Many entrepreneurs in the real estate industry start out with a property or two and then quickly expand into a bigger enterprise.
Part of the struggle with this expansion is that the organizational tools used by the entrepreneur as a smaller entity may no longer be sufficient when managing multiple properties. By properly preparing for the growth of a real estate empire, investing in the proper tools and professionals can cut the amount of time spent managing transactions and allow for more time to focus on continuing to expand, improve, and provide exceptional service.
An entrepreneur might be content with one or two properties, but then an opportunity presents itself to acquire a third, larger property for a steal, and it is just too good to pass up. This type of unexpected opportunity is what causes headaches, because many entrepreneurs wish to jump at the chance to get a deal on a good property. Unfortunately, too many small business owners end up struggling for years after making too big of a jump too fast.
One of the primary considerations in planning for expansion is the management program used for the business. A spreadsheet might be fine when the entrepreneur has only a property or two, but as expansion occurs, this becomes more and more time consuming to keep up with and keep organized. There are many options for real estate property management software that will not only allow an entrepreneur to keep better track of transactions but may also offer pay on-line options that streamline the collection of rents from tenants. This is a situation where an early investment in software can pay dividends down the road as real estate properties, and the tenants who come with them, become more numerous. The other benefit to using a real estate-specific program is, since there is a wide variety to choose from, an entrepreneur can find one that suits the appropriate needs and also keep on the cutting edge of technology. These programs can offer seemingly small benefits that will greatly increase the quality of service provided, while making managing operations more efficient.
contact a member of the Real Estate Services Group.
Another place where pitfalls can be avoided is with financing. As an entrepreneur expands business, it might be necessary to look to new avenues in order to raise the necessary capital to attain new properties. Options include bringing in outside investors, bank loans, and other financing combinations that can become very complicated with multiple entities involved, each having their own preferences and requirements.
Knowing when to invest in a business as far as expansion of personnel is a difficult decision. This is another area where many businesses struggle. Finding the right people to employ, at the right time, can be extremely important. Is it time to find a CFO in order to help with financing? Maybe an employee, or two, should be available to process and review tenant applications and handle other tenant matters? Is it time to have an attorney on retainer? Onboarding the right personnel can truly be a lifesaver, as it will allow for focus on what is needed for continued growth, while leaving some of the hands-on work in capable hands.
This is not intended to be a complete list of all the places where an expanding real estate business might face difficulties. Other hurdles to clear include expanding to a new geographic location, working with debt guarantees, knowing the in-and-outs of lease management, legal complications with financing, evaluating potential tax benefits, etc. In the end, having the right team to consult with and provide guidance through some of these areas can be most beneficial.
Author: Jeffrey Long | [email protected]
Real Estate Services
