We have compiled a pros and cons list for real estate startup funding - take a look at what we've discovered:
Real estate startups are on the rise. People are becoming more interested in working with small startup businesses, as opposed to corporate brokerages. While this is undoubtedly a benefit for indie brokerages, there are both pros and cons within the real estate market.
Investing in a startup is always a business risk. Startups don’t always succeed and a new client or investor must have a lot of faith in the company if they are willing to put their business in an unpredictable market. Small brokerages are becoming more popular, and with more popping up, it is also creating more competition among each business. While this may be good for local clients looking for a small business to buy or sell with, it also creates more hardships. If too many local business arise in the same area, it is inevitable that one will end up monopolizing the real estate market and the other ones will either endure the monetary losses or have no choice but to close. Putting your business in a startup is a great investment if the business begins to thrive – you just have to make sure you are making the right choice with the business you decide to partner with.
If a startup is opening in a healthy market, investors will always have a lot of interest in it. The market is everything, and deciding exactly when to start a business is one of the most important steps you’ll have to take – always do so when the market is in a good place. With a good market comes more investors, and with more investors comes a more stable business. From there, clients will start waltzing in by the dozens. It is also important to look at who your competitors are in the area – if you are the only local brokerage in the area, you already have the upper hand. Being the only business in the area obviously has its perks, but even if you aren’t, it doesn’t mean you’ll be starting your business with an expiration date in sight. Be prepared, know what your competitors are offering, and do research to see if you are able to match or provide better deals than them. As long as you are the most educated and resourceful, you’ll be able to start a business with little to no drawbacks. Just keep in mind the fundamental truths of all business: hospitality, facts, and ability.