If you want to invest in real estate, and you’re prepared to do the work, you might think you’re ready to buy an investment property. However, having a business plan in place is vital to your success. Not only will a real estate investing business plan help keep you on track, it can also be the key to getting lenders and other business people to partner with you.
Components of a Real Estate Investing Business Plan
While you can customize your business plan to fit your needs, there are certain elements that should be included in some fashion. Here is an example of the major sections that can be included:
- Executive Summary
- Company Overview
- Market Analysis
- Financial Plan
- Closing Statement
The executive summary is perhaps the most important page of the plan, because lenders and potential partners will not read further unless they are impressed by the summary.
The executive summary outlines your business plan in a concise manner. Keep it short and sweet, generally about a page in length, while including the most important points of the other sections.
The company overview gives readers a basic overview of your business. Give information about your company including ownership and location, tell if you’re a startup or expansion, tell about past success, and any other pertinent information.
Also give a short biography of the owners and their experience, especially as it relates to real estate and property investing.
The services section will give readers an overview of what your real estate investing business does, such as flipping properties for a fast profit, or investing in rental property to generate cash flow while building long-term wealth.
In the services section of your plan, give readers an idea of what makes you different and unique compared to other real estate investment businesses, and how that will affect profitability.
The market analysis part of your plan is where you explain the exact market in which you will be investing, and present data from documented sources. Especially share historical data relating to real estate investing ROI from sources like RealtyTrac.
Tell readers about the demographics and location of your target market, types of investment property and price ranges in which you plan to invest, and any other specifics. Then present profit projections based on the historical data.
In this section of your plan, go into detail regarding the execution of a real estate investment deal from start to finish, and details regarding management of your overall real estate portfolio. A few questions you should consider addressing are:
- How are investment properties located?
- What are the criteria for choosing investment properties?
- How much do you expect investment properties to increase in value after they’ve been rehabbed?
- How will properties be rehabbed? Who will set the rehab budget and manage the rehab?
- How will rental properties be managed? What is the projected management expense and net cap rate?
- How will properties be sold?
- What is the holding and exit strategies? You may want to include a preferred exit, secondary exit, and last resort exit strategy for different types of property.
The financial plan section should be a clear and realistic picture of the financial health of your business. If you are currently investing in real estate, include detailed financial analysis of the properties you have sold and currently own. Also include forecasted sales and profit analysis.
Your plan can also include how you are going to strengthen your company financially, especially as it relates to sales, profits, and debt.
The closing statement is a summary that states your ultimate goal, while succinctly summarizing how you will reach your goal and track your progress.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group wholesaling properties in the Greater Tampa Bay market since 2005.
We find investment properties for real estate investors, which we resell at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.