How to Make a Real Estate Investment Business Plan

Dave had already bought and sold a few investment houses when he decided to make it a full-time career. Deciding to leave his corporate job for a new career in real estate investing was actually quite easy—he’d already accomplished everything he sought to achieve in his now-former position. But starting a real estate investment business from scratch proved to be a bit more challenging than he anticipated. Quite simply, Dave needed a business plan.

A business plan is a comprehensive document that explains your business structure, strategies, and goals. The process of creating a business plan provides a good opportunity to carefully consider your real estate investing business goals. You’ll also have a chance to create a roadmap that you can follow as you work to achieve those objectives. Some find the business plan development process to be overwhelming—and it does require a lot of thought and consideration—but it doesn’t need to be an unpleasant or arduous task. So don’t get too anxious. You don’t need fancy formatting or overly elaborate detailing. The important thing is that your ideas are well-researched and clearly communicated.

What Your Real Estate Investing Business Plan Should Cover

Every business plan—regardless of the business type—needs to address some basic questions. In short, this plan serves as a blueprint that you can reference in an effort to remain on track as you work toward your business goals. But real estate investing is a unique business and you’ll want to make sure you’ve accounted for that as well. Let’s take a look at what you should include in a business plan document.

Executive Summary

This section should be an overview, or general description, of how your business is uniquely positioned and qualified to succeed in your particular market. The key to writing an executive summary is to describe the market opportunities that you intend to leverage. It’s important that you articulate the actions you will take to make this plan a reality.

You must convey specific skills and advantages that you bring to the table, along with your business mission and values. This should include a mix of both hard and soft skills. For instance, perhaps you are financially capable of bringing some credit and money to the table so financiers feel more comfortable working with you. Or, maybe you have a background in sales, so your personality and work style are particularly suited to investing. If you’ve completed some real estate investing education/training or already sealed a successful deal or two, write it down! This is your chance to brag a little—but be sure to maintain a strategic approach and relate it all back to how you will advance your real estate investing business goals.

It sounds simple enough, but many find that the executive summary is the most challenging component of the entire real estate investing business plan. That’s why many choose to write it last.

Market Analysis

You will need to perform some research in order to write this part of your real estate investing business plan. You will need to decide which type of real estate will be the focus of your investing efforts. Do you want to buy and sell luxury properties, multi-family housing, or single-family homes? Make note of the market trends in the city or region where you plan to invest. What are the risks and opportunities? How will your business gain solid returns on these real estate investments?

Organization & Management

At first, your real estate investing business will likely be a one-man show, with you handling everything from lead generation to financial planning via your home-based office. It’s acceptable to articulate this in your business plan, but you will want to be sure that you think ahead to the future. How will your business grow over the next year, the next five years or even ten years down the line?

As your real estate investment business grows, you may consider hiring help on an ad hoc basis through a staffing firm. If you intend to invest in more than a few properties per year, it may be wise to hire an administrative assistant to help you handle the nitty-gritty of keeping the paperwork in order. Once the business is firmly rooted, some investors also hire scouts to evaluate prospective investment properties. Of course, organizational growth relies upon a growth in revenue, so make sure that your future business structure-related objectives align with your financial goals.

The Service Sector

In a nutshell, you need to have a firm understanding of whom you will buy properties from and you must know who comprises your target audience when you’re selling the property. For instance, if you plan to buy distressed properties below market value, you may find yourself dealing with banks that are selling foreclosed properties or governmental organizations that auction houses. Others may work directly with homeowners who need help to exit a difficult financial situation. Selling these types of properties may put you face-to-face with wholesalers or a typical home buyer. It’s important to determine precisely who you will serve and how you will meet their unique needs.

Marketing & Sales Strategies

Marketing is perhaps the biggest challenge for new real estate investors. There are many ways to generate investment leads. Some new investors find themselves actually pounding the pavement and knocking on doors in their target neighborhoods. Others purchase lead lists and make cold calls in hopes of finding an opportunity. However, approaching distressed homeowners facing foreclosure can be tricky. If not done with compassion and care, you will sink the deal before you’ve even crossed the threshold.

That’s why many new investors find significant value in becoming an independently owned and operated HomeVestors® franchisee. The nationwide “We Buy Ugly Houses®” marketing campaign, combined with best lead conversion resources, can help franchisees seal the deal. In addition, the proprietary property valuation tools make it easier for franchisees to determine the property’s potential return-on-investment. This means you’re far more likely to find yourself in a position where you can confidently make a fair offer to a homeowner.


In this section of your business plan, you will need to indicate how you will secure the funds you need to acquire your first investment property. The plan should also articulate how you will manage year-over-year revenue.

Some investors get their businesses off the ground by taking money out of their self-directed IRAs. Others leverage investment-oriented bank financing such as a  Fannie Mae Homestyle loan or an FHA 203(k) opportunity. However, both of these bank products come with extra red tape.

An alternative to using bank products is to approach hard money lenders in your area. To do this, you will probably need to assemble a real estate investor credibility package in addition to your business plan. However, HomeVestors® franchisees are automatically eligible to get money in hand when a qualified property makes financial sense. This is yet another advantage that franchisees enjoy.

Financial Projections

What are your financial goals and how will you meet them? It’s vital that you address this issue. Even if you only intend to buy and sell a handful of houses this year, you will need to be specific about your exit strategies and what kind of returns you need to get out of each investment. Then, you can figure how much you will earn in a given year.

Of course, once you have some estimated numbers in hand, you will need to develop a tax plan. Every investment property that you sell will place additional capital gains taxes on your plate. Don’t worry, though, because your financial advisor can point out several tax deductions available to individuals who invest in real estate. And, you can also roll your profits into your next investment through a 1031 exchange. You may want to consult with your financial advisor early in the game to ensure you have planned and prepared in an appropriate manner.

Growing Your Investment Business Year-over-year

Your real estate investment business plan is meant to be a living, evolving document; as such, you must update it annually so you don’t lose track of your milestones and goals. Of course, the best way to make sure your growing business stays on track is the have the guidance of an experienced mentor who can help you strategize your way to success. While it can be challenging to find one on your own, HomeVestors pairs each new franchisee with a dedicated Development Agent who can provide expert coaching. If you are ready to fast-track your independently-owned and operated real estate investing business, get in touch with HomeVestors today!

Each franchise office is independently owned and operated.

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