To build a successful full time or part time business of investing in real estate, it is essential you look forward to your intended outcome and answer this key question: “Why is this business in existence?”
The planning process is critical whether you intend to purchase one property or 100 and whether you are going to manage them yourself or have a property manager do it for you. Whether you’re beginner investor or a veteran, creating and reviewing your plan is a once-per-year essential activity that considers all aspects of the support you need. It is a foundational exercise that is NOT OPTIONAL.
This exercise will clarify your plans and eliminate chaos so you can take your business to the next level (whatever the next level is for you). It is a process; however, no business has ever been truly successful over the long term without a plan. Be honest with yourself as you work through it as only then will it bring clarity to areas that require attention and further thought.
If strategic thinking and planning doesn’t happen to be your strong point, don’t worry as this process will guide you through. It requires you to STOP doing what you’re doing and begin right now to proactively plan the next steps for your business. Each question is specifically designed to identify what task you need to complete, what you need to learn, where to seek assistance, or perhaps what jobs and tasks would be best for you to delegate.
“It is better to know some of the questions than all of the answers.” - James Thurber
The list of questions provided is by no means exhaustive - there are always many more questions for you to ask yourself. As you make decisions and work your plan, new decisions will be required and new questions will appear. That is the normal course of business. The plan you make today will make these decisions much easier and make life much simpler.
If you are like most, the chances are good you won’t immediately have all the answers to the following questions. Just start writing and you’ll be surprised by what you already know but have not yet verbalized. They are intended to start your thought process about the bigger picture for your business. Some questions will require you to seek insights and guidance from your network or other experienced individuals on your team.
Building your business of investing in real estate begins with the macro view of your idea(s) which must then be broken down into action steps. As you write your answers to the questions, a ‘plan for your business’ can begin to emerge. It could, for example, become a necessary part of a future ‘business plan’ you provide a mortgage broker, banker, or joint venture partner.
For now it will be the first, or the next steps, in creating your road map to successfully achieving the vision for your business of investing in real estate; it should become a guide that keeps you focused on the things you will need to complete to systematically move forward.
The quality of your plan is a reflection of the quality of the questions you ask.
Too often real estate investors learn the hard way the true costs (financial and other) of not having a plan as they begin to move forward in their business of investing in real estate. Unfortunately we have seen that often the cost is, in fact, that they not begin at all. Although they may have the best of intentions, with no clear plan of the next steps to take, the result is they never get started. Naturally the primary cost of inaction is missed opportunity, which does not move you closer to achieving your goals!
Planning for your investment real estate business is simply a reality check. It identifies both the challenges and the opportunities your business will face. It pushes you to think through your operational and financial requirements and how you’ll handle those needs. But, perhaps most importantly, it becomes a practical tool that prospective JV investors can use to judge the potential of your business model. Your success in attracting investments will depend greatly on your ability to provide a clear picture of your proposed opportunity.