An effective business plan, for most business, can help you think about the business and get to know it fully. It also helps you to strategically plan for the different aspects of the business. Such plans let the investor know what will be pursued as well as provide a clear road map for the management to follow.
Savvy investors always put together a business plan for each property investment. It is important therefore, that you take your time to plan each real estate investment you make.
In writing your plan, you have to identify the areas for improvement and the strategies for increasing the value of the property.
For first-time investors, it is important that you ask the following questions before writing your plan:
1 Why am I going into real estate business?
2 What challenges are involved in real estate? Can I handle them?
Taking time to answer the questions may prevent you from making costly mistakes which make this type of investment a disaster for many people.
Real estate investment comes with its own challenges and it is important that you know them and have a plan for resolving each of them. For most that are bringing in investors to look at your plan, the investors will want to see that you have experience in acquiring and managing real estate – strong enough to face the challenges involved. They want to know if you are emotionally and financially capable of handling tenants who do not pay and refuse to leave. They want to know if you are capable of handling the maintenance of the property and the contractors involved.
Strengths and competitive advantages are also points you should note though they are less important in real estate than in other businesses. You many want to talk to local brokers who know the market and can give sincere and honest advice.
What about insurance and tax reporting? You must be able to source for the right insurance coverage on your property. You must make sure all dues are paid in taxes and your accounts balanced. If you are not very good at this, you may consider getting if done through consulting.
Partnership is also an important issue in real estate investments. If you consider bringing in partners or investors, you have to look at securities law issues and investor communications. You must be ready to provide the reports and financials at intervals determined by the investors,or state laws. Most investors like to see quarterly financial reports.
Writing an effective real estate business plan, even when you know about the business, helps you to know it better. Put yourself in the investors’ shoes when writing your plan. Think about what they want to see and hear and address such.
Above all, writing an effective real estate plan requires getting all the available information you need in putting the business together.