I'm working on my get rich quick business plan for 2011.
Can you eye this for me? I'd appreciate all constructive insight:
It's detailed, so if you have trouble sitting still, run away now probably pass this one.
(LLC) is a company comprised of two capital-backed investors. With one Carlton Sheets program over two years of investment knowledge our goal is to secure a portfolio that delivers sustainable growth opportunities amidst any economic climate. The strength of TBD LLC is a transparent, ethical business model which will generate qualified referrals, long lasting relationships and future business.
Our mission is to create passive income through the purchase, hold, and eventual resale of residential real estate. We will judge investment properties solely on their ability to generate positive cash flow, but will take into consideration the ability to add value through rehab or repositioning for any property in a value add scenario. Once initial MAO has been targeted, it shall be policy that no offer may exceed this position.
The target asset of (LLC) will be single family detached residences in areas ranging from small suburbs to major metropolitans. Investments will remain secure in acquisitions limited strictly to those areas which are stable among key indicators; education, employment and percentage of owner occupied residences. An in depth knowledge of residential trends, anchored by solid agent and legal relationships, shall present opportunities to maximize instant equity at each closing.
It is the vision of (LLC) to aggressively pursue opportunities that meet minimum of our requirements in cash on cash returns and value positioning opportunities. The goal is to purchase one SFR during Q1 of 2011, and resell at FMV as quickly as possible. After 60 days, there is a sinking feeling of failure contingent exit-addendum. This process shall be subsequently repeated, generating income and producing a small business credit relationship with local lenders.
All properties purchased must meet minimum leverage requires of 70% FMV and/or rentals at 1% of resale value.
The vision for future purchase and equity position of (LLC) is primarily fixed on delivering results for lenders and individuals motivated to eliminate their claims on property. Through execution of several transactions we aim to create a flawless operations procedure allowing a constant flow of acquisition and inventory reduction.
Ownership & Employees
(LLC) shall operate under the direction of co-founders TBD. A weakness does exist in FY01 of business as any new venture engages the litmus test of experience building. A built in financial equalizer has been established by investment in random middle-class neighborhoods and capping all out of pocket costs at Future growth will be maintained with additional capital investors and all necessary legal and accounting relationships. Looking forward to continued development of business relationships and an increased volume of RE transactions in FY(TBD) administrative and other support staff will be hired to perform routine phone/email functions remotely.
(LLC) shall initially operate in (Augusta, ATL, DC, New York) purchasing SFR which offer a (TBD%) return on cash investments. Specifically, 3/2, 10 Ã¢â¬" 15 year constructions in South Augusta will be targeted for purchase. After successful implementation of a strategy focusing on 2 REO transactions in FY01 aggressively priced properties, (<61% FMV) will be targeted in the D.C. metro region.
Our knowledge and expertise will allow us to position ourselves in emerging markets surrounding these staples. A key requirement is visiting a fortune teller[s] research of geographical indicators which present opportunities of the correct variables needed for future equity growth.
All future partners are to invest at least one third of the funds required to secure target properties. After each cycle of quarterly activity, all partners shall meet to discuss strategic portfolio planning and needs for capital liquidity.
It shall be the policy of TBD LLC that all business purchases and/or expenses shall be thoroughly integratedisolated from personal funds. No co-mingling of these two spheres shall occur on the part of any partner.
Target FMV: $90,000 - $110,000
Offer maximum: 60/100
Offer range: $54,000 - $66,000
Maximum EMD: $2,000
Cash secure: 5 â€“ 10% d/p
Max. Int. Rate: 6%, fixed
Tax assess: Clear
Panic Exit Strategy
SELL DOM: FMV until exceeds 60, decreasing 5% every 30 days thereafter
Listing agent: 1.5% incentive for sale within 60 day window
SB Account: Net proceeds transfer
HOLD: Rent at 1% of FMV or $1,000 deposit L/O
I like the strikeouts. Why 2011? Is that a typo or are you really looking a year ahead? I'd think that what you do in 2011 depends a lot on what you do in 2010.
You are thinking correctly in putting together a plan... of course the devil is in the details.
A couple of thoughts...
1. FOCUS, Focus, focus... Pick a strategy and become an expert in it. If you try to do too many things you will get overwhelmed and end up failing. I just posted a blog on this very topic. You can read it here... http://www.biggerpockets.com/blogs/585/blog_posts/4093-if-you-chase-two-rabbits-
2. Just like being focused on a strategy, trying to do this in more then one location is going to cause some very disturbing circumstances. Spend the time getting to know one market, learning how to profit in that market and then if and only if you find trusting partners in other areas branch out.
3. Your purchase percentage for retail flips seems to high to me. I always recommend to my clients that they use 60% of the ARV as their starting point and then subtract the cost of repairs from the number. Buying at 30% and 40% of the ARV will guarentee your success... and just starting out.... you want to see profits!
Best of luck!
Leonard: Thanks, it's important that I remind myself many posing as investors are really off base and not approaching this as a solid business. 2010 will be about aligning relationships, pro bono efforts for other investors and mapping out a targeted area per my continued learning and advice of much more seasoned pros like Peter.
Peter: Your point is well taken. I'm envisioning more that the focus shall be on REO's for clear title conveyance though deed recording and transfers have their own cons. The point on a singular market is also well taken. My brother lives in DC, I spend most time in NYC but am from Augusta. The last offers the most opportunity due to lowest cost restrictions to "market entry."
David.... I fully appreciate having relatives in certain locales and NYC can be a challenge as you noted due to price points
I am familiar with the DC/MD market and that market also offers some great opportunities and there are great many investor who are active and may be helpful.
Best of luck!
I have a question about location stemming from your comment. If the costs to entry are about half in the south would you recommend properties with higher costs as a starting point? The cost, 60 cents,will mean the same return but DC may offer a more stable job outlook due to government employees.
What would be your course of action? Go with the market of which you have a deeper understanding (Augusta) or venture into one which is new but positioned for growth?
My brother lives in DC, I was thinking about moving but unsure. Wherever the market is best as we certainly want to live in the area we form relationships with realtors, processors, investors and etc.
I have a saying that goes something like this...
"When you are hunting for ducks... you have to go where the ducks are'
The same holds true for real estate investing. You have to go where there are deals that meet your investing criteria.
The DC market can be very profitable... but I don't know how it meets you investing criteria.
For instance, if you had to put 20% down a $150K purchase could you? Or would you only be able to a 20% down payment on a $40K property?
I know that some areas of GA are great areas for investors. So, it may offer many of the same opportunities that DC offers... but with a lower cost of entry.
I hope this makes sense?
It sounds more and more like my "duck" will be served with sweet tea [down south].
The lower costs are a huge factor and you remind me of the need for adequate carrying capital. Makes no sense to pillage savings and have no reserves. Starting slowly at a lower level will be more long term sustainable.
Now you are catching on.
Also, if you figure you return on investment at the lower price points your money is working much harder for you... which is exactly what you want.
Here is a good business plan...
Get as many fix-rate mortgages as you can qualify for in the next year or so. With the big inflationary tsunami rolling toward us as early as 2012, you'll be happy you did... :wink:
I noticed a few glaring inaccuracies oversights in the BP. The max. offer will be 60 cents. EMD will depend on the leverage/financing offered.
Larger checks attached to offers, thanks to great posts by seasoned investors, seem to be quite useful for quick turn-time.
Quite anticipatory indeed. After a few deeply discounted target properties the plan would expand to include owner financing through wraps and the like.
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