Business Plan - Posted by RP

Posted by Ed Garcia on February 10, 2002 at 21:36:11:


A Business Plan is extremely important for 3 reasons.

(1) For you the Investor, it allows you the investor an opportunity to lay out a game plan from beginning to end. In that game plan you can evaluate yourself and your plan. If you done your job right, you can put all the pieces of how you operate together like a puzzle. Such as choosing your title company, appraiser, contractor, tell how you plan to invest in real-estate, your experience level, how you plan to buy, market place, how you plan to market or sell them, What your plans are if they don’t sell, etc.

(2) For you to obtain other Backers (Investors), now you can show them a solid buyable plan, rather than give them some verbal mambo jumbo with holes in it. The Backer will feel more confident in you and your venture, because you have mapped it out for them.

(3) For a Working Credit Line from a Bank. This line is just like having an Investor. It’s designed to allow you to buy property making cash offers to get a better price, cheaper cost for the money, faster closes, get more deals, can season your deal, etc.

RP, these are just a few reason for a Business Plan. Yes if your intentions are to just do a deal here or there, you don’t need one. If you plan to be a real-estate investor or entrepreneur, it’s PARAMOUNT, for growth and getting the real money from banks as well as romancing Investors (Backers). A good Business Plan adds CREDIBILITY to you and your real-estate venture.

Ed Garcia

Business Plan - Posted by RP

Posted by RP on February 10, 2002 at 20:12:14:

How important is a strong business plan when approaching lenders for the first time. Should the approach be to buy long term rentals, foreclosures, or just a generic approach to obtain general financing/line of credit.

Re: Business Plan - Posted by Chris O. (Seattle, WA)

Posted by Chris O. (Seattle, WA) on February 11, 2002 at 01:46:40:

A little confused here.

I was under the impression that you create an individual plan for each individual deal. You plan on rehab’ing a property on 41st St and need a loan? Create the 41st St. plan for profitability, figure-by-figure.

As a matter of repetition reduction, you also create a universal business plan, wherein you lay out how your general business operates. This is where you explain “…how you plan to invest in real-estate, your experience level, how you plan to buy, market place, how you plan to market or sell them, [etc.]”

The individual plan is specific to why the property you have your sights on is a sure-fire loan for the bank, and this “universal” plan is a supplemental inclusion used to establish relationships with the institution.

Perhaps I don’t understand what a business plan is. Is this “universal” plan, I refer to, what the business plan is and the “individual” plan not a business plan at all? A “plan” for specific deal is a “loan proposal”, isn’t it? And isn’t a loan proposal a business plan? Heh, a Venn diagram would be helpful right about now.

From the nature of how a Business Plan is being regarded in this thread, it sounds like you can go in without any specific property in mind to profit from, and only the idea of what you want to do. It’s hard for me to imagine that you can walk into a bank and tell them what you want to do (ie buy rentals, rehab.) without providing them with ready vehicles to do what you want.

I can reasonably expect a it’s-here-when-you’re-ready-and-need-it line of credit before I even begin investing?

Chris O.