Real Estate Investing Business Plan – Creating Your Plan

Your business plan is not only a great sales tool, but it will also help you to think more deeply into your real estate investing business from varying angles. Of course, a big part of your business plan is to keep you on track through the growth of your business. However, it is very important that you write your business plan in a way that will make lenders and your other business partners want to work with you. Read on to learn what elements need to be in your business plan and even how to write it step by step.

The Sections of Your Business Plan

There are certain elements that must be included in your business plan. All of these elements should be included, but by no means think that you can’t add more if you choose. The required elements are (in order):

Once again, all of the sections above should be included somewhere in your business plan in order to comprehensively lay out your complete business on paper. I know it seems like a lot of work…and it is. But, if you are truly serious about succeeding in real estate investing (or any other business for that matter) YOU MUST write a business plan. Starting your business without a business plan is like going to war without a strategy or tactics. In war, without a comprehensive plan outlining everything possible, you are setting yourself up for slaughter. The same goes with real estate investing.

Now I will go over each of the elements in the above list one by one so you have a clearer picture of what needs to be in each section. If you still aren’t clear about something after I’m done, go to our forums page by clicking the link at the top of this page and post your question on our business planning thread.

Executive Summary

The executive summary is just as it sounds. It summarizes your complete business plan into a short and precise manner. Your executive summary should be no longer than a page or so and should cover the “bullet points” of your business plan. Often, it is best to write your executive summary last so you can summarize all of your other sections more easily.

Ask yourself, “what are the most important pieces of information from each section?” It is these bits of information that will entice the reader (hopefully a lender or other business partner) to get excited and read on. Many times lenders or business partners will ask only for your executive summary. So be sure to make it interesting enough for people to want to learn more. I have placed an example of an executive summary below.

EXECUTIVE SUMMARY:  ABC Real Estate Investment firm is a locally operated company in Naples, Florida that focuses on finding, acquiring, and repositioning C-class multi-family property in the greater Naples, Florida area.  Our main competitive advantage is our process for finding evaluating properties to fit our very specific buying criteria of properties that are between 20-100 units, within a 1 mile radius of major centers of commerce (malls, large and growing shopping centers) or amenities / workplaces like colleges, medical facilities, etc.  Properties will be distressed where the property owners need or want an exit because their expertise isn’t there to make the property profitable or their financing prevents them from holding on.

Funding for these acquisitions will be a custom mix of financing based on each particular situation.  A competitive advantage we hold is our relationships and ability to get access to our stable of private funding partners who can provide both debt or equity funding depending on each transaction specifics.

Long-term revenues will be mainly focused on improving the value of each property with strategic repositioning strategies to get top of market rents while minimizing expense outlay with better and more efficient on-site management.  Exit plans are between 5-7 years after acquisition for each individual investment.

Short-term revenues will be focused on improving the profitability of each property and to turn a positive cash flow within 12 months of acquisition.  A minimum of $200 per door in net positive cashflows is our goal with each acquisition.

A target of 1,000 units in the first 24 months is our current focus.  At that target, a projected net positive monthly cashflow of $200,000 / a month will be achieved across the portfolio.  We’ll acquire 300-400 units the first 12 months and 600-700 units in year two all while providing our debt and equity investors with solid and consistent returns on their investments, creating great communities at our new properties, and a great company culture at ABC Real Estate Investment Firm.

Continue on to the next page (step 2 of 8 ) to learn how to write the Company Overview, Business Model and USP section of your business plan by clicking below.

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