RE: Business plan looking for partnership. Please critiques and bring suggestion

[Dee Xixi]

I. Executive Summary

Apanou Management, LLC was created by two self-driven business partners that saw the potential in the current Real Estate market and would like to make a difference as well. We strongly believe that with hard work and determination we would turn our endeavor to a successful enterprise. The core value of our business venture is simple; imminent action while maintaining fiscal responsibility. Our focus is to invest in distressed properties, absentee owners and through constructive rehabs bring consistent cash flow as a retail or rental. We hold on to the notion that it is our responsibility to bring profitable and worthwhile business opportunities to our partners and to maintain a long lasting business relationship.
Mission
Our target properties are ones that can be acquired from motivated sellers though foreclosures, Bank REO at 65% or less of the current fair market value and from out state owners. It is our duty to guarantee and protect our interests as well as our partners; therefore we strongly reject unsound Real Estate transactions. Our strategy is based on insuring that the profit is established upon the purchase. Appreciation accrue over time will be considered a surplus.

We will strictly invest in areas which are considered to be stable and we will invest in research based company to continually evaluate our target market and make any necessary changes when/if necessary. Our key indicators are education, employment, and the percentage of owner occupied residences.

Acquisition Strategy

We want to aggressively purchase multifamily (4-12 units) properties in Newton-Waltham- Wellesley-Cambridge-Brookline area which is predominantly family oriented neighborhoods. The properties described are usually in somewhat move-in condition but we will effectuate with a throughout remodeling to meet the area standard. Within a month or two of purchase, we want to get the home ready for rental in order to minimize negative cash flow. The repair costs will range from $25,000 to $50,000 depending on the type of work required.
We are interested in purchasing properties at a price that leaves our margins intact and affords us a 10% cushion. We will determine the Fair Market Value after the renovations by reviewing recent comparable sales in the area with our realtor. We will look at several properties to determine which ones are profitable deals and creatively structure them for maximum profit with minimal risk.

Here is a look of the real estate investment return calculator that we used to evaluate our rental properties;
Purchase
Purchase price $

Cash invested $

Real estate value: (0-200) %

Debt
Loan amount $

Interest rate: (0-30) %

Term: (years) (1-50)

Closing costs $

Income
Gross rental income $

Income frequency

Annual rent increases: (0-10) %

Expenses
Annual property tax $

Annual insurance $

Annual maintenance $

Annual increase in expenses: (0-10) %

Other Information
Duration of Analysis: (years) (0-20)

Realtor fees upon future sale: (0-30) %

Annual appreciation rate: (0-50) %

Marginal tax bracket: (0-50) %

Long-term capital gains bracket: (0-50) %

Our formula is based on the annual income of the property minus annual expenses and 1.5 month’s rent (for vacancy) divided by twelve. The key figure (monthly cash flow) is $500.00 $700.00 $1200.00 annually. Expenses would include such costs as taxes, insurance, utilities, maintenance, management, advertising, reserves, leasing, repairs, and debt service.

The Rehab Strategy
The rehab process plays a major role in the success of our business because we have to meet the city/town and renters’ expectations. The average sales price after renovation will range from $500,000 to $900,000 and create an additional net profit of $50,000 within 24 (twenty) months of the purchase price. While we will make sure that the renovation process is done expeditiously, we will also guarantee that the renovation process meets all building code requirements and is done right the first time. To attract potential renters and add to curb appeal, the exterior work is to be done first then our intention is to concentrate on the interior for all cosmetic upgrades. As part of our upgrades, items such as switch outlets, light fixtures, and mailboxes maybe replaced. If everything goes as planned, the house will be listed within a two week period during completions to produce qualified leads. We will use classified ads, yards signs, and enlist broker services to generate qualifying leads to lower any holding costs.

Management Summary

Apanou Management LLC is operated under the direction of its co-founders and the day-to-day operations are handled by the founders. With future growth, services such as accounting, legal counsel, marketing, and all renovation related work will be outsourced to a third party.

