Business Plan critique for rehabbing

[Michael Bingham]

Good afternoon everyone, I have been meaning to put my business plan on paper for sometime and I have a rough draft finally complete after a few hours of reading and thinking about it. I would appreciate any constructive critisim from the community here. We are rehabbers and want to master this strategy before moving on. We both work full time jobs and want to grow our volume slowly but methodically over the next year or two. This outline is specifically built for the short term and will evolve as our business grows along with our strategies. Thank you all so much!

Mission Statement – Better Homes. We want to make an impact in every community we invest in. We will do this by improving the aesthetic appearance and quality of tenants in the areas we purchase. By doing this we will be making a social contribution as well as a financial contribution to our company. The goal is to create a sizeable amount of cash over time that will allow us to move from depending on our full time jobs to exiting the workforce and running our investing business.

Strategy – Single Family Home rehabbing will be our initial strategy. Finding properties that are distressed and we are able to purchase at 65% of ARV. We will slowly increase our volume over time and as our team grows. We want to master this one strategy before we move onto more investing methods. Automation will be a driving force for our success and removing ourself from the strategy.

Market – Our market will consist of the area we are most familiar with, southern Indiana. Eventually we will learn the markets neighboring our immediate area and stretch our search for property in those areas. Watching the trends and relying on two excellent realtors in our area, will allow us to gain an edge on the markets.

Criteria

• Purchase price must follow the 70% rule or lower

• Rehab amount will be dependent on ARV and 70% rule
• Timeframe will initially follow 90-120 day holding - we hope to decrease this greatly as we become more reliant on excellent contractors and team members
• ARV should fall within starter home price or roughly $100K to $160K
• 3 to 5 bedroom
• 1 to 3 bathroom
• Low crime rate and good to great neighborhoods with older owners or family owners

How to find deals, marketing plan – We will rely on the MLS, two excellent realtors, networking with local wholesalers at the REIA meeting, and driving for dollars. Growing this network will be our second biggest task if not our biggest. Finding properties that are great deals has been a problem and we are taking this head on. We will automate this process by getting emails weekly or daily and reviewing properties immediately..

How to finance deals – Currently we are operating on a cash offer basis and hope to continue with this method. Our volume that we hope to achieve in the short term will fall within the funds we currently have access to. As our volume grows, so will our cash funds. Creative financing and learning more on structuring it will be a must as we will eventually reach a breaking point on investments. We have already been fortunate in generating private money and we are diligent on creating a solid history for our private lenders to review so they understand our process and reliability to deliver.

How to do deals – We will make cash offers with up to date letters of proof of funds. Once our offers are except and we have taken possession of the property, we will begin the process we came up with on the scope of work outlined when we determined our max offer price. After we have completed the project we will turn to our realtors to move the property ASAP.

Exit strategies, Backup Plans – Our main exit strategy will be to sell with a realtor and move onto the next investment. However, if the property is being held for too long and tying up funds, we will rent the property for the remainder of 1 year and cash ourselves out with a refi from one of several lenders in our area that we have built a solid relationship with.

Team & Systems – We are in the process of building our team. As many people starting out in rehabbing we have been doing all the work ourselves. On our current project I sub contracted several jobs out and it has worked well. As we move forward we want to interview several General Contractors and handymen to bring onto our team. We work with two excellent realtors that are the best in our area and are investors as well and understand our business. Finding a CPA, Real Estate Attorney, and a lead generating team still needs to be done.

Illustrate example deals – We keep excellent records of our properties expenses as we are rehabbing them. In addition we take many pictures before and after and compile them for our private investors to see how we do business and why it works.