The real estate market is filled with interesting business possibilities. Experts expect the volume of investments in the segment will increase to 720-730 billion dollars over the next few years. At the same time, the real estate market largely remains terra incognita, an undiscovered area for technological projects. Hence there is tremendous opportunity for creative entrepreneurs to build new disruptive business models.
It always looked a bit conservative. We can say, that this industry is mostly unresponsive to innovation. Just a few years back only a small number of countries had an electronic public ledger of the real estate properties. People couldn’t imagine the process of buying a house without the involvement of the broker or agent; people simply didn’t have access to the necessary information for property investment on their own.
But times are changing, and digital techniques are firmly in the real estate business now. Digital innovations have been enhancing the real estate market over the last few years. The conservative image of this industry is changing and all the parties in this game realize that the new technologies will breathe new life into it. So now’s a great time to start a new business in this space.
Are you sure this is the best business for you? Take this quiz to find out.
QUIZ: WHAT BUSINESS IS BEST FOR YOU?
Let’s take a look at the process of buying a house as an example.
Buyers have several ways to find a house: apps, sites or real-life visits. Online search simplifies the ability homes by the selected criteria. Buyers can compare houses and, as a result, choose the best one. his occurs even before you meet with a real estate agent. As a result, in the digital era, a real estate agent acts as an intermediary between the buyer and the object but does not directly affect the decision, allowing the buyer to choose.
What actions are taken by the potential buyer every day?
– She or he used a mobile phone to search for houses;
– She/he looked on the sites, where other buyers share their experience;
– She/he gets in touch with the agent and looks at an average of about 10 houses before making the final decision;
What website features do real estate buyers find useful?
– Photos of the potential house;
– Detailed information about the house, its features and amenities;
– Interactive maps;
– Virtual tours;
For example, the digitalization of the real estate business is actively developing in Thailand. It opens up new opportunities for local businessmen, but there are also some problems in the local real estate market. Statistics show that 9 out of 10 recently established companies close in the first year of operation.
Main reasons for failure
– Lack of the market needs understanding (49%).
– Lack of capital (29%)
– Poor teamwork (29%).
Also, startups, created by individuals, without partners, are often closed due to poor marketing and lack of teamwork. Experts note: the key to entering into the 10% of successful start-ups is understanding the needs of the market.
New real estate companies should start with a rethinking of daily problems. Innovations in this segment of the economy should simplify the lives of buyers, homeowners and other market participants.
There’s also a chance for the digital real estate platforms to democratize the market where estate agents had a monopoly before. By creating a marketplace for buyers and sellers, digital real estate platforms might help to keep estate agents honest, commission fees lower and land more money in the consumer’s pockets.
A part of digital innovations is geared towards the millennial generation, who might want to set up a business on the go and relocate around the country regularly. Many young millennials, for example, invest in green property.
Over the past few years, you can recall only one IT start-up that achieved serious results here — it’s Airbnb, a well-known platform for short-term rental housing. There are simply no other equally successful international players in the sales segment or in long-term renting.
Is there any sense in launching real estate projects or starting a real estate career. Do you know what niches are the most promising now?
What business models are on the market?
The classic business model for real estate projects is the resource that collects ads, grouped according to common characteristics and designated by a special category. For example, you can buy or sell apartments,.
This model appeared at the dawn of the Internet, in the nineties, when users searched for housing on forums and classifieds. Access to such services for an ordinary user is completely free of charge.
Services with paid access to content
Some projects earn on paid content. For example, the platform for finding apartments for rent, that provides full access to the database and the ability to view new ads only for paid subscribers. The important point here is that the content published by the service is not completely unique, and you can often see the same ad for free — for example, in the social media. Therefore, users do not have a sufficiently strong need of paying for the platform services.
Services for agents
One of the popular business models in real estate is the creation of platforms specifically for agents, namely, ad-aggregator sites. Such sites make life easier for agents who need to place an ad on the maximum amount of resources to find tenants or buyers.
Online real estate agencies
These sites publish good photos of the properties, users can view them both on the web and using mobile applications. This is more convenient than working with the offline agencies, and therefore this business model is quite promising. These agencies earn money in the same way as traditional ones – they get a commission for work.
The idea of this model is that the company offers a set of services for the full maintenance of the apartment during the entire term of the lease. The landlord can choose one of several maintenance packages, which include free tenant screening, cleaning the apartment, cosmetic repairs, insurance, utility payments. A fee of 5-10% of the monthly rent is written off.
Building a company in real estate is definitely worth it, cause this industry has a lot of underutilized opportunities.
The market is changing: weak players are leaving, new interesting companies are emerging. The race between leaders is becoming more intense, and this is also encouraging the industry to develop. The main thing is that the technologies are constantly improved, and we believe that IT startups are creating the future of the real estate rental industry.
To start now, you need:
Take into account the real market situation
Competition in the traditional niches of the market is already extremely high, and only leaders can get a high enough revenue – the companies that occupy 3-4-5 places in their niche are getting pathetic crumbs of money.
Choose a promising business model
There are many options for monetization, but one of the most promising now is the “service” approach. Companies introduce new technologies to automate the routine tasks in the real estate industry.
Think about entering the international market
Pre-lay in the business model the possibility of scaling and finalize the business model in such a way that it can be quickly transferred and launched in a new country, taking into account its specifics.
Find a partner
This can be a business in the real estate industry or a large company that just wants to enter the market. So you get experience, connections, the necessary resources and financial help, which will greatly speed up the start of your business.
Technologies make the process of renting or acquiring housing more simple and transparent, minimizing the possibility of fraud or documental scams. Startups, which will offer new solutions and help solve existing problems, will be able to take their niche and succeed.