In the implementation section of your real estate investing business plan you will describe the actual procedures that you will follow throughout your business activities. The information in this section is very similar to the “Specific Business Practices and Procedures” section you wrote earlier…but is more in-depth. Writing this section will benefit you greatly because it will force you to really think about every aspect of how you will perform your deals.
This section should be between one and four pages.
What strategies will you implement ?
By strategies I mean the specific methods that you will use when looking at, performing, and exiting your real estate investing deals. You will describe the way you will perform deals from start to finish.
If you are only doing rehabs, explain the process from the time of purchase (right after you purchase the property only because you described the pre-purchase procedures in the market analysis section) through the sale of the property.
If you plan on using more than one real estate investing method (i.e. rehabbing, wholesaling, buy and hold, etc.) go through the entire process of each. Once you are finished with this section you will have no questions as to how you will enter, perform, and exit your deals.
In this section you will want to answer the following questions.
- How will you estimate repairs accurately?
- How will you control holding costs?
- What is your game plan for a rehab?
- What repairs do you tackle first, second, last?
- To what level of quality do you rehab a house?
- Who will sell your properties and why?
- What has been your average holding period for a property?
- What will make your property sell faster than the competition?
- What if a Realtor can’t sell your property?
- Are you prepared to sell properties yourself?
- Do you have creative sales methods?
- What if the properties don’t sell at all?
- Are you prepared to keep and rent the property?
Of course, you will probably come up with other questions that you should answer in this question, but this list gives you a good start. Basically, you want to let the reader know the exact process that you will follow throughout your real estate investing deals.
One aspect to be sure to include is your exit strategy for each type of real estate investing deal. Write your perferred exit strategy and two backups for each type of deal. For instance:
“Single Family House Rehab
- Preferred Exit – Sell to retail buyer within 30 days of construction completion through our in house marketing and sales team.
- Secondary Exit – If not sold within 30 days of construction completion the home sale will be delegated to XYZ Realtors for a sales commission of 4% for a period of 60 days.
- Last Resort Exit – If not sold within 60 days of Realtor delegation we will market the home as a lease purchase or rental, with the lease purchase being the preferred method. This will be performed by our in house marketing and sales team and will continue until property is eventually sold on a lease purchase. “
As you can see in the above example I tell the reader the exact process of exiting from my rehab investment properties. By having a couple backup strategies you will put any lender or business partner a little more at ease that you have thought through things and have viable ways to exit with a profit. If you don’t have at least three exit strategies for each investment property you should think about passing on the deal. You should ALWAYS have several backups because YOU WILL have deals that don’t go exactly how you plan.
Once again, “If you fail to plan, you plan to fail“
By the time you are finished with this section you will have a great step by step description of each type of investment strategy. Not only will this section benefit the reader of your business plan greatly, but it will be a great roadmap for you.
Click continue to learn how to write your Financial Plan in step 6 of 8.