Real Estate Development Business Plan Template
Written by Dave Lavinsky
Real Estate Development Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their real estate development companies.
If you’re unfamiliar with creating a business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a real estate development business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your real estate development business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a real estate development business or grow your existing real estate development company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your real estate development business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Real Estate Development Businesses
With regards to funding, the main sources of funding for a real estate development business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for real estate development companies.
How to Write a Business Plan for a Real Estate Development Business
If you want to start a real estate development business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of real estate development business you are running and the status. For example, are you a startup, do you have a real estate development business that you would like to grow, or are you operating an established real estate business that you would like to sell?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the real estate development industry.
- Discuss the type of real estate development business you are operating.
- Detail your direct competitors. Give an overview of your target market.
- Provide a snapshot of your marketing strategy. Identify the key members of your management team.
- Offer an overview of your financial plan.
In your company overview, you will detail the type of real estate development business you are operating.
For example, you might specialize in one of the following types of real estate development businesses:
- Residential development: developing neighborhoods or communities of houses for residential living purposes.
- Commercial development: developing commercial properties to sell or lease.
- Subdivision development: dividing a single piece of land into smaller lots to be developed and/or sold.
- Industrial development: readying land and facilities for manufacturing, production, and other industrial purposes.
- Greenfield development: readying undeveloped land for agriculture or leaving as is while holding as an investment.
In addition to explaining the type of real estate development business you will operate, the company description needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of properties developed, generating $X amount in revenue, reaching X number of clients, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry or market analysis, you need to provide an overview of the real estate industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the real estate development industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section:
- How big is the real estate development industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your real estate development business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, schools, families, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of real estate development business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other real estate development businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of properties for sale, leasing another facility versus purchasing one from you or hiring an in-house development team.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of customers do they serve?
- What type of real estate development business are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you make it easier for clients to engage with your business?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a real estate development business, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of real estate development company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide renovation services, sell newly developed land, or finance real estate deals?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your real estate development company. Document where your company is situated and mention how the site will impact your success. For example, is your real estate development business located in a busy retail district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your real estate development marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your real estate development business, including answering calls, planning and managing projects, billing clients and collecting payments, and scheduling meetings with prospective and current clients.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your X number of properties, or when you hope to reach $X in revenue. It could also be when you expect to expand your real estate development business to a new city.
To demonstrate your real estate development business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing real estate development businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your management team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a real estate development business or successfully running their own real estate company.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you charge a development fee of 5%? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your real estate development business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a real estate development business:
- Cost of office equipment and supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of previous real estate developments you’ve been involved in.
Writing a business plan for your real estate development business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the real estate development industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful real estate development business.
Real Estate Development Business Plan Template FAQs
What is the easiest way to complete my real estate development business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your real estate development business plan.
How Do You Start a Real Estate Development Business?
Starting a real estate development business is easy with these 14 steps:
- Choose the Name for Your Real Estate Development Business
- Create Your Real Estate Development Business Plan
- Choose the Legal Structure for Your Real Estate Development Business
- Secure Startup Funding for Your Real Estate Development Business (If Needed)
- Secure a Location for Your Business
- Register Your Real Estate Development Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Real Estate Development Business
- Buy or Lease the Right Real Estate Development Business Equipment
- Develop Your Real Estate Development Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Real Estate Development Business
- Open for Business
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Other Helpful Business Plan Articles & Templates
Property Development Business Plan Template
Property development business plan.
You’ve come to the right place to create your Property Development business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their property development companies.
Below is a template to help you create each section of your Property Development business plan.
Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the property development process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.
Redstone Development is owned and operated by Jack Grant, a real estate development industry veteran who is well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
Redstone Development will handle the entire property development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.
The company focuses on building single-family homes and multi-family apartment complexes in the heart of Salt Lake City. All projects are designed to make these homes aesthetically appealing and luxurious. However, they will also be affordable to ensure that anyone in the Salt Lake City area can afford to live in our properties.
