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Exclusive: an insight into my Property Investment Business Plan

Posted by Paul Wilson

In a previous article I shared my advice on how to keep motivated when investing in property. I explained that the very first rule of property investing is to understand that it is a business and therefore all decisions should be made from a financial, not emotional, point of view.

In order to make smart, rational and informed financial decisions you need to plan ahead and take all of the variables into consideration, now and for in the future.

Seeing as property investing is a business, this type of planning should be documented in what I call a Property Investment Business Plan.

As the old saying goes “if you don’t know where you’re going, how are you going to get there?”. There are countless property investment strategies, so it’s crucial for every property investor to have a defined focus on how they’re going to make money with their investments.

Behind every successful business and investor is a creative, well-thought out and strategic business plan. As an investor and a property coach, I suggest you do the same.

Ideally, you should have one Plan per property, and a Master Plan for your portfolio.

Let’s look at the basics of a good Property Investment Business Plan:

 

Executive Summary

An executive summary should summarise each section in your plan in order to give you, or any of your investing associates, a great understanding of what this property is all about. It should be written last, after you have finished the rest of your plan, and should be updated when necessary.

 

Market Analysis

Give a quick overview of the particular markets you’re going to work in. For example, Sydney, Melbourne, Brisbane the Gold Coast or even all of them combined, and the standout features of the areas you’re targeting. If you can detail right down to the postcode in which you want to invest, the clearer your plan becomes as it is very hard to generalise one market.

Take the Gold Coast for example, there’s the tourist style accommodation and locations, while in other areas you will find great buys in high rental demand for your every day family style accommodation. Your analysis should also include details of the type of property that you are going to invest in such as a three bedroom house, a two bedroom unit, or an inner city duplex as the dynamics vary considerably between each investment type and location.

 

Implementation Plan

This section of the Business Plan goes into detail about:

• How you’re going to buy

• When you‘re going to buy

• What investment strategy you’re going to implement, for example, if you’re going to renovate, subdivide or build.

• Your requirements on the level of financial efficiency each property contributes, for example cash-flow and growth. How can the property put money back in your pocket today as well as in the future?

 

Planning Your Exit Strategy

You should have an exit strategy and a debt reductions strategy in mind for each property right from the very beginning of ownership.  There is no point going through the acquisition state without risk managing the variables that you could encounter if you ever need to exit from an investment.

Write down your strategies for selling:

Under normal trading times In a falling market In a rising market

You also need to determine your ownership intentions, in other words, short, medium or long-term.


Financial Forecasts

In this section, list all the finances associated with each property that you own. These include the property’s:

Income Expenses Profits Losses

If you’re going to take a salary from rental properties, list this as well. In order to see the bigger picture, do financial projections for your property for one year and another for five years.

 

Long Term Goals

This part comes back to keeping motivated when investing in property. Write down in as much detail as you can, what you intend to achieve with your property portfolio over the years to come. When you’re feeling a little lost or off track, you can always come back to this section to reaffirm these goals and gain a new found motivation for achieving investing success. You can also refer back to one of my previous articles about keeping motivated while investing.

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I hope these few insights into my Property Investment Business Plan have given new life to your existing properties, and set up the framework for future investment planning.

What do you include in your Plan? Share your knowledge below to help fellow investors.

 


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