Let’s first look at how Investopedia defines “profitable.”
“While profit is an absolute amount, profitability is a relative one. It is the metric used to determine the scope of a company’s profit in relation to the size of the business.
Profitability is a measurement of efficiency – and ultimately its success or failure.” (source)
So the core element to keep in mind is efficiency.
Again, Investopedia defines efficiency as:
“…the ability to achieve an end goal with little to no waste, effort, or energy. Being efficient means you can achieve your results by putting the resources you have in the best way possible.
Put simply, something is efficient if nothing is wasted and all processes are optimized. This includes the use of money, human capital, production equipment, and energy sources.” (source)
So, a profitable real estate niche is therefore the following:
It’s a niche where the real estate professional has the highest odds of achieving success with little to no waste, effort, or energy.
Five conditions would need to come together for that to happen:
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Existing but underserved segments or new ones that could be newly developed.
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Some competition is a sign that there is a market.
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Your ability to develop the real estate niche
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Room for growth
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A certain degree of barrier to entry
Doing good research is essential to developing a real estate niche.
This research is vital. Why?
You want to discover already-existing segments, underserved ones, or new ones that could be newly developed.
Finding a real estate niche that has no competition could be a trap.
Why?
There are two possible scenarios.
If there is no competition at all, it isn’t really profitable.
Or, for a second scenario, other businesses couldn’t make it profitable, but you can. In the latter case, you have struck gold.
Of course, chances for the latter case always exist, but this scenario shouldn’t be overestimated.
There are usually higher chances that other businesses can’t make it profitable.
But this doesn’t necessarily mean that you can’t.
Maybe you have a certain edge in or the ability for the particular real estate niche to enable you to do what most other real estate businesses couldn’t do.
You can make the respective real estate niche profitable, even though the odds are somewhat against you.
The ideal condition would be to find and develop a real estate niche with:
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Room for growth
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Accessible customers
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Less dominant competition.
You can approach a potential real estate niche from different angles, such as:
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Interests and hobbies
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Geography
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Values
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Income
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Price
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Quality
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Life changes/life situation
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.
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