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Real Estate Business Plan: Calculating Startup CostsShowing that you have a good sense of the cost of starting up your real estate business is absolutely essential to your success in raising funds and launching. Showing funders that you’ve done your research lets them know you are a serious and determined individual, who knows what the business requires. If you’ve miscalculated, you’ll find out down the road by realizing you are sitting on extra cash for which you have to pay interest or dividends or when you realize you are short and must seek additional funding.
The following are some of the primary areas to research to calculate your real estate business startup costs.
Assuming you will have at least one employee, you will need an office. Look at the cost of designing the space, contractors, the cost of the lease over the time you will need the space for renovation before you can start business, and the equipment and furniture you’ll require.
While this space is being built out, you should be laying the groundwork for revenues by communicating the coming of your business to the local community and, particularly, to potential clients. Advertising, sending press releases, spending time cold calling, joining networking groups and local associations, and even hiring someone to hand out flyers can all get the word out and you should know how much this will cost up until the official launch date.
Licenses and Insurance
Before you launch, you will have to secure all of the licenses, permits, and insurance coverage to legally and safely run your business. Speak to a knowledgeable lawyer about the local requirements, even if you start with your own research online.
Include in your startup funding requirements reasonable cash reserves to keep you operating until cash starts to cover all of your monthly costs. You’ll need a cash flow worksheet to work this out, including revenue and operating cost projections for the first year.
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