Date
Milestone
(MM/DD/YY)
(Milestone 1)
(MM/DD/YY)
(Milestone 2)
(MM/DD/YY)
(Milestone 3)
Source and use of funds.
[Sender.Company] will get (Amount) from (Source of Fund) to start its rental property business.
[Sender.Company] will use the funds to secure the initial rental and office space and purchase supplies and equipment. The proposed startup costs are shown in the table below:
Name | Price | QTY | Subtotal |
---|---|---|---|
Item 1 Description of first item | $35.00 | 5 | $175.00 |
Item 2 Description of second item | $55.00 | $55.00 | |
Item 3 Description of third item | $200.00 | $200.00 |
Subtotal | $230.00 |
Discount | -$115.00 |
Tax | $23.00 |
Total | $138.00 |
These are [Sender.Company] 's pro forma financial statements for the next five (5) years. It contains the business's income statement, balance sheet, and cash flow statement.
[Recipient.FirstName] [Recipient.LastName]
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BUSINESS STRATEGIES
In the dynamic realm of real estate and rental properties, a well-designed business plan is the cornerstone of starting a thriving rental property venture . It goes beyond a mere document, serving as a strategic guide that shapes your goals, operations and adaptability.
Your business plan plays a vital role in making informed decisions and navigating market shifts. Moreover, it enhances your credibility with potential partners and investors, showcasing your grasp of the industry. When you’re starting a business in the real estate industry, a solid business plan can truly pave the way for rental property triumph.
Looking to expand your business online by making a website ? Check out Wix’s website builder .
Writing a comprehensive business plan for your rental property business is crucial for setting a solid foundation and ensuring long-term success. It provides a roadmap for your business, outlining your goals, strategies, and financial projections. Here are the six main parts of a rental property business plan:
Executive summary
Business and domain names
Market analysis and research
Operation plan
Marketing and advertising plan
Financial plan
The executive summary is the first section of your rental property business plan. It provides an overview of your business and highlights the key points from each section of the plan. The executive summary should be concise, clear and engaging to capture the reader's attention. It should include:
A brief description of your rental property business
Your mission statement and vision for the business
A summary of your target market and competition
An overview of your marketing and growth strategies
Your financial projections and funding requirements
Example of an executive summary for rental property businesses
“ABC Rentals is a leading provider of high-quality rental properties in the city. Our mission is to provide comfortable and affordable housing solutions for individuals and families. With a strong focus on customer satisfaction, we aim to exceed our tenants' expectations by offering well-maintained properties, excellent customer service and competitive rental rates.
In an increasingly competitive rental market, ABC Rentals stands out by offering unique amenities such as on-site laundry facilities, secure parking and pet-friendly options. Our marketing strategies include targeted online advertising, partnerships with local businesses and word-of-mouth referrals. With an initial investment of $500,000 from private investors, we project steady growth over the next five years.”
Choosing the right business name for your rental property is crucial for building brand awareness and trust. Start by brainstorming ideas that reflect the essence of your business and resonate with your target market. You can use a business name generator tool for inspiration and to check the availability of domain names .
When choosing a domain name make sure to keep it short, memorable and easy to spell. Include relevant keywords and avoid numbers, hyphens or special characters.
After you’ve decided on a name and the right legal structure, make sure to register your business .
Including a market analysis and research section in your rental property business plan is essential for understanding the competitive environment and developing effective business strategies. Conduct market research to identify trends, demand and competition in the rental property market.
Your market analysis should cover:
An overview of the rental property market in your target area
Demographic information about your target audience
Competitor analysis, including their strengths and weaknesses
Pricing strategies and rental rates in the market
Opportunities for differentiation and unique selling propositions
The operations plan outlines the logistical aspects of your rental property business. It covers important details such as location, premises, equipment and staffing needs.
Detail the ideal location for your rental properties based on target market preferences and accessibility to amenities. Include in this the size and layout of the premises, including the number of units and common areas. Remember to list all of the necessary equipment for property management, maintenance and tenant services.
You should also include staffing requirements. This includes property managers, maintenance personnel and administrative staff.
Your rental property business plan should include a detailed marketing and advertising plan to attract tenants. Some strategies to consider: online advertising through rental listing websites, social media platforms and targeted online ads.
You can also look into traditional advertising methods like print ads in local newspapers or magazines—and at the same time partnerships with local businesses or organizations for referral programs. Don’t forget to create a business website to showcase your services and land more leads.
No matter where you promote your business, you’ll want to keep your branding consistent. As a first step, use a logo maker to generate real estate logo ideas .
When it comes to a rental property business, the financial plan lays out the money side of things, like how much it'll cost to start up, where the funds are coming from, how much you expect to earn and when you're likely to start making a profit. This section isn't just about showing your business's money smarts, but it's also a way for potential backers and lenders to figure out what they might get out of investing in your business.
Creating a business plan for your rental property business is essential for setting a solid foundation and ensuring long-term success. To help you get started, here are two draft business plans for a hypothetical rental property business.
Urban Rentals is a premier rental property business specializing in providing high-quality urban living spaces for young professionals and students in the city. Our mission is to offer modern, well-designed apartments in desirable locations at competitive rental rates. With a focus on customer satisfaction, we aim to create a hassle-free rental experience for our tenants.
Company and domain names
The company name, Urban Rentals, reflects our target market and the type of properties we offer. We have secured the domain name urbanrentals.com, which aligns perfectly with our brand identity and makes it easy for potential tenants to find us online.
We have conducted extensive market research to understand the demand for rental properties in urban areas. Our target audience consists of young professionals and students seeking convenient, stylish and affordable apartments. We have identified several competitors in the market but believe that our unique amenities and competitive pricing will set us apart.
Operations plan
Urban Rentals plans to acquire properties in desirable urban neighborhoods close to public transportation, restaurants, and entertainment options. We will renovate these properties to meet modern standards and provide essential amenities such as high-speed internet, laundry facilities, and secure access. Our dedicated property management team will handle tenant inquiries, maintenance requests, and ensure that all properties are well-maintained.
To attract tenants, we will utilize a multi-channel marketing approach. This includes online advertising through rental listing websites and social media platforms, as well as targeted online ads. We will also establish partnerships with local colleges and universities to reach student tenants. Additionally, we will implement referral programs and incentivize word-of-mouth marketing through satisfied tenants.
Urban Rentals will be initially funded through a combination of personal savings and a small business loan. We project steady growth over the next five years, with a focus on maintaining high occupancy rates and increasing rental income. Our financial plan includes detailed revenue projections, expense forecasts and cash flow analysis.
Coastal Properties is a rental property business specializing in providing beachfront vacation homes for tourists and travelers seeking a luxurious coastal experience. Our mission is to offer premium properties with stunning ocean views, top-notch amenities and exceptional customer service. We aim to create unforgettable vacation experiences for our guests.
The company name, Coastal Properties, reflects our focus on beachfront locations and coastal living. We have secured the domain name coastalproperties.com, which perfectly represents our brand and helps potential guests find us easily online.
We have conducted extensive market research to understand the demand for vacation rentals in popular coastal destinations. Our target audience consists of affluent travelers seeking high-end accommodations with breathtaking views. We have identified competitors in the market but believe that our exclusive properties and exceptional service will attract discerning guests.
Coastal Properties plans to acquire premium beachfront properties in sought-after coastal destinations. These properties will be fully furnished with upscale amenities like private pools, beach access and concierge services. We will work with reputable property management companies to handle guest inquiries, reservations and property maintenance.
To reach our target audience, we will implement a comprehensive marketing and advertising plan. This includes online advertising through vacation rental platforms and luxury travel websites. We will also collaborate with travel influencers and establish partnerships with local businesses to promote our properties. Additionally, we will leverage social media platforms to showcase stunning visuals of our properties and engage with potential guests.
Coastal Properties will be initially funded through a combination of personal investments and private investors. We project strong revenue growth based on high occupancy rates and premium rental rates. Our financial plan includes detailed income projections, expense forecasts and return on investment analysis.
Writing a business plan for your rental property business is a crucial step in setting yourself up for success. It provides numerous benefits that can help attract investors and funding, ensure you have the necessary resources and staff, and create a plan to achieve long-term success.
Attracting funding: A well-written business plan is essential for attracting investors and raising money for your business . Investors want to see a clear and comprehensive plan that demonstrates your understanding of the market, your target audience and your strategies for success. A business plan that outlines your financial projections, marketing strategies and competitive analysis will give potential investors confidence in your ability to generate returns on their investment.
Resource requirements: Creating a business plan helps you understand the resources, supplies and staff required to start and operate your rental property business. It allows you to assess the upfront costs of acquiring properties, renovating them if necessary, and furnishing them with the necessary amenities. Additionally, it helps you determine the ongoing expenses like maintenance costs, property management fees and marketing expenses. By having a clear understanding of these resource requirements, you can budget effectively and avoid unexpected financial challenges.
Business success: A rental property business plan serves as a roadmap for achieving long-term success. It allows you to set specific goals and outline actionable steps to reach those goals. By identifying potential challenges and developing strategies to overcome them, you can mitigate risks and increase the likelihood of success. A well-thought-out business plan also helps you stay focused on your objectives and track your progress over time.
Guiding decision-making: A comprehensive business plan provides a framework for making informed decisions in your rental property business. It helps you evaluate potential investment opportunities, assess risks and prioritize tasks. When faced with important decisions, you can refer back to your business plan to ensure alignment with your overall vision and goals. This ensures that you make decisions that are in the best interest of your business's long-term success.
Financial forecasting: A crucial part of any business plan is the financial plan, which includes information on how your rental property business will be funded initially and its projected profitability over time. By outlining your sources of funding, such as personal savings or loans, you can ensure that you have the necessary capital to start and grow your business. Financial forecasting allows you to estimate future revenue, expenses and cash flow, helping you make informed financial decisions and plan for growth.
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May 27, 2019
The business plan format we’ll discuss includes five sections: Property, Market, Goals and Objectives, Management and Financial (see Appendix A for an outline). Let’s take a brief look at each of these sections.
Describing the property is the first step to determining how it should be managed and estimating its potential for return on investment (ROI). Noting the property’s type, features and location provides a basis for comparison to other properties in the market to determine its competitive position . This section may seem elementary, but it is vitally important to establishing the property’s realistic market potential and an appropriate management approach.
The Market section identifies the managed property’s market and how our property compares with competing properties. This information supports decisions regarding rent levels, marketing strategies and long term positioning of the property within the market. A Market Rent Analysis (MRA) should being included to provide comparisons to direct competitors (similar properties) and indirect competitors (other types of properties that potential tenants might prefer if the managed property is not competitive in terms of price, location and/or amenities).
The Market section identifies the target market (preferred tenants) for vacancy advertising and strategies for reaching that market effectively. Understanding the needs of the target market also supports decisions regarding the potential ROI of future property upgrades and some management procedures (e.g. whether to offer online rent payments).
In simple terms, goals are a measurable what and objectives are the reason why . A business plan could have several dozen goals, or perhaps just a few, depending on the property, its market and how it will be managed. But each goal should have at least one objective.
Let’s look at a simple example of a goal and its objective:
“Goal: $29,000 or higher net operating income. Objective: Meet or exceed ROI compared to other available investments.”
Let’s say we have a more specific reason for earning a minimum ROI and a 2 nd objective that is dependent on the first:
“Goal 1A: $39,000 or higher net operating income. Objective: Achieve minimum acceptable ROI.”
“Goal 1B: Increase balance of reserve fund from $90,000 to $100,000. Objective: Increase investment safety from unexpected expenses.”
We might also have a goal of repositioning our property in the market:
“Goal: Remodel to add new master suite. Objective: Increase the property’s income potential.”
Some owners and managers prefer to develop objectives first, and then formulate goals that support achievement of those objectives. Here’s an example:
“Objective: Improve property to increase gross rental income. Goal: Install new kitchen stove, refrigerator and dishwasher before renewing current tenant lease.”
The important factor in each of these goals is that they are measurable, either with a numerical value or by answering a yes or no question. The corresponding objective should represent a strategic improvement to either the property or its performance as an investment.
A business plan should not be confused with a manager’s Standard Operating Procedures (SOP, see Note 1). A plan is a list of tasks, while procedures describe how those tasks should be done. The Management section will identify recurring and non-recurring tasks and who will perform them. These include leasing, tenant care, property care, and improvements.
For example, Section 4.B, Inspections, could include the following:
“Full exterior/interior inspections will be conducted semi-annually and per the Management SOP.”
What does the Management SOP say about inspections? That depends on the manager’s standard practices. Most commonly, the SOP will stipulate the types of inspections that will be performed in the usual course of managing a property, such as weekly drive-by exterior inspections. The SOP may also describe inspections to be performed under special circumstances, such as a tenant complaint about a specific problem, complaints from neighbors, notification of a nuisance on the property by law enforcement, suspicion of illegal activity on the property, suspicion of abuse on the property, or habitually late rent payments (see Note 2).
If there is a plan to make capital improvements, the Management section is a good place to describe them. There should, however, be a separate Project Plan for each improvement that gets into the details of what is to be done.
