How to Write a Real Estate Business Plan
First, housing in various locales across the country has become harder and harder to find. This problem has driven up real estate prices continuously over the last several years.
As real estate prices go up, so do real estate commissions. The more money to make in the real estate world, the more realtors will enter the marketplace. This is just one of the numerous reasons why industry experts anticipate steady growth in real estate companies opening up new shops. As more realtors, specifically real estate brokers, start new shops, a correlated need for a business plan increases as well. From this, our business plan writer has come up with some tips and tricks to help real estate brokers write a coherent and solid business plan.
Executive Summary for a Real Estate Business Plan.
The executive summary section of a real estate business plan should provide specific details related to every aspect of their organization. However, an exorbitant amount of details should be avoided. For example, our business plan writer has found that a real estate business plan executive summary should include a brief description of the internal workings of the business, one or two differentiating factors setting the company apart from other real estate brokers, and a brief highlights of the expected financial results based on the number of realtors working for the firm.
The company information section, specifically the location section for a real estate business plan, should be written discussing the benefits of the company’s office location. To illustrate, some real estate brokers choose offices on roads with high traffic counts. The high traffic allows the broker to exploit external sign visibility for advertising purposes. Other real estate brokers may select office locations that are near popular subdivisions. By doing this, a real estate company may become an expert in a specific subdivision or niche market. Regardless of the strategy behind the office location, make sure to discuss it and touch on the benefits as well.
Product Description and Competitive Advantages
For the most part, real estate professionals offer similar services. The services may include listing properties, residential or commercial, selling properties, and possibly providing estimated values for sale by owners. No matter the services, make sure to identify possible differentiating factors that will help you create a competitive advantage for your business. An example of this may be the use of networking when selling properties. Real estate agent networking not only helps create word-of-mouth buzz for the property, but it also generates referrals in the process as well.
The target market for the real estate business really depends on the opportunities available in the marketplace. Some real estate professionals may target specific subdivisions. In targeting these subdivisions, real estate agents may go door to door soliciting listings. Other real estate professionals specialize in commercial office listings and sales. When this is the target market, then a strong network of referral sources is important. No matter what your target market, make sure to describe the benefits of the target market, how your specific skill set is aligned with the target market, and why you actually select this target as compared to other opportunities.
Industry research for a Real Estate Business Plan
When conducting industry research, some real estate agents immediately start to discuss their local area as well as competitors in the geographic location as well. However, our business plan writer has found that starting off evaluating the real estate industry on the national level in documenting findings helps real estate professionals create a perception of an industry expert. From this elevated platform, real estate professionals can then examine various real estate offices and discuss some strengths, but mostly weaknesses as compared to the national market as well as the local market functionalities. Through applying the structure, real estate professionals are able to evaluate competitors from a strength or weakness as compared to a competitor vs. competitor strategy.
The owner and management section of a real estate business plan should focus on the real estate broker's educational experiences first. Once the educational experiences are listed, then introduce work experience related to real estate next. When introducing this section, attempt to tie in how your educational experience helped achieve work experience related accolades. From this interwoven introduction, future thoughts and aspirations may then be discussed related to the new real estate office and how it may grow or succeed. Finally, in this section, make sure to outline how many employees will be working for the organization and briefly describe responsibilities for each participant.
Funding Request for a Real Estate Business Plan
The funding request section for a business plan in the real estate agent world should first start with explaining or introducing the specific dollar amount needed to start the real estate company. Next, the real estate broker should then identify important categories that need funding in the startup process. Some of these categories may include new office location buildout, working capital, advertising for the new real estate company, training costs, and office supplies. Once each category has an aligned dollar amount, then total up funds at the bottom. Make sure that the total needed at the bottom of your categories is identical to the top-line dollar amount requested on your funding request document.
When preparing your financial projections for your real estate company, start with identifying how many real estate agents you expect to have a board when your office opens. Next, anticipate, on average, how many sales each agent may achieve. What your monthly sales are determined, then project the average commission for the sales and multiply by the number of sales anticipated. Once these calculations are complete, the real estate business owner will then have a ballpark first-month revenue projection. The next step is to deduct real estate commissions paid to employees, fixed office expenses, and taxes. Whatever is left over will be your first month's net profits. The final step for your projections would be to use some growth estimates and conduct a 12-month profit and loss statement.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author