How To Start Real Estate Business From Scratch: The Complete Guide For Beginners

Decide Your Area of Focus

When starting a real estate business, the first step is to decide what area of real estate you want to focus on. There are several main options to consider:

Residential Sales – This involves buying and selling homes and other residential properties for clients. It’s the most common area for new real estate agents. You’ll work with home buyers and sellers.

Commercial Sales – Commercial real estate involves larger properties like office buildings, retail centers, hotels, etc. The deals are more complex and require more expertise. You’ll work with investors, developers, and business owners.

Property Management – This involves managing residential or commercial properties for clients. You handle tasks like collecting rent, maintenance, tenant relations, etc. It provides steady income without relying on sales commissions.

Development – Real estate developers handle projects like constructing new buildings or renovating existing properties. It requires substantial capital and experience. You oversee all aspects from financing to construction.

Think about your skills, interests, and location as you decide which sector to focus on. Many agents start with residential sales as it has lower barriers to entry. But experienced agents can transition into commercial, management, or development for bigger earnings potential. Although it takes more effort to establish, commercial real estate and development tend to be more lucrative in the long run.

Get Licensed

Getting a real estate license is essential for practicing real estate as an agent or broker. The requirements for obtaining a license vary by state, but generally involve taking real estate courses, passing an exam, and submitting an application.

The first step is to look up the real estate licensing requirements for your state. Many states require you to take a pre-licensing course covering topics like real estate principles and practices, law, finance, and more. These courses are often offered by community colleges, real estate schools, or local real estate associations. You’ll need to complete a specific number of course hours, such as 60 or 90 hours.

After completing the educational requirements, you’ll need to pass a real estate exam. Exams are administered by the real estate commission in each state. The exams cover the material from your pre-licensing courses. You’ll need to pass both a national section and a state-specific section.

Once you’ve passed the exam, you can submit a license application to your state real estate commission. This involves a background check and paying licensing fees. If approved, you’ll be issued a real estate salesperson license. This allows you to work under a managing broker. Later on, you may choose to pursue a broker’s license, which involves additional education and an exam.

Knowing the specific real estate licensing steps and requirements for your state is crucial. Be sure to confirm the current guidelines through your state real estate commission website or by contacting them. With the proper education and exam preparation, you’ll be on your way to getting licensed.

Find a Brokerage

New real estate agents have two main options when it comes to affiliating with a brokerage: join an existing brokerage or start their own. Both options have pros and cons to consider.

Join an Existing Brokerage

Joining an established real estate brokerage as an agent affiliate has several advantages:

– Access to brokerage resources and support systems. Existing brokerages typically provide new agents with office space, administrative staff, transaction management platforms, marketing materials, and more.

– Instant credibility. Affiliating with a recognized local brokerage can help you leverage their existing brand and reputation when starting out.

– Training programs. Many brokerages offer formal onboarding and continued education for new agents on things like contracts, marketing, lead generation, and more.

– Lower costs. Joining an existing brokerage has lower startup costs compared to launching your own brokerage. You avoid expenses like office space, support staff, and insurance.

– Mentorship opportunities. You may have access to seasoned agents who can provide coaching and advice.

However, as an agent affiliate you have less control over your business. You need to pay monthly fees to the brokerage and may be required to follow certain policies and procedures. There is also competition from other agents at the brokerage.

Start Your Own Brokerage

Starting your own real estate brokerage has some key advantages:

– Full control. You make all the decisions for your business, from company branding to agent commissions.

– Higher profit potential. You keep more of your commissions instead of paying brokerage fees.

– Stand out from the competition. Launching a new brokerage with a unique identity can help attract agents and clients.

– Build your own team. Recruit and train agents to create your company culture.

– Less restrictive. You set your own schedules, rules, and approaches instead of following brokerage requirements.

However, running your own brokerage also comes with challenges:

– High startup costs. You need capital to cover licensing, office space, staff, insurance policies, and more to launch the business.

– More work. You take on management responsibilities like hiring, training, compliance, and dispute resolution.

– Less support system. Unlike an established brokerage, you won’t have systems already set up when starting out.

– Slow growth. It takes significant time and effort to recruit agents and grow brand awareness as a startup.

Carefully weigh the pros and cons of each option to decide what makes sense for your goals and business needs. Joining an existing brokerage can provide a solid starting point, while running your own brokerage offers more control for experienced agents.

Build Your Business Plan

A strong business plan is essential for any new real estate venture. This document will lay out your goals, strategy, and financial needs as you get started. Key elements to include in your real estate business plan are:

Vision and Goals

– What is your long-term vision for the business? Picture where you want to be in 5-10 years.
– Define your short-term goals for the first 1-3 years in business. This should align with your vision. Goals could include number of transactions, gross commissions, profitability benchmarks, etc.

