How to Start Real Estate Business in Nepal?
2021-10-21 By GharSansar 0 Comments
How to start a real estate business in Nepal?
“Ninety percent of all millionaires become so through owning real estate”- Andrew Carnegie
What is real estate?
Real estate includes land with any other natural or man-made infrastructure below or above the land; houses, fences, ponds are all part of the real estate too.
What is the real estate business?
Real estate business incorporates buy, sell, lease, and brokerage of real estate.
Introduction
The real estate business in Nepal has seen an enormous rise in recent years. Despite the pandemic hitting hard, the number of buyers and sellers only seems to increase. With all this, starting a real estate business can be an opportunity for new investors. So today, let’s dive deeper into how to start a real estate business in Nepal with a deep analysis of all the steps involved during the process.
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Understand the real estate industry in Nepal
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Make honesty and transparency your primary motto.
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Arrange startup capital
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Decide whether to start a business from scratch or buy up and running companies
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Focus on the specific sector of real estate
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Build a team
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Create an excellent digital presence
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Branding and Marketing
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Understand the real estate industry in Nepal
As an aspiring real estate business owner you must first know the ins and outs of the real estate industry in Nepal. While there may be many, for now, let’s know about 6 basic aspects where your research should be focused on to understand the real estate industry in Nepal. They are:
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History of real estate industry in Nepal
We find records of buying and selling of real estate in Nepal from around a century back, but its recognition as a business only started as of 1990 AD. Onwards Nepal has seen the rise of real estate companies. Currently, we can find them in almost all major cities, while most of them are in Kathmandu.
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Distinct type of ownership in real estate
There are three ownership types in real estate; privately owned, publicly owned and one owned by corporations. Privately owned real estate means it is owned by a specific person. Publicly owned real estate means it is owned by the government and corporation owned real estate means it is owned by some type of organization. They all have different legal provisions attached to them. As you may encounter all of them, distinguishing the difference between them is very crucial.
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How is the worth of real estate calculated in Nepal?
There are no proper regulations in Nepal for calculating the price of real estate. To date, we trade real estate based on speculation.
For calculating the worth of the real estate like land: geographical location, access to basic life facilities (i.e., water, electricity, fiber to home internet, nearby healthcare, educational institutions, airports, roads), supply and demand of land in the particular area play a role.
Finding out the worth of houses becomes less speculative compared to lands; as we can know about the quality of materials used and the size of the building just by observation. Then adding the price of land would help us come up with a final price of the house.
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Legal provisions
Law is something that keeps the integrity and peace of the nation intact. It also assures personal, public, and corporate property remains protected. Real estate too has many of those legal provisions in place -- from taxation to the partitioning of the inherited property. As a real estate business owner, one may encounter all these. So proper grasp of these legal provisions is crucial for you.
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Competitor analysis
Our research should be about how the competitors are performing, what services they offer, their ways of marketing, and their future plans. It is crucial because it’s easier to follow a system that’s already tested and proven. If some tactics have worked for them, it would probably work for you too.
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Real estate loans in Nepal
Most of the real estate transactions in Nepal are still dependent upon real estate loans offered by financial institutions. Your research to understand the real estate business in Nepal should also cover the intricate details of Real estate loans.
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Make honesty and transparency your primary motto
During real estate deals, we rarely see the actual price of real estate being reflected in the legal transaction paper. Businesses transact the amount mentioned in transaction paper through cheque, show it in the land revenue office, and cover up the genuine price of real estate through cash.
We can better show it with the following example: it’s like when two parties are to conduct a real estate deal of 5 million, they make the legal transaction paper of 2 million and pay 2 million in check and rest with cash.
It is completely a legal offense. On most occasions, it also violates the government’s provision to only conduct transactions up to NPR 1 million through cash. It is all done to move away from tax duty — as tax amount is higher in bigger deals.
It is one of the many mischiefs happening in the real estate industry in Nepal. Newcomers must know these issues and keep themselves untouched by these foul practices; they should also promise to make honesty and transparency their primary motto after starting the business. This ensures that the business would never fall off the cliff because of any legal obligations and also helps keep a positive brand image.
