real estate business plan

real estate business plan

Real Estate Business Plan

1. Market Analysis

The market analysis is to find out the opportunities and threats. The threats are the external factors but opportunities are in the hands of the business man. This SWOT analysis will help in identifying the factors that will have some impact on the business. Business report will also tell about the moving trends of the market. The graph given in a report will tell the productivity and the progress of the company. Return on investment is most important for all investors so it should also be calculated to provide satisfaction for the investors. Future expectations are also present in market research report. According to the past data, the future results are predicted. Last is the summary. It is the concise form of all the research. This tells us about the effectiveness of all research. Any small and important detail is not missed to include in the summary. So it should be short and to the point. Market research reports help a real estate company in taking better decisions in taking further steps in the business. A decision based on solid research will definitely lead the company to get progress in the future. This will also increase the reputation of the company.

2. Business Strategy

The proposed business strategy for Real Estate Agent, Inc. is a solid one. Stated briefly, the company will purchase investment properties with the intent of holding them until the market price has appreciated, and then will sell. Until properties are ready for sale, they will be rented out to cover the mortgage expenses. The company will allocate $300,000 to start this venture. The start-up funds will be used to cover the necessary expenses to acquire and renovate the chosen properties. It is the intent of the two shareholders to reinvest all post-initial investment revenue into purchasing new investment properties. Over the years, as Real Estate Agent, Inc. amasses a larger portfolio of rental properties, the shareholders will scale down and eventually terminate their real estate brokerage activity. By this time, the company’s primary income will be generated from rental revenue. The executive summary, located at the beginning of the business plan, is worthwhile reading if you are not familiar with the project.

3. Marketing and Advertising

Marketing residential properties is a little different and must fit the specific property or in some cases, the seller. Always use your gathered information and knowledge and apply it. Let’s say for example you are selling a cottage located on a lake and the traffic of sellers market is relatively slow. What people in the market for this are likely to be dreaming about is peace, relaxation and a stress-free life. You can apply this and print ads in a local paper with a picture of the serene cottage lifestyle and direct them to a website showing more information. You can attract internet surfers by using search engines, if someone is looking for a peaceful lifestyle they will likely type in a relative keyword and your property would come up in search results. You can also find out exactly what demographic is looking at your property and where and you can do some direct mail advertising. Possible call out for investors looking for a second property, mail some information right to their primary residence.

For instance, when I was a property manager of a new townhouse complex, I wanted to reach out to potential new tenants. I thought about the people looking for rentals and what they would likely be doing; many of the target market would be students attending school and parents looking for close living arrangements to their work and kids. Time to put the information that I’ve gathered into good use, I took a look at various schools in the area to provide the parents with valuable information about rental opportunities for their children, I found a bulletin at a local hospital outlining a vast amount of healthcare professionals that are in constant need for short term living arrangements and I provided everyone with a map highlighting how close our rental property was to their points of interest. I had a lot of success with this marketing venture and we were able to lease the entire complex in less than a month.

Marketing and advertising in today’s real estate market requires a lot of knowledge about target clients and applying the right marketing and advertising tools. To maximize the potential of becoming successful in real estate, it’s all about location and it doesn’t matter if it’s a buyer’s or seller’s market. Whether it’s through traditional means like newspapers, flyers, brochures, MLS or online marketing, you need to encompass what people are looking for.

4. Financial Projections

Using the information above, the revenue can be estimated for two years. Included in the financial projections summary are the income statement, cash flow statement, and the balance sheet for the years 2008 and 2009. All statements are located in their respective tabs at the bottom of the page.

The business is going to be providing an online information system for realtors to track all potential sales leads. It was found that some of the current systems in place actually charge a monthly fee of up to 200 dollars.

In order to come up with the revenue for the company, several sources of data were collected. First, the average commission a real estate agent receives on a single transaction is 2.5%. It was also found on realtor.org that a new housing sale in the United States for 2007 was approximately 6.2 million. Using this data and with the assumption that half of all housing transactions had a buyer agent and seller agent, the revenue can be estimated. With the average commission on one transaction being 2.5%, that would be a total of 31,000 (6.2 million * 0.5 * 0.025) transactions * 2,500. This would give us a total of 77.5 million. It was also found on realtor.org that there are 1.3 million realtors in the US that operate alone. Using this data, a yearly salary of 50,000 was assumed and with the chance to earn more money, these realtors will eventually join forces with a real estate broker so they can earn more money.

Financial projections include three different types of statements: income statement, cash flow statement, and the balance sheet. The income statement is a monthly statement that shows how much the business is actually making at a given point in time. This statement will show the revenue and expenses of the business and provide the net income on a monthly basis.

5. Implementation and Execution

Our secondary strategy is to create a virtual office to serve as the business hub. This less costly tactic involves a fee for service on a per-use basis, such as renting office space and using conference facilities. By using these two tactics, we greatly reduce our need to spend on higher-priced advertising campaigns with a much broader focus. Step 1 in this process is to develop the website and office simultaneously prior to creating public awareness. Step 2 is to launch the site and make the first push for buyers and sellers to use this medium. Step 2 will take place after recruiting a small group of realtors as seen in phase two. Step 3 will involve an evaluation of the web-based operation and its efficiency as a business hub. The evaluation at this point will take place for a period of 3-4 months. If we find the website is not generating sufficient business, we will discontinue and return to more traditional methods while still using the virtual office as it is a great cost saver. If the web-based strategy is successful, we will continue, but with a more substantial advertising campaign to increase market share.

Phase 1 In the first phase, our allocated budget is small, so we plan to exploit inexpensive strategies. Our primary marketing strategy is to create a web-based real estate firm by developing a customized website. Although this is one of the more expensive tactics, it is a one-time cost without incurring any added fees.

Summary of marketing plan execution This marketing plan delineates our resources, understanding of the market, and tools for implementation. Phase one has two subgroups. Phase two has two subgroups.