Startup Costs

– Estimate costs to get your business up and running. This includes licensing fees, brokerage fees, office rent, furniture, technology, marketing, etc. Calculate one-time and ongoing monthly expenses.

Funding Plan

– How much capital will you need to start? What are your funding sources – savings, investors, loans? Outline how much you plan to put in personally versus raise externally.

Competitive Analysis

– Research other real estate agents and brokerages in your local market. Analyze their offerings, commissions, marketing, and niches.
– Look for gaps or competitive advantages you could bring to the market.
– Use the competitive analysis to shape your business strategy and differentiation.

A complete business plan will provide a roadmap as you launch your real estate business. Be sure to revisit the plan regularly and update it as conditions change. Use it to guide your growth and measure your progress.

Establish Your Business Entity

Choosing your business structure is one of the most important early decisions you’ll make when starting a real estate business. The options generally include sole proprietorship, limited liability company (LLC), and corporation. Here’s a quick overview of each:

Sole Proprietorship

A sole proprietorship is the simplest and most common structure for real estate agents starting out. You operate the business as an individual, so there’s no legal distinction between you and your business.


– Easy and inexpensive to form – just start doing business
– No separate business taxes – profits flow through to your personal tax return
– Easy tax preparation and recordkeeping


– No liability protection – you’re personally responsible for all debts and liabilities
– Difficulty raising investment capital

Limited Liability Company (LLC)

An LLC provides personal liability protection while allowing pass-through taxation like a sole proprietorship. LLCs are more formal than sole proprietorships but more flexible than corporations.


– Liability protection for owners
– Pass-through taxation
– Increased credibility with clients


– More complex formation and maintenance
– Self-employment taxes still apply


A corporation is a separate legal entity from its owners. Corporations provide the highest level of liability protection but come with more regulations.


– Strong liability shield for shareholders
– Can sell stock to raise capital
– Potential tax advantages


– Most regulations and recordkeeping
– Double taxation on profits

For real estate agents just starting out, an LLC provides a good balance of liability protection without too much extra complexity. As your business grows, consider whether transitioning to a corporation makes sense. The ideal structure really depends on your specific situation and goals.

Get Funding

Starting a real estate business requires having enough capital to cover initial expenses like office space, marketing, licensing, and more. While exact costs vary, plan to have several thousand dollars available when launching your business. There are a few common sources real estate entrepreneurs tap into for funding:

Personal Savings – Using your own savings is the simplest way to fund a new real estate venture. Evaluate your current finances to see if you have enough set aside to cover start-up costs and expenses for the first few months until commissions start coming in. Aim to have at least 6 months of living expenses saved as well.

Investors – Seeking investment from friends, family, or outside investors is another option. Make sure to draw up official investment agreements documenting the terms. Only take on investors if you feel fully confident in being able to deliver a return.

Business Loans – Banks and lenders offer small business loans that can provide capital for a real estate endeavor. Be ready to personally guarantee the loan and use assets like your home as collateral. Have a solid business plan to present to prospective lenders to improve your chances of getting approved. SBA loans are a popular choice.

When getting your real estate business off the ground, carefully consider your funding sources. A combination of personal savings, investors, and business loans can provide the capital needed to start with enough operating runway to build your business.

Set Up Your Office

When starting a real estate business, you’ll need to set up a professional office space to meet with clients and conduct your business. This is an important step to establish your credibility and brand as a realtor. Here are some key considerations when setting up your real estate office:

Office Space

– Look for affordable office space in a professional building in your target area. Many realtors opt to rent office space in a shared space with other agents to save on overhead costs.
– Make sure the space has room for a reception area, private office, conference room, and workstations for support staff. The space should be large enough to meet with clients comfortably.
– Choose an office decor that represents your brand and personality. Invest in some nice furniture and accessories to create an upscale look.


– Invest in great office equipment like computers, a multi-line phone system, printers/scanners, and a paper shredder. Reliable tech is essential.
– Set up a CRM system to organize your contacts, listings, transactions etc. Popular options are Salesforce, Follow Up Boss, LionDesk.
– Get photography equipment to take great photos of listings. A digital SLR camera and wide angle lens are ideal.


– You’ll need real estate transaction management software for listings, documents, closings etc. Options include Brokermint, Dotloop, SkySlope.
– For accounting, Quickbooks or Xero are good options. You may also need tax prep software like TurboTax.
– Invest in a good MLS platform to access property listings like Remine or Realtracs. This requires Realtor board membership.

Marketing Materials

– Business cards are a must. Order cards with your photo, name, brokerage logo, phone/email, specialties etc.
– Print brochures and flyers showcasing your services, marketing stats, and past sales.
– Yard signs, car magnets, and other branded items help market yourself in your area.
– Order pre-printed stationery, envelopes, and real estate forms with your logo.
– Create a great looking website highlighting your services, listings, and credentials.

