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What is a real estate business plan

Before you start you ask yourself, what is a business plan for ? The business plan is a document that formalizes your idea, whether it is the creation of a business or a real estate investment.

In short, making a real estate business plan helps you define the action plan to put in place to create and develop your project.  Real Estate Business plan

Moreover, the real estate business plan is often perceived as a sign of seriousness and credibility by investors. Indeed, a complete and clear business plan makes it easier to convince your banker (or other potential business angels) to invest in your project.

Why make a business plan for a real estate project ?

It is not always easy to see what is the point of making a business plan for a real estate purchase . However, the business plan turns out to be a great tool for carrying out your real estate purchase construction project, especially if you intend to rent the property.
As for a company, your project:
Has a business model:
Requires investment:
Aims to make profit:

The real estate business plan allows above all to convince investors (in particular the bank) to finance your project. Thanks to this synthetic and structured document, you will show them that your project is viable and profitable. For example, you will insist on the ability to generate a profit through the rental or through the sale of the property after a given time.

The business plan of a real estate construction , just like the business plan of a rental investment , makes it possible to compare the objectives that you have set and the reality of the market to reassure investors about their consistency.
In addition, to check that the results are in line with your forecasts, the real estate business plan serves as a common thread to which you refer during the progress of your project. However, the business plan is intended to evolve, it is an iterative exercise that is adjusted as the project progresses. It is therefore a communication and management tool to make your real estate investment project a reality.

What should a real estate business plan contain?

If you don’t know how to make a real estate business plan, you’ve come to the right place. Indeed, if the acquisition of real estate can be assimilated to a business project, the business plan of real estate investment requires some adjustments to correspond perfectly to the typology of the project.
To best serve your project, your real estate business plan must be synthetic and contain the following elements:
A quick summary of your project:
A description of your socio-economic situation (age, health, professional situation, etc.)
A presentation of your current financial situation (real estate, savings, investments, etc.)

A detail of the financing plan of the project (amount of the loan requested, duration of the loan, personal contribution, etc.)

what impact on your real estate business plan?

If you want to rent your property all year round, you will have to reassure investors about the attractiveness of the property. For this, just as a company could carry out a market study, do not hesitate to attach updated information on the local real estate market. The objective is to prove that you will have no trouble finding tenants and that the expected rents are in line with the market.
You will also have to demonstrate the profitability of the project by calculating the return on your investment. For this, we recommend that you make a rental business plan via Excel to facilitate calculations and the reading of information.

In this rental investment spreadsheet, indicate:

The costs of acquiring the property: personal contribution, bank loan, notary fees, works, and others;
The annual costs that remain your responsibility: property taxes, insurance, non-recoverable co-ownership charges;
Taxes on rents that you buy in your own name or via an SCI
Annual rents.
The business plan for a seasonal rental
Seasonal rental presents an additional risk since it is necessary to manage to rent the property to several people during the year so as to meet at least the borrowing costs and other costs related to the property.
In your business plan, particular attention must be paid to the financial forecast of your seasonal rental project. To calculate profitability, consider the following:

The expected occupancy rate over the year:

Acquisition and management fees.
Ideally, make two screenings. One optimistic, with a maximum occupancy rate (therefore close to 100%) at least for the high season in your geographic sector, and one with the minimum occupancy rate to meet the charges. This double vision makes it possible to determine the break-even point of your investment .
Ultimately, the business plan is particularly useful for considering the possibilities of profitability as well as for preventing all the risks incurred. It is not a question of painting a pessimistic or optimistic portrait, but of convincing investors of the solidity of your project. The is therefore ideal for canvassing banks (or even external investors) and obtaining advantageous financing.
To find out more about real estate investments, consider consulting our comparative sheet: SCI or SCPI.

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