Writing a Real Estate Business Plan in 11 Easy Steps
1. Write a Detailed Business Description
There's a story and context behind your business, and the business description is where that should shine. Write a brief overview of your Real Estate business. Include your business goals and how you plan on achieving them. Then create a description of your company, including its history, structure, and other relevant information.
The mission statement is part of the business description — which helps keep the rest on the track. Many mission statements follow a familiar format, like:
"To be the best, full-service Real Estate company in the Triangle and to enhance our quality of life through active community involvement.".
In a microstudy of 200 mission statements, it was found that mission statements most often talk about the company's dedication to customers (85%), shareholders (37%), employees (21%), and society (3%).
As well as a defined mission statement, make sure to include:
- When you were founded
- Where you are located
- Who the leaders are
- Special advantages/partnerships
- Market opportunities
- Legal structure
A very brief real estate business description example is:
"Norris & Company Real Estate is Vero Beach's premier upscale real estate firm. They specialize in luxury waterfront homes and condominiums, particularly in Vero Beach and Indian River County, FL."
2. Market Analysis
Research the Real Estate market in your area and identify any trends or opportunities. Include this information in your business plan.
Real estate agents must constantly be aware of the market conditions in their area to serve their clients best. Agents can provide expert guidance and advice by understanding the trends and opportunities.
When writing your Real Estate business plan, including a comprehensive analysis of the market conditions in your area. It will help you better understand your client's needs and identify potential opportunities.
Your market analysis should include:
- An overview of the Real Estate market in your area
- Identification of any trends or opportunities
- An explanation of how you will address these trends or options in your business plan
By including this information in your Real Estate business plan, you will be able to show potential clients that you are knowledgeable and prepared to help them navigate the Real Estate market.
3. Perform a SWOT Analysis
A SWOT analysis is a technique used to identify and define several key characteristics that will impact your business: Strengths, Weaknesses, Opportunities, and Threats.
Think of it this way:
Strengths and Weaknesses are internal. Threats and Opportunities are external.
An analysis can be as simple as making lists of items under each category.
For example, a strength could be a solid and experienced sales team, while a weakness might be that your business is expensive to run because you haven't nurtured supplier relations.
It could be as simple as filling four sheets of paper with descriptions of the strengths, weaknesses, opportunities, and threats — collaboratively or alone. To make the answers clearer and the exercise more manageable, you can use questions like:
- What do our competitors do better than us? Threat.
- What's our unique selling point? Strength.
- Why have customers churned in the past? Weakness.
- Which markets are underserved in your territory? Opportunities.
4. List Your #1 SMART Goal
It's great to be ambitious, but focusing on one goal makes it easier to stay motivated, track progress, and see the measurable effect of achieving it. Even better if that goal is a SMART Specific, Measurable, Attainable, Realistic, and Timed – goal.
Examples of SMART goals you might set for your growing real estate business are:
- Build a new real estate website in the next three months
- Hire and onboard three new SDRs in the next six months
- Increase monthly leads by 50% by next year
- Sell ten houses in the Dallas metro area in the next 30 days.
Pick one at a time and focus on it! Sticking to an achievable goal with a time limit makes it more likely to come to fruition. And, even just writing it down makes you 42% more likely to attain it.
5. Identify Your Market Niche
Before setting out your facts and figures, it's essential to spotlight your target market and how you'll serve this niche. It helps you decide what's realistic and feasible to achieve in your business plan.
Determining your market niche is a fancier way of saying: Who are your services best suited to? While honing in on a narrow target seems a little exclusionary, niche marketing can save you time, effort, and money on marketing.
One tool to help you define your market is a buyer persona. A persona is a fictional typification of your ideal customer, with information that enables you to steer your sales and marketing in the right direction.
It's essential to assess your niche and ensure it is consistent with the market in your area.
For example, if you've decided to focus on first-time buyers, do some research to look at relevant stats and figures:
- What percentage of sales in your market were to first-time buyers in the last 12–14 months?
- What was the average sales price to first-time buyers?
Also, assess how competitive this market is:
- Are you the only agent catering to the young first-timer?
- Are you competing with well-known heavy hitters?
A competitive SEO audit can be a helpful starting point in finding your competitors in the online space, where almost all leads will turn at some point in the buying process.
6. Implementation Plan
Before you can begin implementing your real estate business plan, you must clearly understand your goals and objectives. What are you trying to achieve with your business? Are you looking to buy and hold properties for long-term appreciation, or are you more interested in flipping houses for a quick profit?