Redstone Development will serve home buyers and real estate investors who live and work in Salt Lake City, Utah, or the surrounding area. Salt Lake City is a growing city in need of additional housing. More people come to this beautiful city every year, which reduces the number of available homes and apartment units. Therefore, we will target buyers who are struggling to find affordable housing.
Furthermore, there are thousands of first-time home buyers in the area. These buyers are an ideal target market for the company.
Redstone Development will be owned and operated by Jack Grant. He recruited his former administrative assistant, Sheila Johnson, to be his Office Manager and help manage the office and operations.
Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
Sheila Johnson has been Jack Grant’s loyal administrative assistant for over ten years at a former property development firm. Jack relies strongly on Sheila’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Sheila has worked in the property development industry for so long that she understands all aspects required to run a successful property development company.
Jack will also employ several other full-time and part-time staff to assist with all aspects of running a property development business.
Redstone Development will be able to achieve success by offering the following competitive advantages:
- Location: Redstone Development’s office is near the center of town, in the shopping district of the city. It is visible from the street, where many residents shop for both day-to-day and luxury items.
- Client-oriented service: Redstone Development will have a full-time assistant with property development experience to keep in contact with clients and answer their everyday questions. Jack realizes the importance of accessibility and will further keep in touch with his clients through monthly newsletters.
- Management: Jack has been highly successful working in the property development sector. His unique qualifications will serve customers in a much more sophisticated manner than many of Redstone Development’s competitors.
- Relationships: Having worked and lived in the community his whole life, Jack knows many local leaders, real estate agents, and other influencers in the local property development industry.
Redstone Development is seeking $1,000,000 in debt financing to launch its property development business. The funding will be dedicated to purchasing our first property, construction costs, securing the office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:
- Office space build-out: $50,000
- Office equipment, supplies, and materials: $20,000
- Land purchase and construction expenses: $530,000
- Six months of overhead expenses (payroll, rent, utilities): $250,000
- Marketing costs: $50,000
- Working capital: $100,000
The following graph below outlines the pro forma financial projections for Redstone Development.
Who is redstone development.
Redstone Development is owned and operated by Jack Grant, who is a real estate development industry veteran and well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.
Redstone Development’s History
After 30 years of working in the property development industry, Jack Grant began researching what it would take to create his own property development company. This included a thorough analysis of the costs, market, demographics, and competition. Jack has compiled enough information to develop his business plan and approach investors.
Once his market analysis was complete, Jack began surveying the local office spaces available and located an ideal location for the property development headquarters. Jack incorporated Redstone Development as a Limited Liability Corporation on October 1st, 2022.
Once the lease is finalized on the office space, renovations can be completed to make the office a welcoming environment to meet with clients.
Since incorporation, Redstone Development has achieved the following milestones:
- Located available office space for rent that is ideal for meeting with clients
- Identified the first property to develop
- Developed the company’s name, logo, and website
- Hired an interior designer for the decor and furniture layout
- Determined equipment and fixture requirements
- Began recruiting key employees
Redstone Development’s Services
The real estate and property development industries have been strong over the past few years. As of 2021, the real estate industry was valued at $3.69 trillion and is expected to grow at a compound annual growth rate of 5.2% from now until 2030.
This growth will be driven by increasing demand for personal housing. Millennials and Gen-Z are beginning to rent their first apartments or buy their first homes. After years of living with family or roommates, they are ready to have a space to call their own. This trend is leading to a substantial demand for housing that many cities are struggling to supply.
The main challenge to the property development industry is the decrease in market size in the land development industry. Over the past five years, the industry saw an average annual decline of 0.7%. However, we believe that the pandemic was a considerable factor in this decline. Currently, the land development market is valued at $12 billion USD, and we expect it to grow substantially due to the growth of similar industries and the increasing demand for housing, as mentioned above.
Demographic profile of target market.
