellectual property. The Company can protect their Logo Designs, Business Names and trade secrets in order to keep them from being used by another company.
There must be enforced laws that stand against fraud in this manner where another set of people can pose as a company in order to run transactions. When a real estate company trademarks their intellectual assets, they are kept safe from fraudulent people.
11. Get the Necessary Professional Certification
There are a number of courses required by the law for an aspiring real estate agent to take. These courses run anywhere from 30 to 90 hours and at the end of the course an exam is taken of which the aspiring agent will be required to pass.
One cannot just start working in the real estate industry without this certification and license. If you are going to be a broker, the same applies, there is also a course to be taken and passed before you would be known as a real estate broker.
12. Get the Necessary Legal Documents You Need to Operate
Every company needs to be well documented for legal purposes. In order to operate properly and freely as a real estate company, these documents must be in place. One may go through a great deal of effort to make sure that these documents are gotten and are up to date, because when a business is in line with the laws of the state or country, it has free hand to carry out its operations.
A few of the documents needed for this type of business is listed below;
- Certificate of Incorporation
- Tax ID Number
- Trademark Registrations
- Business Plan
- Insurance Policy
- Operating Agreement for LLCs
- Company Bylaws
- Business License
13. Raise the Needed Startup Capital
When intending to do a business like this, it would take a lot of finances to start and to even remain afloat. Not only will you need to have the finances to take the courses and exams you would have to take, you would also need finances to set the entire business up, get it running and have some money aside to keep you going till you make the first few sales.
When you think about it, it requires lots and lots of money to jump start it and remain afloat. Below are some very interesting ideas on how to generate such funds;
- Because of how costly it may be, you can actually start this business with your own savings if you have so much saved up.
- Ironically you can actually sell personal property to kick start a real estate business.
- You can sell shares of you company; this is also a way to get finances in.
- Members of your family and friends can offer loans to you.
- You can get loans from banks.
- Private investors and business partners can put up some if not all of the capital.
14. Choose a Suitable Location for your Business
The choice of location for your real estate business matters, as you would want it accessible to your clients. In as much as your online presence may be strong, this type of business will involve meetings that take place in a secure and trusting environment. Plus people like to see the home of the business they are about to entrust with such large amount of money.
The interesting thing is that depending on what aspect of the real estate business you want to invest in, your location matters to the general operation of things. You can actually start out your business from a residential apartment, of course your ability to see clients in your apartment will be limited, but this does not stop you from making sales on properties or managing properties for clients.
However if you are going to be more professional about what you do, you will need to get a proper office space, preferably a place that has enough space for all your staff, a place that has a frontage by the street, and a parking lot on the site for your clients to park their cars, when they come to negotiate with you. Of course finding a place around commercial activities matter, a place where other businesses are will be advantageous to you.
Security is also a major factor when looking for a location to run your business in, so you would be looking for an area that is secure. But be rest assured the success of your real estate business goes beyond the excellence of your office, it is the people you are working with, their approach to the work and the results they are able to bring that makes the difference.
15. Hire Employees for your Technical and Manpower Needs
You cannot run this type of business on your own; there are a hand full of people to help you achieve your goals. There are no equipments required for this type of business except you are a developer then you will need to get the necessary equipments to properly erect a structure. Otherwise all you need are the people to help you run the administrative, legal and financial side of your business, below are a list of some of these roles you may need;
- Sales and Marketing Official
- Chief Executive Officer
The Service Delivery Process of Real Estate Business
Basically, the agent goes out to look for properties that are up for sale or lease, then he discusses with the owners about looking for potential buyers, he makes sure he strikes a deal with the owners for a fair commission upon sales. Then the agent goes out looking for prospective buyers, once they are found he convinces them to buy. After all the legal documents are paid for, they settle and the agent makes his gain.
This is of course applicable to an individual agent or an agency with lots of listings; however there are other aspects of the real estate business that may operate differently. However the sequence still remains somewhat the same, if the property needs to be managed, developed or sold. There’s usually commission going to those who are entrusted with making these things happen and that is how profits can be made from this business.
16. Write a Marketing Plan Packed with ideas & Strategies
- Place adverts on as many Television and Radio Stations as you can.
- Make sure you are listed at local directories.
- Be on the Yellow Pages.
- Participate in international expos, seminars and business fairs, to meet and network with people. Networking is actually one of the major deal makers in this business.
- Engage the services of Marketers
- Promote your business on the internet and Social Media Platforms
- Do Promos from season to season.
17. Develop Iron-clad Competitive Strategies to Help You Win
The best way to winning over your competitors is by being one step ahead of them. You must be able to anticipate their moves, see what is going on in the market and know exactly how to maneuver your approach to offer better deals. You must be able to see the loose ends in their approach to the business, identify the weakest link in their ideas. Competition is needed to create the much needed fiction that facilitates advancement.
18. Brainstorm Possible Ways to Retain Clients & Customers
Ability to retain customers is one of the great tricks to running a successful business. The major way to keep customers in this type of business is to give them excellent deals on property bought or leased. They will spread the word about you and bring even more customers your way. Keep them in the loop about more property oriented opportunities, stay in their minds through emails, texts and social media.
Introduce to them more investment opportunities in the field and offer them proper incentives to get their monies to work for them. When they see that you care about them in this way, they will gravitate to you with more deals, because trust is the backbone upon which businesses build their client bases.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Below are a few ideas to help boost awareness about your Real Estate Business;
- Digital Marketing.
- Have your billboards all around the city.
- Brand all your official cars.
- Let your employees wear branded clothes regularly.
- Advertise your business on your website
- Take advantage of word of mouth.
- Can Sole Traders Get Business Grants in Australia? - March 15, 2021
- 12 Best Burger Franchise Opportunities in Australia and Their Cost - February 15, 2021
- How to Start a Property Development Business in Australia - February 15, 2021