Successful real estate investors always treat their investments as a business, including a written business plan that describes the business, the objectives, and the strategy for achieving these objectives. A good business plan acts as a roadmap that gives you direction and helps motivate you to stay on track while being flexible enough to meet your changing needs—thinking of writing your real estate business plan?
Your mission statement
The first item you need to include in your marketing plan is your mission statement: a sentence or short paragraph that outlines your business's intent and the advantages it provides. A strong mission statement addresses concerns like, What should we do? Why should we do it? How can we build value? Keep things straightforward and to the full to stop generalizations and pointless fluff. Less is better of a mission statement.
This section of your business plan explains what you hope to accomplish with this business. Your goals should always be specific and measurable: for example, earn $ 3,000 a month in passive income; to overturn two properties per month; to buy, deinstitutionalize and rent four properties each year. Keep in mind that each of these goals has a certain amount of time attached, and it is a good idea to think in both short-term and long-term terms. Avoid abstract goals, such as: getting rich in real estate sales; to retire earlier; to be the best. If the goals are unclear or subjective, you will never know when or if you will reach them.
So you know why you are in business and what you hope to achieve. Then it would help if you had a strategy to achieve your goals. This section of your business plan includes items such as:
Your market - what types of properties will you target? What are the recent trends? Define the market: area, single-family, family, commercial market, price range, motivated sellers, etc. Stay focused on this market and remember that it is better to do one good thing than five bad things.
Your criteria - what conditions must be met before investing? Consider aspects such as loan-to-value, cash flow requirements, and maximum rehabilitation amount. Think of these conditions as your line in the sand and leave if a business doesn't fit.
Finding offers - how will you find offers, and how will you sell so that interested buyers, sellers, and tenants can find you? Be proactive, and don't assume that transactions will find you.
Financing - how do you intend to purchase properties? Will you use cash, conventional loans, business loans, vendor financing, leasing options, or securing a capital partner? Think about how each method affects the return on investment.
Process - how will you turn a property into a profit? Make a step-by-step plan that includes things like repairs, rentals, and management and who will be responsible for each step. Be specific.
Exit strategy - how and when will you leave the business? Do you want to rent and hold, or make a 1031 exchange? What is the time interval?
Your marketing strategy should also provide descriptions of where you are now. How much capital have you got? Have you got money to use? This can sound like a personal financial statement if you're new to the company. Financially update yourself frequently when the company is increasing and ready to show it to future creditors and investors.
Every kind of company, even real estate investing, will use a business strategy to establish short- and long-term targets, set a plan of action, and present the big picture. You can find targets instead of some small challenge along the route. Note that there are many methods to prepare a business strategy, so all proposals should be frequently revised and examined to include fresh information and represent emerging demands, plans, and financial circumstances.
For more details, see Simple Ways to Invest in Real Estate and the Investopedia Real Estate Investing Exploration tutorial. Are you investing in abroad? You may be interested in reading Do you get tax deductions in the US on real estate abroad?