II. Financial Plan

We are seeking investors who we can develop a long lasting business relationship while Apanou Management, LLC seeks to grow as an entity. To guarantee our partner(s) investment, they will hold the first lien right and depends of their financial stake the deed might be recorded on their name.

Within 5 (five) years, we will refinance the properties to payoff liabilities, including the investor stake and other expenses incurred. If agreed the partnership can last longer than 5 years. It is our every intent to use the fund in an appropriate and responsible manner. We value and protect our partners’s interest and for such reasons, we will not hold on to any negative cash flow property.

Today’s Real Estate opportunities are widespread, however only few savvy entrepreneurs have the will and knowledge to succeed. We at Apanou Management, LLC are heading down the right path with the proper and knowledgeable staff in place for a successful Real Estate venture. We are not in business for the short haul and in the next five years, our goal is to have a financially sound portfolio of 25 (twenty-five) income producing properties. As we progress into a stable financial entity in this industry, we will reinvest 80% (80 percent) of the earning income toward the business and over time, start acquiring more properties. In the past year, we have surrounded ourselves with experienced professionals and invested in resources to educate ourselves in order to adapt with the continuous changing Real Estate environment. Our team includes realtors, attorneys, and contractors in our target area to ensure our success.

Conclusion:
We will exhaust all the property evaluation tools before signing a business transaction deal. Our goal is not to jump into a business deal for a good price but find the right and best fit opportunity to achieve maximum results.

[Bill Gulley]

In just one word......vague!

Another word...........hype!

Lacks substance, specifics. The numbers mentioned are a huge spread, $25,000 to $50,000........might sound better to say requiring no more than $xx,xxx.

What do you base your numbers on, saying your area doesn't say much, again specifics, are you in Dallas, New York, or Branson

The management profile says nothing. who are you, how long have you done this, what expertise do you have who is your Realtor, how good are they, what's their record and how long in the business.

Founders/Co-founders......I suggest you use a resume.

I can tell you spent some time wording this for your presentation, but what it does not say is what you're trying to hide. I've reviewed hundreds of these things as people came begging for money. Without specifics,it goes to the trash.

Your inexperience is okay, everyone starts someplace. Seems new investors all feel like that if they can't come accross as a big shot wheeler dealer people won't listen to them, not true, trying to bluff your way through is worse.

Now, you may have 40 years experience and have done $200 mil in deals, but it doesn't hit me that way.

Now, that was kinda hard, but you asked and you got it straight from me. Chin up and try again and don't give up. Good luck!

[Account Closed]

I've cleaned up some of the grammar, typos and sentence structure. I'll let others give thoughts as to the substance:

I. Executive Summary
Apanou Management, LLC was created by two self-driven business partners that see the potential in the current Real Estate market. We will acquire and rehabilitate distressed properties for retail sale or as long-term rental income properties. The core value of our business venture is simple: imminent action while maintaining fiscal responsibility. We hold on to the notion that it is our responsibility to bring profitable and worthwhile business opportunities to our partners and to maintain a long lasting business relationship.
Mission
We will target properties that we can acquire from motivated sellers or through foreclosures at not more than 65% of the current fair market value. [is this acquisition plus repair costs? If so, you should make that clear.]This strategy will insure that our profit is generated at the time of purchase - we will not rely on appreciation.

