The Business Plan for Real Estate Investing

The Business Plan for Real Estate Investing

Table of Contents

Success in residential real estate investing takes time, patience, and a plan. The first step is to take the time to look inward, have the patience to explore and interpret the options, and then write your plan. This business plan will be your how-to guide in scaling your investment goals.

Every investor needs a business plan. The plan will set the parameters for goals, values, and financing strategies to create wealth and financial independence.

This article will outline the steps to write a complete and comprehensive business plan for a real estate investor. A properly written plan is your guide to the end goal and will serve as a yardstick to measure your success along the way. Most importantly, a plan is a living, breathing document with room to pivot when an objective, method, or goal needs to change.

Key Takeaways

  • A business plan is a framework for operations and a strategy to minimize the effects of obstacles
  • A business plan will be specific to every investor, but there are components that every plan must address
  • The standard time frame for business plans is five years
  • A SWOT analysis must be done on each investment opportunity before the property is placed under contract

Defined Terms

SWOT Analysis – the process of analyzing the Strengths, Weaknesses, Opportunities, and Threats of each investment.

What is a Business Plan for Real Estate Investing?

Real estate investing is a business, and, like all businesses, there needs to be a plan in place to serve as the framework for operations to reach the end goal. The plan will outline the informed and organized steps to reach your goal.

Every business plan will be specific to the investor, but all plans need the pertinent sections to be well drafted and complete. These components are listed and explained in this article. The plan will identify certain obstacles and set out guidance to minimize or avoid them.

The Eight Components of a Business Plan

A well-drafted plan will contain more than a vision and the end goal. The plan must also identify potential obstacles and ways to minimize their effects. It is good practice and will lend credence to your investment business when a comprehensive plan is furnished to a potential lender or investor.

The standard time frame for a business plan is five years.

The eight components of a complete business plan are the following:

  1. investor’s values and mission statement
  2. breakdown of the short- and long-term goals
  3. strategies of the investor’s strengths and weaknesses
  4. best strategy for each property type
  5. marketing and branding efforts
  6. financing plan(s)
  7. internal and external professionals advising and working with the business, and
  8. backup plans and exit strategies.

Although the contents of a plan will be different for all investors, every plan should include each of the above categories to be perceived as complete and informative.

1. Vision

A vision statement is the investor’s values and mission. Often, this section is written last, as it is easier to set out the vision when thoughts are organized around the plan.

When drafting the vision statement, it is OK to look outside of the real estate investment industry. If there are other companies or others in your network with whom you identify, then reach out to determine any aligned values.

The final version of your vision statement will attract and help you identify consultants, lenders, contractors, and tenants.

2. Goals

This section defines the goals and the steps to achieve them. The goals should be categorized into short and long terms. Typically, long-term goals are for the company, like asset types, targeted profits, and portfolio size. Short-term goals are the actionable steps required for long-term goals.

An example, if a long-term goal is to close on two properties during the year, then the short-term goals would be to determine the market area, establish a list of motivated sellers, and work to secure a contract.

Breaking down long-term goals into actionable steps will hold you accountable and create deadlines. Short-term goals are to measure progress and success.

3. The SWOT Analysis

A business plan must address the components of SWOT: Strengths, Weaknesses, Opportunities, and Threats. This analysis method is used across business sectors and is not exclusive to real estate investing. This analysis will enable investors to consider what will work for their business.

When the strengths and weaknesses are identified, you need to examine the competitors and the market area. Will the ultimate sales price be supported in the market? Will your planned renovations be considered competitive to attract tenants or too high of an investment for the area?

The SWOT analysis must be done for each opportunity before the property is secured and under contract.

4. Strategy for Investment

The plan will need to set out the ability to implement this strategy. There are several strategies to be executed by an investor, like rehabbing, wholesaling, and renting. The best method for an investor is evaluating each property, the market, and the mission’s timing.

For example, if the investor’s long-term goal is cash flow for retirement, then the strategy should be renting. But to attain the financial position to acquire and maintain ownership of rental properties, the process may begin with wholesaling.

There are no right or wrong answers, and the strategy may differ for each opportunity. Each strategy must contain an exit plan.

5. The Marketing Plan

All businesses need a funded marketing platform and a plan to implement the efforts. The implementation can include logos, an interactive website, a social media presence, and advertising targets. A solid marketing platform will establish trust with Realtors, investors, and other professionals needed to achieve the exit plan.

Once trust is established, the marketing efforts within the platform will help build and retain the relationships.

6. The Financing Plan

This component can be the trickiest for the investor who is new to the business. Generally, the plan needs to include statements of profit and loss, cash flow, an operating budget, and a balance sheet. The funding for short- and long-term goals and the marketing plan should be expense line items in the statements for an accurate illustration of the cash flow.

The most important factor of a financial plan is accuracy. Accurate financial statements will aid in making the best decisions for the business, raising capital, and reporting to investors and lenders.

7. Business Systems and Teams

This section will set out the systems in place for the operation of the business and the team of professional consultants, contractors, and employees. This section can provide an overview of a typical plan for projects and properties.

When viewed together, this component and the financing section will give either a positive or a negative report on the progress toward the end goal. They will quickly identify the areas needing change.

