A real estate business plan is as essential as a business plan for any new or existing business. This step-by-step guide will explain how to make a real estate business plan, provide a real estate business plan template for you to work with, and give you explanations about how and why each step is necessary for your business plan to be effective.
We also provide links to downloadable templates to help you create your real estate business plan, and sample plans to show you the best ways to tailor your plan for any number of real estate business needs. Whether you are seeking investors to grow your business, or want to track your goals from year to year as your business develops, a carefully crafted plan will help you on your way.
Why You Need a Business Plan for Your Real Estate Business
The real estate business plan fills a number of needs. It provides you with an outline of your business goals and the direction you want your business to take. It keeps you in line with industry trends. It lets you monitor your annual performance, and make changes in your goals as the market changes.
An effective real estate business plan also acts as a financial summary of your business, showing how it stands in relation to your competition and to the industry as a whole. The business plan acts as a road map for you and as a snapshot of your business for any investors or bankers who want to understand your business.
A real estate business plan will help you spot risks and weaknesses early in your business development, and help you set realistic goals for your business. These are known as SMART goals: Specific, Measurable, Achievable, Relevant, Time-based goals.
Creating a business plan without goals is like starting a journey without a destination in mind. Having a destination without a map means going down lots of blind alleys, taking unnecessary detours, and wasting a lot of time as you frequently need to go back and start again.
Your business plan will help you avoid these pitfalls and adjust your course while you travel towards your final goal — a successful real estate business.
How to Write a Business Plan For Real Estate
To ensure your business plan is as effective as possible, you will need to cover key topics and include the right information. Follow our guide to writing a well-formed real estate business plan below.
1. Executive Summary
The executive summary contains an overall review of the rest of the business plan. It should include an outline of your history, your mission statement, and an overview of the rest of the report.
This section will include things like:
- Target clients with a fictional “ideal buyer” persona;
- Target neighborhoods, price ranges, and listings;
- Market overviews and potential threats and opportunities;
- A marketing plan outline.
- Your mission statement. This should include where and how your agency was founded, discuss the legal and financial structure, and stress your dedication to your customers and any special advantages you provide to your target clients.
2. Management Team
If you have a management team, or a group that has contributed to the success of the business, create a summary of their names and contributions.
This section highlights everyone who has been involved in your business.
- Owners, founders, and original managers;
- New management, assigned duties and areas, and specific clients;
- Planned management expansion and anticipated managerial goals.
- Include all information about your managers, names, positions and duties, education and work history, past business successes and other relevant details. Think of this section as your management team’s biography.
As the business expands, your management team section will be one section that needs constant improvement and updating.
3. Products and Services
Your products and services should be phrased in ways that make you unique in the industry and highlight how you stand out from your competitors. As a real estate business, what do you provide for your clients that others do not? How do your agents compare with your competition?
In real estate, your product is your listing and your brand. What is it that makes your company the one that your target buyer wants to use? In this section, you will highlight:
- Your niche market, and how you acquire specific listings in your area;
- Your lead generation model, and the way you obtain leads that differentiates you from your competitors;
- Your personal branding. A defining brand can be nebulous, and many firms resort to hiring a brand agent to help them customize and market their brand. You may be a family-friendly agent or specialize in the young-professionals market. Determining how you present yourself is critical to your service profile.
4. Customers and Marketing
The customers and marketing section lets you identify your specific niche within the real estate business, and how you intend to reach them.
You defined your ideal customer in your executive summary; now is where you expand on your ideal customer “persona.” A “persona” is the industry name for the imaginary person you are selling to.
- Their demographics, age, gender, job, family preference, income.
- Deal-breakers. What do they have to have in a home? What can they do without?
- Amenities, recreation, entertainment. Does your ideal buyer need dog parks nearby, or bike paths? Do they want access to the water, or the theater district?
- What type of neighborhood is your ideal buyer looking for? Do they need a school district or would they prefer to be far from children?
After establishing your ideal customer, you can establish the viability of your marketing niche. For instance, is your buyer likely to be a first-time buyer? If so, what percentage of first-time sales were made in your chosen area in the last two years?
The more detailed you can make your Customers and Marketing section, the more you know how your business is likely to thrive in your chosen area.
5. SWOT Analysis
Strengths, weaknesses, opportunities and threats are a necessary part of every business analysis. In what areas are you and your business strongest, and where do you need improvement? Investors appreciate a business owner who can accurately pinpoint their good and bad points and demonstrate the means to improve.
This analysis should be fact-based, not opinion-based. You should be able to provide statistics and metrics for all your own and your competitors’ business research. Some things to consider are:
- In what areas of your business plan are you strongest? Are they similar or dissimilar to your nearest competitor’s strengths?
- In what areas are you weakest? Are you weak where your competitors are strongest?
- What opportunities exist that you could exploit in the next six to 12 months? Are they opportunities unavailable to your competitors?
- What threats are you facing in the next year? How can you avoid these threats or turn them into advantages?
By analyzing your business objectively, by reviewing all the facts and numbers, you can determine how you will be placed in the next year.
The meat of your business plan is the financials. This includes your expenses, your annual income forecast (whether it is sales, commissions, or other income), cash flow, and expenses. As your business grows, your business plan will include previous years’ financials so that the growth can be tracked.
Your financials should include at a minimum:
- Expenses. These include operating expenses, whether you have a physical location or are still in the virtual stage of operations; licensing and permitting; fees and filing costs; and other operating expenses. If you have employees, it will also include payroll.
- Income. The income section should consist of two parts.
- The past income portion will track how much you have already made. You should be able to show how many leads you have generated, how many transactions you made, and what your income from those efforts was.
- Future income is how much you would like to make going forward. From your past efforts, you will be able to estimate how many leads are needed per transaction, and how many transactions per sale.
- Goals. With this information in hand, you should include your projections for the next year and five year periods. Presumably, you wish to make an increasing profit over each of the next five years. Using your income tracking and market research, you can demonstrate how you will achieve these goals.
Operations contains the moving parts of your financial projections. This section describes how you intend to reach your business goals in the upcoming year. This section might also include upcoming personnel changes, office expansions, and so on.
Real Estate operations can include your projected hours of operation, your action plan for achieving your goals, and your marketing and advertising plan. Initially, this may be somewhat fluid, if you do not plan to have set hours of operation or a brick-and-mortar office.
Later, as your business increases, this section will include business hours, open house times, and so on.
After your first real estate business plan, your previous years’ plans will go into the Appendix so they can be reviewed by potential investors or by your board. You can also include your quarterly statements and other financial documents. Your Appendix is the section for any documents you want to include but which are not essential for your readers’ overall understanding.
Now that you know what goes into your real estate business plan, all that is left for you to do is click on the business plan creation template and begin. Be sure that you have all your documentation and research-ready in advance, and the template will provide you with cues as to what information needs to go into which spaces. After you have filled in all the blanks, the template will generate a real estate business plan to your exact specifications.
Real Estate Business Plan Sample
Writing a real estate business plan is easier when you work from a template. Download a free real estate business plan template from LegalTemplates and get started writing your business plan today.
You can download a business plan in Word format here, or start creating your real estate business plan using our document builder.
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