How to Develop a Property Development Business Plan
If you are looking to start out a property development company on a part-time basis, work it as a full-time job, or if you are just looking for a way to make some extra money, you are going to need to develop a property development business plan.
You will need specific and measurable goals as well as a step by step plan on how you are going to reach these goals. All of this is going to need to be very detailed and should help guide you on your projects.
There are some other things that you need to keep in mind as well. You are going to need to hire staff, an HR or payroll service and a company to make sure you are operating in a legal manner. You are going to need to market your business so you need a website design as well as a marking campaign.
There are many companies to select from so you need to make sure you are working with a quality company. This will show that you are dedicated to your business and you took the time to look into your field.
Writing a Property Development Business Plan
A business plan has to be developed for your specific business. There are some common things that funding partners, as well as investors, are going to be looking for.
The business should contain at least the following information:
- The structure of the company
- The key employees
- Funding plan
- Strategies for development
- Acquisition requirements
- Targeted financial goals
- Exit plan
- Marketing tips
- Construction plan
- SWOT analysis
- Market research
If you are able to make a clear property development plan you will have a great plan to base your company around. All of your business activities can follow this plan.
Structure of the Company:
A business plan is very important for the structure of your company.
If the company has a poorly planned structure it can cost them money down the road as well as customers. The loss of money can be due to poor investments or spending too much money on production.
It may be worth the investment to get some professional help with deciding on the format of the company. It can save you money in the long run.
You need to understand the options that there are to structure your property development business plan.
Who is going to be in charge? Who will keep the business running? Is there a second in command?
You need to determine what roles people are going to play in your business.
You may want to develop a hierarchy diagram that will show the roles and the chain of command.
If you are doing everything you may want to hire some consultants that you can work with on larger products.
Property development businesses need to consider this area and hold it to high importance. Without money, the business cannot run.
You need to develop a plan so you will be able to fund your projects. You will need to list how much you are going to invest, how to handle debt and any help you are getting from investors. This is an area you will need to fully develop.
Your development strategy needs to include how you are going to get the materials for development. This plan needs to be detailed and specific.
The development strategy should include :
- The macro and micro info of target location
- Lands and buildings
- Planning or no planning permission
- Refurbishments, extensions, or new buildings
- Purchases prices
- A target number of projects
- How many projects to run at one time
- The exit values
- When to buy or sell
- Project timelines
There are a number of things to include but there are some questions and tips that need to be discussed.
This includes items such as price ranges, the planning process, the types of construction, and the idea of sales values on the project as well as a projected timeline.
This may change over time
A clear plan will allow you to build your business faster.
Financial targets and returns:
The point of being in business is to make a profit.
If you are not able to set a target for your project and set benchmarks you may lose money and a client.
Your return is not a specific figure, it should be a percentage. There are three ways to measure the financial return:
Profit on the revenue
Profits on the costs
An internal rate of return
Make sure your business has a clear plan for return and know how to calculate these values.
Exit strategy: when to buy or sell?
This is very important for tax purposes. There are different tax rates for property traders and investors to make sure this is part of your plan.
Sales and Marketing Tips
You should include ways of selling and marketing.
This may be hard to write about first but you need to put some thought into it.
There are many different builders to work with and you should check their references. Having a clear picture of what you want is good but every project is not going to be the same.
SWOT and Market Research
You need to know your market. If you want to develop a business plan it needs to be complete to attract investors. You need to know about the risks and how to build up the confidence in your investors.
The market search should prove that your business plan is complete and you know what you are going.
There are a number of ways to conduct market research and there is a great deal of information about there. Look at the macro as well as the microdata. The research needs to back up your business plan and can show that there is a strong plan that you can use for your business.