8. Backup Plans and Exit Strategies

All business decisions need backup plans—to the extent possible. The adage becomes a reality: plan for the worst and hope for the best or if you fail to plan, you plan to fail.

While it will not be possible to think of and plan for every likely scenario, just developing a backup plan will make recognizing a potential problem easier. This thought process will also place an investor in the proactive position when responding to either the lender’s or investor’s questions of:

  • What if the property remains on the market longer than expected?
  • What if the rents are lower than budgeted?
  • What if the property remains vacant longer than projected?
  • What if a seller backs out of a contract?

The Suggested Template

Writing a business plan is a challenging task. But it is necessary, and it will need your undivided attention. For this, Amplend offers the simplified template below. The template should help to organize your thoughts, and it will serve the purpose of your having a comprehensive plan.

To write a well-rounded business plan for real estate investing, you must:

  1. write an executive summary for an overview of your vision
  2. include an explanation of the short- and long-term goals and how they will be achieved
  3. show your expertise by a thorough market analysis
  4. list your consultants, contractors, and others who may be working for or advising you
  5. summarize the ultimate service of your business and how you will differ from your competitors, and
  6. outline the marketing strategy.

A brief overview of each template section is given below.

1. Executive Summary

The summary is essentially the “why” of your investment goals and will explain the vision and the mission. The strategies for marketing, finances, growth, and services need to be set out in this short narrative.

2. Company Description

Next, you will examine the elements of your business and explain them from a high-level view. This will include a description of the services, contractors, and tenant type your properties will attract and how these focused elements will meet the need in the market.

3. Market Analysis

This section will shine on your expertise and your interpretation of the market. The narrative must include your SWOT analysis to support the choices for location and product type.

4. Business Management

If you are a sole investor, this section may seem unnecessary. But the management of your business does not necessarily mean employees. It also encompasses the team of outsourced talent and professionals needed to reach your goals.

Full names, resumes, and qualifications need not be given. Still, an overview of the professionals and consultants you seek will provide an idea of your plan to achieve the goals and targets of the investments.

5. Services

This is where the services to be provided by your business will be explained and how these services will set you above the competition. Details on specific asset types, holding periods, and targeted returns must be given. An essential factor to support the description of the services is your expertise and experience.

6. Marketing Strategy

The main element of any marketing strategy is communication. The introduction and presentation of your business and investments need to be properly and accurately communicated.

A part of this will be your plan for identifying leads. A well-rounded marketing plan should cover your practical approach to operating the business and growing your portfolio.

Additional Tips for a Business Plan

Below are additional thoughts and steps to follow as you consider the suggested template.

1. Tailor the Executive Summary to Different Audiences

The business plan is not exclusive to you. A business plan is also necessary for investors, lenders, and consultants. When writing the Executive Summary, consider the external audience and try accommodating their position and view.

2. Be Descriptive of What You Want

Often, the investor’s needs and wants get buried in the plan. Your wants must be the main point of the plan, and the other sections are to support and define the path of your investment journey.

3. Prove You Know the Market

It will be beneficial to include market vacancy rates and average rental prices within the company’s description. The Marketing Analysis section is where you need to relay specific information regarding new developments, areas of opportunity, and trends.

4. Prove You Know the Competition

Since your competitors are service-oriented like your business, you must “play prospect” to gather information. Researching their website, viewing their listings, and subscribing to their newsletter are good ways to obtain the information you need to write this section. The more information gathered on the competition, the better your position will be in identifying any changes to your plan or focus.

5. Set Realistic Goals for Management and Operations

When preparing projections and proformas, do so on a conservative basis. It is always dangerous when projections are overestimated. This can go both ways when investors plan and represent to do everything themselves or hire a team too big for a start-up. Thinking through the process or regular operations as your business plan is prepared will avoid these pitfalls.

6 Create Example Deals

It is always best if examples support your theories. These examples will set your theories to work and serve as a tool for future deals. Of course, only some opportunities will fit into the model, but the illustration will provide a framework for moving forward.

7. Update the Business Plan

As previously stated, a business plan is a living, breathing document that needs periodic review for changes over time. As operations continue and the portfolio grows, the sections that need to be changed or tweaked will be easy to identify.

Re-Evaluating the Business Plan

A business plan is a guide for future decisions, so it should be reviewed regularly. No decision path is set in stone, and a plan should be reviewed at least annually to account for market changes or any changes to the business structure or target.

This is not to say that the brand or logo needs to change. The changes resulting from a re-evaluation should be procedural, like accounting, return targets, or identifying other opportunities.

Any changes made to the internal operations or marketing platforms should be reviewed within the context of the budget to make sure any additional expenses are accounted for and covered.

The changes to a business plan should be the path for the business’s growth trajectory with the end goal as the target.


There is a lot of information in this article, and you are not expected to be able to write a complete plan from this article. There are software programs and professionals who can help with this task—use them if you are uncomfortable writing your plan or any section within it.

A well-drafted and well-rounded business plan will be as inspiring as it is informative to all who will read and rely on it. The business plan must accurately define the actionable steps necessary to realize your vision.

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