How to Create a Simple Real Estate Business Plan

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Author: Salvatore Vannutini

Article source: http://www.reiclub.com/. Used with author's permission.

Becoming a full time property rehabber is actually a very easy process. So why do so many investors get it wrong, or even worse, do nothing? Simple: NO BUSINESS PLAN!

Make no mistake about it: This is a business! If you invest time and capital with the aim of making a profit, then you are in business, regardless of wether you purchase one or fifty homes.

Before you commit a single dollar or a minute of your time, you should step back and have a good think about what it is that you want to achieve.

When developing your business plan, you may wish to consider the following questions:

- How many renovations do you wish to complete in one year?

- Do you have sufficient capital/finance to achieve this target?

- Will you sell for profit or hold?

- Do you wish to create an additional income stream?

Do you wish to do it as a full time job?

Why you need to write a business plan?

To plot the course

- To create the "big picture" - to recognise long term direction and think about staying in business and not just starting a business

To create a feasibility study

- Test the viability of your goals

- Is it going to be profitable

- What kind of financing will you need

- Recognise the barriers to your success

Become a better decision maker

- Anticipate problems

- The process of gathering information ahead of time will allow you to make more informed decisions

- Your plan will provide you with an organised way to face issues

For a reality check

- The plan will challenge some of your pre-conceived assumptions

- Your plan will raise questions that will inspire solutions before you need to face those problems

- It allows you to recognise what will be required of you

- Identifies your strengths and weaknesses and highlights needed areas of assistance

Guide and measurement tool

The business plan will act as a guide throughout your development and allow you to measure your progress against planned expectations. You can make adjustments accordingly.

Your business plan should contain the following elements:

1. Executive Summary:

Include general information about your business; your objectives; and your Start-Up details.

2. Market Analysis Summary:

Give a brief description of the market that you intend to work in, and your acquisition strategy.

3. Implementation Plan:

Outlines your renovation strategy and process.

4. Sales Strategy.

5. Sales Projection.

6. Projected Profits and/or Losses.

7. Financial Plan.

8. Management Summary.

9. Important Assumptions.

10. Summary.

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