Real Estate Investment Business Plan Template

Real Estate Investing Business Plan

Over the past 20+ years, we have helped over 5,000 entrepreneurs and business owners create business plans to start and grow their real estate businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a real estate investing business plan step-by-step so you can create your plan today.

Download our Ultimate Real Estate Investment Business Plan Template here >

What is a Real Estate Business Plan?

A well-crafted business plan provides a snapshot of your real estate business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your investment strategies for reaching them. It also includes market research to support your plans.

Why Successful Real Estate Investors Use a Business Plan

If you’re looking to start a real estate business or grow your existing business you need a business plan. A solid business plan will help guide your business strategy, your investment strategy and your decision-making. Having a comprehensive business plan is crucial for several reasons:

• To Secure Financing: Most lenders and investors want to see a well-reasoned business plan before they consider funding your real estate venture. Your plan should convince them that you fully understand your market, have a viable strategy and have a management team that can execute. These factors in your plan give investors the confidence that they’ll receive an adequate return on their investment, and make lenders feel that you’ll be able to pay their loan back with interest.
• To Identify Business Goals and Objectives: A business plan helps you to clearly define what you want to achieve with your real estate business over the next five years. These objectives include investment goals, such as revenue targets, or operational goals, such as property acquisition rates.
• To Understand the Market: Conducting market research and including this in your business plan gives you a deeper understanding of the real estate market you’re entering, including potential challenges and real estate investment opportunities. This knowledge helps you craft better marketing, operational, financial and strategic decisions.
• To Plan for Growth: Your business plan should outline the milestones you expect to achieve over the coming months and years. This helps keep you and your team focused and less prone to become distracted with new opportunities that may push you in the wrong direction.
• To Manage Risk: By identifying potential risks in your business plan, you can devise strategies to mitigate them. This proactive approach can save your business from potential pitfalls in the future.

In summary, developing a strategic business plan is a key step for real estate investors who want to launch or expand their business successfully. Your plan will improve and lay out your strategy and keep you focused so you can flawlessly execute it.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Real Estate Investment Business Plan Template and complete your plan and financial model in hours.

How to Write a Business Plan for a Real Estate Investor

A detailed real estate investment business plan should include 10 sections as follows:

1. Executive Summary
2. Company Analysis
3. Industry Analysis
4. Customer Analysis
5. Competitive Analysis
6. Marketing Plan
7. Operations Plan
8. Management Team
9. Financial Plan
10. Appendix

 

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of business you are operating and the status; for example, are you a startup, do you have a business that you would like to grow, or are you operating a chain of real estate investing companies?

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the real estate industry. Discuss the type of real estate investment business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing strategies. Identify the key team members, and offer an overview of your financial plan.

 

Company Analysis

In your company analysis, you will provide a company description of the real estate investing business you are operating.

For example, you might operate one of the following types:

• Real estate investment is a long-term investment wherein you purchase real estate with the intent of keeping properties to rent out.
• Real estate trading is a short-term investment, wherein you buy investment properties that need fixing up and flip it for a higher price soon after.
• Commercial real estate involves purchasing and owning commercial real estate properties, such as office buildings, retail spaces, or industrial warehouses.

The Company Analysis section also needs to provide background on the business. Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
• Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, also called a market analysis, you need to provide an overview of the real estate investing industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the industry educates you. It helps you understand the competitive real estate market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards increasing foreclosures in a particular city, it would be helpful to ensure your plan calls for an increased focus in this real estate market.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your real estate investing business plan:

• How big is the real estate industry (in dollars)?
• What market shifts have occurred in your target markets?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What market dynamics are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the target market for your business. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

 

Customer Analysis

The customer analysis section of your real estate investing business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: mortgage holders, home buyers, renters, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of real estate investment business you operate. Clearly first-time home buyers would want different pricing and product options, and would respond to different marketing efforts than banks.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most real estate investment businesses primarily serve customers living in their same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
 

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other real estate investment businesses.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes property management companies, realtors, and DIY home fixer-uppers. You need to mention such competition to show you understand that not everyone who purchases or leases real estate uses an investment business to do so.

With regards to direct competition, you want to detail the other real estate investing businesses with which you compete. Most likely, your direct competitors will be businesses located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What products do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your competitive advantages. For example:

• Will you specialize in a particular real estate type or market?
• Will you provide services that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your real estate?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

 

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a real estate investing business, your marketing plan should include the following:

Product: in the product section you should reiterate the type of real estate investment company that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, will you offer residential properties, or commercial properties?

Price: Document the prices you will offer and how they compare to your competitors. In this section, you are presenting the types of real estate you offer and the current price ranges.

Place: Place refers to the location of your business. Document your location and mention how the location will impact your success. For example, is your real estate investment business located in a market with a high foreclosure rate, or with a low inventory of office space. Discuss how your location might provide a steady stream of customers.

Promotions: Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Advertising in local papers and magazines
• Reaching out to local bloggers and websites
• Flyers
• Social media advertising
• Local radio advertising
• Banner ads at local venues

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Real Estate Investment Business Plan Template and complete your plan and financial model in hours.

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your real estate investment business such as finding properties to acquire, marketing completed properties, overseeing renovations, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to flip your 25th house, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch in a new market.

 

Management Team

To demonstrate your company’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company. 

Ideally you and/or your team members have direct experience in real estate. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in real estate investment businesses and/or successfully running small businesses.

 

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your real estate investment business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. For example, let’s say you signed a commercial tenant that needs an extensive build out, that would cost you $50,000 to complete. Well, in most cases, you would have to pay that $50,000 now for materials, equipment rentals, employee salaries, etc. But rent will not cover build-out costs for 180 days. During that 180-day period, you could run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing your business:

• Location build-out including design fees, construction, etc.
• Renovation costs
• Cost of depreciation
• Payroll or salaries paid to staff
• Business insurance
• Property management software
• Taxes and permits
• Legal expenses

 

Appendix

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.

 

Real Estate Investment Business Plan Summary

Putting together a business plan for your real estate investment journey will improve your company’s chances of success. The process of developing your plan will help you better understand the real estate investment market, your competition, and your customers. You will also gain a marketing strategy to better attract and serve customers, an operations plan to focus your efforts, and financial plan that give you goals to strive for and keep your company focused.

Free Business Plan PDF for Real Estate Investors

You can download our real estate investment business plan PDF to help you get started on your own business plan.

Growthink’s Ultimate Real Estate Business Plan Template is the quickest and easiest way to complete a business plan for your real estate investing business. It has numerous features not available in the free template including its financial projections template which automatically calculates your complete five-year financial projections including income statements, balance sheets, and cash flow statements. 

Additional Resources For Starting a Real Estate Investment Business

• How To Find Investment Opportunities
• Estimating Rehab Costs for Real Estate Investors
• How To Become a Real Estate Investor
• How To Start a Real Estate Investment Business
• Real Estate Investor Marketing Strategies

 

 

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.
 
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