How to Plan, Start & Grow a Real Estate Business Plan

real estate business plan

The real estate venture is the most lucrative business in the USA and the entire world at large. Choosing to venture in the same is a bold move and a wise decision. It is the best decision because, with an appropriate real estate business plan, one can craftily, leverage through beyond the limits. However, before diving deep into this business, you need to know the compelling facts about real estate. Below is the comprehensive list of necessary truth:

  • By the end of the year 2019, the USA had 139.64 million household units. Of these houses, 43.28 million are occupied by tenants while 80.68 million by owners.
  • A total of 5.34 million homes were sold in 2019. There is a likelihood of selling about 5.52 million homes in 2020 and 5.57 million homes in 202.
  • The home ownership rate in the USA, which is the proportion of occupied households stands at 65.1 in 2019. That is a slight growth from 64.2 of 2017, and 64.8 of 2018.
  • The leading home builders in the USA have revenue in millions of USA dollars. In Miami, Florida, Lennar Corp led in 2019 with 20.56 billion USA dollars and closely followed by D.R. Horton with 17.378 billion USA dollars.
  • There is a projection of an increase in home prices. For instance, home prices are to be 3.5 per cent higher in the fourth quarter of 2020 than in the fourth quarter of 2019.

In summary form, there is a growing market for homes. Yet a slower increase in household units and an ever-growing tendency to own homes. Also, a diminishing renting habit among Americans. Buying a house with tenants lets you begin collecting rental income right away  Putting all the facts on a scale, it is plausible to conclude that the real estate business is the most thriving. And also, less risky. The sale rates for homes are steadily increasing across the years, a more promising fact. Therefore, to leverage through these hard facts and become successful demands appropriate planning. For that, we give you answers to the most compelling real estate questions.   The answers concern planning, starting, and growing your real estate business.

How do you write a real estate business plan?

Real estate businesses bring out the agency’s mission, goals, and origin. It is majorly aimed at informing all stakeholders and employees about the direction of operations.  Generally, it should serve as the business blueprint. Therefore it is not easy anyway because it must be factual, precise, consistent, and up-to-date. Yet it is essential to business. Because of the above, you need to know the guidelines for preparing a real estate investment business plan. Here are the surest nine steps.

Step 1. Assess your target market

Assessment of a target market involves studying the market. In the process, establish its cultural, demographic, and financial factors. It is a preliminary requirement since it impacts on buying and selling. Also, it influences the choices for the new real estate agent business plan. During this process, the following must be done.    

(a) Create a market overview

Compounding historical facts about the real estate business is essential, especially for predicting the business’s future. The primary projections to look at includes the performance of real estate over the years. Also checking the demands versus the sales and supply rate is mandatory. Most reliable sources for market research information are:

  • housing research
  • United States Census Bureau
  • Department of Housing and Urban Development (HUD)

  (b) Establish market segmentation

At this stage, you need to ‘sift chuff from the grains.’ To that effect, critically get a clear overview of your potential buyers. A process that can be done through checking out on the opportunities foregone in real estate.  

(c) Know customer demographics After demarcating the business territory, you need to study the audience in the target. The audience seeks to know their family status, age, marital status, income, employment, and education. Then you can be able to generate a real estate development business plan effectively to suit the population’s needs.     

(d) Know the competitors  For a clear definition of your unique selling proposition (USP), you need to study competitors. Their study also presents an opportunity for self-evaluation to get the right differentiation. Also, it allows you to capitalize on the competitor’s weaknesses in the real estate brokerage business plan.

In the abstract, the PESTEL model is the right tool for the same. Utilize it effectively to know the competitor’s political, economic, social, technological, environmental, and legal frameworks. Then you can get the opportunities to manoeuvre through them.

Step 2. Create an executive summary

An executive summary is a presentation of services/products, purpose, audience, and location in a brief prose. The brief should be in point forms for a quick scan. Often, use about five bold points to introduce your business.

  Step 3. State the mission and visions

A mission statement also referred to as the “why” statement, gives the purpose. It is a buildup on the brief in the executive summary.

  • It should be exhaustive enough to answer the following questions:
  • Why do you start the real estate business?
  • Why did you find passion in real estate?
  • What effects will the business have in society?

Step 4. Conduct SWOT analysis

A Real estate business can accrue either gain or losses, just like any other business. The realization of profit or loss rely on the firms’ internal and external factors. To get a clear picture of these factors, you can utilize the SWOT analysis in your real estate agents business plan. It highlights strengths, weaknesses, opportunities, and threats to the business.

  Step 5. Define the company’s goals

Goals are the specific milestones leading to the achievement of the overall mission of the real estate business. They must be streamlined according to the personal ambitions, results of competitors, and realistic growth. They must also enumerate the critical performance indicators (KPIs) of your real estate.

Step 6. Give an outline of the structure of management and order of operations

Within this section, the business planner seeks to provide critical staffing positions. Alongside the areas, there is a definition of their roles and span of activities.   Operations in a farm should be given a clear picture of the daily workflow in the various offices. Such breakdown helps Create an image of the potency of given offices. But also, it highlights the missing staff positions in business plan for real estate.

  Step 7. Create a financial plan

This section contains all financial projections for the real estate business. They give out details about financial requirement breakdown, the cost implications of operations and activities, as well as sources of the finances.

The section should answer the questions of:

  • How much money is required to successfully establish and carry out operations of the real estate business?
  • What are the cost implications of activities in the business?
  • How will the business meet the cost of operations?
  • What are the key sources of finances in the business?

Step 8. Structure marketing plan

The most central section of the business plan is the marketing structure. That’s because the section gives the approaches used to leverage the entire potential market for the real estate business. Therefore, the section contains details of the marketing plan and chains of distribution. Also, it has all to do with the service/ goods production and pricing required for reliable customer relationship management (CRM).  Notably, this is the last section of your plan.

  Step 9. Review the plan

Even though you already have a plan in place, you ought to do a sequential review of all the business plan sections. Just in case of omissions, unnecessary bias, or even typing errors.

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