For those considering launching an independent business in the real estate industry, this article explains the advantages and disadvantages of starting a real estate company, the required qualifications, the steps to launch, and the key points for success.
What are the advantages and disadvantages of starting a real estate company?
Advantages
- It is relatively easy to become independent, and management can be stable: Compared with other industries, less personal capital is required at the time of launch
- Potential to earn substantial profits: A single contract can lead to significant revenue
- Freedom to adjust your work: You can manage your own schedule
Disadvantages
- The amounts handled are large: If cash flow management fails, there is a risk of bankruptcy
- Initial costs are required: Business security deposit of 10 million yen (can be reduced to 600,000 yen by joining a guarantee association)
What qualifications are required to start a real estate business?
The required qualifications vary depending on the type of real estate business.
| Business Type | Required Qualifications |
|---|---|
| Rental property ownership business | None in particular |
| Brokerage business | Real Estate Transaction Specialist (required at a ratio of one for every five employees) |
| Property management business | Certified Property Manager for Rental Housing |
In addition, having qualifications such as land and house investigator, real estate appraiser, or condominium manager can be advantageous.
What is the process for starting a real estate business?
- Obtain a real estate transaction business license: After paying the business security deposit (or joining a guarantee association), the license is issued in about two weeks to one month
- Submit a business commencement notification or establish a corporation: Sole proprietors submit a business commencement notification to the tax office, while corporations need articles of incorporation and registration
- Set up an office: For brokerage businesses, establishing an office is required under the Real Estate Business Act
What are the traits of people who succeed and those who do not in real estate entrepreneurship?
People who succeed in the rental business
- They outsource operations to a high-quality property management company
- They do not take on excessive loans
- They study diligently, such as by reading more than 10 books on real estate
People who succeed in the brokerage business
- They have a strong network: They can attract prospective clients through relationships built in previous jobs
- They listen carefully: They are able to understand clients' needs thoroughly
- They do not cut corners in client service: They respond patiently even to clients who are not ready to purchase immediately
Common traits of people who fail
- They focus only on tax-saving measures
- They use yield alone as their decision-making criterion
- They do not make use of the internet
- They are unable to differentiate themselves from other companies
What should you watch out for to avoid failure in the real estate business?
Keep initial and fixed costs under control
Until stable sales are secured, it is important to keep office rent and personnel expenses to a minimum.
Choose the region for your business carefully
Competition becomes intense in areas with many competitors in the same industry. Research the competitive landscape in advance and choose an area where you have a realistic chance of success.
Frequently Asked Questions (FAQ)
Q. Can I start a real estate business even without prior experience?
A. Yes, it is possible. However, if you plan to enter the brokerage business, which requires the Real Estate Transaction Specialist qualification, obtaining that qualification is a prerequisite. It is wise to plan in advance how you will secure sales on a limited budget.
Q. Is it too late to start a business after my 40s?
A. Many people start a business in their 40s or later. However, most have more than 10 years of practical experience, and the network and know-how they have built are key to success.
Q. Which is more profitable, being a business owner or an employee?
A. Employees have stable salaries, while business owners can earn substantial income depending on their capabilities. Choose carefully while considering the balance between risk and return.
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