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Real Estate Investment Company

By Marie Cole,2014-06-17 09:23
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Real Estate Investment Company ...

Real Estate Investment Company

    BUSINESS PLAN

    WOLFE PARTNERS

    45001 Washington Blvd. Jefferson City, MO 65101

This business plan emphasizes the entrepreneur's experience, knowledge, and savvy, as

    well as the symbiotic philosophy of the business. The requirements for successful real

    estate investing are clearly explored and a concise response to each concern gives the

    plan its authority. Notice how the cautious short-term goals are tempered with the ambi

    tious outlook.

    ? BUSINESS GOALS

    ? DEVELOPING KNOWLEDGE OF MARKETPLACE

    ? BUSINESS OPERATIONS

    ? TIMELINE

    BUSINESS GOALS

    Mission

    Wolfe Partners has been a family-owned business for more than 10 years. Its principle,

    Ron Wolfe, is a licensed builder in the state of Missouri and has been working in the

    construction industry for more than 25 years. Wolfe Partners, L.L.C. is now being

    established to make the business a full-time venture and to include real property investing,

    primarily single-family homes, into our strategy. Mr. Wolfe also has over 20 years

    experience in corporate operations, ranging from a Mechanical Engineer, upon college

    graduation, to his most recent position as an executive in a Fortune 100 information

    technology company, managing a $13 million business unit with 120 employees.

    Our mission is to create investment income through the purchasing and reselling of

    distressed homes. A targeted 100% profitability will be generated by performing

    cosmetic or functional improvements to single-family homes. These renovations will

    significantly increase the value of the property and make it available for sale to a focused customer marketplace.

Short-Term Goals

    The first year of Wolfe Partners will be spent expanding our building opportunities. The company will strive to create and maintain an image and reputation in the industry as an honest, cooperative, and creative enterprise, characterized by ethics, fair play, and win-win results. Our operations will be noted for our high technology processes that will utilize state-of-theart information and management systems. In order to ensure success, Wolfe Partners will focus on the development of strong partnerships with key real property professionals, i.e., sales brokers/agents, financial institutions, law firms, building trade contractors, real estate service firms, and others.

    During this period we will purchase, renovate, and sell approximately one home per month for a total of nine units in 1999. Also during this period one home will be selected, based on its financial performance quality, as a rental unit to be held. This will be the beginning of our long-term investment strategy around rental income properties, and the developing of our expertise in property management.

Long-Term Goals

    During the year 2000, Wolfe Partners will become a full-time enterprise. During 2000 and each year thereafter, 2 homes per month will be purchased and renovated. This will allow for one house per month to be kept in the rental income property portfolio, while the second unit is sold to continue the cash income stream. Holding to this strategy over a seven-year period will yield a portfolio of 85 investment units each returning an average $2,000 positive cashflow per year for a total annual income of $170,000, and annual asset appreciation of 5%. Also during this seven-year period, more than 80 homes would have been sold for an average $15,000 profit each for a total of more than $1.3 million cash income. At an average investment of $10,000 per unit, a 100% to 150% profit margin is expected.

Ownership & Employees

    Wolfe Partners, L.L.C. is intended to be a highly leveraged organization with only one employee, that being the principle and sole owner, Ron Wolfe. All tasks to be performed on behalf of the enterprise, that cannot be done by the employee, will be hired contract services.

DEVELOPING KNOWLEDGE OF THE

    MARKETPLACE

    Target Neighborhoods

    Wolfe Partners will operate in the southeast corridor of Mixci County. This area will include the communities of Birmingham, Jones, Royal, and Rickston. This area was chosen because of its significant population of homes in our target price range of $80,000 to $100,000 and because of the recent popularity of this area by our target customer base of young, first-time, or first-upgrade homebuyers. Also, we have significant familiarity with those neighborhoods after living in the area for more than 16 years.

