My Business Plan

[Joe Salimao]

Hi guys,
I have recently developed my company’s business plan and goals. I wanted to give an overview of what they are and see what you experienced investors think of it. Here it is.

Target Market:
I want to target blue collar neighborhoods where ARV’s are between 75K-150K. These areas will be good rental communities and will have the potential for $250/month cash flow. They may be lower income but will not be a war-zone and will have stable home values. Still have to pinpoint these areas.

Marketing Strategy:
I will market to pre-foreclosure, absentee owners and probate. I will use direct mail, bandit signs, flyers and printed/web classifieds to obtain my leads. Still need to work on my budget…haven’t done that yet.

Acquisition Strategy:
I will obtain properties for <70% of current market ARV minus repairs, closing costs and transaction costs. Should I include marketing and holding costs also? For example,

ARV = 100k
Repairs = 20K
Closing Costs = 2K
Transaction Costs (cost of money) = 5K
MAO = 70K â€" 20K â€" 2K â€" 5K = 43K

I will encourage owner financing and subject-to by giving three offers, one being I finance, one being they finance and the other being subject-to. Obviously, the owner financing and subject-to offers will be higher than if I have to finance.

Exit Strategy:
My main exit strategy will be rehabbing and renting the properties. I will like to rent all of the properties obtained within the first 3-5 years, although if I obtain a deal through my marketing that doesn’t work as a rental I will assign it to another investor. I will not do any flips in the immediate future.

Short-Term Goals (3-5 years)
Don’t know if this is really short-term but I consider it this because this is kind of my first step in my overall plan, which is to acquire 25-30 rentals over the next 5 years max as a part-time investor. These rentals will cash flow anywhere from $200-$300/month. I will have 30% equity in all of my properties due to my acquisition strategy. Obtaining these properties will give me the experience needed to become a full-time investor and more importantly will give me the income that will allow me to go full-time. These properties will act as a safety net for me and my family.

Long-Term Goals (Past 5 years)
Transition from a part-time investor to a full-time investor. I will also transition my exit strategy from renting to wholesaling and flipping.

What do you guys think?