5 Steps Real Estate Success
1. The Basics – Finalize your Market, your Services and your Funnel
2. Systems & Processes – Build your Processes & Systems around your funnel
3. Automation – Build Automation around your Processes
4. Scaling – Start scaling your automation & build a high performance team
5. Networking – Build connections to expand your reach
In this article I will be talking about the Framework, why certain people in Real Estate make money and why certain people don’t make money. Everybody joins Real Estate with a hope of making money, not everyone makes money. So there is something which is fundamentally very wrong with the people who are not making money. They do everything properly, they do every site visits properly, they do marketing also and spend time with site visits, they do a lot of things but they do not make money. Actually the problem is somewhere very fundamental which is not very obvious to the eyes. Even it is same for the developers or people who are launching their project sometimes they also lose that focus and figure out that ‘In spite of planning such a nice project, it is not selling like a hot cake’. It is selling but at a very slow pace. Even though they have planned such a fabulous project for their customer segment at the right location at the right price still the project is not selling. So something is wrong there, and what is wrong that is what I am going to talk today.
Once you understood the fundamentals in my next blog I will be talking about ‘how you should close a deal?’ It is going to be a mind-blowing stuff for all the Realtors.
I also be writing about Automation. In this article we will understand how to generate better leads on Automation, how you can bring down the cost of leads to a level where you will find that it has become very profitable to run those ads. So it will all about Automation, Tools and Techniques.
Many people have Doubled – tripled their businesses just following these principles.
Let us understand the 5 step Real Estate Framework. This may take 3 to 6 months to completely cover all the stages of framework. If you want success and grow follow this 5 step framework. So what is that 5 stage framework?
Number 1 is the Basics:
Until and unless you do your basics right, finalize your market, finalize your services & funnel you will not be able to grow your business. So all these things are very important.
Number 2 is the Systems & Processes:
Here you should start building the process around the funnel and market that you have planned
Number 3 is Automation:
Automation means whatever process you have built now you will start using certain tools and technologies to get the same work done at a very lower cost and at a very faster speed. But until and unless you have figured out the processes you should not automate. If the processes are not built correctly you should not attempt to do the automation in any business not only real estate. Because if you automate without building processes you are most probably going to waste your money and time and you will make losses. So anything which is going to create loss has to be avoided. So until and unless the process is built right, if we try to automate, it will create more scrap and more wastage and thus it will create more losses.
Many people trying and attempting to do that by automating wrong ads, sales funnel and this leads to losses. So until and unless you figured out what is the process that you need to do and what is the funnel that you have to build, do not enter into automation.
Once you have done the automation and now everything is working fine then will start scaling it up.
Number 4 is Scaling:
Here you start putting more money in Manpower, Advertising, and Technology and then start scaling up your business. Now that you have grown your business you should start Building your Network.
Number 5 is Networking:
As Real Estate is an Information connection business lot of Deals get converted by just creating a solid network.
Let us now move to a very basics of Real Estate yet very important and Powerful because it also has the elements which will answer why certain people do not make money in Real Estate and why others even after doing lesser hard work are making more money what is the fundamental difference?
Lets’ understand How to make money in Real Estate?
Rental – You rent out property and the tenant and landlord gives you the brokerage. This commission which is generally one month of the month becomes your income. It is a very basic kind of Real Estate business. It is generally done by people who are just starting up because it does not require too much of capital. You can start it solo with a mobile and a bike. You can close at least one deal a week and can easily make 30 to 60 thousand a month just by doing rental deals. It is very easy to start.
Resale – Where people sale the property of an existing landlord who has already bought it from a builder. It is also called as secondary market (Resale). It requires somewhere between 3 to 8 weeks to sale a resale property. The amount of money you make is generally 2% of the consideration amount of property. Suppose you sell a resale property worth rupees 65 Lakhs you make a commission of rupees 1.30 Lakhs. And if the buyer is also yours that means a direct deal you can expect the same amount of money from the buyer also. So certain experience people start doing the resale where all the documentation and everything has to be done by the agent himself.
Channel Partner – The third is the Channel Partner where you become authorized partner of the builder and you sale his properties. In this case when you are selling a builders property you do not need to care about the paperwork and documentation which is taken care by the builder himself. Your job is to generate the leads and take the customer to the site and help the customer buy that property. After that you don’t have to do anything that all is not required because the builders team going to take care of the rest.
Commercials – Here you deal into Office Spaces, Malls, Shops, Stores etc. and you can do the rentals as well as property sales
Lands and Plots – It can be NA plot or Agricultural land
Warehousing – As all the E-Commerce companies are planning expansions in India a lot of Warehouse are available in India. You can help these companies in Leasing and buying such warehouses as per their requirements.
Whenever you are doing a Real Estate business do not try to do all these lines of businesses together as mentioned above. It is sufficient to be working in two lines of business. Like you can do Rentals and Channel Partner (New
Projects – Primary Market) or Rental and Resale as per your expertise and interest. But if you want to do everything then you will lose focus and not make money. So number one reason why people do not make money in Real Estate is because they work on all the line of businesses which is not a right thing to do. You have to pick up any one as your primary business which can generate maximum amount of revenue for you and a supporting line of business so that if one business not closing you have certain amount of money flowing in.
