Real Estate Business

How Profitable Is A Real Estate Business? (Updated for 2024)

Pat Walls

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Updated: October 5th, 2024

How Profitable Is A Real Estate Business? (Updated for 2024)

So you want to start a real estate business?

And the first question that came to your mind was, “well, are real estate businesses actually profitable?”

With a market size of $2.69T - there’s plenty of business to go around.

Especially considering:

You could start a real estate business with as low as $16
Based on our data, real estate businesses generate an average of $3.37M per year
You could see gross margins as high as 15% with real estate businesses

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a real estate business.

Let’s dive in!

Is a real estate business profitable?

Yes, a real estate business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $3.37M per year with an estimated gross margin of 90%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your real estate business.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your real estate business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a real estate business worth it?

If you’re wondering if a real estate business is worth it, the answer is a big YES. With real estate businesses, you have the potential to earn $3.37M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $2.69T, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a real estate business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful real estate businesses case studies.

Examples Of Profitable Real Estate Businesses

Here are a few examples of profitable real estate businesses, and a few more details about them:

1. Ark7 ($0/year)

While working at Uber, Andy Zhao struggled with the high barriers to real estate investment. Partnering with industry expert Jim Holt, he launched Ark7, a platform now valued at $8.74 million, making property investment accessible with shares starting at just $5.

Is it profitable? Yes
How much money it makes: $0/year
How much did it cost to start: $2M

How We Started A Real Estate Investment Platform

Ark7 CEO Andy Zhao launched a real estate investment platform that enables investors to purchase property shares starting at $5 and earn passive monthly income and appreciation, with $8.74M total value and $5.5M total investment value to date.

Read this case study

Read by 6,799 founders

2. The Rockville Real Estate Exchange ($180K/year)

Andy Detweiler, founder of The Rockville Real Estate Exchange, came up with the idea after realizing there was a lack of easily accessible information on condos in the Rockville area. He saw an opportunity to fill this gap and created a website where people could find comprehensive information on neighborhoods, properties for sale, and properties for rent, and connect with local experts. Through his dedication and bootstrapping efforts, Detweiler has grown his business to generate $200K per year in revenue and is now expanding and developing a proprietary technology platform.

Is it profitable? Yes
How much money it makes: $180K/year
How much did it cost to start: $5K

How I Started A $200K Real Estate Brokerage Business

Founder Andy Detweiler shares how he bootstrapped his Rockville Real Estate Exchange into a profitable $200K per year business by focusing on solving a problem that people actually want solved, attracting organic traffic, and building a custom front-end tech product and sales team to scale.

Read this case study

Read by 6,102 founders

3. Vesta Preferred Realty ($5.4M/year)

Grigory Pekarsky stumbled into real estate with no prior background in the field. After realizing that his competitive edge was his work ethic and ability to pick up the phone, he quickly became the top agent in his office and eventually started his own company, Vesta Preferred. Now celebrating their 10th year of operation, Vesta Preferred is the #3 real estate company in Chicago and consistently grows at a 20% pace, with plans to write 1000 new leases and sell over $120m in real estate this year.

Is it profitable? Yes
What's the gross margin? 15%
How much money it makes: $5.4M/year
How much did it cost to start: $5K

How I Became A Real Estate Agent And Started My Own Firm

Residential real estate company, Vesta Preferred, celebrates their 10th year of operation with 80% referral-based business and focus on relationship building, recently achieving their goal of 1000 new leases and $120M in real estate sales in 2019.

Read this case study

Read by 8,651 founders

Learn more about starting a real estate business:

Where to start?

-> Real estate business plan
-> How to finance a real estate business?
-> How much does it cost to start a real estate business?
-> Pros and cons of a real estate business

Need inspiration?

-> Other real estate business success stories
-> Marketing ideas for a real estate business
-> Real estate business slogans
-> Real estate business names
-> Real estate business Instagram bios
-> Real estate business Instagram captions

Other resources

-> Real estate business tips
-> Email templates for a real estate business
-> Blog post ideas for a real estate business
-> Real estate business quotes

How much can you make with a real estate business?

With a real estate business, you can make an average of $3.37M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $16. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a real estate business make a week?

Based on our data, average weekly revenue for a real estate business ranges around $70.3K. As such, you could see monthly revenues of $281K.

To know if your real estate business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your real estate business.

How much do real estate businesses owners make?

The income of a real estate business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established real estate business is about $70.3K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a real estate business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Real Estate Business Profit Margins

Generally speaking, a real estate business can expect profit margin of around 90%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a real estate business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, real estate business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, real estate business owners can ensure long-term sustainability and profitability for their business.

Real estate business owner salary

The salary of a real estate business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established real estate business, in a prime position, might see an average weekly salary around the ballpark of $63.2K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a real estate business may be a promising business to start - but the success of your real estate business mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable real estate business.

Part of

Becoming A Real Estate Agent: Everything You Need To Know

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