Becoming a full time property rehabber is actually very easy, So why do so many investors get it wrong, or even worse, do nothing? Simple: No Business Plan! Make no mistake about it: This is a business! If you invest time and capital with the aim of making a profit, then you are in business, regardless of whether you purchase one or fifty homes. Before you commit a single dollar or a minute of your time, you should step back and have a good think about what it is that you want to achieve.
When developing your business plan, you may wish to consider the following questions:
- Will you sell for profit or hold?
- Do you wish to do it as a full time job?
- Do you wish to create an additional income stream?
- How many renovations do you wish to complete in one year?
- Do you have sufficient capital/finance to achieve this target?
Why You Need to Write a Business Plan?
To Plot the Course
- To create the “big picture” – to recognise long term direction and think about staying in business and not just starting a business
To Create a Feasibility Study
- Is it going to be profitable.
- Test the viability of your goals.
- What kind of financing will you need.
- Recognise the barriers to your success.
Become a Better Decision Maker
- Anticipate problems.
- Your plan will provide you with an organised way to face issues.
- The process of gathering information ahead of time will allow you to make more informed decisions.
For a Reality Check
- The plan will challenge some of your pre-conceived assumptions.
- Your plan will raise questions that will inspire solutions before you need to face those problems.
- It allows you to recognize what will be required of you.
- Identifies your strengths and weaknesses and highlights needed areas of assistance.
Guide and Measurement Tool
The business plan will act as a guide throughout your development and allow you to measure your progress against planned expectations. You can make adjustments accordingly.
Your business plan should contain the following elements:
- Executive Summary: Include general information about your business; your objectives; and your Start-Up details.
- Market Analysis Summary: Give a brief description of the market that you intend to work in, and your acquisition strategy.
- Implementation Plan: Outlines your renovation strategy and process.
- Sales Strategy
- Sales Projection
- Projected Profits and/or Losses
- Financial Plan
- Management Summary
- Important Assumptions