Lots of entrepreneurs searching for the best online business to start end up gravitating towards starting a Real Estate business, probably considering brick-and-mortar to be a “safer” business model. Real Estate is also a popular business model because it doesn’t require much technical knowledge, and, in many ways it can be fun. The initial hurdle tends to be the upfront investment required and the fierce competition which makes it harder to differentiate.
The property management business is almost as old as the invention of money. But this traditional business has been transformed in recent years, with apps such as Airbnb, Homeaway or Spotahome providing tools to manage online properties in a more flexible way and with strong advantages over traditional rental models.
Although these new tools are used by many people (eg those who rent out their spare bedroom on Airbnb), most aren’t professionals, which opens up opportunity for entrepreneurs. This new breed is looking to set up an online estate agency, or to manage properties online, allowing them to offer more flexible products to their clients, and capture market share.
In this article we explain the main characteristics of this trendy online business. If you are interested in gaining deeper knowledge into this topic you can check out our course on Property Management 2.0 here.
1- What are the advantages of setting up an online real estate agency?
The main advantage of setting up an online real estate or property management agency is the ability to promote properties on multiple web platforms, and to offer flexible rental terms – not only long term traditional rentals, but also short and medium term rentals.
In this way you can earn up to 25% more than long-term rentals, which will make attractive to the landlords your service, increasing the number of properties you can manage, as well as your commissions.
2- Who are the target audience for these web rentals?
Short-term rentals are generally intended for tourists. Medium-term rentals are generally aimed at businesspeople or students. Different kinds of property are better suited for each audience – we expand upon this in our Online Property Management 2.0 course.
Long-term rentals are generally for professionals or families looking to settle in somewhere they can call “home”. These kinds of rentals will be a complementary product in your portfolio but won’t make up the majority.
3- What is the business model of an online real estate agency?
Your value proposition for landlords will be to increase their profits by managing properties more actively, especially in the short and medium term. You have several options to negotiate with property owners. Again, we expand more details in our course, but broadly speaking you can offer a combination of fixed or variable income for them, depending upon which they value more.
4- How can I make money in real estate managing properties online?
By generating higher income than traditional long-term rentals, you will be able to negotiate your commission with the landlords as a percentage of profits. You can also agree recurring marketing, maintenance and other fees. This recurring income will help you to grow your business without the need for a high initial investment.
5- What are the risks of setting up an online real estate agency?
One of the main risks for short or medium-term rentals is seasonality. That is, in high season is when you can collect more money per day, it becomes critically important that you maximise your income in that period. Another risk, for example, may be that regulation can change. In either case, you will have options to mitigate this. If you have questions you can contact us or see the additional details in the Property Management 2.0 course. In general, online real estate is a low risk business.
6- How can I set up my online real estate agency and start earning money?
You can start today, with no prerequisites. We recommend you do as much research as you can, but you can start pretty quickly:
a) Any Ltd company or self-employed person can manage properties;
b) Platforms for customer acquisition already exist – you must identify the ones that best serve you according to your area of specialisation and target audience;
c) You can rely on management software, both for dealing with clients and enquiries, and for setting a dynamic pricing strategy that will maximise your income.
You can also partner with an existing property management agency and offer to increase their business, both in volume and revenue. We can also refer you to companies in the field to work with them, once you have completed our course.
If you are interested in this topic, you can contact us here.