Types of People who work in Real Estate –
Novice – Fresher’s
Professionals with a small team – It means an Independent agent with a single Tele Caller and 2-3 Sales Executives. Majority of the business is being done by professionals with small team.
Business Owners with Enterprise – Companies like LISA Home Solutions, Nestaway, Investors Clinic, Squareyards are some of the examples. These businesses have huge team, Systems, Reporting Mechanism, Automations.
So these are basically 3 stages of your growth. You start as a Fresher then you start working as a Professional and then you graduate as a business owner and you develop an enterprise.
So this article will help for the fresher to jump and become Professional and help Professionals to become a Business owner.
Let’s see 6 very important steps of making money in Real Estate:
Many people do not understand their Market or Niche and I am going to talk about it now. It is very important to know your Market. If you do not know your market you will not be successful. So if you want to get successful you have to know your market very well, you have to build the right Processes, you have to build the Systems which support those Processes, you have to bring in Automation so that you can save on the money and the effort then you have to delegate. And then you have to take data driven decision. Never do business with your own gut feelings. You have to logically think before doing anything. You have to think through from the data.
Business Models in Real Estate –
Consulting Services –
Development and Construction –
Related Services – Architect, Interior, Structural Consultant, Plumbing Contractor, Civil Contractor, Painting Contractor, Electrical Contractor and RCC Contractor etc.
5 Pillars of Real Estate Business –
If you want to setup your Real Estate Business what are the 5 things that you have to take in control?
1. Traffic –
It is nothing but leads that you generate. You must learn how and from where to generate leads. There are many ways of generating leads. You can generate leads from many sources. But you have to start thinking from where to generate the leads you have to start figuring out which lead helps you. You will understand this in details when I will talk about Sales Funnel in my next article. Lot of things I am saying may not make hundred percent sense but as you read further to my article everything will start connecting back. So stay sharp and stay focused.
You can generate leads by 3 broad Categories.
A) Digitally –
Organic Leads (SEO Blogs) -Leads which comes from SEO Blogs i.e. Organic Leads, Paid Ads or Property Portals. Organic leads are the leads where you don’t have to pay. If you write a good blog it will attract good traffic to your website. It takes a lot of time to get into an SEO and Organic is a long term game.
Paid Leads – Facebook, Instagram, Google Ads. Ads that you are running on Social media are called Paid Leads and you pay for those ads which generates certain number of leads against your investment. You have to be sure from which source you are getting what lead and at what cost.
Property Portals – Like 99 Acres, Magic bricks, Housing, Sulekha etc.
B) Offline –
• Field Visits –
• Networking –
• Builder Site office visits –
C) Newspaper and Media – Classifieds and Publishing ads in TOI
2. Inventory – Properties that you can rent or Sell. You can get these inventories both Online and Offline. Online you get from property portals and offline you go to a builder’s site office and get inventory details from sales manager.
3. Closing Deals – How to Structure and Present a Deal?
4. Marketing Copywriting Skills / Scripts – It is nothing but whatever ads script you write while creating your ads. All the images and text used in an ad is called as ad copy. It will help you create offers for your customers and generate good number of leads. In my next blog I will talking about HPOA framework where I will talk in depth about this.
5. Building Memberships – It is very easy. If you can generate 20 references in a year, the closing rate of reference leads is approximately 70 percent. So you can close 14 -15 deals just by building relationship with your customers. The customers with whom you have already done the transaction. The revenue from one deal is minimum is rupees 1L. So you can generate additional 14 L rupees just by maintaining a good relationship with your existing clients. It is not difficult to maintain relationship with your existing customers.
Now let’s talk about 5 Important Reasons Why People Fail in Real Estate
1. What to Start & How to Start?
There are many types of businesses in Real Estate. You can do Rentals, Resale, Commercial, Residential, Lands & Plots, Channel Partner, Warehouses etc. There is lot of scope in real estate. Market is very big – ($ 180 Billion). But when a new guy comes in he gets confuse as everyone suggests him different way. So let’s understand a structured way.
2. Information Overload
Everybody is trying to give you some information. Let’s understand some basic steps and if you follow this steps I hope you will reach your destination. Too much information causes confusion. And if the information is not structured the person gets completely confused.
3. No Money or Resources to Invest
If you want to make twenty lakh rupees in a year as profit you should be able to invest some amount of money. You can earn in first month & spend in next month, again make some money then again invest again make more money then again invest you can do it like this way. You will have to keep on investing to grow your business.
