How to write a real estate business plan?

As part of any business project, whether in business creation, business takeover or business development, it is important to formalize in writing one's ideas, approaches and objectives. The document that contains all this information is the Business Plan. Still called " business plan ", the real estate business plan it aims to convince its reader of the attractiveness and viability of the project.

If you are reading this article, it is because you need to draw up a complete real estate business plan to be able to invest in this sector. You are in the right place to discover all our advice for carrying out your real estate project. But before we get started, here are the best tools for improve the management of your business

What is a real estate business plan?

Before you start, you ask yourself, What is a business plan for? The business plan is a document that allows you to formalize your idea, whether it is the creation of a business or a real estate investment.

A real model of your project, it details the financial strategy to adopt, the profitability of the investment, the capital to be injected, etc. In short, making a real estate business plan helps you define the action plan to put in place to create and develop your project.

Moreover, the real estate business plan is often perceived as a sign of seriousness and credibility by investors. In effect, a complete business plan and clear makes it easier to convince your banker to invest in your project.

Why make a business plan for a real estate project?

It is not always easy to see what is the point of making a business plan for a real estate purchase. However, the business plan turns out to be a great tool for carrying out your real estate purchase construction project, especially if you intend to rent the property.

In fact, a real estate project can be compared to a business creation, especially if you plan to acquire the property via an SCI. As for a company, your project:

• Has a business model;
• Requires investment;
• Aims to make profit.

The real estate business plan allows above all to convince investors to finance your project. Thanks to this synthetic and structured document, you will show them that your project is viable and profitable. For example, you will insist on the ability to generate a profit through the rental or through the sale of the property after a given time.

The business plan for building construction, just like the business plan of an investment rental, allows you to compare the objectives you have set and the reality of the market to reassure investors about their consistency.

In addition, to check that the results are in line with your forecasts, the real estate business plan serves as a common thread to which you refer during the progress of your project.

However, the business plan is intended to evolve, it is an iterative exercise that is adjusted as the project progresses. It is therefore a communication and management tool to make your real estate investment project a reality.

What should a real estate business plan contain?

If this is your first time writing a business plan, we give you a brief overview of these sections and important things to consider when charting your path forward.

Here are the nine essential elements of a real estate business plan:

1. Identify who you are as a real estate agent

To put yourself in the right direction with your new real estate business plan, you have to start by understanding who you are. Although this seems a bit basic, it is essential that you understand your strengths, your weaknesses and what you want to accomplish.

There are some parts of this section that we recommend you do last (mission statement and summary) because they are easier to do once you have gone through the exercise of dissecting your business piece by piece.

If you are part of a real estate team, you will also use this section to define the roles of each member of your team. Putting on paper what everyone brings to the table is a big part of achieving your goals.

For brokerages, keep in mind not only the type of business you want to run, but also the type of agents you want to attract. Remember that you are the captain of the ship, with whom do you want to go to sea?

2. Analyze your target real estate market

Knowing the vagaries of the real estate market is essential to success. In this section, you will examine every corner of the market, which sections are hot, which sections have slowed down, and most importantly, where the opportunities lie. We suggest you take your time here and really dig into MLS and figure out exactly what the numbers are telling you.

While they're fun to watch, don't spend too much time looking at national or even statewide numbers. Real estate is a local business, and while these macro numbers may have small effects, what matters most is what's happening at the street level in your community.

Here are some good examples of metrics to watch for in this section:

• Average number of days on market for goods of different prices and types
• Typical referral commission rate
• Average price trend for a market you want to participate in
• Number of new listings in a particular industry month-over-month and this year vs. last year

3. Analyze your local competition

Just like the market, you also need to understand the landscape of your competitors. Knowing who does what and how well they do it will help you identify niches that are currently unfilled, as well as service areas saturated with agents all scrambling to get a slice of the pie.

Follow your competitors on social media, watch them closely and see who they are marketing to. Does their target demographic match their business? Since you've already identified your specific market, do a targeted MLS search for homes in their particular range. Which real estate agents also appear a lot in this range?

This section aims to understand what the rest of the field is doing and where the market is underserved. Once you do that, you can move in and fulfill a need.

4. Decide on the services you will provide

Now we get to the heart of the matter. You might think, "What do you mean by 'services' ? Am I not just providing, you know, REAL ESTATE services? These are the questions of those who have no plan. It's not you anymore. Yes, you provide real estate services, but which ones? Where is your greatest opportunity?

What niche does your market need? Perhaps you will be a condo specialist? Perhaps you will focus on first-time home buyers? What about the vacant land game?