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Arrange startup capital
To arrange startup capital, we either should find potential investors or gather finances on our own. With other investors on the board, one should share the profit but also keep space for varied viewpoints that may arise.
Going single-handedly would keep you in charge of all the decisions to be made and the owner of the total profit. Still, if arranging finances are the issues, having partners on board can be your only options upfront.
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Decide whether to start a business from scratch or buy up and running companies
Buying other up and running real estate companies would mean you would buy all their current clients, partners, and brand image. It would ease the way in the beginning but can be financially burdensome — as it requires an enormous sum to buy and maintain an established franchise.
On the contrary, starting a real estate company afresh is financially less intensive and most rewarding in the long run. But it requires more effort as you need to compete with established companies and figure out the way on your own.
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Focus on the specific niche of real estate
As a real estate business, there are many niches to work on. One can be to buy land/houses and later sell or lease them. The other niche is to become a real estate broker — where the job is to find buyers and sellers of real estate in return for a brokerage commission.
The business can be involved in all these niches when necessary, but the greater possibilities can open up if you keep your focus on only one of them and be an absolute expert in it.
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Build a team
We need talents from all fields in the real estate business. It includes lawyers, engineers, programmers, administrative officers, accountants, brokers, and probably many others based on the type of real estate business you would like to establish. Let's first know their roles:
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Lawyers
Legal provision encounters us everywhere — be it while buying and selling real estate, or during the time to file taxes. So lawyers are an important inclusion here.
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Engineers
Engineers help in the design of a building and make sure the constructed building is in line with engineering norms for us to be sure of its durability and safety.
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programmers
They help with the website and mobile application development for our real estate business.
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Administrative officers
They help with keeping an organization up and running. They also remain as a point of contact between all employees.
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Accountant
Their primary job is to maintain the financial record of the organization. They also help in creating three crucial documents; the income statement, balance sheet, and cash flow statement.
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Brokers
They actually go into the markets and do the nitty-gritty task of finding buyers and sellers for the real estate deals.
After gathering all the human resources, it is time to divide suitable responsibilities for all of them based on their capabilities. Hierarchies can be important on some occasions, but for the integrity of the team, you must be careful when to impose limitations on employees based on hierarchies. Ultimately, when the team works as a unit, success is bound to happen.
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Branding of the real estate company
Branding is the art of affecting an attitude towards a particular product, service, or organization. The branding includes logo, color theme, mission, slogan or core values, and other intricate details of the company.
Our mission would be to create an absolute wonder through all ways an audience may encounter the business; be it social media, search engine result page upon entering the business name, website/app, or through the physical office of the business. The attention to detail must be such that a non-interested audience too should be interested to witness and bathe in the elegance of the brand.
One of the pioneering examples of such branding can be found on a real estate company “century21”. Upon visit to their website, a feeling of amusement surrounds the audience for sure. From the logo, user interface and user experience in the website to the tagline “ Don't settle for average” all forces you in some ways to be their customers.
Find a way to emulate brand quality of “century21” into your business and success shouldn’t be much of a hassle.
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Create an excellent digital presence
A time has arrived where we cannot imagine a successful business venture without an excellent digital presence (i.e., the website, app, search engine result page, and social media pages of it). We need to craft these to build a bond with our audience, promote our brand image, and ultimately generate leads and customers.
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Marketing
These days marketing happens in two ways: traditional and digital. The traditional marketing ways are promoting the brand and our services through; billboards, newspaper ads, T.V ads, posters, and pamphlets.
Digital advertisement on the other hand occurs through a digital medium, likely a computer or mobile phone. Our real estate business can be promoted through the help of social media, search engine ads, and our website/app.
We can also make use of contests and giveaways to interact and raise brand awareness among larger audience groups.
One crucial point here is to create a system to keep track of all the existing and potential customers — while also following them up on a regular basis to find out if they need to buy or sell any real estate property. This way no business opportunities go to waste.
Time to make a profit
With all these in place, now it’s time to make a profit where the sky is the only limit. Finally, have an understanding that you need to put in the effort to hold success either as a real estate business in Nepal or with any other business form.
Conclusion
Thank you for coming this far. We hope our effort to enlighten you on how to start a real estate business in Nepal turns out beneficial in all the ways possible.