How to Write a Real Estate Business Plan. An Executive Summary of Successful Business Plan
Here are an overview of what goes into a business plan for a real estate enterprise.
An Executive Summary should includes the following information:
The length of time you have been in operation
A description of the structure of your operation as a single proprietorship, a partnership, or a corporation
The names of your attorneys, accountants and other significant outsiders who lend their counsel and expertise to your operation
The names of other investors in the enterprise, if any
Your business name
A list of properties you currently own that includes their values and the amount of income they produce, if any
Your organization’s earnings in the tax years since it started
The current net worth of your enterprise, including cash on hand, value of properties owned, and other real assets
Specific strengths that will make the business succeed (You currently own a large older building in a prime location, for example, and now you need the funding to convert it into luxury condominiums.)
Current limitations that can be overcome by new funding (It will allow you to buy a specific property, for example, or renovate a building you already own — or improve land and sell lots to developers.)
The location of your enterprise (If you obtain funding using your business plan, will your location change?)
The kind of real estate properties you invest in and/or plan to invest in
A description of anything unique about the kind of properties you own or intend to own
An explanation of any major opportunity that will enable your enterprise to make significant profits
A profile of your customers (Will you be selling or renting properties, to families, or builders, or upscale retailers?)
Other companies in competition with you (Note that your plan should document your ability to compete against these other entities by offering something different or better in the eyes of consumers.)
An outline of significant trends and opportunities that will create new profits for you (For example, new train service has just been instituted between the town where you own property and a nearby city — a factor that makes your holdings immediately more profitable.)
A profile of the person in charge of the business
A pitch for why you or your partner(s) are qualified to make the enterprise a success (List prior experience, education, etc.)
A projection of your immediate goals for the next year, two years, and later if possible
The amount of money you have already invested in your enterprise
The amount of money you need (if the primary purpose of writing the plan is to obtain funding) and how you intend to spend it, (For example, you will invest 40% of it to improve current buildings, 40% to acquire new properties, and the remaining 20% to outfit a new office.)
The projected payback are you prepared to offer to investors, over what period of time
Your Current and Projected Properties and Holdings Analysis should include only the information that applies to you and your enterprise. Here are some questions you will probably want to answer:
What properties, if any, do you currently own? What are their values? (Include appraisals or other documents if appropriate.)
Are there more properties (or more land, or whatever) that you intend to acquire and develop in the years ahead, or are you in a market where that will be unlikely?
Do you currently own offices or other facilities for business use? If so, where are they located and what is their value? What kind of properties are they (single family homes, self-storage facilities, etc.)?
What additional properties would you like to acquire, on what kind of timetable?
What has your primary real estate activity been in the past and how do you intend to change that in the future?
Who are the consumers for your properties (your renters and/or projected buyers)? Include as much information about them as you can such as their income, assets, and eagerness to become your buyers or renters.
How will obtaining funding allow you to reach more of your target consumers or generate profits from them more effectively?
Are there other companies that have generated significant profits by doing what you are planning to do?
Do you enjoy a significant advantage over your competitors? For example, perhaps you own the best piece of land in an area where other builders are already active, or you have retained the services of a great architect who has experience in designing the kind of properties you are intending to build.
Who are the other primary business entities—contractors, consultants, etc. — whose help you will need to bring your plans to completion?
What activities will you need to subcontract out, such as construction, land improvement, and paving, in order to profit from your plans?
What are the potential risks of doing what you plan to do?
Do you have in place permits, environmental studies, or other documents that show that your plan is relatively free of risk to potential investors?
Your Market Plan should provide a more in-depth analysis of your customers, the people who will buy or rent your property. Note that you should include only information that lends credibility and support to your enterprises. You might even decide to omit this section entirely if you have adequately described your target consumers in earlier sections.
There are times, however, when your plan will genuinely benefit from the inclusion of this section. If you are seeking funding to develop a large number of houses in an area where other developers have made a lot of money in the same way, for example, you should include this section to explain your target consumers. Here are the questions to answer:
Who are your target renters or buyers? Are they small families, single renters, or small companies who will rent your homes and/ or offices?
How many of your target consumers are there? Where do they live?
How much money do those consumers have to spend on what you have to offer?
Are there significant marketing opportunities that can generate more income from your consumers (advertising in major newspapers in a nearby city that lies within commuting distance of the property you want to buy, for example)?
Is there some significant characteristic of your properties that makes them immediately more appealing than your competition’s?
Is there a particular share of the market that you intend to capture? (Perhaps the building you want to acquire would give you a 20% presence in the rental market in a particular town, for example.)
How will you advertise or promote your properties in order to generate maximum profits?
Do previous consumers behaviors, such as buying properties you already own, indicate that your future activities are likely to generate money?
Can you include news articles, local business reports or other documents that support the validity of your business plans?