Starting a real estate project seems easy at first glance. However, the reality is that all the smallest details must be well studied to avoid inconveniences. It is obvious that even with great anticipation, unforeseen events can occur. Nevertheless, these can be anticipated in the elaboration of a business plan. As a solution, we present to you in this article the infallible techniques to write it efficiently.
Definition of the real estate business plan
The real estate business plan is a mandatory document to write when creating a company or a real estate investment. It aims to describe your project in a clear and detailed way through an action plan in all senses of the term, either technical or financial. It will prove your professional maturity and the innovation of your ideas. At the same time, it will help you convince bankers and investors to support your offer.
The business plan is:
- A communication and management tool
- An effective way to attract investors
- A way to convince bankers.
Knowing that a real estate project aims at making profits, it is important to write the business plan well to guarantee its coherence. It serves as a reference and a guide to carrying out the project wisely. Indeed, among the profitable activities is the rental investment.
A real estate business plan is divided into two parts:
- An editorial part qualified as qualitative presented in the form of a Word file
- A financial part contains the proof of profitability of the project in the form of an Excel file.
Establishing a real estate business plan must be done in a thoughtful and meticulous way. It must contain all the information that will help the shareholders understand the project’s importance. For this, authenticity is required. In principle, the writing of a business plan is free. However, it must be composed of essential basic elements such as
- A summary of the project
- A description of your situation: age, health, professional situation
- A presentation of your financial situation: real estate, savings, investments
- A description of the property: location and work already done
- A detailed financial plan: the amount of the bank loan, duration of the loan, personal contribution
- A presentation of the economic model: purchase, work to be done, notary fees, other expenses
- The possible risks to foresee and the proposed solutions.
The stages of realization
The steps to be done to issue a real estate business plan are the following:
It allows you to identify yourself as a real estate agent. If you are already a member of a team, you will have to define the role of each person in order to achieve specific objectives.
2. Market analysis
This step consists of determining the real estate market’s hazards and the real estate statistics. The information of the study concerns the following points:
- Market growth rate
- The potential of the location
- The number of competitors in the area
- The behavior of the target
3. The local competition analysis
It aims at identifying and evaluating the importance of competitors.
4. Determination of service offers
For this step, you present your real estate agency. It includes the following elements:
- The origin of the project
- The personality of the project owner: natural or legal person, legal structure, professional experience
- The services proposed for the clientele
- The scope of action: local or national
- The target customers.
5. SWOT analysis
The SWOT analysis consists of issuing a business plan based on your market research. As its name indicates, it allows you to determine your strengths and weaknesses in relation to your real estate project.
6. Setting financial objectives
This step allows you to set your objectives in financial terms and the perspectives of evolution according to your needs and expectations. It allows you to determine your expenses in terms of operation; it is, therefore, the provisional budget. And at the same time, you state the necessary and adequate tools to reach your objectives.
7. The development of a final plan
This plan helps you keep your initial plan and suggestions for change in order to evaluate a strategy in accordance with your objectives. It is then the action plan for the realization of your project.
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