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Hello, my name is Jeff and i'm new to RE investing. I would like your honest opinions and feedback ( negative or positive ) so i can improve my self and situation. My goals are to own commercial real estate to generate a net cash flow of 10k per month. I plan on owning apartment buildings, self storage, office/retail space along with mobile home parks through the buy and hold strategy. I have a goal of owning/partnering a commercial property before the end of 2015.
 I'm currently seeking like minded investors to help me take action and get closer to my goals. I plan on working very hard and i don't expect anything for free. I'm driven, have a business associates degree, have a business plan and sample excels specifically for commercial investing. Any guidance or advise (good or bad) will be greatly appreciated.

*Below is a rough draft of my Business plan. The LLC business name is made up and i plan on setting up a LLC once i get sound advice on which type of corporation to set up.*

Commercial RE Investing Business Plan:
(Keys Investment Properties, LLC)

Company Overview:

Keys Investment Properties will be a LLC (Limited Liability Corporation) formed in the state of Virginia. Its founder Mr. Jeffery Keys, has an Associates degree in business management along with 5 certificates. He has vehicle sales management and finance experience, personal home, life, auto and annuity insurance experience along with accounting/bookkeeping experience in Apartment/mix-use investment properties. He dealt directly with the property management staff to help make decisions and over see all the expected and unexpected expenses of running successful commercial buildings.

Company Objective:

We will specialize in mainly apartment commercial properties but will inquire about others such as, mobile home parks, self storage facilities, strip malls and office buildings when the market is right and the deal makes since. Most Apartment building we purchase will have a minimum of 10 units in middle to upper class areas and will be between 10-60 years old. We will use conventional loans, hard money, private money, equity partners, seller financing & lease options to raise capital in order to purchase, improve, and cut expenses at each of our apartment buildings. We will either stop purchasing or sell properties at the high end of the apartment real estate cycle and adjust accordingly with other commercial properties to insure we maintain a positive cash flow and stay ahead of the competition.

Mission Statement:

Our mission is to purchase & hold structurally sound apartment/commercial buildings in the Virginia, Maryland and DC area that are poorly managed and that are in need of minor cosmetic repairs. These renovations will improve the tenants standard of living as well as increase property values to create long term cash flow and equity.

Goals: (Starting June 2015)


First 6 months:

-Build a “dream team” of bookkeepers, attorneys, CPA’s, property managers, business partners, investors, insurance agents, brokers, bird dogs, contractors, escrow officer & handy man.
-Inquire & look at a minimum of 3 properties per week.
-Attend as many networking programs as possible that will help my commercial investing career.
-Attend as many education/learning seminars/programs as possible to stay up to date and stay ahead of the competition.
-Partner/purchase 1 commercial building within the first 6 months. Due by 12/31/15


First Year:
Purchase a minimum of 2 commercial buildings (by June of 2016)
Continue networking & attending seminars to stay sharp.


Year 2 (second year)
Purchase one commercial building per quarter for a total of 4 buildings per year. (By June of 2017)

Strive to stay cautious and smart about purchasing properties that meet our high quality standards.


Year 3 + (3-5 year goal)
Continue to purchase a minimum of 1 commercial building per quarter.

Have a net cash flow of 10k (ten thousand) per month after all expenses.
Learn and grow in other areas of commercial real estate such as mobile home parks, strip malls, office buildings, and self storage.


Year 5+
Continue to inquire commercial properties along with staying educated and learning as much as possible about each type of commercial real estate we purchase. 

We plan on either buying or starting a property management company to allow a smoother daily flow of our properties.
We will have full time staff to handle bookkeeping, property search, maintenance, due diligence, and market research.

Marketing/Sales Strategy:

Keys Investment Properties, LLC will purchase properties that we can clean and upgrade the property, reduce & control the properties operating expenses, increase rents and possible reduce real estate taxes that have a minimum of 10 units in middle to upper class areas that will be between 10-60 years old. The properties will be structurally sound, a good location, and a good surrounding market but are poorly managed that are in need of minor cosmetic repairs such as, out dated inefficient kitchens, bathrooms, appliances, old windows, old inefficient lights, high expenses, old non-separate metered heating and cooling units, along with ugly curb appeal/landscaping.