Selecting Properties

    Wolfe Partners has developed a strategy around the purchase of homes in the $80,000 to $100,000 price range. This price represents homes on the lower end of home values in the targeted neighborhoods. A price differential of at least $30,000 between our purchase price and typical sales prices is necessary for each purchase. This will allow us to absorb a renovation and acquisition expense of approximately $10,000 to $15,000 and still net $15,000 to $20,000 profit from each deal.

    In order to appeal to the widest audience of homebuyers, these homes will be at least 3 bedrooms, located on side streets close to schools, and inclusive of certain amenities which are desired by young, professional families.

Locating Flexible/Desperate Sellers

    The target neighborhoods are also well populated with sellers that are significantly motivated to be creative in the sale of their property. This "distressed" seller situation can be created for several reasons. The owner may be having trouble selling the property, or may be forced to move quickly to satisfy some pressing personal issue. We will attempt to locate sellers that fit one or more of the following profiles: divorce, estate sales, unemployment, property in disrepair, job transfer, property management problems, absentee ownership, investor washout, tenant problems, retirement, or any other emotional dissatisfaction with the property. It is anticipated that these homeowners will be willing to negotiate on price, terms, or possibly both.

Working with Real Estate Professionals

    To be successful in real estate investing, a strong partnership must be built with many service providers that have an intimate knowledge of the neighborhoods we have selected. This list of business contacts includes but is not limited to real estate brokers/agents, chamber of commerce, local investment clubs, financial institutions, utility company repair personnel, title insurance companies, local government personnel, and others.

BUSINESS OPERATIONS

    Target Customer

    According to recent demographic studies, more than 30% of the U.S. population will be in the age group of 25-44 by the year 2000. In addition, work force studies indicate that the number of trained professionals for most industry categories is inadequate to meet business growth demands and attrition rates. Therefore not only is there a large population of homebuyers in this age bracket, but their long-term employability, and thus their ability to make house payments, is quite favorable. With these trends in mind, our target customer is a young, professional, dual-income family. These buyers will have good credit and income potential, but may not have significant cash reserves. Our approach to these buyers, therefore, will be to get them into our houses with creative solutions to their cash shortage problems.

    Establishing a Buyer Profile

    Several strategies will be employed to publicize the name of Wolfe Partners and its attempt to be a frequent buyer of distressed real estate. A professional public relations firm was hired to develop a corporate image and identity system which will be incorporated into every correspondence for the business, including business cards, stationery, flyers, postcards, signage, and all other advertising. Once a reputation has been built for the business, it is anticipated that much of the purchase volume will be a result of word-of-mouth advertising. It will be important to these types of transactions to have cash on hand to move quickly when opportunities present themselves. To endear the business to the real estate broker community, a commitment was made to work with specific firms to conduct all transactions for their areas. In exchange for that commitment, a real estate investor account has been established and preferential commission rates negotiated with these firms.

Communication Plan

    To announce the newly established operations of Wolfe Partners, and to further our penetration into the real estate investment process, we will advertise our approach

    through several media. This includes newspaper advertisements for buying and selling homes, personal contact with real estate agents and building trade contractors, flyers placed on vehicles in parking lots and in mailboxes of homes needing improvement, and by driving through neighborhoods to talk to residents. We will also begin networking with people at businesses and functions involved in real estate investing, for example, county courthouses, bank real estate foreclosure offices, investment clubs, neighborhood association meetings, etc. The following communication plan outlines how Wolfe Partners will begin to inform the community of our business process.

Buying Properties

    Working with Home Sellers

    A significant amount of time and vehicle mileage can be spent in the pursuit of good home deals. In order to minimize this expense, a rigorous process has been developed to qualify properties for their investment potential, and sellers for their flexibility and compatibility. The process includes two components: a telephone screening script and a property analysis form.

    It will be imperative during this process that we establish a rapport with the seller to create comfort with one another, a win-win environment, and an opportunity to drive to closure on the business transaction. The property analysis form is used throughout the process by first recording any information that is contained in the advertisement, so as not to waste the seller's time, except to clarify understanding. During the following phone screening, the form is used to record additional data that is pertinent to our investment strategy. Then, in the event a visit to the property is warranted, the form would be completed during the property inspection.