Every business must start with a business plan. No matter how short, not having a plan is planning to fail. The biggest mistake I see with investors is never focusing on one strategy. They spread themselves too thin and never become a master. Here is an outline of a very simple business plan, which can very well be the start to your successful real estate business.
- Strategy – Pick one strategy and become a master. Focus all of you efforts on perfection and you can have an automated system that runs with you there or not.
- Market – Define your market. Many are only comfortable with their local market. Me on the other hand, I did tons of research to identify markets with great returns and ability to mitigate risk. Now I focus on one state where I can cherry pick from incredible LTVs and rent to purchase ratios.
- Criteria – Define your LTV, cash flow, max purchase amount, max rehab amount, max timeframe, etc.
- How to find deals, marketing plan – How are you going to automate a system so motivated sellers come to you. MLS, agents, online searches, direct mail to lists, other?
- How to finance deals – Are you using conventional, hard money, private money, equity or JV partners, seller financing, lease options, other?
- How to do deals – How are you going to turn a purchase of a property into profit? Clearly define the steps.
- Exit strategies, Backup Plans – One of the most important sections. How are you going to exit the deal. What are your backup plans as it is wise to have multiple exit strategies? Do you flip, lease option, wholesale, bird dog, sell the note, sell the entity holding title, rent and hold, other?
- Team & Systems – Clearly define your team and systems used to delegate and automate tasks.
- Ilustrate example deals – Illustrate LTV, cash flow numbers and cash on cash return for example deals. Include images of properties and show your successful track record here if possible.
- Financials – Include financials for the timeframe of your strategy.
Once you have completed the first version of your business plan, get feedback from your peers. Have other investors and even consult a professional business plan writer. Your business plan is the backbone of your business success and always your first step.