Business Plan for Real Estate Industry
There are several different types of real estate investments including residential, commercial, and industrial, as well as investments in real estate companies that trade on stock exchanges as Real Estate Investment Trusts (REIT). Typical investing strategies include land development, real estate flipping, or acting as landlords for rental purposes.
Despite their differences, all Real Estate ventures can benefit from a well-devised business plan. This document, when properly drafted, is the foundation on which all entrepreneurs should build the future of their company. When writing a business plan for a real estate company, a writer has to take great care to define the very nature of the venture since investing in real estate is much more complex than other types of investment.
Here at Joorney Business Plans, we understand the importance of a well-written business plan. Our business plans are specially designed to support the immigration applications of investors, bank and SBA loans, and more. Our products greatly increase the success of raising capital with all types of investors.
Investing in real estate is much more complex than other types of investment.
Each type of real estate investment has its own potential benefits and pitfalls, including unique characteristics in cash flow cycles, lending traditions, and other associated risks. Our extensive experience in dealing with all these types of real estate investments, as well as experience when writing for different types of audiences such as United States Citizenship and Immigration Services (USCIS) and institutionalized or individual investors, helps us streamline the process of writing a business plan.
When drafting a real estate business plan, there are several issues to address:
Real estate projects usually require a substantial initial investment. Oftentimes, these projects have several investors depositing different amounts at different phases of the project’s development. Additionally, companies often rely on bank loans to finance their ventures. Joorney Business Plan Writers have extensive experience in the development of financial projections that include the specifics pertaining to the principal repayment and interest amounts calculated based upon the interest rate, the loan amount, the loan term, and the loan type.
Return on Investment – ROI
Unlike in some other industries, the majority of real estate investments are long-term. This means that in many cases, our real estate clients will not be able to make significant profits initially. Furthermore, returns on the investment may vary greatly depending on the location of the clients’ real estate. Real estate investment website Biggerpockets.com produces an annual real estate investment index for major U.S. cities. According to their latest index for 2016, the area with the best returns is Dallas, TX where real estate investors saw 20.7% in unleveraged returns. Joorney Business Plans uses market statistics like these to project the return on investment that falls within the industry’s averages for the specific areas. We often work with clients buying real estate for purpose of renting the property. In these cases, Joorney Business Plans’ employees use market intelligence to project price-to-rent ratios and present the clients with the best estimates.
Within the business plan, it is necessary to include the respective financial statements: profit and loss and balance sheets statements. Together, these two provide a relatively accurate portrayal of a company’s current value — along with its ability to pay bills and earn a profit.
In the Real Estate Industry, it is not always easy to project revenue and cash flow. The length of the sales cycle can vary depending on the type, price, location of the property, season, and the clients’ investment and marketing strategy. Often, the clients rely on our knowledge of the real estate market to estimate the length of the sales cycle that will consequently impact the annual sales in the projections. Using comprehensive experience obtained from writing business plans for over 100 real estate business clients, Joorney Business Plans is able to increase the accuracy of its financial projections, adding real value to business plans.
Market and Industry Analysis
A complete market and industry analysis is the cornerstone of a successful business plan. When writing a real estate business plan, it is of utmost importance to explain how a business model corresponds with today’s market.
The real estate industry, more than others, heavily depends on the location of the business. The location creates desirability, desirability creates demand, and demand raises real estate prices. The real estate business plan needs to include the investment strategy tied to the market and industry analysis, explaining the reasons why the company has selected a certain area and how the company’s target customers benefit from this choice.Your business model should correspond with today’s market
More often than not, our clients have an investment strategy based on their extensive experience in the real estate market or advisory from a third party and need help to elaborate and support their strategy with solid data.
Joorney Business Plans has access to extensive data from reputable sources such as IBISWorld and Statista which collectively offer very comprehensive collections of industry market research, risk ratings and statistics, and studies from more than 18,000 sources. Our writers include an in-depth look at the real estate market, rental trends, mortgages, and forecasts in all real estate business plans and help clients transform their ideas into compelling business propositions supported by real-life data.
It is imperative to align the management team toward a common set of goals
Many of our clients have already formed a management team that includes successful individuals with extensive experience and impressive curriculums. In these cases, the biggest challenge for the Real Estate Business Plan Writers is to align the existing management team toward a common set of goals and to secure that the connection between the company’s human resources and the company’s strategy remains strong and apparent throughout the entire business plan.
Human Resources linked to the Strategy
Traditionally, the Real Estate Industry has always had the perception of being a sector where land and buildings were the languages required and people skills were of no great relevance. Nowadays, even the major real estate companies are beginning to grasp the importance of effective client servicing, enhanced team productivity, and professional managerial skills.
It is therefore also of significant importance to incorporate this information into the business model, effectively tying sales strategies to human resources.
1099 independent contractors are also an important aspect of human resources when writing business plans for real estate companies.
The Real Estate Industry is project-oriented. Hence, the majority of real estate companies hire independent contractors for construction, renovating, maintenance, and management of their properties if and when needed. Additionally, the independent contractors are responsible for any necessary tools or equipment necessary to provide the services.
By employing independent contractors, real estate companies are able to reduce costs by outsourcing the construction, renovation, or property management activities, therefore increasing their flexibility. Unlike in the case of other industries, it is not unusual for the contractor expenses to account for a large portion of the operating expenses. Joorney Business Plans has a great experience when dealing with different types of employees and makes sure to properly describe their role in the company and adjust the finance projections accordingly.
The business plan should demonstrate the value that a real estate company will bring to its adopted community, industry, and the U.S. as a whole. Some of the specifics that each real estate company should address when writing a business plan to support the applications with investor immigration, bank, and SBA loans, and investors are the administration of expenses, sources of funding, the length of the sales cycle, and return on investment. Additionally, now more than ever, real estate companies need to provide a link between their strategy and human resources.
Using its extensive experience in the real estate industry, Joorney Business Plans provides the most recent data supported market analysis, comprehensive competition analysis, marketing and strategy plans tied to the human resources of the client, and viable and realistic financial projections.