Want to create a real estate investing business plan?
Well, you could just launch your business.
You could go door knocking for the next week, maybe even find a property to buy, buy it, and then try to flip it or rent it out. Then you could do that over and over again.
Heck — maybe you’d even build a healthy business out of it.
Buuuuut, maybe not.
If you’re anything like me, then you favor planning over mindless execution (sorry Gary Vee). You don’t want to just launch a business that may or may not succeed, you want a real estate investing business plan. You want to give your business the best possible chance of success.
For that, you need to spend a little time thinking about the details of how your business will function.
Let me prove it to you…
Find out how Call Porter can help you build a wildly successful real estate investing business… in less time
Why is a business plan so important for your real estate investing business?
I could talk your ear off about why people who make a plan for their real estate investing business will succeed. Or I could tell you about the people I’ve personally seen set out without a plan and fail. Or I could tell you a story about one person who had the best of intentions for his new real estate investing business, but lost money his first month because he didn’t have a clearly defined budget.
But I won’t…
I’ll show you.
Research from 2,877 business owners revealed that people with a plan are more likely to grow their business, secure investment capital, and/or secure a loan.
Here’s how the authors of the study put it:
“Except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.”
So whether you want to give your business a better chance at succeeding down the road, or simply become the kind of person who will likely grow a successful business, drafting a plan is in your best interest.
And it doesn’t have to be remarkably complicated.
10 Steps To Drafting Your Real Estate Investing Business Plan
Here are 10 steps to get you moving.
Step #1: Create your vision and mission
It might seem like a silly first step to creating your real estate investing business plan.
Because let’s be honest: you’re setting out to make money, achieve financial freedom, and live on your own terms. You’re not setting out to save the world from some big injustice (probably — props if you are) or change other people’s lives for the better.
You want to build a business that will benefit you.
Still, a mission and vision statement can help define how you’re going to build that business, why you’re building it, and who your business is going to serve. Because even though you’re building a business to benefit you in the end, the only way to build a successful business is by helping others.
As Bob Burg wrote, “Your income is determined by how many people you serve and how well you serve them.”
Here’s an example of a mission and vision statement.
Just like you personally have a “why?” to your existence, your business needs a “why?” to its existence. Your mission and vision statement will help you determine what that “why?” is and how your business is going to make you money by helping others.
Step #2: Determine your end goal
You also must connect your own personal goals to the goals of your business — you’re the one who’ll be building it, after all. Your business will live or die based on your own daily motivation, ambition, and energy levels.
For that reason, you should ask yourself this dead-simple question: “Why am I building this business? What is my end goal?”
Do you want to be a millionaire? Do you want to live on the beach in Tahiti and sip gin for the rest of your life while this business makes you money on autopilot? Do you want to be the CEO of a large corporation? Do you want to make $200k per year and work 10 hours per week?
What you want out of your business will determine the kind of business you build. And the more attractive your end-goal is, the more determined you will be to keep going when things get tough. I love the way that Tim Ferriss puts it: “The question you should be asking yourself isn’t, ‘What do I want’ or ‘What are my goals?’ but ‘What would excite me?'” Because the more excited you are, the more determined you’ll be.
Step #3: Do market research using a SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunity, and Threats.
And determining those four things for your own business before you launch is vital. Ask yourself…
- Strengths: What are competitors already doing well in my market that I likely won’t be able to compete with?
- Weaknesses: What are competitors in my market not doing well?
- Opportunity: What opportunity in my market are most competitors not leveraging and might I be able to exploit that?
- Threats: What will be the big threats to my business and how can I prepare for these?
Here’s a more thorough graphical breakdown of SWOT to help you perform your market analysis.
Step #4: Choose a type of real estate investing to pursue
After you’ve performed your SWOT analysis, you should be ready to determine the type of real estate investing that will be most lucrative for your market. Try not to let funding make the decision for you (i.e. I don’t have much capital, so I guess I’m going to wholesale), because the reality is that there’s always a way to get money to build your business — the important thing is that you’ve chosen a type of real estate investing which is likely to succeed given current market conditions.