A Property Management Schedule , either in list form or graphic (e.g. Ganntt chart ), should be used to identify and track progress of all recurring and non-recurring management activities.
Financial plans can be either simple, such as a single page spreadsheet, or consist of hundreds of pages that include detailed descriptions of each income, expense or financing item. For most single unit or small multi-unit owners and managers, a spreadsheet reflecting an Operating Budget like the example below should suffice (see Note 3).
Tracking performance against the business plan is the ultimate purpose for having it. The primary tracking tools are the Management Schedule and the Operating Budget, which we created in the Management and Financial sections. Establish regular reviews (monthly, quarterly, etc.) and write a brief analysis of your performance to the plan – even if you are the only person who will read it. Your analysis is feedback that should prompt you to take action in response to changing market conditions.
The business plan we’ve been discussing is applicable to a property or small group of properties, typically condos, single family homes, or small multi-family complexes. As with all plans and procedures, the format and content of the document should be tailored to your specific needs. In most instances, rental property profit or loss is just one part of an owner’s total financial picture. When this is the case, the rental property business plan should be incorporated into a broader company or family financial plan.
If you’re an active investor, you may find that drafting a business plan for a potential investment target provides a great analysis tool. To get a good start, you might want to order our Business Plan Services to help get your first plan organized.
Hope you found this review of the residential rental property business plan helpful. For answers to your questions or for help with California real estate investing, sales and property management, please use Contact Us .
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Editor's Note: This post was originally published in April 2020 and has been completely revamped and updated for accuracy and comprehensiveness.
Buying investment properties and renting them out to tenants is a great way to diversify your real estate portfolio and earn passive income. If you are considering becoming a landlord, writing a rental property business plan is vital to make your investment thoughtfully and deliberately. A well-crafted business plan can help you secure financing from lenders. A business plan demonstrates that you clearly understand your business and its potential, making you more attractive to potential lenders. Let's begin! This piece will walk you through what a rental property business plan is, why you should create one, and how to put one together.
Most simply, a rental property business plan is a document that describes the following:
Your rental property business plan will outline the strategies and goals for managing your properties.
Here are some reasons why you should create a rental property business plan:
Before creating your business plan, consider your specific objectives for your rental business. By setting your objectives, you're providing yourself with a target to aim for. A SMART goal incorporates all of these criteria to help focus your efforts and increase the chances of achieving your goal. This is a specific, measurable, achievable, relevant, and time-bound goal commonly used in business and project management to set and achieve goals.
You may only have one key objective or multiple, but each goal should have strategies and tactics to help achieve it.
Let's take the relatively straightforward objective — own four properties by the end of the year. Easier said than done, right? Your strategy will be your rough game plan to achieve this goal. Here are some examples of strategies you may employ:
You can then drill down each strategy into specific tactics. Here's what that looks like:
Focus on 3br/2b single-family homes between 1500-2500 sq feet
Now that you've thought about precisely why and how you will structure your business and execute your investment, it's time to write it! A rental property business plan should have the following components: The business plan typically includes the following elements:
Let's go through each of them separately.
The executive summary of a rental property business plan provides an overview of the key points of the plan, highlighting the most critical aspects. Here's an example of an executive summary:
[Your Business Name] is a real estate investment firm focused on acquiring and managing rental properties in [location]. The business aims to provide tenants high-quality rental properties while generating a steady income stream for investors. The rental property portfolio comprises [number] properties, including [type of properties]. These properties are located in [location], a growing market with a high demand for rental properties. The market analysis shows that rental rates in the area are stable, and the demand for rental properties is expected to increase in the coming years. The business's marketing and advertising strategies include online advertising, signage, and word-of-mouth referrals. The tenant screening process is thorough and includes income verification, credit checks, and rental history verification. The property management structure is designed to provide tenants with excellent service and to maintain the properties in excellent condition. The business works with a team of experienced property managers, maintenance staff, and contractors to ensure that the properties are well-maintained and repairs are made promptly. The financial projections for the rental property portfolio are promising, with projected revenue of [revenue] and net income of [net income] over the next [timeframe]. The risks associated with owning and managing rental properties are mitigated through careful screening of tenants, regular maintenance, and appropriate insurance coverage. Overall, [Your Business Name] is well-positioned to succeed in the rental property market in [location], thanks to its experienced team, careful management, and commitment to providing high-quality rental properties to tenants while generating a steady stream of income for investors.
Your executive summary is the Cliff Notes version of the complete business plan. Someone should be able to understand the full scope of the project just by reading this section. When writing your executive summary, assume it is the only part of your plan that someone reads. Aim for a half-page to full-page in length.
The business description section of a rental property business plan provides an overview of the company, including its mission, history, ownership structure, and management team. Here's an example of a company description section:
[Your Company Name] is a real estate investment company focused on acquiring and managing rental properties in [location]. The company was founded in [year] by [founder's name], who has [number] years of experience in the real estate industry.
Mission: Our mission is to provide high-quality rental properties to tenants while generating a steady income stream for our investors. We aim to be a trusted and reliable partner for tenants, investors, and stakeholders in our communities.
Ownership structure: [Your Company Name] is a privately held company with [number] of shareholders. The majority shareholder is [majority shareholder name], who holds [percentage] of the company's shares.
Management team: The management team of [Your Company Name] includes experienced professionals with a proven track record of success in the real estate industry. The team is led by [CEO/Managing Director's name], who has [number] years of experience in real estate investment and management. The other members of the management team include:
[Name and position]: [Brief description of their experience and role in the company] [Name and position]: [Brief description of their experience and role in the company]
Researching neighborhood trends can help you identify areas poised for long-term growth. This can enable you to make strategic investments that will appreciate over time, providing a stable source of income for years to come. The Market Analysis section of a rental property business plan for landlords should provide a comprehensive overview of the local rental market. Below are some key elements you should include in the Market Analysis section of your rental property business plan.
The marketing strategy section of your rental property business plan outlines how you will promote and advertise your rental properties to potential tenants. Below are some key elements to include in this section.
This section should outline the steps you or your property manager will take to evaluate potential tenants and ensure they fit your rental property well. This can ensure that your company has a thorough and fair process for evaluating potential tenants and selecting the best fit for their rental property. B elow are some critical components to include in this section.
This section should outline the steps you or the property manager you have hired will take to manage the rental property effectively and ensure a positive experience for tenants. Below are some key components to include in the property management section of a rental property business plan.
The financials section of your rental property business plan is crucial for demonstrating the business's financial feasibility and potential profitability of the investment. Let's take a look at what you can include.
As a landlord, you must include a risk management section in your rental property business plan to address potential risks and establish strategies for mitigating them. Below are some key steps you can take to create a risk management section for your business plan.
By including a comprehensive risk management section in your rental property business plan, you can demonstrate to potential investors, lenders, and tenants that you are committed to running a safe and sustainable rental property business.
An exit strategy is integral to any rental property business plan as it helps you plan for the future and maximize your ROI. You most likely plan on renting out your property for a long or indefinite time. If you have a shorter or more definite timeline, like renting it out for ten years and then selling it, mention it here. Should your property go vacant for a long time, or economic circumstances, cause rent prices to fall dramatically, maintaining your property may no longer be sustainable. You should have a plan, or at least a framework, to decide what to do if this happens. Otherwise, your exit strategy should be your backup plan if things don't go as planned.
Creating a comprehensive rental property business plan provides you with a clear direction for your business, helps secure financing, identifies potential risks, enhances property management, and enables monitoring and evaluation of performance. A business plan is valuable for landlords who want to run a successful rental property business.
Kiavi leverages cutting-edge tech and data to fuel your growth with fast, reliable capital.
The above is provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by Kiavi of any of the products, services or opinions of the corporation or organization or individual. The information provided does not, and is not intended to, constitute legal, tax, or investment advice. Kiavi bears no responsibility for the accuracy, legality, or content of any external content sources.
Written by Dave Lavinsky
You’ve come to the right place to create your Property Development business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their property development companies.
Below is a template to help you create each section of your Property Development business plan.
Business overview.
Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.
Redstone Development is owned and operated by Jack Grant, a real estate development industry veteran who is well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
Redstone Development will handle the entire development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.
The company focuses on building single-family homes and multi-family apartment complexes in the heart of Salt Lake City. All projects are designed to make these homes aesthetically appealing and luxurious. However, they will also be affordable to ensure that anyone in the Salt Lake City area can afford to live in our properties.
Redstone Development will serve home buyers and real estate investors who live and work in Salt Lake City, Utah, or the surrounding area. Salt Lake City is a growing city in need of additional housing. More people come to this beautiful city every year, which reduces the number of available homes and apartment units. Therefore, we will target buyers who are struggling to find affordable housing.
Furthermore, there are thousands of first-time home buyers in the area. These buyers are an ideal target market for the company.
Redstone Development will be owned and operated by Jack Grant. He recruited his former administrative assistant, Sheila Johnson, to be his Office Manager and help manage the office and operations.
Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful real estate development businesses.
Sheila Johnson has been Jack Grant’s loyal administrative assistant for over ten years at a former property development firm. Jack relies strongly on Sheila’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Sheila has worked in the property development industry for so long that she understands all aspects required to run a successful property development company.
Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business.
Redstone Development will be able to achieve success by offering the following competitive advantages:
Redstone Development is seeking $1,000,000 in debt financing to launch its property development business. The funding will be dedicated to purchasing our first property, construction costs, securing the office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:
The following graph below outlines the pro forma financial projections for Redstone Development.
Who is redstone development.
Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the property development process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.
Redstone Development is owned and operated by Jack Grant, who is a real estate development industry veteran and well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
After 30 years of working in the property development industry, Jack Grant began researching what it would take to create his own property development company. This included a thorough analysis of the costs, market, demographics, and competition. Jack has compiled enough information to develop his business plan and approach investors.
Once his market analysis was complete, Jack began surveying the local office spaces available and located an ideal location for the property development headquarters. Jack incorporated Redstone Development as a Limited Liability Corporation on October 1st, 2022.
Once the lease is finalized on the office space, renovations can be completed to make the office a welcoming environment to meet with clients.
Since incorporation, Redstone Development has achieved the following milestones:
Redstone Development will handle the entire property development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.
The real estate and property development industries have been strong over the past few years. As of 2021, the real estate industry was valued at $3.69 trillion and is expected to grow at a compound annual growth rate of 5.2% from now until 2030.
This growth will be driven by increasing demand for personal housing. Millennials and Gen-Z are beginning to rent their first apartments or buy their first homes. After years of living with family or roommates, they are ready to have a space to call their own. This trend is leading to a substantial demand for housing that many cities are struggling to supply.
The main challenge to the property development industry is the decrease in market size in the land development industry. Over the past five years, the industry saw an average annual decline of 0.7%. However, we believe that the pandemic was a considerable factor in this decline. Currently, the land development market is valued at $12 billion USD, and we expect it to grow substantially due to the growth of similar industries and the increasing demand for housing, as mentioned above.
Demographic profile of target market.
Redstone Development will serve home buyers and real estate investors in Salt Lake City, Utah, and its surrounding areas.
The community of Salt Lake City has thousands of first-time home buyers, residential real estate investment firms, and people looking for affordable housing options in the area. The company will also target millennials specifically since the majority of first-time home buyers are in this age group.
The precise demographics for Salt Lake City, Utah are:
Redstone Development will primarily target the following customer profiles:
Direct and indirect competitors.
Redstone Development will face competition from other companies with similar business profiles. A description of each competitor company is below.
Upscale Property Developers, Inc.
Upscale Property Developers, Inc. is a property development company in Salt Lake City. In business for over 40 years, Upscale Property Developers, Inc. provides oversight for the entire property development process for new single-family and multi-family residences, commercial offices, and government buildings across the area. Upscale Property Developers, Inc also offers a variety of property renovation, demolition, and revitalization services for existing buildings.
Although Upscale Property Developers, Inc. provides homes with a luxury aesthetic, they are also the most expensive property developments on the market, thus resulting in many first-time home buyers being priced out of the market.
Premium Property Development Solutions
Established in 1990, Premium Property Development Solutions is a property developer of new commercial and residential properties in Salt Lake City. The company specializes in eco-friendly building materials and upscale design options for individual and corporate clients. Clients can customize their building design or choose from a variety of standard design options. The company employs experienced property developers and designers who are well-versed in green building design.
Premium Property Development Solutions is more affordable than Upscale Property Developers Inc. but is still out of most first-time home buyers’ price ranges.
Salt Lake Residential
Salt Lake Residential is also a local property development company that manages the complete property development process from sourcing and permitting to construction and sale. They are mostly known for their unique apartment complex designs but are equipped to take on a variety of different builds. The company has been in business for about ten years and has developed a reputation for building quality homes for affordable prices.
Although Salt Lake Residential has a similar value proposition of luxury homes at affordable prices, this company lacks the green building and eco-efficiency component to their business model, thus losing out on business from eco-conscious home buyers.
Redstone Development enjoys several advantages over its competitors. Those advantages include:
Brand & value proposition.
Redstone Development will offer the following unique value proposition to its clientele:
The promotions strategy for Redstone Development is as follows:
Website/SEO
Redstone Development will invest heavily in developing a professional website that displays all of the features and benefits of the property development company. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.
