Growing A US Real Estate House Buying Business in 2023 and Beyond
For many young people, climbing the property ladder is a dream. Real estate represents an investment. For others, real estate is a business opportunity.
House prices have soared in recent years. Property owners have seen their investments rise in value beyond expectation.
Property investors want to see a profit. Therefore, high valuations are good when the right property is found at the right price. How can you grow a house-buying business in 2023, and make it grow?
Scott Bower, owner of HBSB Holdings, outlines his experience in Phoenix, Arizona in this article with some guidance for anyone looking to enter the house-buying sector.
Is it still possible to grow a house-buying business in 2023?
High house prices might make it seem that making a profit is difficult with real estate now. However, growing a house-buying business is about identifying the right properties to buy. Further down this article, you will learn a little more about how to spot the right properties and find motivated sellers.
Motivated sellers are important as these homeowners are looking for quick sales. Existing home sales dropped in March and then again in April. Sellers may be tempted to lower the asking price when sales slow. This is good news for house buyers.
What types of house-buying businesses are there?
House-buying businesses in the US generally operate by offering cash to homeowners. By bypassing the need for financing and mortgages, these cash buyers can move quickly and finish the buying process much faster than normal.
Types of house buyers include:
- House flippers (fixing and flipping)
- Franchise home buyers (cash buyers)
- Trade in buyers
- Buy and hold investors
Trade-in buyers provide homeowners with the cash to purchase a new home when they are struggling to sell an existing one. Once the existing home is sold, the trade-in buyer receives repayment of the loan plus a fee on top.
iBuyers use technology to provide instant offers on homes. Algorithms rather than a person calculate the value of a home. iBuyers tend to have large financial resources behind them enabling them to build a property portfolio.
The other three options are perhaps the more likely ways to start a house-buying business.
Fixing and flipping defined
This is a real estate strategy where the buyer identifies a property that is available at a below-market price. The property in question will usually require repair work and renovations. Therefore, the buyer must account for these costs.
When the right property is identified, and repair work is carried out cost-effectively, a profit will be made on the sale. One important part of fixing and flipping is being able to identify which renovations will add value. It is easy to sink money into a house-flipping project and end up breaking even or losing money.
Buy and hold investing defined
These house buyers are looking at longer-term investments and will usually use the property to create an income. For example, the investor will identify properties that need some work just as a house flipper would, and then carry out some renovations. The home can be rented once it is up to standard.
About 70 percent of rentals are owned by investors who use them for income. The buying process will be very similar to a house flipper, and usually, renovations and repairs will be needed. But instead of slipping the home, the investor will hold on to it and rent it out possibly for years.
Franchise cash buyers defined
No doubt you have seen adverts for cash for home buyers on TV and the internet. Sometimes these companies operate franchises. This is one way to enter the home-buying business with an established name behind you.
Finding motivated sellers and leads
Regardless of which channel you use for home buying, you will need to generate leads and find sellers.
Options for locating motivated sellers:
- Social media
- Email marketing
- Direct mail marketing
- Cold calling
- Online Marketing
- Optimize local SEO
- Word of mouth
Finding motivated sellers is one of the most critical parts of the home-buying business. These are proven strategies that will help your business’s visibility and make sellers more aware of your services.
For higher rankings on search engines, SEO is used to optimize websites. Websites need SEO to improve performance and increase visitors. But, your website should look into local SEO as you will likely be operating within a certain area.
Cold calling is effective at times, but it is also time-consuming. Social media and online marketing let businesses target specific audiences. Therefore, these marketing strategies can be cost-effective and help to generate quality leads.
Identify prime properties for your business
You will also need to identify the right properties. Motivated sellers are necessary, but their property might not be right for investment.
There are three areas you should look at:
A crucial factor when investing is the location. Researching the USA’s best places to live in 2023 will help. And up-and-coming areas are ideal. Anywhere that has traditionally seen lower house prices may represent the chance of future increases. Areas that are targeted for development and gentrification will see property prices rise shortly.
Distressed properties are ideal for investment. These are sold under the market value, and with the right renovations can be very profitable. However, you should inspect the property fully for any structural issues or anything that will impact your profit.
Houses under the market value are what investors need. You must ensure that there is room for profit after repairs are made.
Strategies for renovation
This is the area that many first-time property investors slip up with. To grow your home-buying business, you need profits. Those profits are what will let you build a portfolio of rental homes or houses to fix and flip.
If you misidentify the condition of a distressed property or fail to have an effective renovation strategy in place, your ROI could be small.
Prioritizing repairs and deferring costs
Identify which repairs are needed to make the home liveable and more importantly, marketable. After prioritizing which repairs need to be done first, consider cutting costs by deferring less vital work. Houses may maybe marketable even small problems.
Add value with renovations
A part of identifying what renovations need to be done is to spot where you can add value. Updating the kitchen or bathroom will add value, but some renovations won’t affect the house’s value at all.
Marketing and selling the property
The last stage of the process for fixing and flipping is to sell the property for a profit. There are some areas to consider when marketing and selling a home.
Real estate marketing tips include carrying out market research and being visible on social media. Pricing is all important. Comparables are useful for setting a realistic price.
Staging is an important part of the marketing process. It is said that houses that use staging companies receive bids and sell up to 30 times faster. But, timing is crucial too. There are periods of the year when homes sell faster than others, so this is worth taking into account.
You could start a home-buying business by simply fixing and flipping. However, creating a business that grows requires certain knowledge. The ability to identify properties is vital.
With a proper home-buying strategy in place, and the finances to back it, you can enter the home-buying industry quite easily. If successful, you could see your business growing a small real estate portfolio to fix and flip or to rent for the long term.