4. Wrong Implementation
You have understood everything but if there is some confusion and you took a wrong decision and you implemented it wrongly, made certain losses and your moral goes down. So either you don’t make wrong decisions or don’t do wrong actions or don’t delay. Many people keep on postponing their life. If you delay then you will not take actions. People fail in business because they delay in Implementation, delay in calling the customer, delay in setting up an appointment, delay in calling a customer for site visit, delay in negotiations etc. So every place they are postponing. So if you keep on delaying things you will not make money in real estate because real estate is faster than other industries. If you do not take action your competitor agent will call up your lead and he will take your customer on site visit and he will get the benefit if the customer gets closed. Many realtors have seen waiting for the customer to call where actually you should call up the customer upfront for visit.
5. If you want to make money in Real Estate you should love Real Estate
It is not only about Money it is about the People, Landlord, Sellers, Buyers, Builders, Developers, and Consultants. Money will always come eventually. It becomes fun if you love Real Estate Business. Everything around us is real estate.
Now we will understand a very important topic: “CUSTOMER AVATAR”
Why do you need a Customer Avatar?
What exactly is a Customer Avatar?
What is a Customer Avatar in terms of Realtors point of view?
How can you make your Customer Avatar?
What do you do after making a Customer Avatar?
It is just a “profile of the customer to whom we want to sell”.
Why do you need a Customer Avatar?
Not everyone is your customer. If you are treating everyone as your customer you are not going to focus anywhere. You have to let go of certain customers who are not your target segment. Let’s consider you are working in Residential segment in Rupees 50 Lakhs to 75 Lakhs category segment and you get a lead for affordable housing for Rupees 45 Lakhs what would a normal agent do? He will spend time in searching the inventory. Because he has a feeling in his heart that I should not let this lead go, if I let this lead go I am going to lose my money, I have to work on this lead as well. So every day that consultant is working on a new lead and the fact is that you do not need new leads on daily basis.
How much time does it take to close a resale deal? Let’s say 6 weeks. If a consultant is working on a new lead on daily basis do you think he is going to close a resale deal? How many of getting now that bulb on moment? I hope everyone is getting here what I am trying to say.
Let’s say it takes one and a half month to close a resale deal, and if a consultant is working on new resale lead everyday how many leads he will close? The answer is NONE! You do not need every day a fresh lead, you have to make a decision what you want to sell? So this is one of the other important thing and what are people are doing they are not only taking the leads from their target segment but they are also taking the leads from other target segments.
Now some of you have might be started to understand that it is not good to keep working with all the leads that are coming in your bucket. You do not need to work on all the leads because if you work on all the new leads you are spreading your energy, you are deviating yourself from the focus and you are not going to focus on one segment. If you work with one customer segment, let’s say you work for one segment i.e. Investors or for families who work in IT sector with a budget of Rupees 70 Lakhs to Rupees 90 Lakh you will understand their nature you will understand how they think you will understand how they behave and you will also come to know how to communicate with them. It’s better to pass it on such leads within your network who deals into that segment where other consultant can work on your leads and both of you can share the revenue equally.
If you know the person you can communicate with him better and if you are generating leads for a similar kind of a customer you can reuse the leads. But you cannot reuse the lead if you marketing different kind of industries. If you are marketing projects of the similar price segments and in the same locality and for the similar kind of audience whatever lead you get you can reuse it in different inventories in the same market. So cost of your leads will go down drastically, it can cost you 50% lesser if you use this strategy. If you focus at same place you can bring down the cost of your marketing budget. That is the reason McDonalds and Pizza Hut do not sell you Biryani. It is not costlier for them to hire a Biryani chef. But they don’t do it because they want to control the cost of their operation. Same way if you work into a customer segment you control the cost of your operations, marketing cost and as a developers or as a consultant if you are starting and growing your business you want to always keep your expenses down. So all I want to say “If you work on all leads you make less money and less profits”
We are here to make Profits. So if you do not work on all the leads and if you focus on your target segment / audience you are bound to make more profits.
If you work only in one segment say commercial segment for 5 years people will recommend your name and say go and meet Realtor Naveen, he is the person who deals only in commercial. Like this “when your specialization grows your brand grows your cost of advertising decreases eventually”. It is easier for you and your company to close deals faster if you work in one segment.
What exactly is a Customer Avatar – Description of a Person who represents a market segment! This represents your market.
How can you make your Customer Avatar and how it will help you make more money?
Let us say if you are working with Families – Residential segment then you understand their Goals and Values. Like what they are looking for. There is a difference between Basic Requirement and Detailed Need.
Basic Requirement – When a customer says I want to buy a 2 BHK property in Navi Mumbai at Rupees 75 lakhs budget, it should have a play area and a Lift and Car Parking
Detailed Need – Why the person wants 2 BHK Property? Because he has a family, two kids, he works in that area, salary segment.
If you understand Goals and Values of your customers it becomes easier for you to understand their detailed need. Most of the consultants work on only basic requirements of the customer & then they keep on thinking why did this customer didn’t purchase from me. Many sales offices of reputed developers do not try to capture the detailed need of the customers. They do not understand the difference between Basic requirement and detailed need. They just capture the basic requirement in the Inquiry form and attend the customer according to the information provided by the customer.