Here are a few types of real estate investments that you can consider:
Step #5: Determine where funding will come from
If you’ve determined that the most profitable type of real estate investing for your market will take some serious capital, don’t worry: there are tons of different ways to find money for building your business. Lots of people with big money just want their money to work for them and provide a healthy ROI.
Ryan Dossey (my brother) has this great video about raising private money for your business and how he raised his first $100k.
Step #6: Choose your marketing strategies
In many ways, this is where the rubber hits the road for your business: how will you find deals in your market? How will you find motivated sellers? How will you convince those sellers to work with you? How will you find buyers to purchase those properties or tenants to live in them? How will you fix up properties if you’re planning to fix-and-flip?
These are all questions you need to answer on your real estate investing business plan.
And if you’re at a loss for answering them, sitting down with another real estate investor in your market and asking them questions can go a long ways.
However you do it, write down your marketing plan of attack — how you plan to find and close deals — what you’ll need to make per deal to remain profitable, and how much you should expect each deal will cost you.
Here are a few common marketing strategies that you might consider.
- Direct mail (check out Ballpoint Marketing if you want to send hand-written mailers en masse).
- Bandit signs
- Door knocking
- Facebook ads
- Search engine optimization
- Cold calling
Step #7: Create a plan for consistently networking with other professionals
When you’re just starting out, no business-building strategy is quite as effective as networking with other real estate professionals within your market. There’s something about those face-to-face connections which can benefit your business for a lifetime.
You might learn a thing or two from other friendly professionals in your market. Or maybe you’ll end up partnering up with them. Or maybe you’ll learn how better to compete with them.
Whatever the case, networking can help build your business. And you should map out a game-plan for consistently networking with other professionals — even if it’s something as simple as going to a monthly meetup or working from different coffee shops every day.
Step #8: Create a plan for delegating down the road
You’re building a business, not a prison cell. Which means that you’ll need to make a plan for delegating tasks to other people down the road.
In the beginning, you’ll likely be the horse, driver, and carriage — that is, you’ll be doing pretty much everything.
But don’t make that time-intensive phase of business last longer than it needs to. You’ll be surprised at how much faster your business will grow (with less work) when you hire A-players, treat them well, and trust them to do their job.
You won’t have to work as many hours, your business will grow more quickly, and you’ll make more money. So make a plan for which tasks you’d like to delegate when the time comes and which ones you’d like to keep (the ones that you enjoy the most, ideally).
And if you imagine that answering the phone every time it rings is a task you’ll want to delegate, Call Porter can help. We’ve built the only call center designed for real estate investors. Our reps are trained specifically to talk with motivated sellers, convert them, and then schedule a follow up call with you or your acquisitions manager. You can try us out for yourself over here. 🙂
Here’s what one of our members has to say.
Step #9: Find your exit strategy
Every good real estate investing business plan includes a thorough plan of attack… and an exit strategy if things go terribly wrong.
Since you have a business plan, your chances of things going horribly wrong decreases quite significantly. Still, it’s good to have a plan B or a way out if things go sideways. Maybe wait to quit your day job, for instance, until your business starts providing for itself. Choose your investors and/or tenants carefully. And consider including a clause in your contracts that gives you a way out (at least in the beginning).
Step #10: Build your timeline
The final step is to determine when you want everything to happen. When do you want/expect to hit your goals? When do you expect to start hiring people? When do you expect your business will be able to fully support you and your family?
These timelines need not be written in stone, though — no one can accurately predict how long it’ll take you to build a successful business (the most important thing is consistent progress). But having a timeline which you can reference and which keeps you heading in the right direction is wildly valuable, especially if you post it on your wall, where you can see it everyday.
So you know you need a real estate investing business plan. You know that having a plan will give your business a better chance of success and turn you into the kind of forward-thinking entrepreneur that succeeds.
But you don’t only know that you need it, you also now know how to create it.
With the above 10 steps, you can draft a real estate investing business plan which increases your statistical chance of success.
And while you could just launch your business without a plan, why would you? It’s a far better idea to spend some time thinking about the details of how your business will succeed in order to succeed then it is to launch quickly and fail quicker.
So get to it — and don’t press the big red button until you’ve drafted a business plan which you’re confident will succeed.