Once you have a good idea of your goals, you can start to put together a plan for how to achieve them. For example, if you're interested in buying and holding properties, you'll need to generate enough income from rentals to cover the mortgage and other expenses. If you're more interested in flipping properties, you'll need to find motivated sellers and then negotiate deals that provide you with a healthy profit margin.
Regardless of your goals, careful planning is essential for success in the real estate business.
Breaking your goals into action steps makes them more tangible and ensures you're making strides to fulfill them. Here are some keys to converting your real estate business plan into actual business practices.
7. Monitoring & Evaluation
Successful real estate businesses have a plan to monitor and evaluate their progress. This plan includes setting clear goals, measuring progress against those goals, and making adjustments as needed. Without this proactive approach, it can be challenging to identify areas of improvement or stagnation.
Additionally, a well-executed monitoring and evaluation plan can help to keep employees focused and on track. By regularly assessing performance and goal progress, businesses can ensure that they are making the most of their resources and achieving their desired results. Ultimately, a sound monitoring and evaluation plan are crucial for any real estate business that wants to stay ahead of the competition.
8. Risk Management
Real estate investing comes with a certain amount of risk. But with a well-thought-out risk management strategy, you can minimize the potential for loss and maximize your chances for success.
One of the most critical aspects of risk management is diversification. Investing in various property types in different markets spreads your risk and increases your chances of finding a profitable investment.
Another critical element of risk management has a solid business plan. Thoughtfully consider each step of the real estate investing process, from finding deals to financing them to managing the properties. Have a clear exit strategy for each investment to know when to sell or refinance. And always remember to stay within your comfort level; don't let greed or fear make decisions for you.
With careful planning and discipline, you can create a real estate investment portfolio that withstands market fluctuations and generates long-term wealth.
9. Financial Plan
Having a sound financial plan for your business is essential. To assist you, we've created spreadsheets you can use to estimate goals, income, and expenses. You will find specific instructions in the spreadsheets, but here are some guidelines for creating a financial plan:
Expenses
To create your plan, determine what your expenses will be.
Here are three main areas your expenses may fall into:
- Licensing: These expenses will include training, state exam fees, etc.
- Personal: This can consist of your wardrobe, technology fees (like computer and phone), and car fees.
- Business: Business expenses include broker fees, website and MLS fees, marketing, advertising, etc.
Our template divides these expenses into the startup and yearly costs to help you discern which payments will recur and which are one-time-only. Here's an example of what your startup expenses might look like.
Yearly expenses might include recurring costs like office rent, electricity bills, and annual license fees.
Income
Estimating income is the biggest concern for most new agents. To do this, you must decide how much money you need to make in your first year and how much you would like that figure to grow. You will also need to research some basic statistics for your market, like the average sale price for homes.
Use our business plan template to help calculate these numbers.
Transactions and Leads
To meet your income goals and cover expenses, you'll need to conduct a certain number of transactions. And, to complete a certain number of transactions, you'll need to work a set number of leads. There's no need to work this figure out by hand.
Our template will automatically calculate the number of transactions and leads you will probably need to meet your goals. Still, you will have to assess these figures to decide whether they are reasonable. For example, if you plan to work part-time as an agent in your first year but need to close 20 transactions to meet your goals, you are unlikely to have enough time.
10. Create a Personal Development Plan
A personal development plan is an essential tool for any real estate business. By taking the time to assess your strengths and weaknesses, set goals, and create a roadmap for success, you can ensure that your business is on track to reach its full potential. While it may seem daunting, creating a personal development plan is simple.
Start by taking stock of your current situation. What are your strengths and weaknesses? What are your goals for the future? Once you clearly understand where you are starting, you can begin to map out a plan of action. Set realistic goals and create a timeline for achieving them. Put together a resources list and ensure you have everything you need to reach your goals. Finally, implement your plan and monitor your progress along the way.
Remember, your development plan should be flexible and adapt as your needs change over time. With some planning and effort, you can create a roadmap for success that will help you achieve your long-term goals in the real estate business.
11. Write an Executive Summary that Captures the Vision
Your executive summary is an anchor point you can use to understand the overall goals, cement the parameters of your target market, and make decisions aligned with your plan. It's also a way to get inspired by your original vision.
For real estate, it would include points on:
- Target neighborhoods and price ranges
- Target clients and a brief description of the persona
- Brief marketing plan overview
- Market threats and opportunities
Think of the executive summary as the section of your business plan you would explain to a friend a football game when asked how you plan to make money as an agent or broker in your local town/ city or state.
Note: due to the specific details in the executive summary, this part of the business is typically one of the last completed items.
