Your Business Plan for Real Estate

A Beginner’s Business Plan for Real Estate Investing

If you’ve been in business long, you know that business plans are a must for raising capital, gaining new partners, or for other ventures of major corporations.

However, have you ever considered the real benefit of having a personal business plan for buying and selling real estate, while leveraging your current equity?

The planning process, as well as a written plan of action, is essential to executing tangible initiatives and achieving real wealth.

New clients often ask what steps are required to develop this sacred document: the Business Plan.

Every planner works differently, but I like to start with my client’s Big Why.

Every overachiever has one.

Why do you get up in the morning? Why do you want to pursue this venture?

The answer to this question generally points directly at my client’s real goals more than anything else.

This question naturally leads to a discussion of my client’s ambitions, and I like to use a worksheet of questions to narrow these ambitions to a plan of action.

Sometimes a detailed plan has gelled in my client’s mind, and he just needs to get these details on paper, but most often we need the planning process to help distill strategy into actual initiatives.

Here are a few starter questions:

  • What future milestones do you need for success?  Number these in order of importance or in chronological order. What actions will generate revenues for you within the next 60 days?
  • What tangible initiatives will generate a large sales volume for you over the next year?
  • What are your associated costs for each?
  • In what ways can you consolidate these initiatives along with your other business activities to make the most of your schedule and energy?
  • How much money do you want to make over the next year to five years, and what concrete steps will you take to achieve this goal?

Partnering with a professional planner or simply a co-worker can make your planning process much more effective. Sit down with someone and brainstorm about the future. Ask your partner to help you organize your plan and develop a written plan of action.

Once you have your ideas in writing, review your goals, mapping your overall goals to daily action items, and focus your weekly schedule and time blocking needs.

Then you should know with assurance how to achieve your goals on a daily basis, what income to expect, and what your expenses will be.

If you have any start-up capital needs, address those and determine where to get the funds needed to implement your plans.

If you need a particular type of business plan for that capital raise, be sure to ask a professional planner to help you pull that together – often banks and venture capitalists are looking for a formulaic business plan.

If you want a more detailed written plan, make certain you cover these areas:

  • What you hope to achieve ultimately in one straightforward sentence
  • Why you will be successful
  • Your business structure (sole proprietorship, S corporation, partners, etc.)
  • How your business will unfold over the next three years with concrete milestones to achieve each quarter (number of houses sold or bought, income, etc.)
  • Specific initiatives detailed with goals, a step-by-step plan, marketing and sales strategy, and a budget
  • A section dedicated to time blocking and how you plan to leverage yourself through an assistant, subcontractor, or other help
  • Overall financials and assumptions
  • An addendum projecting balanced portfolio growth and development using specific properties

At the end of your planning session, make sure you ask your partner to hold you accountable and to meet with you at least once a quarter about your plan.

By setting up future meetings together, you’re guaranteeing yourself a means for measuring your success against your plan.

I like to create written financial projections and an executive summary for the plan so my clients will have two easy reference sheets while they work.

Do whatever works best with your business style, but put something in writing, even if it is very brief.

Whenever you start a new venture, your business plan should be tweaked once a month because you will be learning lessons about your business on a daily basis and the plan is still fluid.

In most cases, after you have been in business two years, you need only update your plan once every quarter.

These updates may only take 1 hour of time, but they are crucial to staying on track.  This is where good accountability from your partner may be essential.

If you decide to use a professional business planner, make certain you pick one with direct, hands-on CEO experience actually conceptualizing, initiating, staffing, funding and operating multiple, multi-industry companies and plans.

Make certain they own real estate and have written plans surrounding their investments.

Their past experiences will directly benefit the quality and reality of your own business plan.

Finally, ask for a sample plan they’ve written for someone else, and make certain that you find their writing style readable and useful given your needs.

This will guarantee that you use the product you’re paying for.

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