How To Start Real Estate Business In South Africa
What is a Real Estate?
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this an item of real property, buildings or housing in general.
How To Start Real Estate Business In South Africa
1. Pick A Specific Real Estate Niche
First, choose your real estate business niche. This is a vast sector where plenty of businesses are active. You just cannot work in all of the niches as that is not viable and practical initially. Your startup cannot do business in all of these niches. So, to work efficiently, pick one or at best two specific niches of your interest. The best way to choose is to prefer the field that you have worked in previously.
Adopt a narrow-down approach to zero into the niche of your liking. You may have experience buying and selling condos, the pick condos. Or, if you specialize in short sales, then choose rental property management. Even when you think about how to start a real estate business with no money, a niche is essential to start about. You simply cannot excel in this business without focusing on a distinctive niche.
2. Choose A Legal Business Structure
When pondering on how to start a real estate business, pick the right legal business structure. By deciding on the structure, you will be able to meet all of your legal requirements to run your company.
Choose a corporation and company structure only if you intend to set it up to gain some distinct financial benefits.
3. Do Extensive Market Research
Market research is essential to know if your business idea will work, and which niche in the real estate market will be good for you.
The research will also give you some idea of the ways to position yourself within the niche. You can even hire an online letting agent to do complete market research on your behalf and execute the marketing strategies as well.
4. Plan Everything
Like all other businesses, the real estate business also is a vast field with numerous aspects. So, find out your business plan before proceeding further into the business.
Write a business plan to have a clear map of the proceedings. Also, include in it the type of logo you would like to have for your business, designed by a designer or a logo creator.
The planning will give you confidence in moving forward in a measured way. For example, if you know how much cash you need to get your company started, you will plan your office building design, purchase the office furniture, equipment, and other things accordingly.
5. Have A Business Plan
A business plan gives you a detailed outline of how you will proceed to achieve your business goals. You have a financial outline that helps you define your real estate business objectives.
There is no need for you to prepare a long plan. Instead, it can be concise in a few pages only. But it must focus on the key details of your business. Many one-page business plan templates are accessible online for use.
6. Build A Sales Plan
Make sure that you have thought of how you will sell your real estate business services. Know that real estate is a sector where success depends mostly on the personal equations you have with your clients. While you can generate leads from various sources, you still need to have a hands-on approach to seal the deals.
That means you must personally meet your potential clients. Working online and talking to people virtually is not going to work. You need to quickly find out if you can serve the client or not, to save your time. This is part of your sales plan.
In case you can serve the client with the real estate services you have, meet the client in person for a consultation. The purpose here is to have an outline of what are their expectations from the deal. At this stage, you will make the client commit to buying real estate from your services. So, consider this in your real estate agent business plan.
Once you have finally sold a real estate product or service to the client, use the deal to generate word-of-mouth publicity for your business. That is a crucial part of your sales plan. The satisfied homeowners have a great experience negotiating the deal with you. They will surely like to speak a favorable word for your services.
7. Set Up Your Shop
Look around for a location where you can set up your real estate shop. But a vast majority of the startup business owners start from their own home.
At the initial stage, focus on choosing a target market rather than finding a location for your storefront.
If your budget does not allow it, find out how to work without a proper storefront and work without hiring employees.
8. Assess Your Finances
Before you start your real estate business, another important aspect to take care of is to assess your finances honestly. You will of course track your sales and commissions. But more than that the intention should be to help make your small business profitable.
You will have many financing alternatives to choose from. An assessment of your business will let you know about how you will finance it for its growth. If you have no picture of those numbers, it will be difficult to sustain your business for long.
9. Have Your Real Estate Business License
You simply cannot run your real estate business without having a license to work as a realtor.
After getting the licenses, you are legally allowed to sell residential and commercial real estate.
Follow These Basic Steps To Have Your Real Estate License:
- Apply For A Pre-License Course – You are required to take a pre-licensing real estate course and pass a real estate exam of your state. So, during the course, you will study property ownership types, selling a probate property, fair housing laws, deeds, titles, contracts, etc real estate laws. You will learn about both your state’s and federal laws in this regard.