We will not purchase commercial properties that have the following issues:

-A structural problem (interior bearing walls, foundation & exterior walls)
- A significant environmental issue (underground leaking tanks or mold)
-A neighborhood that has an oversupply of commercial properties and have a vacant rate of more than 15%.
-Tenants with subsidized government assistance (section 8)
-A rental control ordinance, which limits rates or rental increases.

We will purchase commercial properties that have the following value added characteristics:

-Low rental rates compared to similar units in the area
-Poor property cosmetics ( exterior shows pealing, overgrown shrubbery, weeds in the curbs & sidewalks, a dirty and poorly lit entryway and halls , overflowing trash receptacles, & a poorly lit worn out laundry room)
-Light fixtures with incandescent light bulbs that are paid for by the landlord.
-High heating & cooling bills due to old systems that are not temperature controlled, have no thermostat, and that are old and dirty.
-Worn out and out dated kitchens, bathrooms, & appliances ( worn or cracked counter tops, floors, sinks, vanities, light fixtures, and window coverings)
-Below market rents ( Indicated when half of the tenants have occupied their unit for 3 or more years)
-Old, inefficient windows ( drafty & don't work properly)
-A neighborhood with surrounding properties in superior condition
-A 90%-100% occupancy rate maintained for the prior 24 months ( this may indicate rents are too low)

We will focus on a buy & hold strategy in the Virginia, Maryland and DC area with a unit size of 10-500 units and a purchase prices ranging from $250k-15 million.
The properties will be bought at around 80% of market value to allow for renovations, better financing terms, and higher cash flow.
The properties we purchase will strive to be within 2 miles of shopping, schools, parks, or other cultural amenities.

We will use conventional loans, hard money, private money, equity partners, seller financing & lease optionsto raise capital in order to purchase, improve, and cut expenses at each of our commercial buildings.

Marketing/Sales Strategy:

Keys Investment Properties, LLC will purchase properties that we can clean and upgrade the property, reduce & control the properties operating expenses, increase rents and possible reduce real estate taxes that have a minimum of 10 units in middle to upper class areas that will be between 10-60 years old. The properties will be structurally sound, a good location, and a good surrounding market but are poorly managed that are in need of minor cosmetic repairs such as, out dated inefficient kitchens, bathrooms, appliances, old windows, old inefficient lights, high expenses, old non-separate metered heating and cooling units, and ugly curb appeal/landscaping.

We will not purchase commercial properties that have the following issues:

-A structural problem (interior bearing walls, foundation & exterior walls)
- A significant environmental issue (underground leaking tanks or mold)
-A neighborhood that has an oversupply of commercial properties and have a vacant rate of more than 15%.
-Tenants with subsidized government assistance (section 8)
-A rental control ordinance, which limits rates or rental increases.

We will purchase commercial properties that have the following value added characteristics:

-Low rental rates compared to similar units in the area
-Poor property cosmetics ( exterior shows pealing, overgrown shrubbery, weeds in the curbs & sidewalks, a dirty and poorly lit entryway and halls , overflowing trash receptacles, & a poorly lit worn out laundry room)
-Light fixtures with incandescent light bulbs that are paid for by the landlord.
-High heating & cooling bills due to old systems that are not temperature controlled, have no thermostat, and that are old and dirty.
-Worn out and out dated kitchens, bathrooms, & appliances ( worn or cracked counter tops, floors, sinks, vanities, light fixtures, and window coverings)
-Below market rents ( Indicated when half of the tenants have occupied their unit for 3 or more years)
-Old, inefficient windows ( drafty & don't work properly)
-A neighborhood with surrounding properties in superior condition
-A 90%-100% occupancy rate maintained for the prior 24 months ( this may indicate rents are too low)

We will focus on a buy & hold strategy in the Virginia, Maryland and DC area with a unit size of 10-500 units and a purchase prices ranging from $250k-15 million.
The properties will be bought at around 80% of market value to allow for renovations, better financing terms, and higher cash flow.
The properties we purchase will strive to be within 2 miles of shopping, schools, parks, or other cultural amenities.

