Having a business plan for real estate investing is an essential part in the success or failure of your real estate investments. Putting that plan in writing is a must and will give you something to go back to over and over again to make sure that you are getting where you want to go.
The business plan should start out with an executive summary that includes general information about your business, its objectives and some initial start up details. General information would state something like “I plan on buying properties that need to be rehabbed because this is where the bargains are located.”. Your objectives might sound something like “I plan on rehabbing four properties per year”. The start up details may say something like “I plan on using brokers in my local market area to find properties for me”.
The next part of the business plan should outline the market area you plan on going into. This can be as small as a particular area of your city or as large as a portion of the United States. Pick the best market area that matches the objectives above. If you are going to rehab properties, then you need to look in older areas yet they also need to be in an area of need.
The next item in your business plan for real estate investing would be your implementation strategy. You might outline your strategy for rehabbing properties and the process you will utilize.
Next, you should tackle your sales strategy. You may want to sell immediately or in 6 months or you may hold onto a property for the long term giving you monthly cash flow, or you may have a strategy that includes both.
Your next area would be a financial plan that would include your projected income and expenses. The financial plan should show your start up costs and the amount of funds you have to get started and then project the money you will need to buy the properties, and then the continuing capital required to pay the expenses of the properties as well as your personal expenses.
The last thing that you will want to do is a summary of the business plan and an outline of the assumptions that you have made in the plan.
A solid business plan for real estate investing should:
• plot your course to show you the big picture and give you long term direction
• help you to become a better decision maker along the way by anticipating problems and allow you to make a more informed decision
• show you what kind of financing you will need
• guide you to be profitable
• allow you to recognize what will be required of you
• raise questions that will inspire solutions ahead of time
• identify strengths and weaknesses while highlighting areas of needed assistance
• act as a guide throughout your development and allow you to measure your progress against your planned expectations
Source by David Earl Morgan