Real Estate Business Opportunities

Have you ever wished for a way to dip your toes into the real estate arena without totaling committing your body and soul to it? There may be a few ways to do that…

If you are a come back reader on this blog, you know that I am exploring real estate this year. With the market prices down, the interest rates low and a flood gate set to be released to let many more foreclosures flow, it seems like it might be a great time to invest in properties or somehow get into the real estate sector with some investments.

Although I own a home and a nightly vacation rental, I’ve never been a landlord or a property flipper, purchased a tax lien certificate, held mortgage paper or even owned shares in a real estate investment trust (REIT).

Today, I will be exploring ways to get my feet wet in real estate without putting much money into it. Most of the concepts discussed today are from a book by Bryan C. Wittenmyer – Real Estate Business and Investment Opportunities: The Complete Guide to Starting a High-Profit Business.

In real estate, as in any industry, the best way to learn and build a useful network is to involve yourself with the parties doing business. To do that, you could consider providing services for real estate investors.

Here are some ideas on service businesses you could start and run – even as a side gig – to get to know investors, realtors, property managers, banks and lawyers involved in real estate.

Apartment Preparation Services
What it is.
Owners of apartment buildings and complexes want their property rented out as much as possible. When a renter leaves, the unit has to be made ready to show to the new prospective renter as fast as possible. Your service will clean, sanitize, inspect and repair the unit so that it can be shown and and rented rapidly.

How it helps you.
You get to know landlords and their property managers. This helps you build a mentorship network and may put you onto some deals (if they are ready to sell). It also helps you understand what kind of shape renters in various parts of your area leave the units. You can learn and use some new skills – such as tackling small repair jobs.

What you do.
You perform trash removal; repainting or touch up work on walls and ceilings; inspect heat, plumbing, roof and etc; clean and disinfect the kitchen and bathrooms; vacuum and steam clean all carpets, change burned out light bulbs; service, install and test smoke detectors; do deep cleaning such as washing woodwork and baseboards, cleaning windows, blinds, ovens and etc; inventory any repairs needed and report them to owner or property manager, sanitize and/or deodorize the entire unit.

You can also offer add on a la carte services such as minor repair, extra trash removal, extreme cleaning (like buy spray/removal, cat urine treatment or other pet damage); changeout of locks; lawn mowing and other landscaping services and etc.

What you get.
You can charge a flat fee per unit based on number of bedrooms or square footage, plus extra fees for add on services, or you could write up a contract to be at the ready to do certain tasks whenever an apartment goes empty – for a set fee per month – even if no apartments go empty that month.

Real Estate Owned (REO) Services
What it is.
Lots of banks own real estate these days, much to their chagrin. Many of these properties are empty and a lot of them have been vandalized. You can offer your services to keep the property clean, repaired and secure, for a fee.

How it helps you.
You get to know the banks REO departments and see a lot of their distressed property up close and personal. You will learn about small repair jobs and the kinds of damage that can happen to an empty property plus how to prevent it from happening.

What you do.
You will care for the bank’s properties. Many of the initial tasks are similar to the apartment preparation services above. You will also need to secure property by doing things such as boarding up windows that have been broken (or are in danger of being broken), winterizing plumbing, cutting down weeds and high grass, placing no trespassing signs and doing various types of interior and exterior repairs. This can involve a lot of driving around to various locations if these are homes.

What you get.
If you are lucky enough to find an institution that isn’t already contracting this work out to another service, you can charge a per property or a per service fee and possibly an ongoing checkup and maintenance service fee.

Tenant Investigation Services
What it is.
Property owners and property managers need to check up on prospective tenants to verify that they will maintain the property and pay the rent. You help them do this.

How it helps you.
You learn the ropes on tenant investigation first hand and get lots of practice. This seems to me to be one of the more important tasks needed in managing rental property! You also will need to learn the laws in your state and country as far as what you can investigate and how you can do it. Credit reporting is governed by many laws, including the federal Fair Credit Reporting Act and the Consumer Credit Reporting Reform Act.

What you do.
You work from a signed credit application to do detailed credit checks at each of the credit bureaus; criminal background searches; judgment database searches; verify truthfulness of info on application by calling prior jobs; verify past residency and etc.

What you get.
You can charge for searches per tenant or on a subscription basis with landlords.

Tenant Eviction Services
What it is.
When a renter destroys property or owes back rent, the owner wants them out. There are a lot of laws and procedures involved leading up to, during and after getting an eviction notice. Your service helps the owner through some of these.

How it helps you.
You learn to deal with the worst aspect of property management, including learning something about the laws governing the process and the procedures required to evict. You also create a network of lawyers to use in future evictions of your own.

What you do.
Eviction services are para legal, you will need to have a good understanding of the federal and state laws governing them in your area. Your service would help landlords fill out court documents to get someone evicted. You could include things such as mailing late notices, demands for payment, serving the notice to the tenant, and filing the court documents. You could offer some or all of these You cannot represent the owner at a hearing though – this requires a lawyer.

What you get.
Once you get expertise in this area you can set up a service that charges for a basic level of activity or you could charge separately by type of service. You might even be able to offer some advisement services to help owners understand how to do the process themselves.

Property Management Business
What it is.
Property owners often don’t want to bother with dealing with tenants, property repairs, marketing, showing the property, filling out the paperwork or handling middle of the night emergencies. They hire property management services to do these things for them.

How it helps you.
You will learn nearly all aspects of real estate business, develop a network of people such as advertisers, repairmen, sub contractors, credit investigators, lawyers, real estate agents and etc. You will deal with many property owners, some of whom may want to sell you their properties at a discount or with owner financing.

What you do.
You make sure the property is ready to market, market it, show it, write a contract to rent it, handle maintenance issues, do evictions, credit checks, lawn and pool maintenance and pretty much everything related to making sure the property remains rented and producing income. This requires experience. If you already own and manage your own property you could do this. You usually need a real estate license to be a property manager – actually usually a broker’s license. But you can get a real estate sales license and work under loose direction of a licensed broker instead.

What you get.
You can charge fees for lots of stuff – like the first months gross as a finders fee, clean up and prep fees, marketing fees and etc in addition to an ongoing management fee in the form of a % of monthly gross rent.

Remember, I am not a lawyer or other professional.  Neither am I a real estate broker, agent or sales person.  Don’t start one of these businesses based on the information in this post, check out all applicable laws, regulations and procedures with the appropriately trained professional.

Now that I have reviewed these business opportunities, I really doubt that I will start one.  It sounds like all of them will take quite a bit of time to build up steam.  However, I might try to find a way to work side by side for awhile with someone already in business – perhaps by helping out for free just to get some mentoring.

What do (or did) you plan to do to figure out what real estate investing you want to do?  Would you consider doing one of the above businesses, just to get your foot in the water?