BiggerPockets

I am new to real estate investing and have read that it is best to present a business plan to obtain financing. Can anyone recommend a good source to find a real estate business plan template? If anyone has created one and is willing to share, that would also be appreciated.

Thanks for the help.

Micheal, I have to disagree here. Real estate investing is a business and as a rule of thumb, you always want to keep your business and personal finances as separate as possible. NEVER, EVER, tie your personal home into an investment property. It is flat out too riskly. If something goes wrong with the investment property and you end up losing it than you could lose your primary home as well.

Froehlis, if you are serious about getting into real estate investing, then here are a few things I would suggest to get yourself ready (financing and otherwise).

1) Real Estate Investing is a business. Treat it as such.

2) Decide on a small local area near home to get started and decide how you want to invest (IE. Do you want to fix 'n flip?/Do you want to fix em up and rent them out?/Do you want to buy em and wholesale out to other investors?/Etc.)

3) Learn EVERYTHING you can about your chosen area before you start putting your money into any deals (IE What's the retail market like?/What's the rental market like?/Are the neighborhoods you're looking on the rise or decline econamically)

4)Evaluate your personal financial situation.
-How much cash do you have access to? Ideally I would recommend having enough cash on hand for 6 months payment reserves plus enough for your down payment and closing costs? Now I know most new investors won't have that kind of cash avaliable, so at bare minimum, I would say have enough cash for the 6 months payment reserves. The closing costs and down payment can be worked around, but at least give yourself 6 months worth of payments to either sale the property or get a renter into it.
-Clean Up Your Credit. Pay off your old collection accounts/Pay off your credit card balances, if you can. If not, then at least pay them down below 50%./Make sure that your current mortgages are paid ON TIME (this can kill more investment deals than you know.) For conventional financing, the lowest your middle credit score can be is around 620; 660 or higher will open up most programs for you.

5) Get your financing pre-approved.
Know how much you are approved for and what you payments will look like before you start shopping. This will speed up the financing process and make you look more professional to your potential sellers.

Hope this information helps and good luck in your new career.

Wow, you guys are beating me up today.

My main point was that you don't need a business plan to begin investing in Real Estate.

Secondly, I would love to hear how you all got started in Real Estate. When I started, all I had was equity and little cash but not enough to put a large amount of money down on a house or pay cash for it. I would say the best approach to investing is to save as much money as you possibly can for a down payment, but that is not always the case for the majority. I think in any business there are risks, and Real Estate Investing is risky.

I understand the fraud issue but there are banks out there that will loan on an investment property based on 20% down from an equity line. It is know up front as to where the 20% is coming from and the bank is willing to take the risk. Nothing underhanded is taking place.

To me, I didn't like having the equity line against my own home but that is what I had to do and many, many properties later, that is not an issue anymore. BUT, an equity line of credit to pay all cash for an investment property vs. a downpayment is the less risky option if you have that kind of equity.

A large part of RE Investing and any other business when you start is debt management and if you can handle that then you will be successful. I have never heard of a business that was completely out of the red when it first started out. Most take 5 years to start making money.

froehlis
As you can see there are many ways to get into the business and the approach that some use does not work for everyone for many reasons. Tackleberry and JWorley have excellent advice as well, but I did not have the money starting out and some could argue that I should have waited, but I was hungry enough to make it work. So hopefully you can absorb it all and make the right decision for yourself.

In addition to a business plan it is important to have goals in mind for your business. Because investing in real estate IS a business its not some hobby. I always define a hobby as something you do for fun but doesn't make you money. I hope you do make a business plan its an important article to focus your business and to reference as your business progresses over time.

go to microsoft.com and in the search block type in templates and search for a business plan, If you have ms word. I just downloaded one the other day. Don't expect to complete it in a day it will take about 2 months to complete then you will be constently changeing it as you learn. It will be about 35 pages or so. As far as a HELOC to invest I took a line of credit out on my primary home for $72,000 I then purchase a property paying CASH from the line of credit then in 3 months i got a HELOC on my investment property for a 20 year fixed loan at 8% they lent me 90% of the appraisal and I did not have to pay any closing cost. I was able to take out about $5,000 more than i Needed that i used to pay off some debt. Do your homework and you can't lose.

I completely agree that business plans are a very important part of the financing equation but I feel that it is equally important to have strong business credit.

I guess I'm the contrarian here! I've never had a business plan because I don't look at Real Estate as a business but rather as a long term Investment for my Retirement and Financial Future. Quality, Investment Grade Real Estate always appreciates and provides High Income/cash flow. Of course that is my preference. However, if you like the challenge and risks that go with buying Retail, Real Estate, then you should have a business plan, marketing plan, and personal goals just like any other type of business.