Forums: Discussions for entrepreneurs and small business.

Hi all!  I`m new to this site so go easy.  I heard about it from a guest on Donny Deutsch`s show on CNBC.

I am a cube dweller for a Fortune 100 and I`m bored and sick of cube life.  I`m in the IT department.  My passion is real estate (buying, selling, fixing, building, etc).  I discovered this passion after buying my second home and learning to finish the basement on my own.  I framed, plumbed, wired, painted, tiled, etc a full basement.  This included a full bath, laundry room, two bedrooms, and a large family room.  I`ve since sold that home for a profit and hired a general contractor to build a custom home.  I`ve since finished the basement in this home along with some additional space in a side room.  We are currently trying to sell this home in order to relocate to start a business.

I`ve put a lot of thought in different real estate businesses (handyman, mortgage agent, Realtor, etc).  It seems to always come back to being a Realtor.  I am looking to do this in the southern part of CA.  I know, CA is getting hammered in the current RE environment.  But my thinking is that if I`m there in the bottom or hopefully near the bottom I`ll be best prepared for a more normal market should one come back.  Not the overheated market but a normal one where a home priced fairly will sell in a reasonable amount of time.  I plan to open my own brokerage with a twist.  Unfortunately I can`t give away my twist at this time.  I`ve been reading marketing books such as Duct Tape and I`m getting ready to start my business plan using the Palo Alto software.

I hope that my passion for RE, my plan to become the most knowledgeable agent out there, hard work, and my marketing twist will secure me a healthy spot in the already crowded CA RE market.  With the current home prices it is my estimate that 12-20 homes per year can secure me a nice income so that I can actually afford CA (taxes, housing, energy costs, etc) without renting for the rest of my life.  I also hope to attract a few top performers to join my firm once I`m off the launch pad.

Sorry for the long post but this is my intro and my idea.  Please let me know what you think about my plan and any insight you might have on the current RE crunch.




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Thanks!

drm7

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Motion Creates Emotion

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Sylvia Freelance Business Plan Writer

I`m not a real estate agent, but I do work for a realtor franchise. When anyone goes into real estate, from what I`ve heard, they can pretty well count on there being somewhere around at least a year before they start breaking even. That`s in the "normal" market that used to exist.

One major question is exactly that---is there going to be a return to what used to be considered a normal market? Some folks would argue that with the great settling going on at the moment, we`ll likely see a very different market in the future. Part of that difference will be how easily buyers will be able to get financing. Look at what`s going on in the UK, for instance, as to the new difficulties.

Another big question will be competition. Right now, realtors and agents are flying all over the place in the storm generated by the housing market problems. Outside Chicago, huge realty businesses are either going broke or letting everyone go due to an inability to close on houses.

It`s true that people always will need a place to live. Everyone would like to have a house, otherwise they`ll be okay with an apartment. But for the foreseeable future, it looks as though anyone with money can pretty much pick and choose whatever they`d like to own.

So it comes down to your skills in reading the market. Perhaps one option would be to set up a "virtual" real estate company. You would pick a house, factor in your changes, develop a price, then look to see how long it takes to actually sell (by whomever is selling it).

What I`m thinking is that it would be a way to test your own skills. If you regularly pick a house, set a price, then see it sell within a few months for something close to that price, you probably have a terrific instinct for real estate. Does that make sense? You wouldn`t be investing real money and time, but you could see how things "would work" if you were doing this full-time.

There`s also the issue of licensing, and you don`t say if you have a real estate license. Around here, you also usually have to be an agent working for a realtor, I think, before you can open your own agency. I don`t know where you`re located, but you`ll want to check the licensing regulations.

drm7,

I have a good friend who owned and operated a RE brokerage in SoCal for 15 years. As the licensed RE broker - he spent most of his time in the office, supporting and monitoring his sales agents. This left him virtually no time to do any personal sales. 

In residential RE there are two parties to the transaction, each usually represented by a RE agent. Although many folks think they can do both - the "successful" agents usually understand which side of the transaction is their "strong suit" and focus their energy on that.

My suggestion, is to get your feet wet in the business first. Be an agent for a broker. See what issues there are. Determine if you prefer being a sellers agent or a buyers agent. The experience will be a benefit when you open your own brokerage.

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Business Growth Masters, LLC -
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Home of the Scalable Business Plan and QuikStart Capital Programs
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info@bizgrowthmasters.com

Thanks for the advice everyone.

Craig:  Can you elaborate more on what is happening in England?  I have been contemplating what type of market will emerge but just can`t imagine what it will be.  California allows someone with a four year degree to sit for the brokers exam.  I plan to work with closing firms, appraisers, inspectors, and anyone else that can give me "training" as to what goes on during a deal.

Robert:  I hope to start as a one man office concentrating on building my skills as a listing and selling agent.  I believe an agent should determine what their strong suit is and focus on that.    I understand many agents don`t like it when a broker works sales/listings too.  This is why I want to work alone at first.  I need to gain the skills necessary to help any future agents.  Who knows, if I do well enough I may stay a one man show.

Thanks again!

drm7



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Thanks!

drm7

As a result of the collapsing mortgage system in the UK, getting financing is becoming almost impossible. Regardless of credit histories, background, types of deals, it`s all shutting down while everyone waits to see what happens.

That`s already happening here, and generally speaking, follows the typical progression from Europe to the US. With so many problem banks, I`m only offering a caution that perhaps getting into real estate right now, as a newcomer, might be more problematic than not.

Craig:  that is one of my biggest fears.  That even borrowers with the slightest mark against them won`t qualify thus driving the housing market down even further.  The unsold inventory is very high.  People need to relocate for various reasons and when they can`t sell their home how will they be able to do it.  I do fear that we are still a ways from the bottom.  The market I want to work in is more affluent with higher home prices and incomes.  I`m starting research now to see if this type of market still works.  The more affluent folks are not as held back by credit/income issues.  For instance, I have some MLS reports, by zip code, on single family detached homes showing avg-days-on-market around 65 days for the year 2006 and around 70 days for the year 2007.  YTD through end of April 2008 shows DOM around 75.  I would be tickled pink if it only took 75 days to sell my home.  It has been listed for 14 months and we`ve dropped $90k on the asking price.  My market is severely down.  So even though the inventory is high in my target market it does appear that things are moving.

Any tips on additional research I can do for my target area?  I`m hoping that using great marketing techniques I can set myself apart and raise my name recognition.  It is my opinion that during the market boom most agents didn`t have to learn marketing to make money and now many are unprepared.  My wife is a former PR specialist in earned media.  She will be my parnter in this venture.



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Thanks!

drm7

Not sure just thinking out loud here, but I know foreclosure rates are very high and banks hate sitting on all that inventory they are not equipped to manage.  Could you think of a way to work in real estate by helping banks manage this inventory?  Maybe auctions, rentals, fixing up and keeping an eye on the properties...

Around the Chicago area, it seems most folks with an income in the 6 figures are doing just fine. Many people actually are doing just fine. It`s only the small percentage of people who don`t understand economics, who bought into the fantastical schemes of getting something for nothing.

It`s the old selling luxury cars versus economy cars situation. If you focus on that affluent market, it`ll be more difficult breaking into it, but you`ll have a more steady environment. The key to all of this is always marketing, and prospecting. If you can devote at least 75% of your time prospecting for home buyers and sellers, you likely will do okay, no matter what geographic area.

At least that`s my limited understanding of the real estate market. :-)