Posted by Redline on October 28, 1998 at 11:31:57:
Sounds like retirement to me!
advice on business plan - Posted by SS
Posted by SS on October 27, 1998 at 11:32:56:
I am currently developing a business plan for my real estate business (rental properties). I own several units and have yet to establish a line of credit with a bank. I’m hoping I can use this plan and some connections to develop a relationship for some working capital. Anyone out there use this apporach, and if so, would you consider reviewing our plan?
My optimistic plan is to retire in 10-12 years from the income from 20 rental properties. I am still in the aquisition phase. Feasible or too optimistic?
THANK YOU - Posted by SS (MI)
Posted by SS (MI) on October 28, 1998 at 07:26:21:
I wanted to thank everyone who reponded to my thoughts on a business plan. Just for some background, I have established an LLC and continue to buy rental properties. I know there are many, and probably, easier ways to make $$ in RE investing but I’m trying to get some experience and read everything I can get my hands on before I test out other methods. Besides, I have a corporate job that does not leave me a lot of time to focus on multiple methods.
I want to use the bank line-of-credit for down payments until I have enough equity in my homes to obtain a equity line of credit. I have the money for down payments (10% down) but we do not want to liquidate our investments if we don’t have to.
Thanks again for the advice.
Re: advice on business plan - Posted by Millie I.
Posted by Millie I. on October 28, 1998 at 24:37:57:
SS,
A plan is always a good way to start, but it must include scheduled accomplishments that you MUST deliver by specific deadlines. The plan must be realistically achievable or you will be setting yourself up to fail. There will be times where you will be ahead or behind a little, you will have to make sacrifices ( money & time ) if necessary to meet your deadlines. (i.e. skip vacation for a year to buy and fix a property ). You have to be self-motivated and unforgiving if you fall behind, otherwise you will have all kind of excuses not to make it. Yes, you will have to be your own boss, and kick your own b-u-t-t.
As you proceed thru the years, your level of sophistication will change, the economy and the market will also change, you will need to modify your plan to reflect the growing times, be more agressive? diversify to other areas of real estate investment? sell certain properties because the market in that area has changed? move into a more advanced level of investment because you have learned to make more money working less hard?
Planning is great. Make sure the plans grow with you.
You may be a lot wiser 5 years from now. If you reach your goal in 10 years, I doubt you will sit back and retire. Not if you are successful.
Millie I.
P.S. I buy a house every quarter while managing my properties. But I modify/upgrade my plans every 2 or 3 years. I expect to get smarter every year. I have enough to retire on, but I can’t stop, I love what I do, it’s in my system. When it is fun, it’s not about money anymore.
Re: advice on business plan - Posted by Bud Branstetter
Posted by Bud Branstetter on October 27, 1998 at 21:10:30:
Last first. 10-12 years is not overly optimistic. Depending on the creativity, knowledge and work ethic it could be conservative. I echo the the sentiment about rental property. There are easier methods to make money. Part of the trick is to learn how to keep it.(not give to Uncle Sam) Trading up to bigger properties is a valid plan. You then have to hire management etc. done.
The bank will be more impressed by a scapbook of the properties you acquired, their equity and their cash flow. Cash down to a loan will only impress them enough to give you a similar loan. A business plan is good but use it as the blueprint on how to buy and make money.
Give serious thought to incorporating… - Posted by raelynn mitchell
Posted by raelynn mitchell on October 27, 1998 at 15:40:02:
and credit will be a little easier if you build a track record with small, easy to get department store cards first. Not many people know it, but Macy’s, Robinsons May, JCPenneys, and even Nordstrom’s all have corporate accounts. Not to mention Sears, Target (commercial acct), Office Depot, Staples, Texaco (get the fleet application), and Office Max. Guarantee these if necessary to get the account; you just want the credit history to be there. You can always go back and reapply after you’ve had the card for 6 months to one year and apply without the guarantee. If all payments have been made on time on the guaranteed accts, they usually open the unguaranteed acct 4 you. Then you can close down the guaranteed acct and go on without personal guarantees.
By the way, this list is by no means all-inclusive. A local electronics store called Fry’s Electronics (in No. and So. Cal and Phoenix area) have a corporate account but just don’t publicize it; you have to ask.
One interesting thing about incorporating: if you have more than one corporation, you have more than one corporate version of a Social Security Number, called an Employer Identification Number. EINs are what most creditors use when checking business credit, along with a corporate bank account. One can have as many corporations as you want, and build credit to each one completely legally, as each corporation is a separate entity from yourself. Can’t get that $250,000 line of credit? How about ten different $25,000 creditlines via ten different corporations? (Not as complicated as it sounds once you are used to the idea of corporate credit.)
Corporations are great for asset protection. However, most people overlook the other benefits of incorporating that can be equally as good.
I am by no means an expert on inc’ing, but also give serious consideration to inc’ing in Nevada, as Nevada is the only state that has no disclosure of ownership. Many other states want you to reveal whoever owns 10% or more of stock.
raelynn
Re: advice on business plan - Posted by cris(MI)
Posted by cris(MI) on October 27, 1998 at 11:55:42:
You will not be retired. You will be working full time keeping your 20 rental properties maintained.