Understanding the Costs of Owning a Real Estate Business

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­­Understanding the cost breakdown of owning your own real estate franchise can be a barrier to getting started. Between start-up costs, marketing, training and franchise fees, it can be an overwhelming process to grapple with.

Owning a real estate franchise can be an extremely fulfilling and profitable business venture. To take this concept from dream to reality, it’s important to understand exactly what’s financially involved. This article will outline a step-by-step process of inquiring, starting up a real estate franchise and growing it into a rewarding business. 

If you’re at the prospective stage of considering opening a real estate franchise purchasing journey, it’s important to be equipped with the right insight and information to guide decision making. Read on for a detailed overview of what to expect along the way and how to make the most out of real estate franchise opportunities.

 

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Why can owning a real estate franchise be financially beneficial?

If you’re considering opening a real estate business, going down the franchise route can provide a tried and tested model for success. Quality franchises will provide new owners with the training, support and resources to build a profitable business right from the get-go. 

All franchise groups offer something different and have different priorities. Some are low cost, low service. Some are higher cost models but offer higher levels of service.

The RE/MAX focus for all new business owners is to provide them with a platform to become industry leaders and run their own lucrative operation. RE/MAX does this by offering a unique model that puts the prosperity of the agents first which in turn creates more recruitment and retention opportunities for business owners.

So, what exactly is involved in joining a real estate franchise? Let’s get into it.

 

How much does it cost to buy a real estate franchise in Australia?

The cost of initially buying a real estate franchise and the start-up costs are two separate matters to consider. 

While some real estate franchise opportunities will set you back $30,000 – $40,000, the cost of buying a RE/MAX franchise is significantly less. In this case, think of this cost as a setup fee. This initial fee goes towards the coordination of your franchise launch and setting you up as effectively as possible.

The start-up costs will vary dramatically depending on your financial position and scale. RE/MAX Australia and all other good franchise groups should be consulting with you around these costs and providing you effective solutions to reduce your capital expenditure at this initial stage. To give you some indication, costs for a start-up business over the first year can range from $50,000 up to $250,000. The bulk of these expenses can vary from office fit-outs to skill development and marketing.

 

The monthly fees involved in owning a franchise

The monthly fees of owning a franchise can vary depending on the organisation. Some real estate franchises may charge up to 12% on your sales and property management turnover, whereas RE/MAX fees are considerably less but still provide a full franchise offering.

Charges may include capped fees and some fixed components.

RE/MAX has a mix of fixed and variable percentage fees. What this means is, that the larger the business grows the overall percentage decreases. RE/MAX also has capped property management fees. For further clarity and breakdown of the fees, please feel free to contact RE/MAX today and one of our representatives will talk you through the structure.

The unique conjunctional AGENCY model that drives success

While most real estate businesses only have two profit centres, RE/MAX has three.
There are a small number of groups that will offer this, with RE/MAX being the first to introduce the model to the Australian market.

The standard real estate business will rely on property management and sales to drive revenue. At RE/MAX our third profit centre is our Conjunctional Agency (CA) model. With the CA model, you’re effectively outsourcing your office’s back-end administration and support services to sales people that are looking to run their own sales business.

It allows the sales person to set up their own business without the overheads, risks and distraction of starting their own office. As well as the sales infrastructure, the RE/MAX office provides all of the opportunities of being part of the RE/MAX brand including technology, marketing resources, training and systems and processes.

Franchises using a conjunctional agency model are well-positioned for the fast-evolving real estate industry as it services a growing demand amongst top level agents who are looking to start their own enterprise but also want to just get on with the job of servicing their clients and selling property. This point of difference is a strong part of why so many people choose to invest in a RE/MAX franchise.

 

WHAT’S THE PATHWAY TO OWNING A REAL ESTATE BUSINESS

It can be beneficial to sit down with your prospective franchise organisation to discuss your pathway options. These may vary depending on your situation. For example, the RE/MAX U program caters to those who want to start their business but aren’t quite financially or personally ready.

With RE/MAX U, you can start off as a conjunctional agent as the first stepping stone towards ownership. You will have total access to unparalleled tools and guidance during this process. Once empowered and prepared, you can move towards RE/MAX franchise ownership.

 

Plan for a profitable future

The number one way to ensure a positive, profitable experience for real estate franchise ownership is effective planning.

With the support of a quality franchise organisation behind you, you can map out a profitable future for your new business. Overwhelmingly, the main reason why real estate franchises are productive is that the guesswork is taken out of the equation. Using tried and tested business models, franchise owners don’t have to scramble to find solutions to problems. A valuable franchise organisation will make it their mission to prevent owners from making mistakes and instead focus on growing their business.

Interested in how RE/MAX can help you set up a successful real estate business?
Contact us for a no-obligation, 100% confidential chat.

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