Social Media
Redstone Development will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Print Advertising
The company will invest in professionally designed advertisements to be printed in real estate publications. Redstone Development will also list its properties for sale in key local publications, including newspapers, area magazines, and its own newsletter.
Community Events/Organizations
The company will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.
Redstone Development’s pricing will be moderate so consumers feel they receive great value when purchasing properties from the company.
The following will be the operations plan for Redstone Development.
Operation Functions:
The following are a series of steps that lead to our vision of long-term success. Redstone Development expects to achieve the following milestones in the following six months:
1/1/202X Finalize lease agreement
2/1/202X Design and build out Redstone Development
3/1/202X Hire and train initial staff
4/1/202X Purchase first property for development
5/1/202X Kickoff of promotional campaign
6/1/202X Find second property for development
Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business as outlined in the Operations Plan.
Key revenue & costs.
Redstone Development’s revenues will come primarily from the sale of completed properties. The company will sell new single-family homes, multi-family townhomes, and apartment complexes/condominium properties to individual buyers and investors.
The cost drivers will be the overhead costs required to staff a property development office. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.
Key assumptions.
The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.
Income statement.
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
Revenues | ||||||
Total Revenues | $360,000 | $793,728 | $875,006 | $964,606 | $1,063,382 | |
Expenses & Costs | ||||||
Cost of goods sold | $64,800 | $142,871 | $157,501 | $173,629 | $191,409 | |
Lease | $50,000 | $51,250 | $52,531 | $53,845 | $55,191 | |
Marketing | $10,000 | $8,000 | $8,000 | $8,000 | $8,000 | |
Salaries | $157,015 | $214,030 | $235,968 | $247,766 | $260,155 | |
Initial expenditure | $10,000 | $0 | $0 | $0 | $0 | |
Total Expenses & Costs | $291,815 | $416,151 | $454,000 | $483,240 | $514,754 | |
EBITDA | $68,185 | $377,577 | $421,005 | $481,366 | $548,628 | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
EBIT | $41,025 | $350,417 | $393,845 | $454,206 | $521,468 | |
Interest | $23,462 | $20,529 | $17,596 | $14,664 | $11,731 | |
PRETAX INCOME | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Use of Net Operating Loss | $0 | $0 | $0 | $0 | $0 | |
Taxable Income | $17,563 | $329,888 | $376,249 | $439,543 | $509,737 | |
Income Tax Expense | $6,147 | $115,461 | $131,687 | $153,840 | $178,408 | |
NET INCOME | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
ASSETS | ||||||
Cash | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 | |
Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
Inventory | $30,000 | $33,072 | $36,459 | $40,192 | $44,308 | |
Total Current Assets | $184,257 | $381,832 | $609,654 | $878,742 | $1,193,594 | |
Fixed assets | $180,950 | $180,950 | $180,950 | $180,950 | $180,950 | |
Depreciation | $27,160 | $54,320 | $81,480 | $108,640 | $135,800 | |
Net fixed assets | $153,790 | $126,630 | $99,470 | $72,310 | $45,150 | |
TOTAL ASSETS | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 | |
LIABILITIES & EQUITY | ||||||
Debt | $315,831 | $270,713 | $225,594 | $180,475 | $135,356 | |
Accounts payable | $10,800 | $11,906 | $13,125 | $14,469 | $15,951 | |
Total Liability | $326,631 | $282,618 | $238,719 | $194,944 | $151,307 | |
Share Capital | $0 | $0 | $0 | $0 | $0 | |
Retained earnings | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
Total Equity | $11,416 | $225,843 | $470,405 | $756,108 | $1,087,437 | |
TOTAL LIABILITIES & EQUITY | $338,047 | $508,462 | $709,124 | $951,052 | $1,238,744 |
FY 1 | FY 2 | FY 3 | FY 4 | FY 5 | ||
---|---|---|---|---|---|---|
CASH FLOW FROM OPERATIONS | ||||||
Net Income (Loss) | $11,416 | $214,427 | $244,562 | $285,703 | $331,329 | |
Change in working capital | ($19,200) | ($1,966) | ($2,167) | ($2,389) | ($2,634) | |
Depreciation | $27,160 | $27,160 | $27,160 | $27,160 | $27,160 | |
Net Cash Flow from Operations | $19,376 | $239,621 | $269,554 | $310,473 | $355,855 | |
CASH FLOW FROM INVESTMENTS | ||||||
Investment | ($180,950) | $0 | $0 | $0 | $0 | |
Net Cash Flow from Investments | ($180,950) | $0 | $0 | $0 | $0 | |
CASH FLOW FROM FINANCING | ||||||
Cash from equity | $0 | $0 | $0 | $0 | $0 | |
Cash from debt | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow from Financing | $315,831 | ($45,119) | ($45,119) | ($45,119) | ($45,119) | |
Net Cash Flow | $154,257 | $194,502 | $224,436 | $265,355 | $310,736 | |
Cash at Beginning of Period | $0 | $154,257 | $348,760 | $573,195 | $838,550 | |
Cash at End of Period | $154,257 | $348,760 | $573,195 | $838,550 | $1,149,286 |
What is a property development business plan.
A property development business plan is a plan to start and/or grow your property development business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Property Development business plan using our Property Development Business Plan Template here .
There are a number of different kinds of property development businesses , some examples include: Single-family detached housing, Multifamily housing, Developing and Subdividing Lots, and Commercial buildings.
Property Development businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate developer business plan and a real estate investment business plan template.
Starting a property development business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Write A Property Development Business Plan - The first step in starting a business is to create a detailed real estate development company business plan that outlines all aspects of the venture. This should include market research on the real estate market and potential target market size, information the services you will offer, marketing strategies, pricing details and a solid financial plan.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your property development business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your property development business is in compliance with local laws.
3. Register Your Property Development Business - Once you have chosen a legal structure, the next step is to register your property development business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your property development business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Property Development Equipment & Supplies - In order to start your property development business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your property development business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
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Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">, opportunity.
MSN Real Estate (MSN) is an Oregon-based real estate company that will offer benchmarked rental units for the Eugene, Oregon community. MSN’s units will balance safety, cutting edge features, and a positive atmosphere for all tenants.
MSN will target three distinct customer segments. The largest segment that they will service is University of Oregon students. This segment is growing at 7% a year with 18,000 prospective customers. This segment is especially attractive since most of the local rental properties that are geared toward students are run down, poor quality units. The second market segment is local professionals who are increasing at 4% and have 12,000 potential members. The last segment is faculty and staff of the University. This section has a 5% growth rate and 6,000 potential customers.
The market for high quality, reasonably priced apartment units has been growing at a rate of 6.7%. Oregon’s rental rates have remained even, averaging $697, or $.79 per square foot, during the fourth quarter of this year. The Oregon market is experiencing rapid employment growth that is fueling demand for apartments, but not many new units are emerging. Not only is MSN pioneering this particular niche of affordable quality living, but it is capitalizing on the strength of the current economic growth in Oregon
MSN Real Estate provides high-quality, comfortable rental units in Eugene and other areas of Oregon. MSN’s apartment units offer state-of-the-art living conditions reflective of the rapid advancements in technology and a growing need for quality housing. Our company is dedicated to a hassle free living environment in which our tenants can enjoy all of the benefits of safe, attractive, and inviting units. Unlike many other realty companies that are solely concerned with turning profits, our primary objective at MSN is to maintain the highest level of customer satisfaction that is achievable. Tenant safety, happiness, and comfort are our main goals. MSN maintains competitive market prices, while working toward expanding the number of units owned, and increasing total profits earned. Within the company we will strive to work as a cohesive, harmonious unit focused on exemplifying our mission. Just as customer satisfaction is an intricate part of MSN’s success, so is employee satisfaction. That is why the founders of MSN Real Estate believe that employee satisfaction will make the company a success and will be the key to their longevity.
By Year 2 the company will be profitable enough to purchase its second facility. It is currently in discussions with the owners of a 20-unit apartment building in downtown Portland, OR. It is difficult to predict changes in the building values over the long term, but it is estimated that we will be able to purchase this building for $570,000.
Financing needed.
We will be getting $1,250,000 from various sources to start. We will have an angel investment firm of $1,000,000. A loan of $200,000. Lastly we will get $50,000 from the two owners
Our solution, target market, market size & segments.
MSN Real Estate’s main consumer base will be primarily students at the University of Oregon who will benefit from the apartment’s unparalleled level of quality, location, and technological amenities. We will also be marketing to local area professionals and recent graduates, along with faculty and staff at the University. These customers will be looking for safe, high-quality environments that can foster the type of atmosphere needed for scholastic and professional success.
Market Segmentation
We start with a critical competitive edge: there are very few apartment units that offer the same level of quality and technological amenities as MSN properties. We also have a very high regard for customer service; something that is unparalleled in this industry. MSN believes it is essential that the customer feels he/she is being treated with the utmost care and urgency. All staff and personnel go through a training program that teaches many of the skills needed for successful client relations and customer service.
Keys to success.
Our Keys to Success:
Marketing plan.
Marketing in a highly competitive housing industry depends on the recognition of excellence, as well as a point of difference to display our units in an individualized light. MSN will build a reputation upon these components.
We will develop and provide a living environment of unmatched proportion. It starts with the commitment to customer satisfaction and fulfilling their demands. Our commitment to quality and comfort includes safety and 24-hour customer service. The aspect of our living developments that differentiate MSN from all other real estate companies is our focus on maintaining the most advanced technological innovations on the market for our tenants.
MSN headquarters will be established in A-quality office space in the downtown area of Portland, Oregon. This will be the heart of our company, with satellite locations in Beaverton and Eugene, Oregon. We are also installing an in-house Internet server and 24-hour answering service so that all customer or business communications are dealt with in an expedient and fluid manner. Within any living development with more than 32 units a representative of the company will be located.
MSN real estate will have the most up-to-date technology provided both to the customers and to the subcontractors and other clients.
Milestones table.
Milestone | Due Date | |
---|---|---|
Nov 13, 2017 | ||
Nov 27, 2017 | ||
Dec 11, 2017 | ||
Jan 03, 2018 | ||
Jan 16, 2018 | ||
Feb 02, 2018 | ||
Mar 13, 2018 | ||
June 05, 2018 | ||
Sept 10, 2018 | ||
Dec 10, 2018 |
MSN Real Estate will be created as a Limited Liability Corporation based out of Portland, Oregon. It will be owned by its principal investors, Shawn Menashe and Nathan Koach. Shawn Menashe is the acting CEO and holds a 40% stake in the company. Nathan Koach is the acting CFO and holds a 40% share of the company as well. The other 20% is held by silent investors
MSN Real Estate is completely departmentalized. The main departments are finance, marketing, management, and research and development. Nate Koach, co-owner of the company, assumes the responsibilities of the CFO, while his counterpart, Shawn Menashe, will be responsible for the duties of CEO. The company will make all decisions in accordance with the company mission. Employees are delegated tasks based upon their specialty.
Every six months, the two top partners will assess the results of these tasks, and the personality of the employee involved, to determine promotion and/or salary issues.
Management Team Gaps
The present team requires business development and administrative support. Most of the partners have been working in business environments where this kind of support was provided to them as part of a larger organization.
MSN will turn to Dynamic Public Relations to help create business development programs, such as speaking opportunities and magazine article insertions, as well as forums and seminars that are important to our ongoing development.
Regarding administration, we need a strong finance manager to guard cash flow. Our partners are not accustomed to the worries of cash flow, but they have the sense to listen to reason and deal with constraints if the finance manager provides the proper information.
Key assumptions.
MSN’s plan depends on the assumptions that are made in the following table. These are annual and monthly assumptions that show the consistent growth of the company. Since we operate on a monthly collection basis, we are assuming that the majority of the collections will be timely and in full.
Some of the underlying assumptions are:
Expenses by month, net profit (or loss) by year, use of funds.
The total start-up expenses include legal, stationery, architect, brochures, consultants, insurance, rent, construction, expensed equipment, etc. Start-up assets required include short-term assets (truck, cell phone, etc.), and initial cash to handle the architect and contractor fees prior to opening. Additional cash is needed to pay all zoning fees and governmental regulations.
Long-term asset purchases and the assumption of long-term liabilities are anticipated.
