When writing your executive summary, assume it is the only part of your plan that someone reads. Aim for a half-page to full-page in length. Your market analysis will determine that your desired sale price, also known as the after repair value ARV makes sense.
Neighborhood grade is typically on a scale of A-F, with considerations of location, views, street view, and school proximity. Find properties that were sold in last six months that are within a one mile radius of the property. Consider the following questions: How much did these properties sell for? What shape were they in, relative to the condition you expect your property to be after you repair it? Also, use online resources to gather as much information on the surrounding neighborhood and real estate market as possible.
This removes the need for a third party, which streamlines the purchase, but it also exposes you to all of the downside should things not go as planned. Also, buying properties in full cash and not taking advantage of leverage means you can take on fewer projects simultaneously with the same amount of cash reserves. If you wish to take less of a cash stake in the property, you may consider a private financing source. Some flippers have access to private lines of credit from family, close friends, or business partners.
These are typically fast and reliable sources of financing if you have those connections available. What unique or enviable resources do you have that give you a competitive advantage? Understanding your strengths will enable you to focus on them so you can maximize your advantages over your competitors.
Now shift your focus outward from your company to the market and customer base that you serve. What opportunities do you see just waiting for the right company to come along? Finish your SWOT analysis by identifying the major outside threats to your business. What challenges do you face? What potential threats are keeping you up at night? The better you are at identifying threats, the better positioned you will be to respond to them.
Comparative Market Analysis Real estate by its very nature is an illiquid investment. A comparative market analysis CMA , however, is a tool that a real estate agent, home buyer or house flipper can use to get a pretty good estimate as to what the true value of a house may be. A CMA uses the prices of similar properties recently sold in the area to provide estimated values. The closer the two houses are in terms of age, size, and condition, the more accurate your CMA is likely to be.
After performing these two tests, you should have a good handle on how your company might perform in the house flipping market. Perhaps even more importantly, an in-depth, unbiased SWOT analysis will help investors carve out their own niche moving forward. However, their problems create an opportunity for investors to lend a helping hand. The said, investors need to identify their own opportunities and how they can take advantage of them.
This part of the house flipping business plan should seek to identify what the target audience needs, and offer a solution. Market Analysis The market analysis section of a flipping houses business plan should identify the main indicators of the area investors intend to work in.
Pay special considerations to the past, present and future. Adding a swimming pool, for instance, can turn off buyers due to the risks it creates. Nature poses risks, too. The properties you buy, flip, and sell exist in given environments and exposed to any risks in those environments, from natural disasters to climate change. There are ample resources on risk management for real estate agents. Team Your team can be more important than your product or service.
Describe your team here, even if it is just you and a receptionist who answers the phone in your office building. Management team and qualifications: Address who works for or with you, what do they do, and how much you pay them. Compile the details of their relevant experience and education. Hiring plans : Outline who, if anyone, you need to hire to fill skills gaps in your management team and how much you plan to pay them.
If you will buy and sell houses as a team effort with other real estate agents at your business, make sure to give your clients the contact info of everyone on your team. Mission statement: Your mission statement articulates your goals for what your company does for its customers, employees, and owners. Be sure to avoid copyright infringement when you create images and advertisements for marketing your company.
Legal structure and ownership: Explain your business structure and who owns how much of it. For example, PARE resides in a shared office building where it rents private space alongside other startups. Financial plan Include these key elements : Profit and loss statement : This explains how your business made a profit or incurred a loss in a given amount of time typically three months by listing all revenue and expenses, then documenting the total amount of net profit or loss.
Cash flow statement : Documentation of how much cash the business brought in, how much it paid out, and the amount of its ending cash balance on a monthly basis. Balance sheet : Snapshots how your company is performing at a given moment by including how much money you have in the bank, how much your customers owe you, and how much you owe your vendors. Sales forecast : Projections of what you think you will sell in a given timeframe 1 to 3 years.
Personnel plan: Costs of employees. This section includes a brief plan for how you will eventually sell your company. You could sell it to another company or to the public.
List a few companies you might eventually sell to. This is important to investors since it tells them how they will make money from their investment. Also, consider startup costs. When fixing and flipping homes, real estate agents first need to consider four key costs : Cost of property acquisition Cost of rehab and repairs Carrying costs to flip a house Cost of marketing and selling Reality TV misleads viewers if they go away thinking that purchase price, fix up price, and sales price are the only expenses they need to anticipate when flipping a home.
If you take out loans to buy properties, expect to pay interest since you do not know when you will finish flipping and selling the property. Plan to shoulder all the expenses, not just the basics. Appendix The appendix provides a space for any charts, graphs, images, or other items that did not fit in other parts of the business plan. Large sets of data or visual aids can be distracting if they are in the middle of the plan.
Instead, keep them here. You can include expanded versions of your sales forecasts and other financials. Or you can include personnel plans that extend further into the future and display insurance costs for employees. You can also include general assumptions about tax and interest rates in the upcoming months.
Conclusion Now, go back and write your executive summary! Once you finish writing your business plan, consider next steps, such as market research and branding. To help you get started, you can download our free traditional business plan template or our Lean Plan template.
LivePlan can also help you walk through the process of writing your business plan when you are ready to go.Your executive summary will include the following sections: Who you are: Your business name, location, and contact information. Another competitive advantage that we are bringing to the industry is the commission model our commission structure. The properties you buy, flip, and sell exist in given environments and exposed to any risks in those environments, from natural disasters to climate change.
Answering these questions and more in your business plan can help potential investors or financiers feel confident about working with you. The more you can highlight the experience and talent of the members of your management team, the more you are likely to impress potential investors. Please note that the above projection might be lower and at the same time it might be higher since some factors are beyond our control.
By providing a line item for each of these anticipated expenses, investors can see that you understand exactly how much money you need and exactly where it will be spent. Comparative Market Analysis What is the economic environment surrounding your project? You can begin with your mission statement and a description of exactly how your business intends to operate, such as whether you intend to house flip a single home or whether you intend to run a long-term business flipping several homes simultaneously. Our goal is to become one of the top 15 leading house flipping company in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force in the industry. This is also a good place for you to respond to any threats or obstacles you identified in your SWOT analysis. But where should you turn?
Assists in the disposition of property; conducts market research to determine the value of properties; contacts brokers and potential buyers; assists in structuring sales transactions and negotiations with buyers.
There are a host of organizations with whom you might form partnerships, or whom you might simply consult as resources for your real estate company. A house flipping business plan will force you to consider any difficulties that may arise. It's also a good idea to walk-through as many open houses as possible so you can get exposure to the types of finishes and materials that your competition is utilizing in their flips. Potential investors will want to see how you will market and sell your house so that everyone can make a profit.
He might be a year-old man with a young family, seeking his first starter home. Mention your funding needs. The company description of your business plan is also where you should provide the basic information about the history and composition of the company, such as when it was founded and by whom, where it is headquartered, and how many employees it has, if applicable.
Find properties that were sold in last six months that are within a one mile radius of the property. Holds an open house to show the property. Identify the most important positions that will be held, and who will hold them.
Target market: Who is your ideal buyer? These clients will provide you with the first houses you can put on the market. Tailor your marketing and sales plan to attract more people like your ideal customer. Threat: Some of the threats that we are likely going to face as a house flipping firm are unfavorable government policies, and global economic downturn; global economic downturn usually affect spending power and the real estate industry is known to encounter decline in sales and profits during this period.