I maintain that no residential redeveloper can run a sustainable rehabbing company without the perfect real estate rehab business plan already in place. To be clear, I am not referring to the method in which you intend to rehab each individual property, but rather the plan to get everything up and running; the blueprint you will follow for the foreseeable future. That said, if you intend to run a successful rehabbing company, you must first build it upon a solid foundation. And for what it’s worth, no foundation offers more support than a properly devised real estate rehab business plan.
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Real Estate Rehab Business Plan Basics
Today’s most prolific residential redevelopers have a real estate rehab business plan, and there is no reason you shouldn’t as well. It’s worth noting, however, that there is no reason to reinvent the wheel when formulating your own plan. Feel free to take a thing or two from those that have already been there and done that. Let’s take a look at what today’s best business plans include:
1. Mission Statement
As the aptly named mission statement portion of your real estate rehab business plan would lead you to believe, it’s at this point in which you lay the foundation for the rest of your company. In doing so, be sure to define your company’s long-term goals in a clear, concise statement. This section is dedicated to what you are trying to accomplish, not how you intend to do so. By no means should your mission statement raise more questions than it answers, so make sure it is both legible and understandable; it’s something you’ll likely reference numerous times in the future, so it’s best not to have a mission statement that boarders on the ambiguous.
With a tangible goal in mind, proceed to identify the real estate team that will make it all possible. And while you don’t need to name off everyone in the rank and file, I recommend identifying those managers you deem important enough and, of course, the chief executive officer (CEO). Merely jotting their names down won’t suffice; you have to supplement their name with the appropriate information. Alongside each name, include two important things: years of experience and previous accomplishments. In doing so, you will identify the strengths of your team and make the delegation of tasks easier.
3. Market Summary
In order to formulate a real estate rehab business plan worthy of your consideration, you must include a section dedicated solely to the market in which you will be working in. With that in mind, pay special considerations to everything from where the market was in the past, where it currently is now, and what the future holds for it. Among other things, be sure to reference changes in the market share, who your competitors might be, shifts, costs, pricing and anything else you deem valuable. Not surprisingly, the market summery should consume a great deal of the time it takes you do draft a promising real estate rehab business plan. I recommend that you take it seriously, as it will identify the opportunities your company needs to make a name for itself.
At this point, it’s in your best interest to identify not only the problems that plague your industry, but also the opportunities that are inevitably created as a result. As with any business, you are providing a service; one that meets the needs of a particular consumer base. Find out the exact problems your target audience is faced with and address them head on. Only once you have an idea of the needs stressed by those you intend to serve can you proceed to give them what they want. In a way, you are reverse-engineering your product/service. Find out what it is your customers want, and figure out how to provide it.
5. Business Concept
Provided you have made it this far, there is no reason you shouldn’t have already identified the key technology, concept or strategy from which your business will be derived. What is it that will help sell your services as a rehabber to your target audience? Perhaps it’s the systems you use to find and close deals, or maybe it’s the extensive network of professionals you have aligned yourself with. Whatever the case may be, jot it down in your real estate rehab business plan. Remember, your business plan will serve as a reference for years to come, so there is no reason to be anything but honest. With a sound concept in your corner, it will be hard to forget why you went into business in the first place.
You could very easily argue that it pays to know your competition’s real estate rehab business plan as much as it does to know your own. And while you may not be able to uncover the minute details of those you are going up against, the age-old adage holds true: keep your friends close and your enemies closer. Even though they may be your direct competitor, there is a great deal of information to be gleaned from how and why they do the things they do. Dedicate this portion of your real estate rehab business plan to summarizing the very competition you intend to face off against. What are they currently doing that is working? What hasn’t worked out se well for them? Do they currently have a competitive advantage?
7. Goals & Objectives
Now it’s time to expand on the mission statement you identified in the first step of drafting your real estate rehab business plan. Instead of stating what you simply want to accomplish, take it a step further; come up with the steps you will need to carry out in order to attain your goals. I recommend extrapolating the steps you want to take over the course of the next five years. In that time, identify the specific, measurable goals you hope to achieve. That way, you will take the first step in holding yourself accountable.
8. Financial Plan
No real estate rehab business plan would be complete without an entire section dedicated to financial literacy, at least as it pertains to your very own company. That said, now is the time to devise a financial plan. Take a moment and outline a high-level financial plan that simultaneously explains the model you intend to use and any pricing assumptions your research has uncovered. Don’t forget to include forecasting for annual sales and profits over the next three years. This is another one of those sections where the more you include, the better.
Drafting a great real estate rehab business plan is no simple task, but I can assure you it’s well worth your time and effort. Few things have the power to guide you along the road of real estate investing quite like a sound plan. Take the time to make a plan you are comfortable following for years to come, and there is no reason you should ever find yourself lost.