Monday, April 27, 2015

Real Estate Investment Business Plan - Developing a Sound Business Concept


Another thing you should do as part of your business plan and part of your explanation or discussion with private lenders is talk about your management team. Obviously you’re going to talk about your own skill sets, and a lot of that was discussed last month in our credibility kit.


Talk About Your Management Team


Everybody else involved in your team should be addressed. Your team may be full time employees. They may just be your realtor or two if you have any. It may be your insurance agent or mortgage banker. It may be a hard money lender. It could be your title corp or your attorney – all these folks that are involved.


Clearly if you’re going to be doing significant rehabs, you would include your contractor(s). You need to lay out who these people are and what their skill set is.


What I was doing in my kit was I would include their names, addresses, etc. Also allow the private lender to call them as a reference. I would list these people out for a couple of reasons.


One, it demonstrates who your team is and allows your private lender , if they would like, to call them and check up on you. A lot of private lenders are going to want to do that. They will want to call references and talk to some of the individuals in the background.


This part allows them to do that and at same time presents you and your team. Assuming they are good, solid professionals, it should reflect very highly on you that you’ve hired this type of professional.


Have a Mindset


Also, just make sure you have what I call mindset. If there’s been any change, make sure you understand that change happens. We’re clearly seeing that in this environment. Six months to a year ago it was quite different.


You’ve got to be able to talk about today’s environment and what’s going on in today’s news. Stay up on the news. Be able to talk about the news and how it’s going to impact your business.


For example, today our new president and his colleagues have issued a plan that potentially is going to be some kind of joint venture between government and the private sector. They’re going to participate in some sort of mortgage modification plan and supposedly bring the interest rates down on a lot of mortgages for people that are close to foreclosure.


How does this impact you? How does it impact your potential investor? How does it impact your business? Be sure to have some understanding of these concepts and be able to talk about them in a fairly intelligent way.


Keep Up With Current Market News


You really do need to stay caught up on the news and what’s going on in the market. All of these are going to impact the way you interact with that private lender.


When you’re sitting down with them, you’ve got to be able to say you understand the market is changing. You have to be able to say you understand the mortgage market has kind of collapsed. That’s why you’re talking with Mr. Private Lender , because you can’t get a traditional mortgage.


This is an opportunity for him to partake in your business and get a much higher return on his investment on capital compared to what one may get in a CD or money market. “I can offer you 9, 12, 15% compared to the 2 or 3% that you’re getting. It’s almost an advantage for you, Mr. Investor, to partake in this business now.”


A year ago you may not have needed a private lender. Today you probably really do. You can play into the news and make it part of your presentation and business plan in terms of why it makes sense for them to be in your business.


Be aware of what’s going on in the marketplace. Be attuned to it and how it’s going to impact your real estate business.




Real Estate Investment Business Plan - Developing a Sound Business Concept

No comments:

Post a Comment