Start-up Expenses
Legal $6,400
Architect Fees $3,000
Stationery etc. $270
Brochures $275
Consultants $2,550
Insurance $1,315
Rent $1,400
Construction $75,000
Expensed Equipment $600
TOTAL START-UP EXPENSES $91,000
We are getting startup funding from a couple of sources:
An angel investment firm will give us $1,000,000. They believe its a good investment due to our company assets
Long term liabilities – 200,0000
Menashe – 25,000
Koach – 25,000
Totaling $1,250,000
2018 | 2019 | 2020 | |
---|---|---|---|
Revenue | $891,900 | $1,246,200 | $1,429,100 |
Direct Costs | $79,330 | $111,020 | $119,790 |
Gross Margin | $812,570 | $1,135,180 | $1,309,310 |
Gross Margin % | 91% | 91% | 92% |
Operating Expenses | |||
Salaries & Wages | $249,600 | $254,592 | $259,683 |
Employee Related Expenses | $49,920 | $50,918 | $51,937 |
Leased Equipment | $24,000 | $24,000 | $24,000 |
Utilities | $21,600 | $21,600 | $21,600 |
Rent | $43,200 | $43,200 | $43,200 |
Insurance | $18,000 | $18,000 | $18,000 |
Amortization of Other Current Assets | $0 | $0 | $0 |
Total Operating Expenses | $406,320 | $412,310 | $418,420 |
Operating Income | $406,250 | $722,870 | $890,890 |
Interest Incurred | $13,805 | $11,638 | $9,339 |
Depreciation and Amortization | $40,000 | $40,000 | $40,000 |
Gain or Loss from Sale of Assets | |||
Income Taxes | $0 | $0 | $0 |
Total Expenses | $539,455 | $574,969 | $587,548 |
Net Profit | $352,445 | $671,231 | $841,552 |
Net Profit/Sales | 40% | 54% | 59% |
Starting Balances | 2018 | 2019 | 2020 | |
---|---|---|---|---|
Cash | $44,000 | $401,326 | $1,075,272 | $1,917,238 |
Accounts Receivable | $0 | $0 | $0 | |
Inventory | ||||
Other Current Assets | $12,000 | $12,000 | $12,000 | $12,000 |
Total Current Assets | $56,000 | $413,326 | $1,087,272 | $1,929,238 |
Long-Term Assets | $1,200,000 | $1,200,000 | $1,200,000 | $1,200,000 |
Accumulated Depreciation | ($40,000) | ($80,000) | ($120,000) | |
Total Long-Term Assets | $1,200,000 | $1,160,000 | $1,120,000 | $1,080,000 |
Total Assets | $1,256,000 | $1,573,326 | $2,207,272 | $3,009,238 |
Accounts Payable | $0 | $0 | $0 | |
Income Taxes Payable | $0 | $0 | $0 | |
Sales Taxes Payable | $0 | $0 | $0 | |
Short-Term Debt | $35,119 | $37,285 | $39,585 | $42,027 |
Prepaid Revenue | ||||
Total Current Liabilities | $35,119 | $37,285 | $39,585 | $42,027 |
Long-Term Debt | $210,881 | $173,595 | $134,010 | $91,983 |
Long-Term Liabilities | $210,881 | $173,595 | $134,010 | $91,983 |
Total Liabilities | $246,000 | $210,881 | $173,595 | $134,010 |
Paid-In Capital | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 |
Retained Earnings | ($90,000) | ($90,000) | $262,445 | $933,676 |
Earnings | $352,445 | $671,231 | $841,552 | |
Total Owner’s Equity | $1,010,000 | $1,362,445 | $2,033,676 | $2,875,228 |
Total Liabilities & Equity | $1,256,000 | $1,573,326 | $2,207,272 | $3,009,238 |
2018 | 2019 | 2020 | |
---|---|---|---|
Net Cash Flow from Operations | |||
Net Profit | $352,445 | $671,231 | $841,552 |
Depreciation & Amortization | $40,000 | $40,000 | $40,000 |
Change in Accounts Receivable | $0 | $0 | $0 |
Change in Inventory | |||
Change in Accounts Payable | $0 | $0 | $0 |
Change in Income Tax Payable | $0 | $0 | $0 |
Change in Sales Tax Payable | $0 | $0 | $0 |
Change in Prepaid Revenue | |||
Net Cash Flow from Operations | $392,445 | $711,231 | $881,552 |
Investing & Financing | |||
Assets Purchased or Sold | |||
Net Cash from Investing | |||
Investments Received | |||
Dividends & Distributions | |||
Change in Short-Term Debt | $2,166 | $2,300 | $2,442 |
Change in Long-Term Debt | ($37,285) | ($39,585) | ($42,027) |
Net Cash from Financing | ($35,119) | ($37,285) | ($39,585) |
Cash at Beginning of Period | $44,000 | $401,326 | $1,075,272 |
Net Change in Cash | $357,326 | $673,946 | $841,966 |
Cash at End of Period | $401,326 | $1,075,272 | $1,917,238 |
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Creating a business plan is essential for any business, but it can be especially helpful for apartment construction businesses who want to improve their strategy or raise funding.
A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you will accomplish it. To create an effective business plan, you must first understand the components essential to its success.
This article provides an overview of the critical elements that every apartment construction business owner should include in their business plan.
What is an apartment construction business plan.
An apartment construction business plan is a formal written document describing your company’s business strategy and feasibility. It documents the reasons you will be successful, and your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.
An apartment construction business plan is required for banks and investors. The document is a clear and concise guide to your business idea and the steps you will take to make it profitable.
Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.
The following are the key components of a successful apartment construction business plan:
The executive summary of an apartment construction business plan is a one- to two-page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.
This section should include a brief history of your company. Include a short description of how your company started and provide a timeline of milestones your company has achieved.
If you are just starting your apartment construction business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your apartment construction firm, mention this.
The industry or market analysis is an important component of an apartment construction business plan. Conduct thorough market research to determine industry trends and document the size of your market.
Questions to answer include:
You should also include sources for the information you provide, such as published research reports and expert opinions.
This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.
For example, an apartment construction business’ customers may include:
You will use this information to determine your marketing strategy and how you will reach your target audience.
You can include information about how your customers decide to buy from you as well as what keeps them buying from you.
Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or apartment construction services with the right marketing.
The competitive analysis helps you determine how your product or service will be different from competitors and what your unique selling proposition (USP) might be that will set you apart in this industry.
For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and advantage; that is, in what ways are you different from and ideally better than your competitors.
This part of the business plan is where you determine and document your marketing plan. . Your plan should be laid out, including the following 4 Ps.
This part of your apartment construction business plan should include the following information:
The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present.
Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters and then each year for the following four years. Examples of milestones for an apartment construction business include reaching $X in sales. Other examples include reaching a certain number of customers or constructing a certain number of units.
List your team members here, including their names and titles, as well as their expertise and experience relevant to your specific apartment construction industry. Include brief biography sketches for each team member.
Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities, you plan to hire for in the future.
Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix).
This includes the following three financial statements:
Your income statement should include:
Revenues | $ 336,090 | $ 450,940 | $ 605,000 | $ 811,730 | $ 1,089,100 |
$ 336,090 | $ 450,940 | $ 605,000 | $ 811,730 | $ 1,089,100 | |
Direct Cost | |||||
Direct Costs | $ 67,210 | $ 90,190 | $ 121,000 | $ 162,340 | $ 217,820 |
$ 67,210 | $ 90,190 | $ 121,000 | $ 162,340 | $ 217,820 | |
$ 268,880 | $ 360,750 | $ 484,000 | $ 649,390 | $ 871,280 | |
Salaries | $ 96,000 | $ 99,840 | $ 105,371 | $ 110,639 | $ 116,171 |
Marketing Expenses | $ 61,200 | $ 64,400 | $ 67,600 | $ 71,000 | $ 74,600 |
Rent/Utility Expenses | $ 36,400 | $ 37,500 | $ 38,700 | $ 39,800 | $ 41,000 |
Other Expenses | $ 9,200 | $ 9,200 | $ 9,200 | $ 9,400 | $ 9,500 |
$ 202,800 | $ 210,940 | $ 220,871 | $ 230,839 | $ 241,271 | |
EBITDA | $ 66,080 | $ 149,810 | $ 263,129 | $ 418,551 | $ 630,009 |
Depreciation | $ 5,200 | $ 5,200 | $ 5,200 | $ 5,200 | $ 4,200 |
EBIT | $ 60,880 | $ 144,610 | $ 257,929 | $ 413,351 | $ 625,809 |
Interest Expense | $ 7,600 | $ 7,600 | $ 7,600 | $ 7,600 | $ 7,600 |
$ 53,280 | $ 137,010 | $ 250,329 | $ 405,751 | $ 618,209 | |
Taxable Income | $ 53,280 | $ 137,010 | $ 250,329 | $ 405,751 | $ 618,209 |
Income Tax Expense | $ 18,700 | $ 47,900 | $ 87,600 | $ 142,000 | $ 216,400 |
$ 34,580 | $ 89,110 | $ 162,729 | $ 263,751 | $ 401,809 | |
10% | 20% | 27% | 32% | 37% |
Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:
Cash | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 | $ 869,278 |
Other Current Assets | $ 41,600 | $ 55,800 | $ 74,800 | $ 90,200 | $ 121,000 |
Total Current Assets | $ 146,942 | $ 244,052 | $ 415,681 | $ 687,631 | $ 990,278 |
Fixed Assets | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 | $ 25,000 |
Accum Depreciation | $ 5,200 | $ 10,400 | $ 15,600 | $ 20,800 | $ 25,000 |
Net fixed assets | $ 19,800 | $ 14,600 | $ 9,400 | $ 4,200 | $ 0 |
$ 166,742 | $ 258,652 | $ 425,081 | $ 691,831 | $ 990,278 | |
Current Liabilities | $ 23,300 | $ 26,100 | $ 29,800 | $ 32,800 | $ 38,300 |
Debt outstanding | $ 108,862 | $ 108,862 | $ 108,862 | $ 108,862 | $ 0 |
$ 132,162 | $ 134,962 | $ 138,662 | $ 141,662 | $ 38,300 | |
Share Capital | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Retained earnings | $ 34,580 | $ 123,690 | $ 286,419 | $ 550,170 | $ 951,978 |
$ 34,580 | $ 123,690 | $ 286,419 | $ 550,170 | $ 951,978 | |
$ 166,742 | $ 258,652 | $ 425,081 | $ 691,831 | $ 990,278 |
Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:
Below is a sample of a projected cash flow statement for a startup apartment construction business.
Net Income (Loss) | $ 34,580 | $ 89,110 | $ 162,729 | $ 263,751 | $ 401,809 |
Change in Working Capital | $ (18,300) | $ (11,400) | $ (15,300) | $ (12,400) | $ (25,300) |
Plus Depreciation | $ 5,200 | $ 5,200 | $ 5,200 | $ 5,200 | $ 4,200 |
Net Cash Flow from Operations | $ 21,480 | $ 82,910 | $ 152,629 | $ 256,551 | $ 380,709 |
Fixed Assets | $ (25,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Net Cash Flow from Investments | $ (25,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Cash from Equity | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Cash from Debt financing | $ 108,862 | $ 0 | $ 0 | $ 0 | $ (108,862) |
Net Cash Flow from Financing | $ 108,862 | $ 0 | $ 0 | $ 0 | $ (108,862) |
Net Cash Flow | $ 105,342 | $ 82,910 | $ 152,629 | $ 256,551 | $ 271,847 |
Cash at Beginning of Period | $ 0 | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 |
Cash at End of Period | $ 105,342 | $ 188,252 | $ 340,881 | $ 597,431 | $ 869,278 |
You will also want to include an appendix section which will include:
Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your apartment construction company. It not only outlines your business vision but also provides a step-by-step process of how you will accomplish it.
A well-written business plan is an essential tool for any apartment construction. The tips we’ve provided in this article should help you write a winning business plan for your apartment construction company.
By: Author Tony Martins Ajaero
Home » Business Plans » Real Estate Sector
Are you about starting a serviced apartment complex? If YES, here is a complete sample serviced apartment complex business plan template & feasibility report you can use for FREE .
Okay, so we have considered all the requirements for starting a serviced apartment complex. We also took it further by analyzing and drafting a sample serviced apartment complex marketing plan template backed up by actionable guerrilla marketing ideas for serviced apartment complex. So let’s proceed to the business planning section .
We all know that the post-recession housing industry in the early 21st century saw a shift away from home ownership to home renting, allowing a straight increase to the apartment-rental niche of the industry. Many people don’t know that buying apartments and renting them can arrive as solid opportunities for real estate investment businesses, since apartments attract tenants in both good times and bad.
It is very important to understand and be conversant with how to start a business of buying apartments and renting them. The first step in venturing into this business is to research and understand the business and how it works.
It is very important that you consider using the Limited Liability Company (LLC) form of organization so that you may gain a measure of financial protection from the business’s debts. It is advisable that you understand that starting your business as an LLC or a private corporation can guarantee the management control afforded by the sole proprietorship form of organization while protecting you from being held personally. He will be in charge of multiple mortgages in the worst-case scenario during the cause of your business.
You may want to thoroughly go through the business plan below to give you a good insight on how to run your business.
1. industry overview.
It is known fact that Serviced apartment businesses are responding creatively to the increasing demand for, and undersupply of short-term rented accommodation in some parts of the world. It is also known that the demand from businesses wanting short-term accommodation – particularly serviced apartments – for overseas assignees has soared in recent years and shows no sign of abating.
It was analysed that within the past seven years, the number of serviced apartments has grown by 80 per cent and now totals more than 750,000 properties worldwide, some 61 per cent of them in the US and 17 per cent in Europe.
The trend of the Serviced apartment industry looks set to continue, with the number of apartments raising by as much as 18.2 per cent between 2014 and 2015.
Also the fact that demand exceeds supply puts upward pressure on occupancy levels. Showing the reason why three-quarters of global operators report a year-on-year increase. Given these high occupancy rates, it is no surprise that more hotels are moving into the market.
