How to Finance a Real Estate Business in Slow Seasons

Posted at 12:25h in Small Business Trends by Kelly Hillock

Slow seasons do not always mean you should hit the panic button and try to find a new strategy for your real estate business. Sometimes, you can take short-term financing like a real estate business loan, and use it to fund investments so you can grow, scale, and earn more as the busy season picks back up. You can also shift your focus by using the skills you already have to offset the lulls.

Here are a few examples of typical slow seasons and times when expenses may be high, as well as ideas on how you can adjust or get financing to keep your business running smoothly.

Seasonal slowdowns

The winter lull is a result of people wanting to enjoy their home without having to host open houses and tours, so they may put a hold on the buying or selling process until they have more time to focus on it.

Chances are you won’t be able to change their minds, but you can help to increase the selling price and possibly make some extra money by making interior design updates before the post-holiday buying season starts. And that is an easier sell to listers, because who doesn’t want more money?

The added benefit of doing renovations during the holidays is this is also the slow season for contractors, so you can get discounted pricing with more availability. And you can take advantage of holiday sales on paint, replacement items, and supplies. If you already have a couple of listings, now is the time to look at what increases buyer demand or home values in your area and find some deals.

Please keep in mind that this won’t lead to immediate revenue, unless you get paid for the contracting and organizing work. However, it can lead to higher commissions for you once the property sells.

If your clients will be gone for the holidays, have their homes painted. According to OpenDoor, a new coat of interior paint can result in a 107% ROI, and according to a HomeLight survey of real estate agents, an exterior paint refresh can add $7,500 or an ROI of 151%.

HVAC is another opportunity to consider. The units will be on sale and the contractors want the installation work. Zillow says the ROI on going from gas to electric is 103%. Also, if the garage door is dented and needs more than a paint job, replacing it can bring in a 102.7% ROI. All of these added together can equal a big gain and a higher listing price.

Payroll and Keeping Employees on Board

An incredible agent is only as good as their team. If a large listing falls out of escrow, you can use short-term financing to keep your staff with your brokerage.

You’ll get the money you need to pull through the slow season as these loans are designed specifically for these situations. Short-term loans can sometimes have higher interest rates, but the payback period is also shorter. So, once the house goes back through and passes escrow, you can pay back the loan. The fees you pay on interest are never going to be as costly as having to replace talent in a real estate brokerage.

Depleted Funds from Lawsuits and Regulation Changes

The summer burst of business can overwhelm newer agents, causing them to forget to disclose information, miscommunicate, or accidentally breach their contract. In other instances, you or your team may miss new regulations due to the busy season and find yourself in violation.

When lawsuits and lawyers are eating your time and money, you may not have as much time to get new properties to flip or bring in clients. Instead of waiting for commission checks to clear and owing money, try a short-term and flexible real estate business loan. The benefit in choosing loans designed for real estate businesses is that the lender is familiar with these types of industry situations and will be able to understand your unique needs.

When provided by alternative lenders, these loans can be customized for real estate professionals and can often be funded in as little as 24 hours, which is considerably faster than most traditional banks. You may also get cleared for a larger amount to cover the current legal costs and to invest money in other initiatives, such as advertising and marketing to bring in new listings or paying an assistant to host open houses while you handle the legal work.

Acquiring Competitors

If you haven’t already, slow seasons can be the perfect time to finally launch your own brokerage, as these times may bring forth the retirement of various other real estate professionals from the business.

This could be your opportunity to finally own your own brokerage or to expand into a new territory. If the current owner is only looking to semi-retire and hasn’t considered selling, you may be able to purchase their business, keep them on as an advisor or agent, and keep their team because you’re offering the current owner a win-win solution. A business acquisition loan could be a smart option here to get your foot in the door and into their brokerage.

In this situation, although there is an upfront investment required to acquire their business, you could end up with brand recognition, a fully trained staff, and a stable of listings and leads to get up and running faster. Further, if the previous owner was hesitant to try new technology, you may be able to reduce costs by increasing efficiencies and make it even more profitable.

Become a Real Estate Investor and Flip or Rent

As a real estate agent, you have advantages over inexperienced entrepreneurs who dream of being their own bosses and flipping houses. For example, you can list your own properties and access the MLS while applying your knowledge of what brings in the buyers and offers. This saves you on paying commissions to other real estate agents.

And the real estate investing industry rarely slows. Here’s a chart from ATTOM Data showing 24 years’ worth of data from 2000 to 2024 and demonstrating consistent activity throughout. By using the deals and discounts from the winter lull, you can get homes in order while building custom pricing with contractors and laborers that can be used for your own projects and for clients. This becomes a secondary source of income you can rely on, especially when slow seasons occur.

For situations where buyers aren’t purchasing, you can try being a landlord. You can recoup the costs of the renovation with higher-priced short-term leases for corporate accounts or go for smaller monthly returns but consistent revenue with traditional 12-month leases. Yes, you’ll need to fix up any damages once the tenants move out, but there is income coming in to keep your business going.

Slow seasons can seem scary. But remember: These short periods of time do not mean you have to give up on your real estate business. Brokerages and independent agents alike can secure financing to stay afloat or shift their day-to-day focus to set themselves up for greater success when the busy season returns.