Redstone Development will serve home buyers and real estate investors in Salt Lake City, Utah, and its surrounding areas.
The community of Salt Lake City has thousands of first-time home buyers, residential real estate investment firms, and people looking for affordable housing options in the area. The company will also target millennials specifically since the majority of first-time home buyers are in this age group.
The precise demographics for Salt Lake City, Utah are:
Redstone Development will primarily target the following customer profiles:
- Home buyers
- Real estate investors
- Apartment/Condominium management companies
Direct and indirect competitors.
Redstone Development will face competition from other companies with similar business profiles. A description of each competitor company is below.
Upscale Property Developers, Inc.
Upscale Property Developers, Inc. is a property development company in Salt Lake City. In business for over 40 years, Upscale Property Developers, Inc. provides oversight for the entire property development process for new single-family and multi-family residences, commercial offices, and government buildings across the area. Upscale Property Developers, Inc also offers a variety of property renovation, demolition, and revitalization services for existing buildings.
Although Upscale Property Developers, Inc. provides homes with a luxury aesthetic, they are also the most expensive property developments on the market, thus resulting in many first-time home buyers being priced out of the market.
Premium Property Development Solutions
Established in 1990, Premium Property Development Solutions is a property developer of new commercial and residential properties in Salt Lake City. The company specializes in eco-friendly building materials and upscale design options for individual and corporate clients. Clients can customize their building design or choose from a variety of standard design options. The company employs experienced property developers and designers who are well-versed in green building design.
Premium Property Development Solutions is more affordable than Upscale Property Developers Inc. but is still out of most first-time home buyers’ price ranges.
Salt Lake Residential
Salt Lake Residential is also a local property development company that manages the complete property development process from sourcing and permitting to construction and sale. They are mostly known for their unique apartment complex designs but are equipped to take on a variety of different builds. The company has been in business for about ten years and has developed a reputation for building quality homes for affordable prices.
Although Salt Lake Residential has a similar value proposition of luxury homes at affordable prices, this company lacks the green building and eco-efficiency component to their business model, thus losing out on business from eco-conscious home buyers.
Redstone Development enjoys several advantages over its competitors. Those advantages include:
- Location: Redstone Development’s office is near the center of town, in the city’s shopping district. It is visible from the street, where many residents shop for both day-to-day and luxury items.
Brand & value proposition.
Redstone Development will offer the following unique value proposition to its clientele:
- Service built on long-term relationships and personal attention
- Big-firm expertise in a small-firm environment
- Client-focused property development, where the company’s interests are aligned with the client
- Effective project management
- Affordable pricing
The promotions strategy for Redstone Development is as follows:
Redstone Development will invest heavily in developing a professional website that displays all of the features and benefits of the property development company. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.
Redstone Development will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
The company will invest in professionally designed advertisements to be printed in real estate publications. Redstone Development will also list its properties for sale in key local publications, including newspapers, area magazines, and its own newsletter.
The company will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.
Redstone Development’s pricing will be moderate so consumers feel they receive great value when purchasing properties from the company.
The following will be the operations plan for Redstone Development.
- Jack Grant will be the Owner and President of the company. He will oversee all staff and manage client relations. He will also oversee all major aspects of the development projects. Jack has spent the past year recruiting the following staff:
- Sheila Johnson – Office Manager who will manage the office administration, client files, and accounts payable.
- Kenneth Bohannon – Staff Accountant will provide all client accounting, tax payments, and monthly financial reporting.
- Beth Martinez – Marketing Manager who will provide all marketing for Redstone Development and each property it manages.
- Jack will also hire a team of architects, engineers, interior designers, and contractors to design and build the properties.
The following are a series of steps that lead to our vision of long-term success. Redstone Development expects to achieve the following milestones in the following six months:
1/1/202X Finalize lease agreement
2/1/202X Design and build out Redstone Development
3/1/202X Hire and train initial staff
4/1/202X Purchase first property for development
5/1/202X Kickoff of promotional campaign
6/1/202X Find second property for development
Jack will also employ several other full-time and part-time staff to assist with all aspects of running a property development business as outlined in the Operations Plan.
