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The Significance of a Business Plan in Commercial Real Estate

By: Space Selectors   August 12, 2019
investor writing business plan at his desk

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Success in the real estate investing industry is not something that comes easily. It definitely won’t happen without property planning or implementation. This is where a business strategy is essential. For entrepreneurs, a real estate business plan can serve as a road map to all of your business operations. If you are looking to stay ahead of the curve, having a business process will play an important role in having success with commercial real estate laws.

 

There are a few important elements needed to create a successful business strategy. An investor will need you to have future goals, company values, financing strategies and more. Once you have written your strategy, it can help to create the foundation for smooth operations and outline a future full of potential.

 

Real Estate Investing Business Plan: What it is and Why You Need One

The main role of a property acquisition model is to be a living document that provides the framework for business operations and goals. It will focus on future goals for the organization as well as thought out and appropriate steps for how to get there. Business services can vary from person to person but we typically see them covering a time frame for one to five years.

 

Don’t let yourself underestimate the importance of drafting a business plan for real property investing purposes. It is without a doubt, one of the single most important steps a new investor can take. A business plan will help you avoid potential issues, be a blueprint to follow, and let investors know which steps to follow to achieve the end goal. It puts you in a position to succeed. In a lot of ways, a business plan is the most valuable document to investors, as it is outlining the most direct path to success.

 Commercial real estate business plan

Your business plan should address a company’s short and long-term goals. In order to accurately do so, you need to make sure that you have more information that just the vision of the company. You will need to also provide a detailed look at the ins and outs of the company. Included in this should be financial information, marketing outline, organization structure and more. You will know if you have done your business forecast correctly if it can serve as a comprehensive overview to anyone who reads it, whether internal or external to your company.

 

Below are seven must-haves for a well-executed business plan:

  •   Outline the company values and mission statement.
  •   Provide and break down future goals into short and long-term.
  •   Discuss and contemplate out the strengths and weaknesses of the company.
  •   Provide potential marketing and branding ideas with examples.
  •   Discuss how the company will be financed (and by whom).
  •   Explain who is working for the business.
  •   Provide answers to any potential issues with backups and exit strategies.

 

These are the very most important factors of a quality real estate business risk. In order to make sure you have created one, you will need to know which factors matter the most. A quality real estate business plan will explore each category in detail.

 

Now that we have broken down the “what” and the “why”, let’s go into more detail about how it provides help and correlates to success with a real estate investor.

 

What is the type of real estate you are buying?

This will answer the question of special interest to banks, lenders or financiers. Are you going to flip properties? Develop office space? Open a restaurant or health care facility? You will need to show that you understand the specific type of real estate you are getting into. You understand the zoning regulations and building codes. Not only does having this planned out help you with investors or financing, but it also helps you focus on your long term forecast, create a budget and know what to expect before getting a property.

 

Where are you investing?

Location, location, location – we have heard that before! But it is not just an old clichè, it stands true when it comes to real estate. Your business plan should strongly show where you are looking to buy property and provide details for that space. It should include things like a map, property values, competitive sites, current prices and projections to show what the locations would be worth years out. Is the area being developed? What is currently there? These are all important things to know when starting a business or relocating. Having these factors outlined in your realistic model is just one more focal point that helps you find the best location for your business needs.

 

Who are you working with and who are you targeting?

In most cases, we do not see people working alone in commercial real estate. Providing an outline of who you are working with, who you partners are, or people who will play an important role is key for a business to be successful. Outlines define roles and allow you to create a team for success. If you are looking for an investment, showcasing your team will help provide a feeling of security to someone looking to come aboard. Not to mention, highlighting the strength and composition of your team is good when looking for banking or possible loans, as it shows stability and commitment from a group of individuals who will help the business be successful and profitable.

 

Determining profits and projections

At the end of the day, numbers are one of the key ingredients to a successful business. You need to be able to show in your outline how much it costs to run the business (detailed monthly expenses), and how much is needed to buy the properties. You will also need to provide projections for revenues, and how long it will take to start making money off the properties. The revenues should be projected month by month for a few years out. This is crucial to help you find a spot that truly fits your budget. If you do not know how much you will be spending to operate your business, how can you know the amount you can afford to spend on rent? This is a key step to have before signing any lease agreement.

It’s a guide to follow

A business service model is a great guidebook to help you through finding commercial real estate for your business. It serves many purposes, including reassuring potential lenders and landlords that you are on the right track. Remember, it is a guide not a rule book. Things may come up that you haven’t planned for, changes happen. So, you do not have to follow it to the letter. You can help to prepare and overcome obstacles that come your way by having this laid out before getting started in your commercial real estate search.

 

 

 

Most Popular Questions & Answers

How do I start my own real estate company?

https://spaceselectors.com/what-do-commercial-real-estate-brokers-in-denver-co-actually-do/

This quick synopsis will help you understand how to start your own real estate brokerage or how to work with real estate agents.

 

 

How do you write a business plan?

https://www.entrepreneur.com/article/281416

1. Research, research, research.

2. Determine the purpose of your en-devour.

3. Create a company profile.

4. Document all aspects of your business.

5. Have a strategic marketing plan in place.

6. Make it adaptable based on your audience.

7. Explain why you care.

 

 

What is the goal of a business plan?

The Goal is essential to marketing and acquisition and includes important content like competitors analysis, finances, goals & timeline.

Are you looking for help in writing your commercial real estate business plan? Contact us today, and we can connect you with all the resources you need to get your project done right! Fill out our survey for more information!

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