By investing in the right office space, tech, equipment, and marketing materials, you’ll be well positioned for success in your new real estate business.

Market Yourself

Effective marketing is essential for any new real estate agent. There are several key ways new agents should focus their marketing efforts:

Build a Website

Your website will likely be the first impression potential clients have of you. Invest in a professional, modern design that reflects your personal brand. Make sure your contact info, headshot, listings, and credentials are prominently displayed. Update fresh content regularly to improve SEO.

Leverage Social Media

Social platforms like Facebook, Instagram, and LinkedIn allow you to share listings, market reports, staging tips, and lifestyle content. Post regularly to build an audience and highlight your expertise. Respond promptly to comments and messages.

Network Consistently

Attend industry events, conferences, local business association meetings, charity events, and open houses. Bring plenty of business cards and connect with fellow agents and potential clients. Join real estate and community organizations to expand your sphere of influence.

Run Targeted Ads

Facebook, Instagram, and Google ads can generate leads by targeting key demographics and interests in your area. Focus ads on your specialties like luxury homes or first-time buyers. Retarget past visitors to your website to nurture leads. Allocate sufficient budget for testing and optimization.

Get Referrals

Ask satisfied clients for referrals to friends, family, and coworkers. Remind clients you depend on referrals to grow your business. Provide incentives for referrals that result in transactions. The majority of agents’ business comes from referrals.

Find Your Niche

When starting a real estate business, it’s important to find and establish your niche area of expertise. This will help you stand out in the crowded real estate market and attract clients looking for specialized knowledge and services. Three popular niches to consider are:

Luxury Homes

Working in luxury real estate requires extensive knowledge of high-end homes, neighborhoods, amenities, and market values. Develop relationships with affluent clients by understanding their needs and preferences. Showcase your expertise in luxury home staging, marketing, and negotiations. Focus your efforts on networking with other luxury specialists and promoters. Highlight access to off-market listings and discretion.


Becoming a foreclosure expert enables you to help homeowners navigate financial distress and transition their property. Build skills in short sales, foreclosure law, and connecting owners with assistance programs. Develop a strong network of real estate and legal professionals who specialize in foreclosures. Market yourself as an advisor who can guide clients through the emotional and financial complexity of the foreclosure process with compassion.

Commercial Leasing

Commercial real estate requires knowledge of zoning, property management, and working with business owners and landlords. Become an expert in site selection, lease negotiations, and development by networking with other brokers and joining industry associations. Understand the lifecycle costs, operational needs, and growth plans of business tenants. Focus your marketing on business parks, shopping centers, and office buildings where you can cultivate client relationships over time as their needs change.

Choosing a niche and becoming a specialist in luxury real estate, foreclosures, or commercial leasing demonstrates extensive expertise that attracts clients and referrals in a competitive real estate market.

 Build Your Client Base

One of the keys to success as a real estate agent is building a solid client base. Here are some of the best ways to generate leads and build your list of clients in real estate:

Lead Generation

Hold open houses – Open houses are a classic way for real estate agents to meet potential buyers. Make sure to capture contact info and follow up with all visitors.

Door knocking – Target neighborhoods you’d like to work in and spend time door knocking to introduce yourself to homeowners. Listen to their needs and let them know you’re a local expert.

Online marketing – Build a real estate focused website and leverage SEO, social media, email marketing, and pay-per-click ads to generate inquiries.

Networking events – Attend local networking events to meet professionals and potential clients. Come prepared with business cards, brochures, and conversational elevator pitches.

Referral programs – Offer incentives to existing clients who refer new business to you.

Expired listings – Connect with the owners of recently expired listings to see if they’d like to relist their property with you.


Ask for referrals – Request referrals from past clients, friends, family members and other contacts. Remind them you are looking to grow your business.

Provide top-notch service – Exceed expectations when working with clients. Happy clients will be eager to recommend you without prompting.

Remain top of mind – Check in with your network regularly via email newsletters, social media, phone calls or handwritten notes. Send holiday cards and marketing materials.

Repeat and Past Clients

Keep in touch – Maintain ongoing communication with all past clients. Add them to your mailing list, invite them to events, and ask for reviews.

Offer promotions – Provide special incentives or discounts to repeat customers and loyal past clients to encourage referrals.

Provide excellent service – Clients who have positive experiences working with you in the past will be likely to come back in the future or refer others.

Ask for feedback – Check in to see how you can improve. Use feedback to strengthen your skills and business practices.

Send thank you notes – Express your appreciation for the chance to work with clients again or any referrals they’ve sent your way.

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