Real Estate Business Plan
Step by Step Template
What kind of real estate business plan you develop depends on your real estate goals and your current situation. Once you've done some goal setting, you need to develop a plan to reach those goals.
Let's say that you currently rent and have the flexibility to move anywhere within a 50 mile radius. You'd like to buy a house and possibly get into the rental property business but your credit score is low. Look for houses for rent that are in decent school districts and would meet the criteria of a house likely to be purchased by a first time home buyer. Try to negotiate a deal with the landlord to purchase the property. You could try to sign a lease-purchase agreement and ask for rent credits. Or you could ask for the seller to finance the property for you. If he is worried about your reliability, demonstrate good faith by paying the rent every month and making small repairs to the property.
On the other hand, if your goal is to buy several houses a year, you have got to work on finding private sources of money (banks will limit the number of real estate loans you can have) or become well-versed in getting seller financing. You also need a marketing plan to get enough leads of motivated sellers to keep your pipeline full. And finally, you need to put together a team for your business that includes a network of Realtors, mortgage brokers, contractors, lawyers and insurance agents.
What are some elements you should include in your real estate business plan? Here are a few to think of:
Beginning Real Estate Business Plan
- take steps to improve your credit score
- start an investment savings fund
- start researching good areas to invest in - drive neighborhoods that look promising
- join your local
Real Estate Investment Club
- talk with your banker or mortgage broker about what kinds of loans are available to you
- if you currently rent, start talking with landlords that own houses and find one open to selling
- if you currently own a home, would it make a good starter home? Think about buying another house and renting out your current home
- sign up for a voice mail service - I've used Evoice for many years. You can check your voicemail by Any Phone, Online or get it in your Email! Try eVoice Receptionist!
- open up a second checking account for your business
- If you will be using borrowed money for the down payment, get the funds in your bank account early
- If you will be using conventional financing, get a pre-approval letter from your banker or broker
- study the
Guide to Home Inspection
- Go to some open houses in your targeted neighborhoods and try to do a thorough home inspection. Question the Realtor to determine if there is a
Determine if the PITI will be lower than the local rents.
- Respond to some local newspaper or Craigslist ads on properties for rent. See if the owner is open to selling the property
- Look at 10-15 houses before you think about making an offer.
- Familiarize yourself with what the closing costs might be for the type of house a first time home-buyer might be interested in. A mortgage broker can provide a "Good faith estimate of closing costs".
- Once you have found a motivated seller, ask a Realtor to provide you with a list of comparables to give you an idea of what properties in the area have sold for recently
- Explore with your Realtor (or the seller directly if possible) what type of flexibility that might have in either price or terms. Don't be afraid to make a "low-ball" offer or ask for "give-backs".
- Once you have an offer accepted, get your financing in place, contact an attorney and determine what you are going to repair or replace in the house.
- Order some "Rent to own" signs
Doing it - Final Steps of your real estate business plan
- Line up any contractors you might use for property improvements so that they are available after you property closes
- During the repair phase, tackle what jobs you can and leave those too time consuming or too complicated to a contractor
- Stay calm but focused - remember that it will take longer and cost more money than you planned!
- Once the property is a week away from completion, I stick a rent to own sign up with my Evoice phone number. I also put out flyers describing the house and the terms of my
"rent to own"
deal in a flyer box
- Screen your tenants carefully. I like to look at the place the applicant is living to see how well they are taking care of it.
- Once you have signed a lease-purchase agreement with the new "buyer" relax!
Repeat as often as desired to meet your
As you become more familiar with this process develop a customized real estate business plan to suit your needs.
Return from Real Estate Business Plan to Buying a House
Investing in Rental Property Home