What questions you need to answer before starting a career in real estate?
The world of real estate can offer many different things, in many different ways. When starting a career in real estate, it’s important to begin by comprehending your “why” for getting started. This, more than anything, will influence your approach to getting started, including running a business, and dealmaking. These three elements will ultimately play a significant role in your level of success moving forward, with both your business and your career. For beginner investors, this revelation can oftentimes come from a series of questions.
PayPal co-founder, investor and venture capitalist, Peter Thiel, knows a thing or two about what it takes to build a successful business. In his new book, Zero-To-One, he outlines several questions that startup founders should ask themselves (and answer) before launching a business. By answering honestly, investors will gain a better understanding of not only how their business stacks up in the real world, but stimulate interest, ideas and encouragement.
Starting A Career In Real Estate: 6 Questions You Need To Ask Yourself
For those considering the idea of starting a career in real estate, including building a strong, profitable and sustainable business, it’s important to evaluate where you stand. The following six questions should help to narrow it down:
1. Are you able to create breakthrough improvements?
You may not be interested in creating new technology or real estate apps that dramatically change the industry, but can you offer significant improvements on what else is out there? This isn’t necessarily a requirement for investors looking to improve their real estate portfolio and finances. However, if you aspire in starting a career in real estate, you have to have a serious edge. Thiel recommends finding a way to make things about ten times better than they already are. This applies to making solar panels, selling houses, building multifamily apartments, or starting a mortgage company. What can you do ten times better than existing competitors in your niche?
2. Is now the right time?
Is this the right time to start this business? When it comes to investing in real estate, Warren Buffett’s mentor Benjamin Graham believes in dollar cost averaging: consistent investment throughout all phases of the market in order to achieve the highest average returns. However, sometimes it may be a little behind the times, or ahead of its time to launch a specific business product. For example, anyone trying to launch your own version of the MLS may be a little late to the game. If it’s a little too early, is it worth getting in and training consumers, and waiting for it to take off?
3. Can you create a monopoly?
That doesn’t mean you have to set out to conquer the entire real estate market. In fact, Peter Thiel suggests following the winning strategy of our most recent big success stories. That is starting big, in a small market. Facebook started out at just one school, and expanded to another. It wasn’t for a a while that they decided to go public. Can you make a big splash in one niche? That may just be one city, one neighborhood, or even one condo building. It could be simply drowning out the competition with enough outdoor advertising to be seen as the only logical choice in local experts, or something else. What can you monopolize?
4. Do you have the right people?
Do you have the right team to launch your business and succeed? Do you have all your corporate bases covered? This doesn’t have to all be in-house, or among the founding team. You can outsource, sub-contract to vendors, bring in coaches, and use outside professionals–just make sure you have a quality team that can really drive you to success.
One available option to investors, especially those just starting out, is a forming a real estate partnership or starting a real estate team. Because even the most successful investors know they can’t do everything by themselves, the assistance of a helping hand can be invaluable for beginners, including adding a layer of expanded networking and investment opportunities.
5. Do you have distribution?
Can you deliver? What channels do you have to sell your product? If you create a new tool for handymen and rehabbers, can you get it on the shelves of Walmart? If you are publishing a real estate book, can you get it sold on Amazon? If you are wholesaling houses do you have a buyers list?
As an investor, it’s important that you understand it will take time to establish both a brand identify and steady stream of real estate leads. When starting a career in real estate, part of your strategy will be building a reputation in your local market, with the other consist of generating leads and establishing a thriving system in place. From online marketing to guerrilla marketing, like bandit signs, your efforts to market yourself will play a significant role in achieving success. That said, consider your sources for finding leads, as well as build a brand before getting started.
6. Do you have durability?
The last question to ask yourself when starting a career in real estate is: Can you sustain? It’s rarely worth going through all the work to starting a real estate business if you don’t intend to see it through. Don’t expect to raise millions in venture capital if you won’t stick around to get to an IPO. Before undertaking a career in real estate, it’s important for new investors to ask themselves if they’re in for the long haul. Will you be able to continue building your business for the next 10 or 20 years? How will you keep your business a float. How will you keep staying ahead of the competition and new technologies? Answering honestly and openly will provide a stable platform to make your next move.
Even Thiel admits that many successful startups may not have amazing answers to all of these questions. However, the simple act of asking yourself will prove beneficial, as it should get the ball rolling in the right direction. Starting a career in real estate takes goals, vision and the resilience to keep pushing on. By conducting an honest self evaluation, including assessing where your real estate niche may lie, investors can begin to form the building blocks to a successful business. Like all great things, starting a career in real estate will a combination of passion and effort, but most importantly, time.