Key revenue & costs.
Redstone Development’s revenues will come primarily from the sale of completed properties. The company will sell new single-family homes, multi-family townhomes, and apartment complexes/condominium properties to individual buyers and investors.
The cost drivers will be the overhead costs required to staff a property development office. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.
Funding Requirements and Use of Funds
The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.
- Average monthly payroll expenses: $50,000
- Office lease per year: $100,000
Income statement, balance sheet, cash flow statement, property development business plan faqs, what is a property development business plan.
A property development business plan is a plan to start and/or grow your property development business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Property Development business plan using our Property Development Business Plan Template here .
What are the Main Types of Property Development Businesses?
There are a number of different kinds of property development businesses , some examples include: Single-family detached housing, Multifamily housing, Developing and Subdividing Lots, and Commercial buildings.
How Do You Get Funding for Your Real Estate Development Business Plan?
Property Development businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate developer business plan and a real estate investment business plan template.
What are the Steps To Start a Property Development Business?
Starting a property development business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Property Development Business Plan - The first step in starting a business is to create a detailed real estate development company business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your property development business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your property development business is in compliance with local laws.
3. Register Your Property Development Business - Once you have chosen a legal structure, the next step is to register your property development business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your property development business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Property Development Equipment & Supplies - In order to start your property development business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your property development business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
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How to Write a Real Estate Business Plan + Example Templates
7 min. read
Updated May 30, 2023
Owning property – it’s one of the cornerstones of the global economy. And with real estate accounting for roughly $3.7 trillion worldwide, it’s no wonder so many people get into the real estate business.
But the real estate industry is constantly evolving, with new technologies and market trends shaping the way people buy, sell and manage properties. Whether you’re looking to start a home buying and selling business, a commercial real estate investment firm, a property management company or real estate investment trust, you need a well-thought-out business plan that not only outlines the steps to create a comprehensive and effective business structure, but also accounts for real estate’s unique challenges and opportunities.
A real estate business plan shares many similarities with a standard business plan. Here on Bplans, we’ve got a great guide already on how to write a traditional business plan . In this article, we’ll outline the key points to consider when creating a comprehensive and effective business plan for your real estate business as well as provide a free downloadable real estate business plan template .
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Understand licensing requirements
What’s your area of expertise, get a good team, brokers, contractors, legal and financial advice, plan for visibility in a crowded space, embrace online lead generation, document your entire sales process, show how you will stay ahead of the market, understand your customers’ needs, create a financial plan to secure funds, think long-term, speak the language of investors, real estate business plan templates and examples.
Your business plan will certainly include a company description – this is where you’ll outline your business, including its legal structure, management team and more.
Go into detail describing the area or areas of the real estate market you plan to operate in: residential sales, commercial leasing, property management, or more niche markets like luxury real estate or vacation rentals. Your business may want to mix two or more of these segments.
Once you’ve identified your niche, you’ll need to obtain any necessary licenses and permits. This process can be time-consuming and complex, so it’s best to research the requirements ahead of time and create a plan to ensure you’re compliant with all regulations. License and permit requirements vary by state and locality, so be sure to check with your local government to ensure you have all the necessary paperwork filed.
Depending on the market segment or segments you’re targeting for your real estate business, you’ll need to identify the team members that will help you get your business off the ground.
If your plan calls for purchasing properties, you’ll need a team of real estate agents or brokers. Document how they will help you find and acquire real estate, as well as how they can assist with marketing and selling properties once they’re in your portfolio.
You will also want to document how contractors and inspectors will help you assess the condition of properties you are considering purchasing, and provide estimates for repairs or renovations.