It is also important to note that the industry is showing a growing trend for ventures to locate serviced apartments and hotels on the same site, producing savings during development and operation.
While short-term assignments are forecast to grow to more than a fifth of all international relocations in the three years to 2019, long-term assignments are expected to fall from 52 per cent to 45 per cent over the same period. Also the availability of short-term rental accommodation is not meeting demand in many markets, such as Asia.
Liberty World LLC is a new Serviced Apartment Complex Business established by Felix Cruise and Agatha Melvin for the sole purpose of buying and owning income producing real estate. We at liberty World LLC understand that we were established to fill the void in the local Auckland, New York rental housing market by giving clean, well cared for rental homes to well qualified tenants or patrons.
We believe that neither the homes nor our prospective tenants are chosen on a careless basis, but instead on purposeful, planned and methodical basis. Our property selection process at Liberty World LLC will be rigorous and based on long term investment standards and tenants will be personally analysed.
We at Liberty World LLC believes that the key to successful property management is to be entirely committed for the long term in both our property and tenant selection process, and careful business endeavour.
We at Liberty World LLC plan to focus our main efforts on purchasing and developing existing properties. We believe that once we buy the property, each unit will be hard wired with Internet access, state-of-the-art amenities will be installed, and safety measures will be put in place making sure that of a standard and safe environment.
We also believe that our course of action will be first and foremost be pursued as a way to efficiently utilize capital and build a reputation within the community.
We believe that Liberty World LLC will be led Felix Cruise and Agatha Melvin. Felix has a bachelor’s degree in Economics and received his MBA from the University of Oregon. After his academic endeavours, Felix went to work for one of the largest property management companies in the area. After nine years with StableLive Inc. Felix attained the position of Vice President of Operations. We were meant to understand that it was during his time at Stable Live Inc.
He gained substantial industry insight and experience. Agatha on her own brings different set of skills and experience to Liberty World LLC, coming from a customer service background. It was a very papillary information that even before the young age of 18, the intelligent Agatha had already completed her undergraduate degree and went to work for Vodafone.
After four years at Vodafone, Agatha was promoted to the Director of Customer Service for the North America aspect of the Vodafone. In this position she was able to manage Vodafone; a million plus person customer service department. This experience provided Agatha with incredible customer attention skills that she will leverage at Liberty World LLC.
We at Liberty World LLC plan to provide clean, quality homes in the Auckland growing markets to well qualified tenants and business patrons. We at Liberty World LLC also have plans to purchase additional quality income producing properties huge enough to generate, passive income streams. Our primary source of revenue at Liberty World LLC is rental income. Supplemental income will include:
Our Business Structure
It is very important to note that both Felix Cruise and Agatha Melvin will own and manage Liberty World LLC. Felix will perform routine maintenance requirements and repairs. Agatha will manage the daily bookkeeping requirements. Agatha will then pass on payments to vendors such as trash service and recycling service, and forward the required information to the company accountant for preparation of the annual income taxes.
Felix will also take care the day to day maintenance of the rental unit, and he will always replace air filters monthly, inspect the grounds, and make notations of the overall physical condition of the property. The tenant will be put on notice for example if the yard needs to be mowed or weeds appear to be an issue. We at Liberty World LLC believe that the tenant will have enough time to the notice and will be fined daily until the issue has been resolved.
We at Liberty World LLC know that the success of our business depends on an organized division of responsibilities in order to run an efficient, diversified enterprise. Just we must have start above, the main decisions and Responsibilities in the company will be divided between the two top partners. They will focus on maintaining high quality and a cohesive business entity. Here are the workforce we hope to start with:
Chief Executive Officer
Project Manager
Admin and HR Manager
Head of Construction
Business Developer
Company’s Lawyer
Head, Acquisitions and Dispositions
Head of Asset Management
Sales and Marketing Officer
Front Desk / Customer’s Service Officer
It is very important to explain that SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis is an aspect of strategic planning that discussion these four elements as they relate to Liberty World LLC business proceedings. Outlined below is a well researched SWOT Analysis for Liberty World LLC:
Opportunities
We at Liberty World LLC believe that our two prong approach to real estate will allow our business to grow successfully in the rapidly changing real estate market. We also hope that our business strategy will allow us at Liberty World LLC to offset the risks from each business unit so that there is a diversified balance in our real estate portfolio.
This is especially important as the business uses leverage to finance the acquisition of its properties. This industry is constantly evolving and leaving many inflexible companies stagnant. One of the major trends is the need to adapt to technological advancements as well as maintaining the overall appearance and condition of the complexes.
Also we have noticed that with the demand for serviced apartments growing exponentially, an interesting phenomenon is becoming more and more prevalent in our industry, which has caught on since the success of the TAS Alliance and the other ‘global’ hybrids – businesses that operate their own units under the same name as their agency.
We believe that this is not new; it was how the original global programmes were won for the past 15 years. But as we all know, being an agent is not easy, and its challenges should never be underestimated. It is also important to note that Europe was the second-largest global region for serviced apartments, although the relative maturity of individual country markets varied considerably.
We at Liberty World LLC hope to build and operate among several different investment and operating units, which is why it is nearly impossible or hard to characterize any specific tenant that will occupy the our apartment complex property. But we plan to enact strict tenant quality and credit review procedures to make sure that the revenues will not be interrupted by tenant default at Liberty World LLC.
Our competitive advantage
We at Liberty World LLC understand that the real estate is effectually one of the most free market oriented businesses in the country, competition cannot be accurately categorized. But we know that there will be a sizable amount of competition from both single owner investment firms to large construction companies that are looking to ripe from the unusually high real estate prices throughout the New York metropolitan area.
We at Liberty World LLC understand that there are very few apartment units that offer the same level of quality and technological amenities as Liberty World LLC properties, but we believe that we possess high regard for customer service; something that is not very common in this industry.
We at Liberty World LLC believe that it is important that our customer feels he/she is being treated with the utmost care and urgency. We will makes sure that all our staff and personnel go through a training program that teaches many of the skills needed for successful client relations and customer service.
It is very crucial to note that the direct finance and purchase of apartment complex properties is our main business at Liberty World LLC. We believe that residential real estate will provide a continuous stream of rental income that we at Liberty World LLC will use for reinvestment and profit stability for our business. We have without delay sourced a 20 unit apartment complex that will be initial property acquired as a starting point.
We at Liberty World LLC plan to develop a complex economic Pricing Strategy that will determine the fair market rate of a property based on its capitalization rate in conjunction with the market values of residential property. Residential real estate is the least risky form of real estate investing because the service offered is a necessity.
Our main source of income at Liberty World LLC is acquiring apartment complex properties with the sole purpose of renting the properties to the general public. Liberty World LLC plan to generate profits from both the ongoing rental income. While generating capital appreciation from the long term holding of these properties. We hope that now the real estate market has hit come to its bottom, that the market will have a future growth rate of 5% to 6% per year.
We will like it to be known that the founders of Liberty World LLC will personally lease their properties and do not need to pay incentives to sales agents, and just like sales agents, the founders of Liberty World LLC are motivated to lease properties quickly- after all vacant properties do not generate revenue! Although that we at Liberty World LLC are motivated to get tenants in quickly they will not ‘rush’ at the expense of sacrificing quality.
We believe that if we at Liberty World LLC is unable to find a perspective tenant in a reasonable amount of time (approximately 30 days) then the cost of doing business are the advertising costs associated with placing classified ads with the local newspaper and Craigslist.
We at Liberty World LLC expect a gradual raise in the total number of units over the next year. We believe that as time goes on; the monthly per-unit rental price will slowly ascend, joined by the reduction in cost over time, producing an increased per-unit profit.
We believe that from our opening in January to June, we expect that all units will be completely rented out. In the summer months we expect fewer tenants, so we have planned on a rent lowering process to entice renters to stay. Also, we will only rent on yearly leases to make sure that all rented units remain filled year round.
With the estimated profits from the previous months the annex will be completed in September, adding 14 more units. Listed below is the summary of our sales projections:
We at Liberty World LLC understand perfectly that marketing in a highly competitive housing industry rests on the recognition of excellence, as well as a point of difference to display our units in an individualized light. We at Liberty World LLC plan to develop and provide a living environment of unmatched proportion. Our astounding service starts with the commitment to our prospective satisfaction and fulfilling their demands.
Our commitment to quality and comfort includes safety and 24-hour customer service. The aspect of our living developments that differentiate Liberty World LLC from all other real estate companies is our focus on giving and implementing the most advanced technological innovations on the market for our tenants throughout our business and operation. We plan to use the following strategies to market our business:
We at Liberty World LLC hope to focus on providing high-quality living in convenient locations with a wide customer base. We particularly understand that we need to remain at the upper echelon in the quality range when compared to competitors in the industry.
We also understand that we can only do this by organizing and implementing a sound publicity and advertising plan that will assume responsibility for the functionality and appearance of all our properties at Liberty World LLC. We plan to make use of the following strategies:
Our pricing at Liberty World LLC will be at the top of what the market will bear. We believe that we are competing with large firms who have similar complexes. Our prices will be competitive with these larger firms while maintaining the high level of quality and expert management. It is very important to state Cleary that Liberty World LLC will utilize Competition Based Pricing – in which prices are based on the market.
We believe that Liberty World LLC thorough due diligence process will never buy the highest priced property or the lowest priced for that matter. Our Prices vary by unit from $440 to $1,200 a month. We plan to make sure we follow market pricing trends in order to maintain a competitive advantage in the huge industry.
We all at Liberty World LLC after our extensive research and thorough discussion understand efficiently that different customers prefer different payment options as it suits them but at different times and ways. We plan to make sure that we provide them with payment options that will make their transactions less stressful and very open.
Listed below are the payment options we at Liberty World LLC plan to make available to our customers;
We have also chosen to partner with a known bank in the united states in order to give our customers the best they can ever get in the nursery school industry of the United States.
From our detailed analysis above, and after considering everything possible and legal, we need approximately Six hundred and ten dollars ($610,000) to start up Liberty World LLC.
Generating Funding / Start-up Capital for Liberty World LLC
Felix Cruise and Agatha Melvin, the founders of Liberty World LLC have been interested in locating a means to supplement their income. When Agatha’s mother passed away earlier this year, she received approximately $300,000 in inheritance and she decided to use this windfall to purchase and manage investment income properties.
Together with Felix Cruise who’s savings was enough, they decided to continue education classes at their local community college and decided upon the subject property for their first purchase. They own the business solely and for now hope to raise and run the business themselves which is why the way of raising fund is subjected to just these few ways:
Our most important marketing strategy at Liberty World LLC is customer word of mouth. We believe that the only way to truly know the quality of our units is through experience; hence we must maintain the highest level of customer satisfaction.
We believe that rewards will be given to clients or customers that refer new clientele to Liberty World LLC. Liberty World LLC believes that the high level of quality we at Liberty World LLC will provide can attract a strong demand for our units.
We at Liberty World LLC plan to make use of early move-in bonus program. We plan to make sure that any individual that signs their lease before June 15th will receive a free month as well as two parking spaces. We believe that this will encourage people to try and beat the rush of people who move in later. We also believe that it will give the appearance of increased demand.
We believe that for people who desire high-quality living with all the technological amenities available, only we are Liberty World LLC real estate properties will be able to serve their needs and desires at an affordable price. Unlike most other property management companies, we at Liberty World LLC are very committed to guaranteeing customers full satisfaction, with 24-hour on-staff service, live answering service, and a website that takes care all complaints instantly.
We believe that sales in our business will be based upon providing customers with a living concept fitting of their needs. We hope to be in touch with the needs and desires of our prospective patrons in order to best attract a consistent flow of incoming residents in the industry.
Our sale program at Liberty World LLC will include sales awards for length of lease agreements, maintaining a full capacity status, and customer service awards for those who best exemplify Liberty World LLC commitment to customers.
We at Liberty World LLC hope to award existing customers for referring new customers to the company. We at Liberty World LLC depend on our alliance with Manny Construction to develop our housing units, as well as Leslie Architectural firm to assist in the layout and design of our units.
Checklist/Milestone
Article Index:
5.0 marketing strategy and implementation, 6.0 organization and management, 7.0 financial plan, 1.0 executive summary.
Real Estate Ventures, Inc. is a newly formed S-Corporation wholly owned by Steve and Linda Rogers for purposes of purchasing and owing income producing real estate. Real Estate Ventures, Inc. fills the void in the local Franklin, Tennessee rental housing market by providing clean, well cared for rental homes to well qualified tenants. Neither the homes nor the ten\ants are chosen on a hasty basis, but rather on purposeful, planned and methodical basis. The property selection process is rigorous and based on long term investment standards and tenants are personally evaluated by the owners. Real Estate Ventures, Inc. believes the key to successful property management is to be committed for the long term in both the property and tenant selection process.
The owners of Real Estate Ventures, Inc. are lifelong residents of the thriving Franklin, Tennessee area, a suburb of Nashville. Steve Rogers, an entrepreneur has owned his own company, ProStar Paints for 15+ years. Linda Rogers is a math teacher at Franklin Elementary. Both owners have access to additional sources of revenue to supplement expenses associated with the investment property. In addition to their outside revenue, the Rogers received a $100,000 inherence when Linda’s mother passed away recently.