Acquisition Strategy
We want to aggressively acquire multifamily (4-12 units) properties in Newton,Waltham, Wellesley, Cambridge, and Brookline areas, which are predominantly family-oriented neighborhoods. We will continually evaluate our target market and make any necessary changes if and when necessary. Our key indicators are education, employment, and the percentage of owner-occupied residences.
The properties we will target are typically near move-in ready condition but we will thoroughly remodel them to meet or exceed the area standard. Our renovations will be completed within sixty days after purchase. The repair costs will range from $25,000 to $50,000 depending on the type of work required.
We will determine the fair market value after the renovations by reviewing recent comparable sales in the area with our realtor. We will evaluate numerous properties to determine which meet our investment criteria. We will creatively structure our acquisitions for maximum profit with minimal risk.
[Here is a look of the real estate investment return calculator that we used to evaluate our rental properties;
Purchase
Purchase price $
Cash invested $
Real estate value: (0-200) %
Debt
Loan amount $
Interest rate: (0-30) %
Term: (years) (1-50)
Closing costs $
Income
Gross rental income $
Income frequency
Annual rent increases: (0-10) %
Expenses
Annual property tax $
Annual insurance $
Annual maintenance $
Annual increase in expenses: (0-10) %
Other Information
Duration of Analysis: (years) (0-20)
Realtor fees upon future sale: (0-30) %
Annual appreciation rate: (0-50) %
Marginal tax bracket: (0-50) %
Long-term capital gains bracket: (0-50) %
Our formula is based on the annual income of the property minus annual expenses and 1.5 month’s rent (for vacancy) divided by twelve. The key figure (monthly cash flow) is $500.00 $700.00 $1200.00 annually. Expenses would include such costs as taxes, insurance, utilities, maintenance, management, advertising, reserves, leasing, repairs, and debt service.] This section doesn’t make sense to me. If this came from a spreadsheet, consider attaching a printout of the spreadsheet at the end of the plan.
The Rehab Strategy
The rehab process plays a major role in the success of our business because we have to meet the expectations of our renters and potential end purchasers. The average sales price after renovation will range from $500,000 to $900,000. We will create a minimum net profit of $50,000 within 24 months of the purchase. While we will make sure that the renovation process is done expeditiously, we will also ensure that the renovation process meets all building code requirements and is done right the first time. To attract potential renters and add to curb appeal, the exterior work is to be done first then our intention is to concentrate on the interior for all cosmetic upgrades. We will list our properties within two weeks of acquisition in order to attract qualified tenants during the renovation process.
Management Summary
Apanou Management LLC is operated under the direction of its co-founders. With future growth, services such as accounting, marketing, and all renovation-related work will be outsourced to third-parties.
[Who are the co-founders? Do you have any experience? Any education?]

II. Financial Plan
We are seeking investors with whom we can develop a long lasting business relationship while Apanou Management, LLC seeks to grow as an entity. Our investors’ interests will be secured by a first-priority lien on our properties.
Within five years, we will sell or refinance our properties to pay off liabilities and to distribute principal and profits to our investors. We will use our investors’ funds in an appropriate and responsible manner. We value and protect our partners’s interest and for such reasons, we will not acquire any negative cash flow property.
Today’s real estate opportunities are widespread, however few entrepreneurs have the will and knowledge to succeed. We at Apanou Management, LLC are heading down the right path with the proper and knowledgeable staff in place for a successful real estate venture. We are not in business for the short haul and in the next five years, our goal is to have a financially sound portfolio of 25 income producing properties. As we progress into a stable financial entity in this industry, we will reinvest 80% of the earning income toward the business to allow us to acquire more properties. In the past year, we have surrounded ourselves with experienced professionals and invested in resources to educate ourselves in order to adapt with the continuous changing Real Estate environment. Our team includes realtors, attorneys, and contractors in our target area.
Conclusion:
We will exhaust all of our evaluation tools before acquiring any property. Our goal is not to jump into a business deal for a good price but to find the best opportunity to achieve maximum results.

[Dee Xixi]

Thanks Jon and Financexaminer. That exactly what i was looking for, constructive critiques. I will make the correction where you guys made the remarks and i will sure to post it again for more feedback.
Thanks a bunch

[JJ Gernaat]

Dee,
I am also new and currently working on my business plan, structure, and team members would you mind if I shot you an email and asked a few questions?

-JJ