Real_Estate_Business_Plan.doc

此文档收集于网络，如有侵权，请联系网站删除Real Estate Business PlanFlipping Homes, Inc.Address:P.O. Box 855 Reisterstown, MD 21136Phone:410-517-2507Fax:443-381-0397Principle Owner:W. Stephen CookPlease feel free to visit us atFlippingHBusiness Plan for Real Estate InvestorsIntroductionCongratulations for taking a step towards improving your business! If you are like most small business owners, you probably have thought about creating a business plan for your business but have not done so for one reason or another. Whether you did not know where to start, or the ones you have looked at before were not specific enough for your business you have come to the right place. The information provided here has been simplified and is appropriate for most real estate investors. A business plan is like a compass - it gives you direction, ensures that you stay on course, lets you know when you finally get to your destination. In the process you will create and improve a pattern for repeating your success. We all have heard of how most small businesses go out of business within the first three years. The reason for their failures will vary but majority are due to lack of proper planning. Can you imagine building a house without a set of plans and drawings? None of us would, so why would you start or continue to run a business that is going to be your lifeline without a plan? The business plan you create can be used to set goals, apply for funding from lenders, and track progress. Most individuals and banks are reluctant to lend large sums of money without looking at a business plan that has clear objectives. Even if you plan is to use your own funds to start the business you may have a need for additional funding down the road for gap funding or expansion. In real estate, whether your strategy is buy and hold or buy and flip/retail, a solid business plan will be critical to your success. The PlanThe successful real estate investors business plan should include the following information: company information, marketing strategy to include acquisition strategy, implementation plan, sales strategy, projected sales, profit and loss, overall financial plan and management summary. The plan should be prepared in such a way that anyone reading it could clearly understand the purpose and the strategy for success. This means you need to address who, what, and how questions. First, provide background information on the company in an executive summary. You will address why and when the company was formed, who owns and operates it and where it is located. Go into more detail in describing the companys objective. If it is a start-up then identify all the start-up costs and state them along with a chart you create in a spreadsheet. Second, list the target market for your properties, how you plan to acquire the target properties, and whether your plan is strictly buy and hold, buy and retail, or a combination. You also need to address how your company will differentiate itself from others in the business. Third, explain your rehab process in enough detail to educate the reader who may or may not be familiar with this aspect of the real estate business. This process is just as critical as the acquisition and sales strategies. It is great to have a plan to acquire the properties but without a well thought out and organized process you could be sitting on a property for a long time even years. State how the quality and the affordability of your homes will make them more desirable.Fourth, every business needs an effective sales plan. Your goal should be to get the most money for your property in the shortest time. Therefore, you need to put together an effective sales team and plan to meet your goals. Even if you are a buy and hold investor you should complete the rehab as soon as possible and put a tenant in the property to start generating income.Fifth, provide financial information including sales projections and profit and loss forecast. Use charts and graphs to make your point. If you are a buy and hold investor then provide projections for rent, expenses, and vacancy. For the buy and hold investor a key measure of success is cashflow so include a cashflow table in the plan. Finally, list all assumptions and close with a summary. The sample plan that is attached is for a business that has been around for over a year. Make sure you adjust your plan to reflect the relevant information such as start-up costs for new business and past performance data. At this point you may be wondering why do I need a business plan if I am only a part time investor? Whether you are a part-time or full-time investor you still need a plan for acquiring the properties, marketing them, and making profit. The only difference is that you now have a documented plan to refer to, point to what is or what is not working then make the necessary adjustments. In other words, you have accountability. If you have been around the real estate business for sometime you probably know of at least one individual who ran out of money before the rehab was finished or got into trouble with a rental property due to unexpected vacancy or bad tenants. This is a very common occurrence with investors who got into the business without a plan. The resulting consequences are usually drastic such as liquidating the property under renovation for a loss, foreclosure, loss of good credit, and even loss of personal property to name a few. By purchasing this plan you have decided you needed to make a change and run your real estate business like a professional with a plan and accountability. Congratulations! Now go to the sample plan. After you finish reviewing the sample plan, return to this section to get some information on what you will need to prepare your own plan.The DataBefore you get started with your own plan, ask yourself the following questions and gather the necessary information:1) What type of investing will you be doing? ( Buy and hold, buy and retail, or both)2) Will you be doing business in your name or inside a company? If inside a company, then decide the type and file the necessary paperwork to incorporate.3) What areas will you be targeting?4) How many deals would you like to do per year? What is your desired profit per deal?5) How will you achieve those goals? Where will your funding come from?6) Who is going to be on your team? Identify all the team members such as Realtors, attorneys, contractors, etc. and list each members role to ensure you have identified and addressed any gaps. If you do not have any names get leads from other investors7) What is your exit strategy?Sample Investments, LLC123 Main StreetAnytown, Anystate 12345(410) 555-5555 FAX (410) 555-5556December 15, 2002To Whom It May Concern:Enclosed is a Business Plan for Sample Investments, LLC a real estate investment company. The company buys, repairs, and sells homes in Sample City and surrounding counties. We have been in business for a year and a half. We are looking to expand our business over the next three years. In order to achieve those goals we need additional funding. We are requesting a Line Of Credit in the amount $350,000. As detailed in the attached plan the funds will be used to buy distressed properties, repair then retail themShould you need additional information you can reach me at (410) 555-5555. Thank you in advance for your consideration.Sincerely,Jane InvestorSample Investments. LLCBusiness PlanSample Investments, LLC November 2002Table of ContentsI.Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1A.Company Information1B.Company Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1C.Company Summary2D.Start Up Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2II.Market Analysis Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3A.Market Segmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Company Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3B.Market Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4C.Acquisition Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4D.Competitive Edge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6III.Implementation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7A.The Rehab Process7B.The Rehab Plan7IV.Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8V.Sales Projection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10VI.Projected Profit and Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11VII.Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12VIIIManagement Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12IX.Important Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133X.Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13I.Executive SummaryA.Company InformationSample Investments, LLC was formed in July 2001 to invest in distressed properties that require rehabbing for retail or rental. The investment in distressed properties will be in Sample City and surrounding suburbs. Sample Investments, LLC is solely owned and managed by Jane Investor. Sample Investments LLC is located at 123 Main Anytown, Anystate 12345. B.Company ObjectiveSample Investments, LLC purchases residential real estate in Sample City, Sample State and neighboring suburbs. We target properties that can be acquired at 70% or below of the current fair market value after repairs. These properties generally need moderate to major renovations to go into the retail or rental market. The resale value of the properties after repair ranges from $75,000 to $150,000. While our main objective is to make a minimum of 15% profit based on the After Repair Fair Market Value on each deal, we are also aware of our responsibility to the communities we do business in, and our role in the betterment of these communities. Therefore, we always make every effort to provide products that are of good quality and will blend in well with the neighborhood.C. Company SummarySample Investments, LLC invests in residential real estate by purchasing distressed properties below 70% of fair market value. Our strategy is based solely on making sure the profit is made going in and not on speculative appreciation months or years down the road.Our profit margin over the past year has been on the lower end of our target but volume has been higher. This is to be expected in the early stages of the business cycle. As the business matures we foresee reducing the number of transactions and increasing the profit margin. As we develop our business we have put in place a solid group of people with defined roles that will ensure our success such as Realtors, settlement attorneys, contractors, and bankers. As with any business we will continually evaluate each members role and contribution and make necessary changes.D. Start-up Summary (If new company)Sample Investments, LLC will receive initial funding from its principal in the form of capital contribution and short-term loans. The start-up expenses will be approximately $10,000. These expenses are related to legal services, stationary, equipment and working capital. II.Market Analysis SummarySample Investments, LLC invests in distressed residential real estate. The main target areas will be those areas that are in high demand by first time homebuyers and those looking to upgrade into modern renovated homes. These areas are Sample Village and Sample Gardens just to name a few. They have stable resale values yet provide a sufficient amount of opportunity. Once the target property is acquired, it is renovated to match or exceed current market standards for retail or rental whichever the case then marketed. The process from start to finish takes six months on the average. A. Market Segmentation Sample Investments, LLC plans to retail 90% of the properties and keep 10% per year as rental after the renovations have been completed. This percentage will change in the second and third year as we shift our strategy more to “buy and hold” to build passive income and create wealth. B. Marketing StrategyThe properties targeted by our company are affordable single-family homes and duplexes in predominantly first time homebuyer neighborhoods located in Sample City and neighboring areas. The resale value of the homes ranges from $75,000 to $150,000. C. Acquisition StrategyWe find the properties through a variety of sources but our main source is the Multiple Listing Service (MLS). The Realtor, Jane Realtor, with Major Brokerage Firm, has been effective in locating the right type of properties. These properties are typically owned by banks and government through foreclosures. The condition of these properties at the time of acquisition will range from badly in need of repair to ones only needing minor cosmetic repairs. The repair cost will range from $5,000 to $45,000 depending on the type of work required. The properties usually are all in need of paint, carpet, new kitchen and bath. Since most of these properties have been neglected for some time they almost always need landscaping as well as major system checks. We pass up on properties with major foundation problems, extensive roof damage, odd floor plans and those that require lead paint, asbestos, or radon abatement that could result in significant cost overrun.The most critical factor to our companys success is buying the property at the right price. We determine the Fair Market value after renovation by reviewing recent comparable sales for the area. This data comes from the Realtor as well as other online sites such as . The first formula takes into account (in the 30%) all acquisition costs, holding costs, selling costs and profit (See complete descriptions below). This formula works better on properties that would retail for more than $100,000. Fo