Real Estate Ventures, Inc. is purchasing their first investment property, a well maintained single family home located in the highly sought after Red Mill Estates subdivision. Real Estate Ventures, Inc. has a contract on the house and the sales price is $107,500. The property is in need of some repair and maintenance (primarily cosmetic). Real Estate Ventures, Inc. will contract the work to a well known contractor that is personally known by Real Estate Ventures, Inc. for 15years. Steve Rogers will paint the property. It is estimated the repairs will take one month to complete at a cost of approximately $10,000.
A tenant, known by the owners with excellent credit and references, has been located and is ready take occupancy the following month. She has provided a security deposit.
The owners of Real Estate Ventures, Inc. are requesting a $53,750 commercial real estate loan to purchase the investment property. The credit facility will be based on 15 year amortization and have a loan to value ratio of 50%. The following business plan will provide a history of Real Estate Ventures, Inc., its current and future plans, and its ability to repay this financial obligation.
Real Estate Ventures, Inc.’s goal is to invest in quality – both in its properties and in its tenants. One of the largest mistakes made by new real estate investors is in poor property selection. Even worse is their tenant selection process, often with little or no background and credit checks. At Real Estate Ventures, Inc., the owners are extremely devoted to their business and their commitment to the long term can be seen in their extreme dedication to both their properties and their meticulous selection process of finding long term tenants.
Real Estate Ventures, Inc. holds the following as its Guiding Principles.
Real Estate Ventures, Inc. is fully committed to make its rental property business a long term success with future plans for expansion. It is this dedication and drive which will set them apart from their local peers. The following are what Real Estate Ventures, Inc. believes are its keys to success:
Real Estate Ventures, Inc., (“Real Estate Ventures, Inc.”), is a newly formed S-Corporation formed for purposes of managing the underlying real estate located in Franklin, Tennessee, a principal city in the Nashville Metropolitan Statistical Area (“MSA”). Real Estate Ventures, Inc. is jointly owned by Steve and Linda Rogers, husband and wife.
Steve and Linda Rogers are lifelong residents of Franklin, Tennessee. Steve has an established business and has owned his paint business known as ProStar Paint for 15+ years. Linda Rogers, a graduate of Middle Tennessee State University, is a math teacher at Franklin Elementary School.
Real Estate Ventures, Inc. is an S-Corporation.
Steve and Linda Rogers, the owners of Real Estate Ventures, Inc. have been interested in finding a means to supplement their income. When Linda’s mother passed away earlier this year, the couple received approximately $100,000 in inheritance and they decided to use this windfall to purchase and manage investment income properties. Together they attended several continuing education classes at their local community college and decided upon the subject property for their first purchase. The 1,356 SF house is located in the Red Mill Estates neighborhood. The house is in need of some cosmetic updates to bring the property to current rental market standards and is primarily comprised of new carpet, paint, and laminate tile.
The couple plans to subcontract the project and have build-out and completion within 30 days and the tenant taking occupancy thereafter.
Below is a detailed summary of the Construction Budget :
Steve Rogers personally knows the contractor, Ben Nelson, of Ben Nelson Construction, and has painted many houses for the contractor over the past 15 years. Mr. Nelson has approved the budget and believes that barring weather conditions, the project should be completed on schedule with minimal cost overruns. The contractor is reputable and is well known in the community for its integrity, finishing projects on time, and its quality of workmanship. Steve will do the painting himself. The estimated time to complete the renovation and rehabilitation is one month.
Real Estate Ventures, Inc. has located an approved tenant for the property as well. A teacher and acquaintance at Linda’s school has requested to occupy the unit. The single mother of two recently divorced and is currently living with a relative. The house is a wonderful opportunity for the teacher to launch a fresh start and the location is 5 minutes to the school where she teaches with Linda. The tenant has passed the credit and rigorous background checks and her references have all checked out. Real Estate Ventures, Inc. is holding her security deposit.
Real Estate Ventures, Inc. extensively researched the local market and found it met their key criterion. The Red Mill Estates neighborhood has lush landscaping, larger than average lots and is primarily owner occupied. The surrounding neighborhoods are middle class suburbs with five grocery stores within a 5 mile radius, various restaurants, and shopping malls 3 miles away near the easily accessible I-65. The property is located in the Franklin City Elementary School District.
The property is clean and well maintained by the original owner. Updates to the property will primarily be cosmetic to bring the property to current market standards.
3.1 products/services descriptions.
Real Estate Ventures, Inc. provides clean, quality homes in growing markets to well qualified tenants.
The primary source of revenue is rental income. Supplemental income will include:
Forfeited Deposits Bounced Check fees (NSF) Late charges Damage and Cleaning Charges Application fees Pet Charges Lease Termination charges
There are seven rental income properties within a 1 mile radius of the subject along with several multifamily apartment units. For comparison purposes, the multifamily units have been excluded from this comparison. Rents per square foot range from a high of $1.11 to a low of $0.83 per square foot (“PSF”). The average market rent PSF in the Franklin market is $1.01. The subject rent PSF is $0.98 and compares favorably with the market.
Following is a table outlining the local comparables:
3.4 inventory management, 3.5 warehousing and fulfillment, 3.6 future products/services.
Real Estate Ventures, Inc. has near term plans to purchase additional quality income producing properties sufficient to generate, passive income streams.
Franklin, Tennessee, located in Williamson County, is a Principal City in the in the Nashville Metropolitan Statistical Area (“MSA”) and is ranked 31 in the United States. According to the University Of Tennessee’s 2012 Economic Outlook, Williamson County is one of the fastest growing counties in the state, expanding by 44.7% over the prior year.
Health Spring, Community Health Systems, Healthways, Home Instead Senior Care, MedSolutions Inc, Magazines.com, the Provident Music Group, Renal Advantage Inc, World Christian Broadcasting and Nissan’s North American headquarters are based in Franklin.
There are over 1,600 businesses in the surrounding 3 mile radius of the subject. The majority of the local businesses are in the service category and comprise 40.1% of the local employment base followed by 20.8% in the retail trade.
Franklin vacancy levels were reported to be 6% compared to the industry average of 7.9%. SOURCE: Trulia, Bureau of Labor Statistics
The housing market recovery has remained true to the old real estate axiom of “location, location, location.” How your local market is faring today – and if it makes more sense to buy or rent, to sell now or to hold off if possible – is largely determined by unique, local factors and fundamentals. Timely and comprehensive local market information will be even more important in 2013 as buyers continue to seek bargains and sellers look to maximize returns. Source: Zillow Research
A recent survey of Franklin, Tennessee revealed there are currently 67 single family residences available for rent. The average monthly rental charge ranges from $2,202 monthly to $1,058 monthly. The middle tier monthly rent is $1,283 or $1,031,532 annualized.
Real Estate Ventures, Inc.’s portion of the $1 million market represents 1.51% of market share.
The primary participants in the rental real estate market are other single family residences and apartments. However, other indirect competitors include: condos, mobile homes, trailers, garage apartments and duplexes. Sellers of homes that offer rent to own options pose yet another form of competition.
Within a one mile radius of the subject are 10 apartment complexes and 7 single family residences available for rent. For comparison, this analysis will focus only on the single family residences available for rent.
1101 Gown Blvd 2 BDR / 2 BA $1,200 month / 1,107 SF This property competes closely with the subject. However, the subject is superior with its extra square footage and additional bedroom.
1102 Gown Blvd 3 BDR / 2 BA $1,350 month / 1,445 SF This property is most comparable to the subject. Comparable Number Two has 119 additional square feet are and is $0.05 lower in monthly rent.
700 Fountain Blvd 3 BDR / 2 BA $2,595 month / 2,328 SF This property has the largest square footage of the comparables and is located on acreage. It is also the demanding the highest monthly rental charge. Based on these factors Comparable Number 3 is an indirect competitor.
3104 Travis Road 3 BDR / 2 BA $1,995 month / 2,083 SF This property competes directly with the subject. With an additional 757 square feet, this property is priced $0.02 PSF below the subject and could appeal to the value renter. The downside to this property is its inferior location – which is across the street from a landfill. The property has been vacant for four months and it is rumored the owner will be dropping the asking rental price.
308 Hardy Street 3 BDR / 2 BA $1,125 month / 1,200 SF Comparable Number 5 is slightly older and smaller the subject. Built in 1980, the property is 126 feet smaller than the subject. The property is clean and well maintained and is considered a direct competitor with the subject.
1200 Main Street 4 BDR / 3 BA $1,800 month / 1,700 SF This property is larger than the subject by over 300 feet. Asking rent is higher than the subject as well and higher than the $1,100-$1,400 range Real Estate Ventures, Inc. is hoping to attract. This property has an additional bedroom. Based on these factors; Comparable Number 6 is considered an indirect competitor.
3225 Bolen Drive 3 BDR / 3 BA $1,750 month / 2,100 SF Comparable Number 7, like Comps 3 and 4 is substantially larger than the subject. The asking monthly rent of $1,750 is also above the range Real Estate Ventures, Inc. is targeting. The property has exceptional value with rents per square foot the lowest in the market at $0.83 and will appeal to the value renter. The property is clean and well maintained. Based on its larger square footage and higher asking monthly rent, Comparable Number 7 represents an indirect competitor.
The 1 mile radius surrounding the subject had a population of 7,199 at the 2010 Census and is expected to grow to 7,363 by the Year 2017. The majority of the homes are owner occupied with 1,950 housing units and a reported 793 renter occupied units from the 2010 Census. Rental units are expected to grow to 854 by the Year 2017. The median age at 2010 was 34. Source: BUSINESSDECISION.INFO
Residents within a 1 mile radius of the subject are comprised primarily of two market segment groups: In Style represents 52.7% of the market share and Crossroads with 35.4% of the market or 88.1% cumulative market. The In Style market is comprised primarily of residents that live in the suburbs but prefer the city lifestyle. These residents prefer townhomes to traditional single family homes and have a median household income of $182,665. Real Estate Ventures, Inc. is targeting the latter group, Crossroads, as their primary target customer. Following is a brief summary of their target occupant:
Crossroads neighborhoods are growing communities in small towns. Married couples with and without children and single parents are the primary household types in these areas. They have a median age of 32.2 years. This population is growing at 1.6% annually faster than the US population. The median household income is $43,799. Children are the focus of their lives. They drive domestic cars and trucks and handle the maintenance themselves. Source: ESRI.COM/Tapestry
Prior to selecting the rental unit, Real Estate Ventures, Inc. placed an advertisement for rent with the online classifieds at Linda’s place of employment, Franklin Elementary. The response was overwhelming! Real Estate Ventures, Inc. had 14 candidates to choose from! The majority of these applicants were fellow teachers or friends of teachers. All applicants were families, both single income and dual income. Real Estate Ventures, Inc. had to inform the turned down applicants that the property was already leased.
Based on this market ‘test’ Real Estate Ventures, Inc. decided to put the “pedal to the metal” and make an offer on the property.
Real Estate Ventures, Inc. is targeting families with children – single family households or dual income households. The target tenant is young, under the age of 35 and is likely to have some additional financial obligations, such as student loan debt and car note debt that they want to pay off prior to considering home ownership. Many of the new teachers at Linda’s school fit the target profile and Real Estate Ventures, Inc. will continue to pursue this target group as tenants. The target rent is the $1,100-$1,400 range.
Given the option of raising a family in a traditional single family home compared to an apartment complex, Real Estate Ventures, Inc.’s target tenant prefers the former. The Red Mill Estates neighborhood and surrounding neighborhoods are growing residential neighborhoods making the location ideal for Real Estate Ventures, Inc.’s tenants. With limited direct comparables, the demand for single family residences available for rental is high in this market.
The local single family rental home market increased 1.4% over the prior year. Source: Zillow Rent Index
Real Estate Ventures, Inc. will position itself as the rental property of choice when it comes to quality properties in solid neighborhoods, by actively staying current on local market conditions.
Real Estate Ventures, Inc. will own, operate, and lease clean, well maintained single family residences to well qualified tenants. Others often miss the mark by investing in low quality properties which will not provide sufficient ROI (return on investment). Additionally other landlords often fall short in responding to tenants needs for repairs. When a tenant calls requesting repairs to say a leaky faucet, Real Estate Ventures, Inc. will have a repairman on premises that same day and more than likely one of the owners will personally make the repair. What will set Real Estate Ventures, Inc. apart from other property managers will be its unique ability to bring quality properties and tenants together. The following sections address the various tactics that will contribute to this effort.
SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis is a method for strategic planning that evaluates these four elements as they relate to Real Estate Ventures, Inc.’s business objectives. The following section helps demonstrate Real Estate Ventures, Inc.’s marketing strategy:
Real Estate Ventures, Inc. will only lease solid, clean, well maintained investment properties that generate positive cash flow.
In order to meet these objectives, Real Estate Ventures, Inc. will not make the mistakes many new landlords make and perform thorough due diligence prior to purchasing any property; All perspective properties must meet the following requirements:
Real Estate Ventures, Inc. will strive to be a superlative landlord as well – by responding within one hour to any tenant issues regarding repairs and maintenance during normal business hours of operation. Weekend and evening calls will be answered the following business day unless it is a life threatening emergency (such as the smell of gas, water main breaks) in which case the owners will be paged immediately and an emergency response service will be sent.
