Earning a living as and International Real Estate Broker

There are many ways to earn a living in International real estate. It is best to find one or two and stick with those. If the first choice does not work out, build on the experience you have gained and try something else.

Making a business plan: It is necessary to calculate the time and money needed for any endeavor before beginning. A good business plan can be a roadmap to success. A business plan starts with a mission statement. A mission statement for a broker who works with investment properties might read:
“ I assist in the formation of wealth by finding, evaluating and presenting properties that are appropriate for the portfolios of individuals or organizations.”
Once a mission statement has been developed a “break-even” cash flow level must be established. In a business plan for an individual agent the starting place is to determine minimum personal financial requirements. Then the fixed costs of operating the business are added. This gives us the total fixed cost of the enterprise.
The next step is to calculate the profit margin of each transaction or service that will be provided. In real estate this is the most difficult step. A person who has a history of a year or two in the business can use historical data. For a new agent, the only source of these numbers is to talk to experienced agents. These numbers will be different for everyone; so great care should be taken in the research for this step. Now an estimate could be made of the average transaction or service gross revenue. The profit margin can be applied and the number of transactions required to make the break-even income can be estimated.
Now the activities required to cause the transactions to occur must be listed and “closing ratios” must be established. Finally the amount of activity is determined that must be completed to make the “break-even” cash flow level. By examining the activity required the feasibility of the enterprise can be determined. If the enterprise is not feasible or if break even is all that can be expected, the entire process must be re-examined. It may be necessary to go all the way back to the mission statement.

Here is an example of the portion of the business plan discussed above. Please be aware that all of the numbers and assumptions are “plucked from the air”.

Minimum personal requirements (monthly) $ 2500
Fixed business expenses
Car $ 700
Supplies & Postage 200
Office expenses 800
Telephone 400
Travel 1200
Personal Advertising 200
Dues 200
Miscellaneous 200
3900
Break-even cash flow $ 6400

Because the mission statement states that properties will be found for investors, there will be no marketing costs for the individual transactions. It might even be assumed that it will not be necessary to look at every property that is offered and possibly not even all of the properties that are sold. Perhaps the cost percentage ratio of each transaction in this plan will be only 5%. Assuming that the average commission is $35,000. The net profit on each transaction is $33,250.
Since the break even of $6400 per month adds up to 76,800, 2.3 transactions per year are required to break even. If each investor buys a property every 3 years, 7 investors are needed. It will be considered that an investor will be considered “found” when the first property is purchased by them. A further assumption may be made that every year one investor will die, retire, or get out of the business. Also the assumption will be made that one out of every ten properties found will be suitable for one of our investors and one out of every 10 properties offered will be purchased.
This mission statement in the model requires two basic types of activities. One is finding and qualifying investors and the second is finding suitable properties. Another blog will discuss acomplishing these objectives.

David Segrest is a REALTOR in Charlotte, NC

David S. Segrest, CIPS, CCIM, TRC, CEA
david@segrestrealty.com
http://www.segrestrealty.com
Serving the world in the Carolinas, Serving the Carolinas in the World