We will use conventional loans, hard money, private money, equity partners, seller financing & lease optionsto raise capital in order to purchase, improve, and cut expenses at each of our commercial buildings.

*i apologize for the bold text in the following section. It would not let me edit this for some reason.

Marketing Plan:

Keys Investment Properties, LLC will inquire properties through a number of different ways. The main way we plan on getting property leads are through commercial real estate brokers. They get access to properties before they go out to the public which will allow a steady flow of properties to work numbers on before the public knows about them. We will also use bird dogs to find properties from their connections. We will make connections with property managers which are in constant contact with the owners of the properties and will know when they are ready to sell. We plan on attending networking meetings to get our name out to find deals through word of mouth. We will network online with sites like Biggerpockets.com to reach out to other like minded individuals to join with and find deals in that community. We plan on making connections with CPAs, Attorneys, and other real estate professionals which will have personal relationships with commercial property owners. We will also go door to door and try to talk to owners of buildings that fit our criteria and offer to buy. Another way we will inquire properties is through social media such as Facebook, Twitter, LinkedIn, & Google+.

Exit Strategies:

Keys Investment Properties, LLC has a few plans for an exit strategy just in case things do not go as planned. We will use the following options when we need to sell in unexpected times:
-Selling FSBO
-Selling With a Real Estate Agent
-Selling With Seller Financing
-Lease Options
-Telling our network of investors
-Putting our property on the internet such as biggerpockets.com & loopnet.com to get exposure all across the nation.

Keys Investment Properties, LLC believes with our marketing plan we should only increase the value of our properties and if we do come into a situation where we need to sell in a hurry we will have equity and it will be easier to get rid of.

Financials:

Jeffery Keys' personal finances are limited to his high credit score. His income is limited due to his full time commitment to commercial real estate investing. He just completed his Associates business Degree and is fully committed to commercial real estate investing. Mr. Keys has the following skills that make him great for real estate investing:

-Great customer service skills
-Long sales/management history
-Accounting & Bookkeeping skills
-Adapts to change easily
-Great problem solver
-Willing to take educated risks
-Creative & open minded
-Strategic thinker
-Willing to do continued education to keep skills sharp
-The time to commit, travel, learn, grow and inquire about properties
-Completely focused. ( No other job or commitment to get in the way of his commercial investing career)


Thank your for reading all of this! Please commit
-Jeff Keys
 

Looks like you have a really well thought out plan, Jeff. Great job and good detail. I would be interested in looking over some potential deals with you when you get to that point. In the meantime, please shoot me any specific questions in a private message. I'm by no means an expert but I was where you are just about a year ago. Forming an LLC, putting team members in place and finding our first buy and hold have all happened. Now we are now looking to the next horizon which will include multi family, medium to large size if we can find the right partner and the right deal. I'm based in Annapolis but I work my day job in downtown DC.

Good luck and hope to hear from you,

Travis

Hello, Mr. Paez. First off, thank you for reading my business plan. It's nice to know you were like me a little over a year ago and now you have a property under your belt. Congrats on that! I appreciate your offer to look over my deal when i get one. That means a lot and any help ( expert or not ) would be great. My parents live in Calvert County, MD so your not too far away from them. I look forward to sending you my deal info when i get one and i really appreciate your time and willingness to help!

Thank you

-Jeff

Nothing works as you planned, so just do yourself a favor and go buy one - this will tee-up your decision-making process :)

Great advice Mr. Leybovich. Nothing works out as planned. I'm sure i will learn much more on my first deal vs 5 years of reading. Overthinking is something i need to work on. That's by past accounting experience kicking in. I appreciate your time! 

