Please Critique My Plan

[Robert Jenkins]

Mission
(insert business name) is a company comprised of industry professionals and capital-backed investors. With over five years of experience in brokerage, our in depth knowledge of the markets and ability to adapt to the changing environment has allowed us to successfully navigate the terrain to grow and or preserve the wealth of our clients.

Our mission is to create passive income through the purchase, hold, and eventual resale of commercial real estate. We will judge investment properties solely on their ability to generate positive cash flow, but will take into consideration the ability to add value through rehab or repositioning for any property in a value add scenario. The target asset will be multi-tenant retail, office, or multi-family property in areas ranging from small suburbs to major metropolitans. The multi-tenant aspect will provide an added level of security and ability to protect the investments of all parties involved.

Short-Term Goals
In the first few years (insert business name) plans to aggressively pursue opportunities that meet minimum of our requirements in cash on cash returns and value positioning opportunities. The goal is to purchase one building every six months for the first two years, allowing for a secure base of income. In the first two years we plan to pursue deals ranging in size from $500,000 to $2,000,000 with special attention given to any property that may be distressed.

At the same time we understand, to really succeed is to build long term quality relationships with industry professionals. Therefore, we plan to market (insert business name) as a professional investment company who “does what they say,†and provides all parties in a transaction with the most favorable results, to create and sustain long term personal relationships. Doing so will position us in a spot where the best opportunities come to us.

Long-Term Goals
(insert business name) s time horizon is significantly long term. We plan to preserve and create wealth for our investors and capital backers for the next fifty years. With the goal of long term, stable cash on cash returns and well positioned value increasing purchases, we plan to successfully operate in any area of the business cycle. With goal oriented purchases and “know how†to stay away from herd mentality, we will be able to operate at a maximum leverage, while at the same time still meeting high returns on investment. Ideally within the next 10 years we’ll like to have built an investor, client, property portfolio large enough to positioning ourselves as a publicly traded company and becoming an R.E.I.T.

Like Buffet is to stocks, (insert business name) will be to real estate. Long-term value investing, quality cash-flow and the occasional homerun.

Ownership & Employees
(insert business name) plans to be a highly leveraged organization with One employee, that being the principle and owner Robert A. Jenkins. All tasks to be performed by the enterprise that can not be performed by said employee shall be contracted out.

Target Market
(insert business name) will focus on Los Angeles and Orange county markets for our income properties. However, positioning ourselves in emerging markets where the value of a long-term hold is substantially evident is our secondary focus. Initially our primary focus will be on the San Fernando Valley submarket of Los Angeles. The reason being, the location is desirable among the top earning professional all the way to the underpaid low income individuals. This will create opportunities to add value and having a steady demand for occupancy and thus generating steady income. Eventually, the long term area of focus will be West L.A. and Santa Monica districts.

Our knowledge and expertise will allow us to position ourselves in emerging markets all across the nation.

Deal Selection
Fundamentals, Fundamentals, Fundamentals. Being able to stick to a method based on numbers that actually exist, and aren’t pro forma, will be the cornerstone of all investments made by (insert business name) If the deal does not secure the capital of our investors, it will not be one we move forward on. Although there is risk in all real estate investments and can't guarantee anything.

The main instruments to measure a deal will be; cap rate, cash on cash, value positioning, and stability. (insert business name) will purchase deals ONLY on actual numbers and sell at highest amount of profitability. All properties bought by (insert business name) will be self managed and upon the sale shall be negotiated to remain the management company.

Numbers:
Min. Cap rate: 8% Min. C.O.C.: 9%
Min. Deal Size: $500,000 Min. Value Add: 30%
Min. Occupancy: 80% Target Occupancy: 95%

Exit Strategy
(insert business name) has a plan to hold our investments for a minimum of three years on all properties that meet or exceed requirements of the deal. For all nonperforming or troubled assets they will be “flipped†if the value extracted can exceed 110% of the current “all in†investment or if the initial loss from the sale is less then the projected loss from a long term (3-5 year) hold.

[J Scott]

Hey Robert -

The purpose of my plan was four-fold:

1) To get input on my plan. When I first started, I had no idea whether what I intended to do made any sense, or whether the numbers I was assuming were accurate. While I could sit down and try to explain my plan to other investors, friends, and family to get their feedback, it was much easier to just hand them my business plan, and let them critique it on their own schedule. I got a lot of great advice that allowed me to revise my plan before I started, and helped me be successful pretty much from day one.

2) To keep me focused and on-track. My plan lays out a clear set of goals and criteria that I use to find and analyze properties that I consider for purchase. By documenting my criteria and my plan, it has helped keep me from straying from my original plan and keeps me on-track to achieve my goals.

3) To get financing. It's nice to have a clear, concise plan that I can hand to lenders when they ask. In fact, my plan helped me get the funding I needed to quickly scale my business.

4) To find investors/partners. Just like getting financing, I could hand the plan (along with my investor prospectus) to potential partners and investors, and they could review it on their own before sitting down with me. By the time we were ready to chat, they already knew what I was doing and where I was heading, so it made these discussions a lot more productive.

So, for me, there were a lot of uses for my plan. Had it just been for me, it likely would have been much shorter (just a couple pages), but still would have been tremendously valuable.