What is the value of your Real Estate Business?
Create capital value in your Real Estate Business
Being in business is about producing good economic rewards for the hard-working business owners that take on the risk and responsibility of running a business.
These economic rewards come in the form of cashflow profits and capital profits by growing the value of your company shares.
For many businesses the significant profits and returns from their years of hard work come in the form of tax free capital gains from selling the business or equity in the business.
The disappointing aspect of the real estate industry over the years has been the lack of capital value and goodwill generated from Real Estate activities.
What has been frustrating from a finance perspective is that too few owners have appreciated the enduring value that their business systems, processes and activities create. The Capital Value that goes with a successful cashflow positive business can be a significant asset for Real Estate owners.
Thankfully times are changing, and good businesses are starting to sell at a multiple of earnings and creating capital profits for business owners.
We are seeing a lot more corporates buying real estate offices as they see the long-term value and good consistent cashflow returns from owning a real estate office or a group of real estate offices.
How do you set up your business so that it has a capital value associated with the business?
In our view the key to creating equity and enhanced capital value is certainty and maintainability of future cashflow and earnings.
What are the key drivers to certainty and maintainability of future cashflow and earnings:
1. Consistent regular market share in your area (above 20%)
2. Low risk on specific agents (Less than 10% revenue)
3. Commission split with agents at industry standards
4. Lead generation tools to supply agents with opportunities
5. Structured recruitment and training process
6. Diversified revenue streams (Property Management, Finance, Insurance)
7. Automation of processes and bottom line profitability efficiency
8. Strong governance and financial reporting
Having a plan to implement these 8 points will not only drive superior profitability and cashflow returns it will also bring your Real Estate business into the domain of businesses that create significant value through capital growth.
If you want to know more about creating Capital Value in your real estate business contact us now.
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