- Clear The Exam – Make sure that you pass the real estate pre-license exam with good marks, which is 70% to 75% of questions answered correctly. That will require you to study the state and federal laws a bit deeper. The examination duration ranges from 1.5 hours to 3.5 hours depending on the state.
- Make An Application For The License – After passing the exam, you need to apply for the real estate business license. The state authorities will check your background before granting you the license.
- Get A Real Estate Broker – Now, you should associate your real estate business license with a licensed real estate brokerage. It is essential to do your business as an agent. You can choose to work with a franchise brokerage or a boutique brokerage.
10. Set Up An Accounting System
Your real estate business, even if it is a sole proprietorship, will be filled for tax purposes. It will also need to track your cash flow. Therefore, you must have a bookkeeping and accounting system.
Accounting is all about keeping a record of your organization and financial information. Bookkeeping records and categorize your financial details.
Your new real estate business can start by hiring a bookkeeper on an hourly basis. The bookkeeper will be responsible for keeping your bank accounts and financial records. You can also hire the services of an outside bookkeeper to pay your bills and manage invoices.
11. Hire A Business Lawyer
The job of a business lawyer is to make sure that the deal between you and your client is genuine and as per law. You need a business lawyer to set your business structure right. The lawyer will play a vital role in splitting ownership interest in case you have co-founders.
So, when everything is legally in place, your business can move forward smoothly. An experienced lawyer is a great help in overcoming obstacles that usually come in when thinking about how to start in real estate.
But avoid hiring a less experienced lawyer who may do more harm than good to your prospects of finalizing a deal. Such overzealous lawyers can even kill a potential deal due to their inexperience.
12. Have Your Business Insured
An insured business is well-protected from any potential damages in the future. If for any reason you suffered losses to your office furniture and other property, insurance will compensate. So, keep your real estate business secure and safe by purchasing insurance before you start.
Starting a real estate business with business insurance will cover any potential losses to your property and any theft. The insurance will also cover damages caused due to intellectual property lawsuits.
For small real estate businesses, such losses matter a lot. Do not forget that even a small business in real estate involves a large amount of money, which is the price of commercial and residential properties. You should get your liability insurance to give you protection from any possible claim. An unhappy client can sue you if something goes wrong due to negligence or any other factor.
13. Work On Brand Building
Branding is essential to build credibility and your business will look bigger than its size to the target consumers. Branding is all about creating a perception of your business in the minds of people.
14. Get An Impressive Logo
Another aspect of doing a real estate business successfully is to have a unique and impressive logo. Such a logo will be your symbol of business that will appear everywhere on your promotional and marketing materials.
But a logo is not just any other symbol of a company and its business. More than that, a logo conveys your brand values to your target audience. People will have a certain impression of your real estate business when they see your logo. It can convey your value of honesty, dedication, quality products and services, trust, etc. to people.
15. Have A Website For Your Business
When thinking about how to start your own real estate company, and how to give it a boost, make sure that it has a good presence on the web. Your potential clients make online searches to find out real estate products and services on offer.
But ascertain that your real estate website comes up on the top rankings of the search results on Google. A clear visible website at the top search result will mean that the consumers can reach your website, where you have put all the details of your company and business.
16. Build An Online Presence
You also need to have a strong online presence for your real estate business. In this digital age, an online presence is not optional but essential in your field of work. Think of online when planning how to start a real estate company.
A strong online presence is all about how quickly people or target audiences can find a business or company online. So, the success of your real estate business depends on how easily your clients can locate you online.
17. Build Your Social Media Presence
Make sure that your social media presence is strong. There are several social channels like Facebook, Twitter, Instagram, and others to explore.
You should particularly be present on Facebook and Twitter. These are the two most used and popular social channels where you can reach out to your potential clients.
All you need to ensure is to post your text and visual content regularly. With daily inputs from your end, your audience will become familiar with what you do. They can then recognize you as an expert real estate business owner.
18. Stand Out From Your Competitors
Another point to note while starting your real estate business is to stand out distinctly from your competitors.
