To hit the six figures is not a big deal for all real estate professionals, whether they are newbies or already in the real estate field. Generally, real estate is known for its high profits, but do all the individuals in the field generate high income? No, success comes to only those who have strategically sound planning, updated knowledge, delicacies, and opportunity avenues of the real estate market. In this article, we will discuss how to make 6 figures in real estate.
How to Start Profitable Real Estate Business that Touches Six Digits?
Realistic goal setting is a crucial part of every business. Mostly, people take it easy, but in fact, it is not a piece of cake. If you have an objective to earn $100000 in the first year, it is more likely a wish. You must know why you want it; is it achievable or not? After all, you have to make it public.
Get aware of the ongoing market trends regarding your targeted property, its trading trends annually, and at what pace and direction. Estimate the average sale price, and the benefit margin in different closings.
By keeping in mind, your target goal, analyze whether the product type and the market area can touch your expectations; if not, then switch to another product type.
Arrange a Database
Select the market area; collect the contact information of major property owners in your target area. Maintain a record of significant transactions and the buyers, sellers, appraisers, etc. involved in that. Gather this information in a CRM.
Make your Business Plan
Here clarify the pathways that how can you approach the sellers and buyers? How can you arrange finance for large investments? Estimate the number of closings that could enable you to hit the six-digit figure.
This is the step where you formally enter into the real estate market. During this stage, you need to practically apply what you have planned in earlier steps. Ensure public engagement and be vocal about your objectives.
How to Get Potential Buyers and Sellers?
Buyers and sellers are the main pillars of the real estate business; hence you must know how to get them.
The two major ways to approach buyers and sellers:
Prospecting accounts for actively and physically searching out new clients one-on-one. On the other hand, marketing or advertising is to reach out masses by simply vocalizing your message and allowing your target clients to approach you.
Remember the main point, prospecting takes much time before it shows results but does not put a financial burden on your company account, while marketing demands a lot of money with quick results. You can choose any of them or hold both based on your resources.
Best Ways to Earn Profit in Real Estate
Real Estate High Profit by Increasing Property Value
The most common way real estate offers a profit. This term implies an increase in value which is the most obvious way of profit generation in real estate. There are several ways to get maximum return on investment.
Lets’ talk about one way that if you have purchased a property through borrowed money, you need to refinance the provided loan in lower interests; it will ultimately decrease the cost basis but increase the amount of your profit.
How can you get maximum appreciation from an underdeveloped land? You can get it by developing it. With the expansion of cities, the outskirt’s land value increases. If you build residential or commercial property, it will increase your return by many folds. The most obvious source of appreciation for undeveloped land is, of course,
For the maximum value, residential properties’ location plays a central role in the prospects of diverse neighborhoods, including different transit routes, parks, playgrounds, schools shopping centers—the value of a house increases. You can also avail such an opportunity if you get one. The same is the case with commercial properties.
Similarly, remodeling an old building and converting it into a commercial estate, improvements in a house like constructing a room or bathroom, or the provision of utilities can generate high-profit margins. You can also include some renovations.
Real Estate High Profits by Different Types of Incomes
It is the second method to touch the 6 digit figure in real estate. In this process, regular income can be generated through rents. Its forms are as under:
Income from Raw land
By making dealings carefully, raw lands can generate large profits, and the mesmerizing thing is that you don’t need any investment once you buy them.
Depending on their location, companies can pay you royalties for any discovery of minerals or pay you regular rent if they install something on it like pump jacks, gravel pits, pipelines, cell towers, and access roads. It can also be used for products such as agricultural production.
Income from Residential property
For any time of residential property, you need to find good-paying tenants who pay you a definite amount per month. You can increase the value with inflation if mentioned in the tenant; however, your property’s location plays a central role in this domain.
Income from Commercial property
Commercial properties are solely for large incomes; rent increases with locality neighborhoods. Apart from basic rent, more options are there, like contractual amounts in the right of first refusal or a premium.
Vacation Rentals and Airbnb
In recent years the trend of vacation rentals has increased due to the organic environment; thus, many travelers prefer it over staying in hotels. To find rentals, you need to enlist your property on online platforms like Airbnb, HomeAway, or VRBO.
If you are in the real estate business, you can convert a portion of the single house constructed in a tourist destination or nearby it into small apartments or rent out single rooms with a homely texture. You can also add management services like cleaning or photography to increase your profit.
How to Generate Manual Leads for Real Estate
Six figures cannot be achieved if you lag in lead generation, which is crucial for success in the real estate field. Your primary goal should be to reach maximum people and build a working relationship with them.
Get more Referrals
Referrals are warm and active. If you satisfied a client, he would be a source of more clients; connections built. You need to develop trust in your customers and establish a relationship based on confidence and fairness.
Appreciate your clients so that they would approach a closing deal. You can do it by offering closing gifts. In this way, you will make a memory in your client’s mind with a long shelf life gift. It will provide a reason for your clients to talk about you with their family and friends, which appears to be an ultimate source of lead generation.
Hence, making six figures in real estate is not tedious work anymore. With strategic planning and execution, you can become billionaires; all you need is to uphold a cautious approach and patience. I hope you will reap the benefit from this.
Sheena Whitlock, a property expert, and blogger with over 15 years of experience in the field. The knowledge and skills Sheena has acquired during her career have given her invaluable insight into the property management business.
She has done her Property Development BSc (Hons) from the University of Portsmouth and completed her Master’s Degrees in Property Management from the University of Chicago.
As a professional, she has spent time working for various companies as a property management officer and currently works at Asset Info Hub where she shares her knowledge and experience on various property matters with people around the world, questioning their queries via blogging and virtual consulting services.