Business Plan

[Chukwudi Motanya]

Mission Statement

Initial goal will be to generate enough passive income in order to maintain a lifestyle without a job. $4,000 of passive income will allow me to live without a full time job. Next goal will be to generate passive income that would equate to $13,000 per month or roughly $156,000 per year. This measurement will be the amount I believe will allow me to take care of my future family without having to work full time. Dream goal will be to generate $42,000 in passive income a month, or the equivalent of $500,000 per year. This I believe would allow me to live an affluent life and give me the opportunity to pass a legacy down to my future family.

Strategy

My strategy will be to buy and hold assets that will generate net positive passive income after taking into account maintenance cost that will be a natural expense of these assets.
To achieve my initial strategy, I will focus my attention on single family houses and small multiunit complexes (4 units and under) . Part of my strategy for the multi units will be to become owner occupants of these units in order to take advantages of the benefits of being an owner occupant.

For the 2nd part of my goal, I will plan to go into the commercial segment and acquire properties with 5 or more units. It will be similar to my initial strategy, but it will be on a bigger scale. Timeline: (10 years)
For the 3rd part of my goal and my dream, I will need to convert my current assets and raise capital in order to into the bigger scale commercial assets that will allow me to generate the $13,000 a month a require in order to reach my dream. Timeline: (10 years)
At the end of my journey (God willing) I will be 53 years old and $500,000 of passive income a year!

Market

For the initial part of my goal, my market should be the surbuban area of Atlanta, in particular, the Lithonia, Decatur, and Fayetteville area. I have chosen these markets for my initial goal because I am still a beginning investor and my origins are from Atlanta. Also I have family members in the area who will be my eyes and ears on the process while I am currently in Philadelphia.
For the 2nd and 3rd part of my goal, I will be willing to simply invest in regions where the numbers make sense. Currently I do not have the knowledge to fill in this gap. (Maybe ya’ll could help?)

Criteria

For my initial goal of single family houses and small apartment complexes In the Atlanta area, max purchase amount for single family houses in Atlanta will be 100k. Cash flow from each property should be at least 100 per door after accounting for all expenses, and at least 15% cash on cash return(Capital expenditure, property management, vancancy, etc…) Time frame for each property ideally would be forever, but realistically every 3 years we should evaluate our strategy with each of our assets.
With Multi Famlies, we will need to fill in the gaps of knowledge with what the numbers look like in the region.
For the second and third part of my goal, it will be the same comment. We will need to find out the market and look more into the commercial side of deals when we get to that point

How to find deals/ Marketing plan

For Initial goal, we will find deals through brokers and agents with access with the MLS. We will also form relationships with reliable wholesalers in the area who could help find us deals. This might not be the most optimal from the beginning standpoint, but this will be temporary until we form connections in the area.
For the 2nd part of our goal, we will need to leverage relationships that we will focus on forming during the 1st ten years of this project. From our relationships we will hopefully be able to find win – win situations where we can find assets that are off- market. We will also rely on commercial brokers and internet sites such as loop net where deals of the commercial size are posted.
3rd part of the goal will be through a continued mix of net working and leveraging relationships with brokers, investors, and the internet.

How to finance deals

For the initial part of the goal, financing our deals will most likely be heavily bank financed. Bank finance will make sense for the owner occupied assets that we will go after and also the single family households. We will also look into portfolio lenders for ways to be able to carry more than the maximum 4 loans that most conventional banks will allow you to have.
Another means of financing we will tap into will be private money lending and Joint Ventures. Both of these means will be used more towards the later stage of our 1st goal so we can leverage our experience at that point to first and always make sure that our private money members get their money back, and that we can seek out successful partners for Joint Ventures.
For the 2nd stage of our goal, we will need to step into the commercial lending world and figure out how to utilize financing from this segment. We will need to research this part of our goal when we reach this point
The same methodology we use for our 2nd goal, we will use for our 3rd goal

How to do deals

1. Find the deal in our specially laid out chosen location
2. Run the numbers on the deal to see if the asset fits the minimum net $100 per door and the 15% cash on cash return model
3. Check to see if structurally the property will make a viable deal
4. Place a bid on the property with a pre approval letter in order to obtain bank financing, or execute using capital raised from the various sources discussed above

5. Get the team to move in to make the property rent ready as soon as possible.

6. Hire a property manager and rent out the property as soon as possible

Exit Strategy

Our exit strategy should allow us to be able to rent the property at a breakeven point. If for some reason we need to get the asset away from our hands, we could reduce the rent below market to attract more potential tenants.
A 2nd exit strategy will be to sale the property. We should be looking for properties that have some equity in it, and if we find deals such as these, we could sell the property and hope to recoup the losses that we may have taken from holding on to it.
This same strategy will be applied at all three stages of our investing.

Team

For the beginning part of our goal, our team will consist of brokers that we will work with would have access to the MLS. We will also have contacts to Wholesalers who could bring us deals.
We will then need a reliable contractor and Handy man that we could work with for the various repairs that our property will need.
Property manager will be key for all of this to come together, as we will need one in order to make sure our time is free to find other deals.
We will lean on our mentors who have experience when it comes to questions that we currently may not have the answer too due to lack of experience.
2nd and 3rd parts of our goal will include all of the above, but we will need to add commercial brokers to the mix and private money lenders. Potential Joint Venture partners will also be included in this stage.