Your business is new in the market. So, people may not notice it immediately if it does not catch potential clients’ attention immediately.
While a new business takes time to establish in any given market, it should make a sound start. So, study your competitors and find out how you can offer useful real estate business services.
19. Build A Strong Network
To start a real estate business with a purpose, you must start building a network. It is a challenging industry where the competition is fierce.
You have to survive and then grow by competing well with established and new real estate businesses. The only way to grow here is to do hard networking. Networking should be a key part of doing business in this industry. You need to make new connections and nurture older ones. With more connections, you can then easily establish your credibility.
However, not all the connections matter. Make sure that you choose quality clients and build a network of them for your business. Therefore, join networking events in your area where you will personally meet with influential clients. They are instrumental in meeting your goals. Also, they can help build your sphere based on those connections.
20. Manage Customer Relationship
As your business grows, your list of customers becomes larger with time. Your Inbox has too many emails from clients and managing them becomes a hard task.
So, one of the key considerations for starting a real estate development company is to have a strong CRM team.
You should manage customer relationships with an honest intention of helping out your clients. They should see you as their rescuer when they are stuck with a real estate issue.
21. Request For Referrals
Your satisfied customers can suggest to you some valuable clients that you can then contact. These are called referrals. So, referrals are important to make new contacts and clients for your real estate business. As they say, one thing leads to another, you can also use the referrals to make further inroads in this jungle of real estate.
Many surveys have established the importance of referrals in the fast growth of a business. A study by Wharton School of Business has shown that the referred customers are more loyal and they have a 16% greater lifetime value. This means that such customers are more likely to be with your business for life.
So, do not be shy in asking your clients for referrals. They are satisfied with your services and so they will be more than willing to help you with referrals. You should take referrals as your great source of leads for your new business.
Frequently Asked Questions (FAQs).
How much does it cost to start a real estate business in South Africa?
The average cost of a new Just Property franchise is R60,000 to R200 000, depending on the size and location of the store. Franchisees must also pay a monthly marketing and advertising fee of 2% and a royalty fee of 6%.
Is real estate profitable in South Africa?
Real estate is a profitable sector in Sub-Saharan Africa due to the region’s fast-rising population and high demand for accommodation. Already, some investors are making a fortune by pushing up property/rent prices in several cities across the continent, thus making real estate ideal for potential new investors.
Is real estate a good career in South Africa?
These agents work a two to four hour day and because real estate is not really a half-day job, will earn the average income for most agents in South Africa, which is around R16,000 to R20,000 per month before tax and running costs.
Can you get rich with real estate in South Africa?
There is no quick way to make money or get rich in real estate, but you can grow wealth gradually and consistently by investing correctly. You are probably aware that there are numerous ways to accumulate wealth, but real estate is one of the most effective.
Is it worth investing in real estate in South Africa?
Property investment in South Africa is an excellent long-term investment strategy and one of the best ways to start off your property portfolio. Investment properties are purchased with the intention of earning a return through the rental of the property, the future resale of the property or both.
Do you need matric to become an estate agent in South Africa?
You don’t necessarily need a degree to become an agent. Indeed, you can finish Matric and head straight for your internship. If you are a matriculant, there is a specific way to go about entering the industry.
What do I need to study to become a real estate agent in South Africa?
You can become a real estate agent in about four to six months, depending on where you live. Online prelicensing classes can speed up the process. Requirements vary by state, but the general steps are to take a real estate prelicensing course, take the licensing exam, activate your license, and join a brokerage.
Do you need a degree to be a real estate agent in South Africa?
Education and Training
In most cases, you don’t require a college degree to become a real estate agent, but it does help potential career job seekers stay competitive and relevant. An associate or bachelor’s degree is more than sufficient perhaps in business, finance, or any other related field.
Can I buy a house cash in South Africa?
Whereas closing the deal can take around 10 to 15 days if the home is purchased using a home loan, a cash purchase can usually be closed in a few days. Thereafter, transfer of the property for a cash deal can be as quick as 6 weeks, whereas transfer on a property with a bond is usually about 3 months.