Nearly all investors lack a rock solid, real estate investing business plan. Many don't find it necessary at all...plenty scoff at having one...so it's no wonder that in 2004 a study by Tactical Real Estate discovered that 92% of all real estate investors drop out in their first 90 days.
Even more alarming, of the 8% who stick to investing the following 9 months, 90% of these investors drop out because they haven't survived the first year of their portfolio.
When you compare those facts to the statistics reported by the U.S. Small Business Administration (SBA.gov), a government agency that tracks business start-ups, they've found that over 50% of all small businesses fail within their first year.
This compellingly sad fact - that there is a far higher failure rate and attrition of real estate investment businesses than any other type of business around - can only point out the need for anyone investing in real estate to have created a rock solid, real estate investing business plan.
And what does Warren Buffet have to do with it? For one, the man is a pure investing genius. Since he's created his massive empire by investing in stocks, which is a decision made after reading the company's financials, studying their industry, and identifying key success factors within its business plan, there's really no better person that I can think of who could better critique a business plan.
Moreover, many of Mr. Buffet's business principles can be applied to creating your own real estate investing business plan as well, and hence I give you the 7 Essential Elements to you'll need to create a real estate investing business plan that would make even Warren Buffet leap over tall buildings to invest in with you:
The 1st Element - Executive Summary
With my consulting clients, I have them write this first of all (even though it will change when the plan is completed). Your executive summary in your real estate investing business plan sets the strategic tone and direction for your business, and in 2 or 3 paragraphs, anyone not aware of what your business is, the value it provides, how it's to be positioned in the market and its expected revenue growth, will have a clear understanding. Your Executive Summary is a high level overview of the long term goals you've set out, where you'll be operating, and how you expect to compete and succeed.
