7 Steps to Writing a Real Estate Business Plan

The real estate industry in Australia is a competitive market, especially if you manage your own business. This is why having a clear business plan is essential to your success in building a profitable and sustainable business.

In its simplest form, a real estate business plan is a document that maps out the future success of a business. It details where you are currently, what you plan to do, and how you are will do it.

The reasons for developing a business plan are twofold.

1. Firstly, it can help you grow your business. Research found that a well-thought-out business plan can nearly double the chance of securing a loan.
2. Secondly, it will likely give you a greater idea about what you are getting into. The plan is designed to give you visibility and perspective on what’s most important in your business.

And the stats back this up. One study, which analysed more than 10,000 businesses, found that planning improved business performance overall.

It’s also not just for new real estate businesses either. The same research found that it can benefit existing businesses even more than it helps start-ups.

This comprehensive guide will make sure your business plan ticks all the boxes. It will show you the structure and key analysis methods you might need when writing your business plan in Australia.

1. Executive summary for real estate businesses

An executive summary is the essential first component of your real estate business plan. It will be the anchor that underpins and summarises the rest of the document and will be something you can refer to when understanding your company.

Your executive summary generally might include your overall goals and objectives, the parameters of your target market, and how the basic strategies that plan to achieve your goals.

For your real estate business, it might be a good idea also to include a marketing overview and a description of your neighbourhood and price ranges.

Since this section essentially refines the message of the overall document, it is usually best to do your executive summary last.

2. Business description

The next heading in your real estate business plan is your business description. All businesses have their origin story, and this is your chance to share yours. To avoid waffling on too much, try and focus on answering the following questions:

• What does your business do?
• Why does it exist?
• How do you plan on achieving your mission?
• Where is the location of your business?
• Who are your business leaders?
• When was founded?

When writing your business plan, put yourself in your reader’s shoes. They might not know anything about your business and have limited time to find out. Give them the details needed to know the basics of your real estate business.

3. Conduct a SWOT analysis

Performing a SWOT analysis can be a crucial part of developing a real estate business plan. The analysis aims to put the strengths, weaknesses, opportunities, and your real estate business’ threats.

As you might imagine, this could take a fair bit of research. But it is essential to thoroughly analyse your playing field before you go any further.

It can help you identify specific areas of concern in your business while also helping you test the feasibility of your business idea. In addition, the SWOT analysis will provide arguments for you to make when presenting your project.

A SWOT analysis can help you write a realistic real estate business plan. While it can be intimidating, it will help you achieve your goals. Using the SWOT analysis will help you identify your niche, assess its viability, and manage the financial aspects of your plan.

It will also likely impact the following sections and your plans, so ensure you are putting some time into this section.

4. Analyse your competitors

Making it in the crowded real estate sector requires you to etch out your own niche and market. To do this, you might need to analyse where your competitors sit and find out where you can exploit opportunities to build a name for yourself. What you are looking for is to find areas of the market that have either been neglected by real estate businesses or completely saturated by them. That way, you can tailor your business toward the opportunity and avoid threats.

5. Identify your target audience

Now it’s time to get into the specifics. This section is to identify who your target seller and buyer are. For instance, you could identify first home buyers and specialise within this area or target real estate investors if it’s a high-growth area.

Your target audience may come about when conducting your SWOT analysis as you would generally target an area that presents an opportunity and aligns with your strengths.

Keep in mind that this is not a space to discriminate against your customers. Anyone could be a buyer or a seller and its poor practice to write-off groups of people based on race, gender, colour, sexual orientation among other things. Rather, focus on describing their business attributes in relation to your business.

6. Determine your goals

This section is the crux of your real estate business plan and your future aspirations. There will be many business goals that you will want to achieve. Some goals will be short term and while others will be set to be achieved two years from now. Others will be specific to certain areas of your business, such as growth, finances, or marketing.

The key thing to try and achieve when developing your goals is to ensure they are SMART. That is:

Specific – Your goal might need to be clear and void of any uncertainty.

Measurable – You might need to be able to measure your goal otherwise you won’t know it has really been achieved.

Attainable – Is your goal realistic or are you reaching for the stars? You should try to ensure your goal is achievable.

Relevant – Your should try to align your goals with the results you are trying to achieve.

Timely – Ensure your goal has a deadline.

7. Develop a financial plan

Now that you have a goal in mind, you can set your budget accordingly. Consider your monthly cashflow, savings and debt and develop a budget that is built for success.

Being as accurate as possible in this step is crucial because if the data doesn’t add up it’s going to be hard to run a real estate business. Forecast your revenue and deduct your expenditure to understand how much money you will have at your disposal. Aim to also put a little aside for an emergency fund.

Other things to keep in mind is your tax and insurance. Ensuring you take the time to get this right may save you a lot of pain later down the track. Real estate businesses carry a lot of risk, so it’s critical to consider having real estate insurance in place to protect your business from adverse situations.

Recommended reading: How to Develop a Plan for a Business

Final words

Ask nearly anyone who knows how to own a real estate company and they will tell you to write a solid business plan. While the plan can help you get essential loans granted, it can give you a clearer view of your path ahead. Hopefully, your property developer business plan will hopefully set you on the path to success.