Real Estate Industry – Franchises and Businesses
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Real Estate Business & Franchise Opportunities
Real Estate Industry
General Real Estate Industry
The Real Estate industry is the economic sector that focus on buying, selling, renting, leasing, and managing real estate. It is real property that consist of land and improvements. The Real Estate industry can fluctuate depending on national and local economies but tend to remain constant as it deals with necessary goods: people always needs a place to live and businesses needs office spaces.
Real estate, rental, and leasing account for 13.3% of gross domestic product (GDP), or $2.7 trillion. In addition, the sector supports more than 2 million jobs and generates more than $10 billion in corporate profits.
Real Estate Industry Trends
An increase in demand within real estate investors and developers for low taxes, economic diversity, and high quality of life is among the driving forces behind the trends that shape the housing dynamic. In addition, homeowners, space users, and capital sources will increase even more the demand for technological sophistication. For example, deliveries to the front lobby, automating home valuation and machine learning algorithms to categorize interior features and correlate them to home value, artificial intelligence technology to enhance the buying and selling experience, and the Internet of Things to help real estate professionals grow and manage businesses more efficiently than ever.
Key Real Estate Industry Numbers
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the small business owner including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 21 SBA loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA loan was unable to be paid back, or defaulted.Â
*SBA Loan Data from 2010-2019
*Non-Franchise Businesses taken into account: 9,131
Real Estate Franchises
Are you interested in running your own business in the real estate industry? Maybe you have always had an interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off… in the commercial and residential property market, but you worry you do not have enough experience in the field. In this situation, you may want to consider owning a franchise in the real estate industry. Franchises already have a proven business model for you to follow, and you can learn from the experience of other franchisees. You will have the support and training of the franchisor while also being your own boss.
The real estate industry has a wide range of franchises to choose from. They include but are not limited to property management, vacation rentals, commercial and residential properties, and even business services related to real estate. Some of these options like property management are a rather low investment amount. Property management franchises utilize technology software to efficiently manage hundreds of units, which can lead to a profit margin of 25-40%.
How much can a Real Estate franchise cost?
Vetted Biz has reviewed over 2,900 businesses and franchises with 1,700 in our portfolio as viable investment opportunities. Of the businesses reviewed in the real estate industry, we have seen an investment range starting at around $8,855Â all the way up to $4,569,000. On average, the royalty fee is around 5.9% and the marketing fee is approximately 1.9%.
When reviewing the real estate franchises in the SBA 7(a) loans from 1991-2019, it is important to note that many fluctuations occurred after the recession and housing market went down. The loans disbursed in Real Estate franchises had a 60.1% Paid in Full rate and 12.5% Charged Off rateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be….
Average Real Estate Franchise Industry Percentage Fees
Standard Real Estate Franchise Industry Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 69 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the… is when the SBA loan is fully paid off by the franchisee including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be… is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 26 SBA franchise loans fully paid including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off…, 1 SBA franchise loan was unable to be paid back, or defaulted.Â
*SBA Franchise Loan Data from 2010-2019
*Franchise Businesses taken into account: 542
Sample Real Estate Franchise Income Statement
| Year 1 | ||||
|---|---|---|---|---|
| Base | % of Revenue | High | % of Revenue | |
| SalesThe total amount in dollars made in the business before expenses are deducted. See also Gross Revenue. | $ 43,400 | 100% | $ 56,700 | 100% |
| Cost of Goods SoldAlso known as Cost of Sales, Cost of Goods Sold includes the direct costs associated with generating revenue. Depending on the business, it can be physical products, supplies, and/or payroll. More | $ 0 | 0% | $ 0 | 0% |
| Gross ProfitThe profit a business makes after deducting the costs involved in making, providing, and selling the goods and services. In an income statement, it is the sales minus the cost of goods sold.Gross profit = Revenue – Cost of Goods Sold | $ 43,400 | 100% | $ 56,700 | 100% |
| Expenses | Â | Â | Â | Â |
| Rent | $ 6,000 | 14% | $ 6,000 | 11% |
| Utilities | $ 3,600 | 8% | $ 3,600 | 8% |
| Marketing / Advertising | $ 18,000 | 41% | $ 20,400 | 36% |
| Insurance | $ 1,900 | 4% | $ 1,900 | 4% |
| RoyaltiesFees paid by a franchisee to their franchisor in order to operate a franchise location. They are usually on a weekly or monthly basis. More | $ 3,900 | 9% | $ 5,100 | 9% |
| Salaries / Wages | $ 5,000 | 12% | $ 5,000 | 9% |
| Repairs and Maintenance | $ 0 | 0% | $ 0 | 0% |
| All other expenses | $ 4,800 | 1% | $ 4,800 | 1% |
| Total Expenses | $ 43,200 | 99% | $ 46,800 | 82% |
| Â | Â | Â | Â | Â |
| Owner BenefitThe amount of money a business owner receives before taxes from a business’s operations over the course of a year. More | $ 200 | 1% | $ 9,900 | 18% |
| Net Profit MarginThe net profit margin shows how much a business is generating profit for every dollar of cost, expenses, interest, and taxes involved. It is displayed as the percentage of how much of each dollar collected by a company as revenue translates to net profit. The… | 1% | Â | 18% | Â |
| Â | Â | Â | Â | Â |
| Year 3 | ||||
| Base | % of Revenue | High | % of Revenue | |
| Sales | $ 249,700 | 100% | $ 335,600 | 100% |
| Cost of Goods Sold | $ 0 | 0% | $ 0 | 0% |
| Gross Profit | $ 249,700 | 100% | $ 335,600 | 100% |
| Expenses | Â | Â | Â | Â |
| Rent | $ 12,000 | 14% | $ 18,000 | 11% |
| Utilities | $ 3,600 | 8% | $ 3,600 | 8% |
| Marketing / Advertising | $ 18,000 | 41% | $ 20,400 | 36% |
| Insurance | $ 1,900 | 4% | $ 1,900 | 4% |
| Royalties | $ 22,500 | 9% | $ 30,200 | 9% |
| Salaries / Wages | $ 60,000 | 12% | $ 75,000 | 9% |
| Repairs and Maintenance | $ 0 | 0% | $ 0 | 0% |
| All other expenses | $ 4,800 | 1% | $ 4,800 | 1% |
| Total Expenses | $ 122,800 | 49% | $ 153,900 | 46% |
| Â | Â | Â | Â | Â |
| Owner Benefit | $ 126,800 | 51% | $ 153,900 | 54% |
| Net ProfitAlso known as net income or net margin, the net profit is the net income on an income statement. It is the revenue minus the cost of goods sold, expenses, interest, and taxes.Net Profit = Revenue – Cost of Goods Sold – Expenses – Interest – Taxes Margin | 51% |  | 54% |  |
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