-Jeff

Originally posted by @Jeff Keys :

Great advice Mr. Leybovich. Nothing works out as planned. I'm sure i will learn much more on my first deal vs 5 years of reading. Overthinking is something i need to work on. That's by past accounting experience kicking in. I appreciate your time! 

-Jeff

 Nope - wrong again :)

There's thinking and then there's planning. Thinking is a function of rationale and curiosity. Nothing wring with that at all. Think all you want, as much as you want, for as long as you want...

However, thinking is not what you showed us here. You have shown a plan, which is why I commented as I did. Planning, in addition to rationale and curiosity, require wisdom. Wisdom is what you are missing. Why - because wisdom is a function of perspective, and that only comes after doing - you can't think wisdom, Jeff...

You don't know real estate. You don't know if it works, and if so - how. Most people here are no better off than you in that department. So, keep thinking, but stop planning. Go do some ****, and take notes and what works, and what doesn't. Which strategies are viable, why, and when. Once you internalize some of what happens to you, then you'll start to develop wisdom, which in turn will help you plan realistically!

Good luck, Jeff!

Mr. Leybovich, very good point about keep thinking and stop planning. I personally feel i need to make connections and get out there. I appreciate your insight and advice. Thank you very much. I hope to get out there soon and start my long road of gaining wisdom. Have a great day

-Jeff

I beg to differ

Planning before taking action is already showing a certain level of wisdom

Knowing to buy at 20% below market value or better already is making sense whether this conclusion came for insight, intelligence, or listening to those that do have many years of experience in our particular field. 

Picking properties that are already in good condition and in good locations is something frequently over looked by many real estate investors. 

Making improvements in management, marketing, and product appeal is far less costly than making physical and costly repairs of buildings

Understanding to invest in quality buildings knowing that their value and costs will be higher is already showing a better understanding of what makes a good investment

Viewing and taking a professional approach to real estate investing as a business to be conducted in a professional manner from the start already puts one ahead of those that take a more blind and personal approach. 

Commercial real estate is frequently valued much higher than residential real estate for a reason.

It was mentioned in the plan that budgeting and operational cost as well as acquisition cost will be in the millions of dollars which is realistic. 

There is in place a method of identifying known areas of potential cost overruns and of avoiding them.

No one is saying that to plan real estate investing is the very same as actually doing it but allot of investor/owners are doing and have been doing for years. The very same investors that are our present day poor managers, those that have let their real estate holdings depreciate in value, and cash flow very poorly.

Problems are being identified and solutions are being proposed. These are a few good points I see to planning first. 

There are some questions of course such as.

Why were the stated market areas selected for business development?

Are there enough buildings in the selected market areas to assure an adequate supply of the preferred scenario to which the plan is addressed?

I imagine I could spend an entire year thinking of ways to contribute to the fruition of this plan but suffice it to say that I think you are on to something that can practically and cost effectively be applied.

Hello Mr. Dominguez, 

You have good points and i can see where you're coming from. I feel the condition or location of the property in which i plan on purchasing could change depending on what my short or long term goals are for that property. For example, i mainly want to buy and hold so with this approach i feel i could buy a property that is in better condition or maybe even higher then 80% value because i'm not looking to flip it. I want cash flow. So as long as i can be creative and create more income for that property it will increase in value and still remain a great investment 5-20 years down the road. I think i'm looking to buy at 80% for the fact it will allow for an easier exit strategy just in case things don't work out. But on that note, if i can still improve the property in some ways such as adding vending machines, curb appeal, cutting expenses, etc. then i should have no issues with an exit plan and generating cash flow from a property that i purchase at 90+% of the value along with protecting my investors money.
You make a good point about the local area in which i'm trying to invest. I'm sure there are a lot of factors to consider before a property should be purchased and having an over supply of a certain unit size/type is one big one.
I really appreciate your input and i love hearing others point of views about investing. Thanks for your time and i hope to see you around!

-Jeff 

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