How Long Does It Take To Start A Real Estate Business?


How long does it take to startup and kick off a new real estate business?

Is starting a real estate business something that should take just a few hours, or do you need to patiently invest years of hard work? What are the critical steps in getting to where you want to be? What barriers should more real estate entrepreneurs be breaking down?

Some never take the next step towards formalizing a real estate business. They just get into the game and start doing deals. Some add a few helpers, but don’t start an actual business. Others keep going at it solo. Then there are those that have no desire to engage in hands on real estate, but want to own businesses and start at the top, and work down instead. So do you really need a company?

For the select few that just want to do their own thing, running a company can become a distraction, and add to expenses. However, this doesn’t mean the benefits and protections of LLCs and other legal entities can be overlooked.

Many are missing out, big time. They are not focusing on building a business. This is especially true for those that want scale, and who want to just see the profits from real estate and being an owner versus having a job. That’s true, no matter how much better and higher paying that new job is.

Basic Steps in Starting a Real Estate Business

Technically, ‘starting a business’ is easy. Its maintaining a successful business that can be tricky. These simple steps should help:

  • Research
  • Business plan
  • Choose a name
  • Incorporate
  • Get a tax ID number
  • Open a business bank account

With the exception of comprehensive market research, most of the above can’t be done in a day. Some will take months to get there. While thorough planning is wise, many let the process drag on too long, while continually rethinking and second guessing themselves. Don’t fall into that trap.

Raising Capital

Some real estate entrepreneurs will also be keen on raising funds for their startups. Some will find it unnecessary, thanks to mortgage finances and other working capital options that this industry is privy to. Others just feel they need a big war chest to strike out and get going. There is nothing wrong with that, but there are two things to watch out for. The first is realizing that more money doesn’t always help. Normally a good business model can work with or without extra capital. More money just speeds up the pace and scale. If it isn’t working, $10M is just going to be burn money, and extend the decline. The second lesson is not to spend forever in fundraising mode without getting started. It can take anywhere between 0 to 40 weeks for startups to secure seed capital, according to research by DocuSend. But that doesn’t mean you just sit there and put life and business plans on hold in the hope of getting it.

Ensuring a Profitable Business Start

How can you ensure a profitable business start? This is crucial, especially for those taking a little longer to get going. Once the clock starts ticking, you’ve got expenses. That could simply be renewing your LLC, insurance or business checking account fees. No matter how small, you want income coming in as fast as possible. In reality, while it is entirely possible to generate income in real estate within 30 days, some closings can take 90 days to happen. Even if you hit the ground hard on day one, you might not see any cash coming back in for a couple months.

Don’t wait to start lining up deals and income. Most will find that they can begin lining up revenue and deals in advance. This may depend on your exact type of business and your organization, and maybe even the season, but most should be able to set up closings to happen in their first and second month of being in operation. Kicking off with six figures in income your first month will make a world of difference.

The earlier you get started, the better. The earlier you organize yourself as a business, the more tax breaks and legal protection you’ll have. If you can act faster than the competition, you’ll have the advantage. It can take anywhere from a few hours, to a year to get a real estate business going, but that doesn’t mean you have to put off activating revenue producing activities.