You don't have to pick just one, but to pick none is to miss an opportunity. Think long and hard about what you (and your team, if you have one) do, what you are passionate about, and what the market needs. The overlap of these categories is your answer.

5. Identify who your ideal customers are

Once you have an idea of ​​the services you offer in your market, you have a good idea of ​​who your customers are. For example, if you need a real estate agent (or brokerage) that specializes in first-time home buyers, you know your average client will be younger, which means they'll be more likely to communicate via social media, which means their newspaper advertising is a waste of money.

On the other hand, if your ideal customers are older retirees, the mailbox is still an important way to communicate with them. Explore and really understand everything you can about your customers – it will pay off big time.

6. Perform a SWOT analysis

SWOT – or Strengths, Weaknesses, Opportunities and Threats – is a common player in business plans and is particularly prominent in our real estate business plan templates.

Here, you rate each of these categories using what you've discovered about yourself and your business as you write. Think of it as a summary so far.

Then combine that knowledge with what you know about yourself and how you work. For example, maybe you are strong in analysis (strength) but weak in cold calling (weakness)?

Maybe there is no brokerage that primarily focuses on millennials (opportunity)? Perhaps your target market is new construction and a slowdown in construction is expected (threat)?

SWOT analysis is a great thing to keep on hand even after your real estate business plan is complete. In fact, we've spoken to a few agents who make a copy of this section and stick it on their office bulletin board, just to make it a priority every day.

7. Determine your financial, personal and growth goals

All your hard work on your real estate business plan has culminated here with your goals. In this section, you will outline your different objectives for your business: financial, growth and others.

Use the research and analysis you've done to solidify your goals into measurable statements that you can return to and evaluate periodically. Here are some goals you may want to think about:

• Specific gross commission income
• A specific number of transactions
• A specific number of leads in a given time
• Hire an inside salesperson or assistant
• Add new agents to your team
• Spend some time working versus home with family

Also in this section, you will list the tools you will use to achieve your goals. You probably have a good idea of ​​what will be on this list, but be sure to schedule time to come back and review your real estate business plan to see if there are any new tools you need to add to the list, or to remove others that no longer move you forward.

8. Analyze your initial and ongoing financial needs

The penultimate section of your real estate business plan is understanding the math behind all of your plans. Although financial planning might not be everyone's strong point, most of the hard work has already been done for you thanks to the careful investigation you conducted in the previous sections of this document, so fear not. Fill in the blanks, complete the formulas, see where you stand.

In this section, you will factor in all of your operating expenses, including all of your marketing and lead generation costs. Be sure to factor in all of your monthly outreach and new customer generation efforts.

9. Make a plan to review your business plan

Finally, don't forget to complete your follow-up section. It can be tempting to jump straight into the plans you've made, but you need to know when you're revisiting your strategy.

Your real estate business plan is a living document, not something set in stone. We suggest checking in quarterly to see if the strategies you've chosen are moving you toward your goals.

4 questions to ask yourself when starting your real estate business plan

As you prepare to write your real estate business plan using one of our templates, here are some questions you should consider.

We've found that the conversation that comes from these questions helps get the juices flowing, and the business plan comes together a little easier. Or, if you need some food for your next realtor-only dinner, that works too (more wine, please).

1. How do your short-term strategies support your long-term goals?

Every day you go to the office (or just open your laptop on the couch) to work, you have the opportunity to get closer to your goals. What daily routines will be part of your entry into the winner's circle this year?

2. What questions do your customers have that you will answer?

Understanding and anticipating the needs of your customers is essential to success. Put yourself in the shoes of your target clientele: What is the first question that comes to mind when you think of real estate?

3. How do your strategies differ from your competitors' strategies?

This is a tough question because you can’t be in your competitors’ heads or boardroom. But, I don't think anyone on the verge of launching a very successful business has ever said, "Well, let's do it like everyone else, it seems to work, is not it ? »

Even if your adjustments to the standard approach are subtle, there must be SOMETHING (even if you're the only one who knows it) that you do differently from others.

4. Who has the final say on decisions in different areas?

This question mostly applies to real estate teams and people starting a brokerage, but it's a useful thought experiment for anyone. If a person is responsible for ALL the decision making, you may miss an opportunity to use someone else's expertise. What decisions will you entrust to others? How will you work together to make sure the plan stays consistent?

Ready to create your real estate business plan?

We want to hear from you. Do you still need help writing your own business plan? Let us know in the comments and let's continue the conversation.

Thank you for your loyalty