On a monthly basis, Real Estate Ventures, Inc. will change and replace air filters and monitor smoke and radon detectors.
The owners of Real Estate Ventures, Inc. love what they do! And it shows in from the quality of the properties they invest in to the caliber of tenants they lease to. They thoroughly review the property and analyze the real estate market. Real Estate Ventures, Inc. will continually monitor and evaluate the local market trends. They are in this for the long term!
Real Estate Ventures, Inc. utilizes a thorough due diligence process prior to purchasing and investing in any property. By doing their homework, Real Estate Ventures, Inc. can competitively price their rents – often at or below market. Thoroughly knowing their market gives Real Estate Ventures, Inc. the competitive edge over their competitors. Further, Steve’s background in painting and his extensive connections in the construction field in the local Franklin market, gives Real Estate Ventures, Inc. the competitive edge when in it comes to knowing the quality and caliber of the local contractors. Many competitors will fall short and subcontract often to the lowest bidder with unknown track records. If a major tenant repair is required, Real Estate Ventures, Inc. will be prepared and have the ability to select the best contractor at a fair price. This in turn will keep expenses down and profit margins and return on investment on target.
Real Estate Ventures, Inc.’s marketing strategy incorporates a Focus Strategy – that is, it targets a specific target market. Real Estate Ventures, Inc. concentrates their marketing efforts on attracting solid, credit worthy tenants that are motivated to live in growing, thriving comminutes.
Real Estate Ventures, Inc. is a high quality real estate investment corporation. Real Estate Ventures, Inc. carefully and methodically selects its rental properties in growing neighborhoods, with low vacancy rates. The properties are clean, well maintained and provide positive cash flow. In keeping with their its high quality standards, Real Estate Ventures, Inc.’s tenants, reflect these attributes as well and have exceptional credit scores, timely rental payment history and a strong desire to live long term with their families in a solid community. Real Estate Ventures, Inc. is committed to their properties for the long term – they do not foster a “here today gone tomorrow” mentality. Above all Real Estate Ventures, Inc.’s owners love what they do and are committed to the company for the long term.
Real Estate Ventures, Inc. utilizes Competition Based Pricing – in which prices are based on the market. The company’s thorough due diligence process assures that they never buy the highest priced property or the lowest priced for that matter.
Real Estate Ventures, Inc. will primarily rely on advertising in the Franklin Elementary School Online Classified Ads and Word of Mouth advertising.
As properties become available, Real Estate Ventures, Inc. will post signage in front of the property. As a last resort, Real Estate Ventures, Inc. will post classified ads with the local newspaper and Craigslist.
Real Estate Ventures, Inc.’s website features properties available to rent, the business phone number to contact for information regarding renting or who to contact for repairs. Additionally the website will have links to complete an online application and links to key articles for tenants such as the importance of obtaining sufficient renters insurance for example.
In the event that a property is available, the site will feature photos of the property along with detailed description of the property, amenities, details of the surrounding neighborhood and any concessions that are currently available.
Real Estate Ventures, Inc. is uniquely sized to both personally own and manage its investment properties. Through their extensive contacts in the Franklin area, Real Estate Ventures, Inc. hopes to rely on Word of Mouth advertising and not be forced to allocate a large portion of their budget to advertising costs. However, in the event that a property remains vacant for 30+ days, Real Estate Ventures, Inc. has a policy in place to purchase classified advertising space in both the local newspaper and on Craigslist.
Real Estate Ventures, Inc. will meet with prospects right on site. The prospects will be greeted and treated with the utmost professionalism in a relaxed and respectful environment. The first meeting is an opportunity for the owners of Real Estate Ventures, Inc. to decide on leasing to the prospective tenant. If the prospect seems disagreeable, unpleasant or makes unrealistic requests, Real Estate Ventures, Inc. will not lease the property. If however the prospect is professional, and has reasonable requests, then this meeting will be considered along with the credit report and background check in making a decision to lease.
The following table represents the estimated sales from the rental unit the initial three years of operations. The analysis assumes 100% leased and no escalations in rent the initial two years.
Table 5.6.1 Annual Sales Forecast
The owners of Real Estate Ventures, Inc. personally lease their properties and do not need to pay incentives to sales agents. However, just like sales agents, the owners of Real Estate Ventures, Inc. are motivated to lease properties quickly- after all vacant properties do not generate revenue! Although the owners of Real Estate Ventures, Inc. are motivated to get tenants in quickly they will not ‘rush’ at the expense of sacrificing quality. If Real Estate Ventures, Inc. is unable to find a perspective tenant in a reasonable amount of time (approximately 30 days) then the cost of doing business are the advertising costs associated with placing classified ads with the local newspaper and Craigslist.
Clean title and zoning, will be instrumental in purchasing investment real estate. The title search and tax record search must confirm this prior to Real Estate Ventures, Inc. purchasing any property. The title search must be free of liens.
All maintenance and repairs will be performed by bonded and licensed contractors that are in good standing with the state.
Following are the Milestones Real Estate Ventures, Inc. believes will allow them to meet their objectives.
Table 5.8 Milestones
In the event the rental unit remains vacant for an extended period of time or in the event that extreme repairs and depletes all cash reserves, the secondary recourse will be to the owners. After the owners have depleted their personal reserves, the property will be sold. Proceeds will be used to satisfy obligations to creditors and any surplus will be returned to the owners.
The following section highlights ownership and future staffing expectations of Real Estate Ventures, Inc.:
Both Linda and Steve Rogers will own and manage the subject real estate. Steve Rogers will perform routine maintenance requirements and repairs. Linda Rogers will manage the daily bookkeeping requirements. She will submit payments to vendors such as trash service and recycling service, and forward the required information to Real Estate Ventures, Inc.’s certified public accountant for preparation of the annual income taxes.
Steve Rogers will oversee the day to day maintenance of the rental unit. On a monthly basis he will replace air filters, inspect the grounds, and make notations of the overall physical condition of the property. The tenant will be put on notice for example if the yard needs to be mowed or weeds appear to be an issue. The tenant will have sufficient time to remedy the notice and will be fined daily until the issue has been resolved.
Steve has successfully owned and operated his painting business for 15+ years and is in the neighborhood on a daily basis. He will drive by the property frequently for visual inspections of the property. He is readily available in the event the tenant has any repair needs. Steve is also the author of this rental property business plan.
Linda Rogers will oversee the day to day bookkeeping needs for the rental property.
All tenants will be required to agree to EFT (electronic funds transfer) for monthly payments – which should minimize the need to collect rents.
Real Estate Ventures, Inc. does not have an accountant or attorney on its staff. Income tax preparation and consulting services will be provided by the owner’s long term personal public accountant. Real Estate Ventures, Inc. will rely on their title company to verify clear title.
Steve and Linda Rogers will own and operate Real Estate Ventures, Inc. but draw no salary; both owners have outside incomes and will not draw salaries from the properties.
Table 6.4 Personnel Plan
Steve and Linda Rogers, owners and operators
The following financial plan covers the following:
Construction Budget Real Estate Ventures, Inc. estimates a 1 month completion. Work will be performed by a contractor that is well known by the owners. The contractor is bonded, licensed and in good standing with the state.
Source of Funds The owners of Real Estate Ventures, Inc. received approximately $100,000 in inheritance and have access to liquidity to fund start up costs and meet operating shortfalls. However, they plan to invest a portion of these proceeds into additional rental income properties. Additional source of funds comes from both owners ‘day jobs’ – Steve Rogers owns his own house painting business and Linda Rogers is a math teacher at Franklin Elementary.
Profit and Loss Vacancy levels in Franklin are a low 6% and is substantially lower than the national average of 7.9%. The analysis assumes 100% occupancy over the 3 years reviewed.
The following table represents start up costs.
Table 7.2 Start-Up Costs
The owners of Real Estate Ventures, Inc. received approximately $100,000 in inheritance and have access to liquidity to fund start up costs and meet operating shortfalls. However, they plan to invest a portion of these proceeds into additional rental income properties. Additional source of funds comes from both owners ‘day jobs’ – Steve Rogers owns his own house painting business and Linda Rogers is an elementary school math teacher at Franklin Elementary. The following table shows the proposed Source and Use of Funds:
Table 7.3 Source and Use of Funds
The rental income property is expected to generate $1,300 in monthly rent or $15,600 annually. Break even rents required are $14,020 or approximately 10.78 months of revenue. The following chart depicts break-even analysis:
Table 7.4 Break-Even Analysis
7.5.1 projected profit and loss.
The pro forma profit and loss is based on the initial 3 years associated with the subject property.
Table 7.5.1 Pro Forma Profit and Loss
The statement of cash flow shows the incoming and outgoing cash of the business.
Table 7.5.2 Pro Forma Cash Flow
Table 7.5.3 Pro Forma Balance Sheet
The business ratios are based on NAICS code 531110. The ratios demonstrate that Real Estate Ventures, Inc. is well capitalized, has a low leverage position and has good liquidity. Real Estate Ventures, Inc. compares more favorably to its industry peers primarily due to the owner’s injection in equity.
Table 7.6 Ratio Analysis
Investing in an apartment building is one fantastic way to build up your financial portfolio. You can live in one of the units, manage the property yourself, and collect rent to pay off the mortgage. Depending on your resources, you could decide to invest in a duplex, a triplex, or even a 6-unit building.
A typical 6 unit apartment building can be three stories tall, with two units per floor. Another design standard is the 6 unit townhouse row that is simply one unit right beside the other. Some 6 unit apartment buildings may also be two stories tall, with three units on each floor.
Residing in a multi-unit apartment building comes with its own set of pros and cons. Getting along with your fellow apartment dwellers is a must and should be a top priority. Remember that you will be sharing walls, and your floor may be someone’s ceiling, so kindness and consideration are essential.
This 6 unit apartment building is a modern take on apartment living with big picture windows and an eclectic facade. Three stories high, this building houses two units per floor with balconies for units on the upper floors. There are no elevators, and the only access to the upper floors are two stairwells right by the main entrance.
Each unit comprises two bedrooms, each measuring 12 x 11 feet and 10 x 10 feet. An open concept living and dining area take up half the square footage of the entire unit. These spaces measure 12 x 9 feet for the dining area and 12 x 13 feet for the living area.
A full toilet and bath and a small yet complete kitchen take up the rest of the space in this cozy unit. A utility room beside the kitchen could serve as a laundry room when outfitted with the proper hookups. Altogether, each unit provides 900 square feet of living space.
The building exterior sends off truly modernistic vibes with its play on different building materials. The artful marriage of wood, stone, steel, and glass somehow work brilliantly together in the interplay of subdued neutral tones.
This two-story, 6 unit apartment building showcases three apartment units per floor with two stairwells in-between the units. Each apartment has two bedrooms, 1 ½ baths, and a spacious living area. This apartment building plan is typical in many urban cities across the country and remains popular through the years.
The master bedroom measures 14 x 15 feet, with the secondary bedroom at 10.5 x 15.5 feet. The living area is the most prominent space in the apartment at 13 x 17.5 feet. A dining area measures 8 x 9 feet, the 1 ½ baths and a small kitchen make up the rest.
Altogether, each unit provides 980 square feet of living space. Many apartment buildings of this nature serve as adequate residences for small 2-3 person families. A tiny porch area beside each stairwell is perfect for housing mailboxes for each apartment unit.
The 6 unit townhouse row building plan is reminiscent of the brownstones typical in well-heeled areas in northeastern cities in the country. Townhouse row-style apartments are usually bigger than two or three story apartment buildings with the same number of units. With two floors of living space, townhouse apartment units are a roomier option for families of more than two people.
Apartment units in townhouse-row-style buildings typically have 3 bedrooms, 2 ½ baths, and even a walk-in closet or two. The master bedroom measures 12 x 16 feet, with the other bedrooms around 11 x 11 feet each, on average. The downstairs area comprises the living, dining, kitchen, and laundry rooms.
The main floor gives you approximately 700 square feet of living space and 650 square feet for the upper floor. Most main floors have an open layout with a powder room up front and a fireplace in the back. Some units offer decking towards the back of the unit, adding a bonus usable outdoor living area.
Many people do not get excited over the prospect of living in a multi-unit apartment building . The thought of sharing a wall with a total stranger and everyone knowing your business is frightful to many individuals. Not getting along with the girl next door would make merely walking down a shared hallway a dreadful ordeal.
But there are also tremendous advantages to this type of communal living. Friendships can blossom between neighbors, and you can keep an eye out for each other and each other’s property. Apartment living is also easier on the budget, and parking is almost always included in the deal.
No maintenance woes.
Reputable landlords pride themselves on maintaining a clean and functioning building with proper heating, cooling, and security systems in place. They also have good relationships with responsible contractors who can quickly come out for an urgent repair request.
Most apartment units will not have a lawn for you to mow or flower beds to water. You won’t have to worry about purchasing a lawnmower and looking for space to stow it when not in use. However, if you thrive on gardening and enjoy planting, this residential option may not be for you.
