Question about REI business plan - Posted by Michael A. Bardelli

Posted by garrison on March 03, 2002 at 12:37:53:

i have been looking for the same…
if you run across anything let me know.



Question about REI business plan - Posted by Michael A. Bardelli

Posted by Michael A. Bardelli on March 03, 2002 at 07:26:06:

To all,
I was wondering if there is anyone out there who has written a good solid business plan that they have presented to lenders for use in obtaining a working line of credit. I have read most of the acrhives and they haven’t really helped much. I have read Ed Garcia’s repost of a business plan but it seems that one doesn’t seem to deal with REI. Any help would be appreciated. Thanks in advance.
Michael A. Bardelli

REI business plan - Posted by Mitchell

Posted by Mitchell on March 04, 2002 at 11:35:03:


I have never seen an REI business plan. Please pass it on if you do find one.

There are models if you are doing REI via a Limited Partnership for a sizable property like a shopping mall.

However, if you are seeking to do SFH rehabs, I have never seen a business model. How can you? Each property stands on its own. No two properties are alike. In commercial real estate there are numerous standards to measure against. It is not nearly as easily outlined in SFHs.

Find your rehab deal. Tie it up via an option for $1.00, making sure to record a Memorandum of Option. Contact a title company to do a “Pencil Search”. Get bids from two legitimate contractors for the rehab. Find out how much a bond will cost, insuring that the project can be completed. Make sure, if you are not a professional contractor, that you get a “Clerk of the Works” to oversee the project. This could be a retired contractor who makes sure that the little things are being done and reports to you about the status of the project. Then, contact hard money lenders for the purchase, rehab and remarketing monies. Outline for them the costs of the project, including their interest. Show them a timeline for repayment. Determine a backdoor strategy. Cover all “what ifs”.

After you have done several rehabs, you should be able to do the entire process yourself without using anyone else’s money. Or, if you like OPM, then put a fund together via a Limited Partnership or sell shares in a LLC.

Your spreadsheet analisys would show the six rehabs that you just did and the costs, timeframes and profits of those transactions. Then, taking an average, you can extrapolate transactions based on how much money you are trying to raise.

Using other pros cost money, so finding the transaction that has enough profit in it is your job. You concentrate on doing the $100 per hour work. Hire out the $10 - $20 per hour work. Get rid of incompetents quickly. Calculate your eventual profits on sale prices that are 90% of FMV. This gives you more credibility and allows for a downturn in real estate.

Good luck,