To begin with the ABCs:
Real estate today is cluttered with innumerable construction companies and builders. The number is always on the rise because of the profitability and the cash flow in this industry. But anyone on the onset to start a real estate company will have to think twice or thrice before investing.
‘Investment’ of any kind, needs prior research and planning. When it comes to real estate more vigilance is needed. Because the tenure and the volume of investment are comparatively longer and bigger respectively.
Secondly, like in every investment, investing in real estate involves risks. So, you need to put your money to work today in such a way that you have more money in the future. Thus, a simple investor’s logic is applicable here too!
Thirdly, the return from your investments must be sound enough to cover the risk you take and the expenses you bear in the long run. Of course, as a thumb rule, the returns should always outweigh the risks taken.
Secondly, like in every investment, investing in real estate involves risks. So, you need to put your money to work today in such a way that you have more money in the future. Thus, a simple investor’s logic is applicable here too!
Thirdly, the return from your investments must be sound enough to cover the risk you take and the expenses you bear in the long run. Of course, as a thumb rule, the returns should always outweigh the risks taken.
The roadmap to go about investments in the real estate industry:
Every real estate firm will have its own formula to run the show. But the foundation from which the formula is derived will be the same.
Being one of the upcoming real estate agencies in Bangalore, we present a simple yet powerful formula for a profitable business in the realty world. This encompasses an analysis that has both macro and micro checks in place.
The formula for a successful real estate business includes:
Being one of the upcoming real estate agencies in Bangalore, we present a simple yet powerful formula for a profitable business in the realty world. This encompasses an analysis that has both macro and micro checks in place.
The formula for a successful real estate business includes:
W5 FORMULA
- What are we investing & spending for? – Project Planning
- Where is the investment going? – Location
- Why is this investment & for how long should you be doing it? – Project scope & scale
- When to pause, and where to stop? – Designing & development
- Who is accountable? – Building the team
THE W5 FORMULA OF INVESTING:
What are we investing & spending for? – Project Planning:
For any real estate project, consumer need identification is essential:
- Identify a pressing consumer need or
- Create a strong need and satisfy the same
On the other hand, what is your speciality? Pick up a specific real estate niche. For instance, choosing one or a few of the following will work:
- Residential real estate
- Resort and vacation homes
- Commercial real estate properties
- Rental Property management
- Commercial property estate agents
- Real estate consulting services.
The list is actually never-ending. At the end of this step, you will be able to devise a proper plan that details that can help you get an idea of the investment:
- Your industry overview
- Target market analysis, target customer segment
- Potential competitors
- Financial plan
- Feasibility study
Where is the investment going? – Location:
The next important milestone is procuring land. The real estate business revolves around this one single world, location. The location of any given land is the key to a project’s success. Lots of down points in developing a project on the said land can be overlooked if the right location is chosen. The following should form your checklist for procuring the land:
- Connectivity through proper modes of transport
- Proximity to all essential infrastructure
- Market value – present & future trend
- Grading of the land – sloping of the land if any
- Zoning laws that limit what can be done on the property
- Parking space accommodation
- Neighbours – adjacent properties that can affect the value of your land
- Legal aspects/compliances/permissions/licenses/permits
- Scope for future expansion
If you are able to check all the boxes against the above list then you have the right capital, to begin with, for your realty business.
Why is this investment & for how long should you be doing it? – Project scale & scope:
A proper market study along with the location analysis will give you sufficient insight into both the scale and the scope of your investment.
The scope of your project should throw light into each of the following:
The scope of your project should throw light into each of the following:
- Project requirements: expected risk, budgeting hard & soft costs (hard costs are those related to physical construction and labour while soft costs are those that relate to organisation and administration), deadlines etc
- Work breakdown structure, project assumptions & deliverables that serve as guidelines
- Project exclusions: certain variants that should be kept at bay
- Project constraints: resource constraints like time, money, area, legal implications and the like.
It involves choosing the right architects/consultants, as they play a very vital role in designing and development. The realty industry is filled with a lot of quality players like, “real estate brokerage firms” and “real estate agents”. Such expert partners who can leverage your strengths are definitely an ideal part of your investment.
When to pause, and where to stop? – Design & development:
It involves choosing the right architects/consultants, as they play a very vital role in designing and development. The realty industry is filled with a lot of quality players like, “real estate brokerage firms” and “real estate agents”. Such expert partners who can leverage your strengths are definitely an ideal part of your investment.
Who is accountable? – Building the team:
Coming to the project execution team finally! This includes the most professional sales, training & development, marketing & CRM teams. The entire administrative and post-operational wing is an important part of your investment in the realty business. Most of the real estate companies in Bangalore resort to channel partners, agencies that guarantee the sale of properties within a stipulated time frame. Apart from mere selling, they employ their own marketing and sales strategies in addition to the in-house strategies of the builders. They excel in contemporary value add-ons like branding, PPC advertising, digital marketing, SEO, lead management etc.
TAKE AWAY:
Thus, by following such a carefully laid down investment approach, one can simplify the entire process, making real estate investments a piece of cake. But keep in mind that ‘simple’ doesn’t imply ‘easy’. Any mistake made, will result in consequences that can range from minor inconveniences to chaotic disasters no matter how big your real estate company might be.
Happy Investing!
Happy Investing!