As an added incentive, a lot of apartment buildings offer pool facilities. And as a resident, you have complete access minus the worry of cleaning and maintaining that comes with pool ownership. Just take a dip when the weather gets hot, bask in a lounge chair, and worry not.
Today’s society sadly presents the slow vanishing of community, but this is not the case with apartment living. Being in close quarters with people forces you to be sociable and make friends. As a result, you will experience a feeling of belonging and knowing that someone’s got your back while you have theirs.
Most apartment buildings provide 24/7 surveillance all around the property. This security measure is extended when neighbors also keep an eye out for each other. A watchful neighbor is more observant in catching events out of the ordinary than any video camera.
Limited space.
Let’s face it; apartments are mostly small dwelling places that do not leave you much room to spread out. There are zero possibilities of adding to the back room or constructing an outdoor living area. You either need to get creative, or you move out and look for a stand-alone house.
Parking may become a hassle if and when you decide you need more than one vehicle. Another unfortunately common parking problem is when a neighbor takes your parking spot or just barely passed driving school. Parking is one primary reason apartment dwellers eventually become house dwellers.
Most, if not all, apartment buildings will not allow you to repaint their white walls. And if you go ahead and do it anyway, you need to paint it back to white before leaving. Or say bye-bye to your security deposit.
Many of us are animal lovers, but most landlords are not. Apartment buildings often have very specific pet restrictions concerning dog breeds and the size and weight of your pets. If you are a multi-pet household, a multi-unit apartment may not work for you and your fur babies.
Having observant neighbors who look out for you is a good thing. But nosy neighbors who do nothing but watch you all day can be nerve-wracking. Nosy and noisy neighbors can make apartment living a dreadful experience, especially in a shared structure.
How do i choose an apartment for myself and my family.
Aside from the more obvious factors like location, budget, and size, there are vital things to look out for when choosing an apartment. If possible, always see the unit with your very eyes instead of relying on photoshopped pictures online. Talk to the neighbors if you can, and get a feel of the neighborhood. Check if the area is safe and secure. Look at the building facade and take note of cleanliness and structural integrity. Scope out the building all the way from the parking garage to the rain gutters and dumpsters in the back. Remember, you are searching for a home where you can be safe, secure, and happy.
Ahhh, the age-old question; to rent or to buy. The answer depends on your family’s needs and your plans, long or short term. If you find yourself in a city you and your family love, you might consider purchasing a home. You can buy an apartment unit instead of renting one, keeping apartment living limitations in mind. Owning an apartment unit can turn into a worthy investment and may become an income-generating asset for your family.
Apartment living is not for everybody. If you thrive on interactions with people and don’t care for lawn work, apartment living may be for you. Purchasing an apartment to shore up your investment portfolio can also be a sound decision.
Whether a single-family structure or an apartment unit in a multiplex, we all need a place to call home.
Stacy Randall is a wife, mother, and freelance writer from NOLA that has always had a love for DIY projects, home organization, and making spaces beautiful. Together with her husband, she has been spending the last several years lovingly renovating her grandparent's former home, making it their own and learning a lot about life along the way.
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If you want to give yourself the greatest chance of succeeding in the multifamily investing game, writing an effective business plan is key. A business plan can clarify your goals and bring potential obstacles to your attention.
Depending on the nature of your investment goals, you may want to have a specific business plan for each property you acquire, as well as an overarching business plan for acquiring a larger number of properties. While multifamily business plans can vary significantly in nature, they generally have a few shared components. These include:
In the same way that 19th century Prussian military commander Helmuth von Moltke said “No plan survives first contact with the enemy,” no multifamily business plan will ‘survive’ contact with the real world. Markets change, lenders change requirements, and service providers adjust their costs all the time — and your apartment investing business plan should reflect that. If you’ve realized that a new type of marketing could benefit your property, or that you want to look for properties in an entirely different market-- simply change your plan. Having a business plan is great, but it’s a template, not a stone carving, so allow it to guide you on your journey while not letting it restrict your choices.
Having a business plan for apartment investing can help you gain clarity on your goals, identify potential obstacles, and gain ideas and insights that can make your investments more lucrative. It can also be essential if you plan to purchase multiple properties, or if you’re considering bringing in business partners or outside investors, as you’ll likely need to share it with them in order to get their approval.
Your business plan should include your investment strategy, which summarizes what type of property you will invest in and how you will make it profitable. This is a bird’s eye view, and can also include mentions of your plans for financing, property management, renovations, exit strategies, and other important elements.
For example, a specific plan could say “We plan to acquire a class C 15-25 unit property in the Atlanta, Charlotte, or Charleston markets, upgrade it to a class B property, and raise rents by 10-15%. We will hire an outside property management company to take care of management responsibilities, and plan to finance the property with a 70% LTV loan.”
The key components of a business plan for apartment investing include:
The investment strategy summarizes what type of property you will invest in and how you will make it profitable. This is a bird’s eye view, and can also include mentions of your plans for financing, property management, renovations, exit strategies, and other important elements, which you can elaborate on in future sections.
For instance, a specific plan could say “We plan to acquire a class C 15-25 unit property in the Atlanta, Charlotte, or Charleston markets, upgrade it to a class B property, and raise rents by 10-15%. We will hire an outside property management company to take care of management responsibilities, and plan to finance the property with a 70% LTV loan.”
For more information on financing your apartment investment, please visit Multifamily.loans Apartment Financing .
Creating a business plan for apartment investing requires a comprehensive understanding of the investment strategy, legal, accounting, and asset management. The investment strategy should include the type of property you will invest in, how you will make it profitable, financing plans, property management, renovations, and exit strategies. You should also consider who you will use for legal, accounting, and asset management services, and how much they will cost. These costs should be reflected in your financial projections.
For more information, please see Do You Need a Business Plan for Apartment Investing? from Multifamily.Loans.
The best practices for creating a business plan for apartment investing include having a mission statement, investment strategy, target market, property financing, marketing strategy, financial projections, exit strategy, and legal, accounting, and asset management. Your investment strategy should summarize what type of property you will invest in and how you will make it profitable. This is a bird’s eye view, and can also include mentions of your plans for financing, property management, renovations, exit strategies, and other important elements. For instance, a specific plan could say “We plan to acquire a class C 15-25 unit property in the Atlanta, Charlotte, or Charleston markets, upgrade it to a class B property, and raise rents by 10-15%. We will hire an outside property management company to take care of management responsibilities, and plan to finance the property with a 70% LTV loan.”
For more information, please visit this article .
Without a business plan, apartment investors may not be able to accurately measure their profitability goals against their actual progress. Additionally, lenders generally require detailed financial plans before approving a borrower for a loan, so if you want financing, you’ll need to create a reasonable estimate of what the future may hold. Without a business plan, investors may not be able to accurately assess the risks associated with their investments, and may not be able to respond to opportunities or setbacks in the market. Source
Creating a business plan for apartment investing can be a daunting task. Fortunately, there are a number of resources available to help you get started. The Multifamily.loans blog is a great place to start, as it provides an overview of the legal, accounting, and asset management considerations you should take into account. Additionally, the blog provides guidance on how to create an investment strategy that outlines the type of property you will invest in and how you will make it profitable.
Other helpful resources include the Small Business Administration's guide to writing a business plan , which provides a step-by-step guide to creating a business plan, and the Investopedia guide to creating a real estate investment business plan , which provides an overview of the key elements of a real estate investment business plan.
Finally, you may want to consider working with a professional business plan consultant to help you create a comprehensive and effective business plan. A professional consultant can provide valuable insight and guidance to ensure that your business plan is well-crafted and meets your investment goals.
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Property Rental Business Plan Template & PDF Example. Edward. July 24, 2024. Business Plan. Creating a comprehensive business plan is crucial for launching and running a successful property rental business. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your property ...
Get our rental properties business plan template & step-by-step guide to quickly & easily create a rental property business plan today. ... Buildings with 2 - 4 units are the most common (17.5%), while multistory apartment complexes with more than 50 units represent the next-largest, at 12.6% of the industry. ...
Six months of overhead expenses (payroll, rent, utilities): $350,000. Marketing costs: $50,000. Working capital: $60,000. Easily complete your Rental Properties business plan! Download the Rental Properties business plan template (including a customizable financial model) to your computer here <-.
A Sample Rental Property Business Plan Template 1. Industry Overview. Rental property business is grouped under the Apartment Rental industry and this industry is made up of companies that rent one-unit structures, two- to four-unit structures, five- to nine-unit structures, 10- to 19-unit structures, 20- to 49-unit structures and 50- or more unit structures.
Financial Highlights. [Company Name] is currently seeking $370,000 to launch its rental property business. Specifically, these funds will be used as follows: Website design/build and startup business expenses: $120,000. Working capital: $250,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even.
A rental property business is perfect for anyone who wants an easy way into the world of business ownership. You simply need a house or an apartment building to rent, and a solid business plan as a ticket to the industry. Of course, preparation is always the key to success. If you really want to make money by investing in a property, you first need to have a solid plan on how to make it work.
Here's how to create a business plan for your rental property investment in five steps. 1. Identify the Main Goal of Your Rental Business. The first page of your rental property business plan typically consists of an executive summary, which briefly covers the different topics you'll be explaining in your document.
Download Template. Create a Business Plan. A rental property business is a great way of earning a passive income. It can help you have great finances if you go about it in the right way. The rental property market stood at a size of 174.2 bn dollars in the US in 2021. And with the subsiding pandemic isn't about to shrink any time soon.
Utilize this free Rental Property Business Plan Template to outline a detailed strategy for your rental property venture, covering areas like property acquisition, tenant management, and financial projections. It serves as a valuable guide to ensure your rental property business is well-prepared for success in the competitive real estate market. .
01. Executive summary. The executive summary is the first section of your rental property business plan. It provides an overview of your business and highlights the key points from each section of the plan. The executive summary should be concise, clear and engaging to capture the reader's attention. It should include:
Rental Property Business Plan Section 1: Property. Describing the property is the first step to determining how it should be managed and estimating its potential for return on investment (ROI). Noting the property's type, features and location provides a basis for comparison to other properties in the market to determine its competitive position.
professional business plan with automated financial forecasts. You can also do: 200+ Sample business plans Get access to hundreds of sample business plans covering almost all industries to kick start your business plan writing. This helps you to get an idea how the perfect business plan should look like. View Sample Business Plans Step-By-Step ...
Here are some examples of SMART goals for a rental investment business: Own four properties by the end of the year. Earn $5k in rental revenue per month. Earn $150k in rental profit by the end of year 5. Hire a team of 4 business partners and open an office in Nashville, TN, in the next five years.
Airbnb Business Plan. The Tracktown Townhome is a Eugene based Airbnb rental that offers a comfortable stay and exposure to the rich track and field history of the area. The housing market is more competitive than ever. Rental prices are rising and the availability is fairly limited. There's a need for customers to find rentals and even for ...
Redstone Development expects to achieve the following milestones in the following six months: 1/1/202X Finalize lease agreement. 2/1/202X Design and build out Redstone Development. 3/1/202X Hire and train initial staff. 4/1/202X Purchase first property for development. 5/1/202X Kickoff of promotional campaign.
Cash at End of Period. $401,326. $1,075,272. $1,917,238. Download This Plan. Explore a real-world real estate management business plan example and download a free template with this information to start writing your own business plan.
This part of the business plan is where you determine and document your marketing plan. . Your plan should be laid out, including the following 4 Ps. Product/Service: Detail your product/service offerings here. Document their features and benefits. Price: Document your pricing strategy here.
Startup Expenditure (Budget) The Total Fee for incorporating the Business in Auckland: $750. The budget for Liability insurance, permits and license: $25,000. The Amount needed to acquire a suitable Office facility with enough space in Auckland for 6 months (Re - Construction of the facility inclusive): $50,000.
4.1.1 Market Size. A recent survey of Franklin, Tennessee revealed there are currently 67 single family residences available for rent. The average monthly rental charge ranges from $2,202 monthly to $1,058 monthly. The middle tier monthly rent is $1,283 or $1,031,532 annualized.
Two-Story 6 Unit Apartment Building Plan. "6-Unit Apartment Plan" by PlanSource, Inc. This two-story, 6 unit apartment building showcases three apartment units per floor with two stairwells in-between the units. Each apartment has two bedrooms, 1 ½ baths, and a spacious living area. This apartment building plan is typical in many urban cities ...
Apartment construction is a business that offers infrastructure, groundbreaking, framing and final construction services by working on both small and large scale construction, repairs, and alteration projects focused on apartment buildings. Some of these services include design planning, remodeling, site preparation and carpentry, laying ...
For instance, a plan to purchase a $4 million apartment building might say "I, as GP, will contribute $100,000 of equity. LP investors are expected to contribute an additional $900,000 of equity, for a total of $1 million. ... Having a business plan for apartment investing can help you gain clarity on your goals, identify potential obstacles ...
Business Plan Sample business plan living dorm and boarding house executive summary overview: mr. reine and ma. gracia colanggo, residence of b27 l18 lauan road ... BP-Apartment - Business Plan Sample. Business Plan Sample. Course. Marketing Management (MARK 3073) ... Building 1,585,360 1,585,360 1,585,360 1,585,360 1,585,