Business Plan Advice Needed

I have been lucky enough to meet with a few potential investors, however they see that I am inexperienced and have asked me for a business plan. Fair enough, I need to get some things on paper. I feel there is two parts to the business plan:

  1. Detail the specifics of my/company goals
  2. Specifics of a particular deal

If you are looking to investor your money, what are the critical specifics do you want to see? What should I include about myself in my plan?

Also, my personal goal is to obtain 100 rental units (currently have 3 of them, haha), but cannot come up with a clear picture in my mind how to do this. I am sure in my plan if I make a statement like “Obtain 100 units” I need to at minimum explain a strategy. Does anyone have any suggestions on how to cultivate a strategy for this kind of goal? Or do I simply focus on the specific deal at hand?

From my experience, my business plan was only looked at in the very beginning (like trying to negotiate my first deal). After the train leaves the station and you have experience, people are going to be way more interested in what you’ve actually done vice your theories on paper in your business plan. I have a copy of a generic RE business plan if you want it. I’ve sent it to several people on here. Here’s what I included in my package when I was seeking financing:
last three years of tax returns
recent pay stub
updated P&L statements for the business
personal financial statement
data sheets for current property holdings including current values, loan balances, and monthly rent

It also wouldn’t hurt to throw in a current copy of your credit report too. All of the things I listed above will give anyone a good picture of your current financial situation. Full disclosure up front should help gain their trust.
Since these investors are wanting a business plan, I would explain to them what types of deals you look for and how your prior deals looked financially. You can state your acquisition goals too. You never know when deals will come along, but you could say you would like to acquire X amount of properties per year on average. You’ll be surprised how things can happen in this business. We only bought one house this year, but we’re closing on 15 units next week. We went to a bank trying to get 8 units and it nearly doubled by the time we were done putting the deal together.
Do you depend on part of your rental income to support your lifestyle? We currently don’t take any money from our business for expenses. Everything goes into improving the properties or making the next deal. That’s how we grow. I hope you’re doing well with your current three properties. That will open doors for you. Most banks aren’t interested in helping someone get started in rentals, but many will help you if you can show them you can be successful in the business. For our new deal, our banker told us he wouldn’t even be interested in talking to anyone about multiple properties if they had no experience.


Happy New Years! Thank you so much for your detailed response. I would love to see your sample business plan. Can you please send it to me? You should be able to see my email by clicking on my username.

I have one house which is a 3 family (Not 3 properties). =) When I purchased the house it was a 2-family. I turned it into a legal 3 family by going before the local Zoning Board then working with the Building Department to get it up to code. The Zoning Board actually denied me the first time and kicked my butt at the hearing. Then, over the course of a few years I studied the bylaws, built my case, and got some neighbors on my side and got the approval. Now, I want to take this experience and bring it to a higher level. However, the house has eaten all my cash to get it processed and renovated. If I want to do more I will need investor help or wait a few years and save (not the preferred method).

I have a full time job and work at a cool place – but my dream is to start my own business. I’d like to find a way to become a full time investor in less than 5 years. Is this possible without having a “cash cow” already?

Long term, I’d like to buy and hold multi-family rehabs. But wonder if I should consider trying to do a couple flips to increase my cash for investing. I also keep going back in forth on what’s more important the number of units (a goal of 100 units) or setting a goal of “X” of dollars passive income each month.

Also, you mentioned acquisition goals. Do you mean to include the parameters used to evaluate a property?

Congrats on your success!!! I can’t wait to be talking about purchasing 15+ unit buildings! =)

Thank you,

Your email address is hidden. PM it to me.
Our 15 units aren’t all in the same building. It’s acutally comprised of 12 SFHs, 1 duplex, and 1 bungalow.
We’ve pulled money from my credit card a couple times to help out with deals. We had to put in some of our own money in deals in the beginning, but we later developed a relationship with a local bank where we could get 100% financing as long as we bought at the right price. For this current deal, we’re pledging two paid off properties as collateral for the package of properties. This is allowing us to get full purchase price financed. We’re just paying a few thousand for closing costs out of pocket.
These are things that can open up for you after you have an established track record. You may be able to pull some money out of your current rental property depending on the amount of equity you have. That might help you get started.
A five year horizon for quitting your job may be doable, but you’d have to work really hard at it. We’ve been doing this for about five years. The business has grown nicely, but there’s no way I could quit my job and maintain the quality of life we have just off our business. We just don’t have enough properties free and clear yet. Cash flow is good, but a lot of it goes into getting the next deal, rehabs, etc. I have an income goal for our business. I would like to have in excess of 20k/mo in rental income. For us, that would mean about 40 properties.
For acquisition goals, I think you should show what type of property you’re trying to get as well as the average rate you would like to acquire these properties. Our business model seeks properties that cost <30k for purchase price and rehab that will rent for up to $650. So I would include that information as well as how many we’d like to buy per year.

An important question you do not state is what sort of equity are you working with? The reason I’m asking is that in some cities, a triplex is worth half a million bucks. If your equity is half that, you could sell that triplex and move to a depressed area of the country and use that cash as a downpayment for a decent sized apartment building. Moving to other cities (like I did) is one way to reach your goals.