Real estate markets are rife with legal hurdles, so you will want an experienced real estate attorney to help you navigate these issues. Document how you will be able to draft contracts and review lease agreements, and the guidance you will receive on zoning laws and regulations
Finally, an accountant can help you manage your finances, including bookkeeping, taxes, and financial planning. They can also advise you on the best business structure for your company.
With so much competition, it’s essential to develop and document a strategic marketing plan for promoting your real estate services.
Your marketing plan should detail the channels and tactics you’ll deploy to reach your target audience and convert them into clients. Identify the most effective marketing channels to reach your target audience, such as social media, email marketing, search engine optimization (SEO), and content marketing.
These days, a vast majority of prospective buyers start their search online when looking for properties. So you’ll want to detail how you will optimize your web presence. You can also outline a content marketing plan that will position your company as an expert in the areas your target markets are interested in. These could include topical blog posts, articles, social media posts, videos and other content types to engage potential clients and showcase your expertise. All of these will make it easier for clients to find you.
Of course, there will be plenty of in-person work to do, too.
With long sales lead times, you will also want to describe your sales process and how you will meet sales targets. This should include prospecting methods, lead generation techniques, and follow-up strategies. Establish a client relationship management (CRM) system to manage leads, schedule client consultations, property showings, offer negotiations and contract signings so you can demonstrate that you will be able to manage and transactions effectively.
Demonstrating in your business plan that you have conducted a thorough market analysis is crucial. To conduct an effective market analysis for your business plan, you should investigate the current state of the real estate market in your target area, including property prices, sales volumes and inventory levels. You will also want to examine the competitive landscape in your target area by analyzing other real estate businesses offering similar services.
Next, determine the economic conditions and needs of the specific customer segments you want to serve, whether they’re first-time homebuyers, luxury property investors or commercial property renters. The more you understand how your target audience feels about the real estate market in your area, the better you will be able to tailor your services.
You will also need to show your knowledge of external factors like mortgage rates, and local, state and federal government regulations that may impact the real estate market. These factors all contribute to market volatility, so showing how you will manage market shifts and adjust your strategies will better position you to mitigate potential risks by identifying them in your business plan and documenting contingency plans.
It’s hard to operate a successful real estate business without access to capital. And you can’t expect to receive any – whether through a bank loan or investment – without a detailed analysis of your financial projections and funding requirements.
A 3-5 year financial forecast will demonstrate that you have a long-term vision for your business. Be sure to base your financials on market research and up-to-date industry data. You may also want to consider different scenarios, like best-case, worst-case and most likely outcomes to account for potential fluctuations in the market.
The forecasts should include: profit and loss statements, which illustrate your business’s revenue, expenses, and net profit or loss over a specific period; cash flow projections, which help you determine your business’s ability to generate positive cash flow; and balance sheets, which provide a snapshot of your business’s financial health, including its assets and liabilities.
If you are writing your business requires specifically to secure outside funding, you should clearly specify the purpose and amount needed in this section. Describe how the funds will be used, whether for purchasing property, hiring staff or launching a marketing campaign. And detail the type of funding you are seeking, whether it’s a loan, equity investment or a combination. Include information on your desired terms, repayment schedule and any collateral you can provide.
Above all, be transparent about your funding needs and show potential investors or lenders how their investment will contribute to your business’s success and generate a return on investment.
Because of the intense competition, changing market conditions and startup funding needed, it’s important to write a comprehensive business plan if you’re considering starting a business in the real estate industry. Taking the time to plan out your business before getting started will minimize your risk and maximize your potential for financial success. To help get you started, check out our free home real estate business plan template . You can download this document in Word form and use it as a foundation for your own business plan.
In addition to these resources, you may want to brush up on how to write specific sections of a traditional business plan. If so, take a look at our step-by-step guide on how to write a business plan .
Elon is a marketing specialist at Palo Alto Software, working with consultants, accountants, business instructors and others who use LivePlan at scale. He has a bachelor's degree in journalism and an MBA from the University of Oregon.
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