The Second Half of my Busines Plan

So my daughter is sick and I stayed home from work. Between chasing her little sixteen month old torpedo moving body around the condo and getting on the computer, I finished the second half of my business plan. I realized after starting it that I still have a lot to learn, which is evident through how much I left out.

Before I post it I want to share some good news.

I think I found a great guy in my area that is willing to mentor not just me but anyone that wants to join him one night a week as he attempts to create a Meet-Up for Real Estate Investors. He's actually taking us on a trip to a house in the middle of rehab. I'm super excited about this and hope to learn a lot about estimating costs and finding contractors and sub-contractors. The best part is it's free, unlike the other REIA in the area, though I will be going to that one as well.

Between the two I plan to find mentors, investors, and possibly - dare I say - silent partners willing to give me a chance to manage and close a deal.

I think I ended the first blog at Criteria but I don't remember if I covered it or not. Either way, I changed it up. Hopefully this makes a little more sense.

So, again, without further ado, my business plan.

Criteria

LTV - 70%-80% on asking prices that are already far below ARV

Cash Flow -$200 minimum to make my 25 unit = $5000/month income

Max Purchase Amount – 25k on 2/1 and 75k on 3/2+ that require a major rehab. 75k on 2/1 and 100k on 3/2+ are not requiring major rehab.

Max Rehab – 25k with maximum 2 month time frame

Summary - Deals need to be less than $75k with an ARV of over $100k for 3 beds / 1 bath minimums. They need to have a cash flow of at least $200 per unit so that I can meet my 25 unit goal and $5000 monthly income. Rehab costs have to be no more than $10k. I don't know what my LTV should be, yet.

Flexibility

I give myself 6 months using the above criteria. If no deals are found and closed in that time I will adjust the criteria to the market. If no deals are found in 2 months from this adjustment I will shift markets outward still leaving The Fort for last – it’s so expensive.

Marketing Plan

I will initially cold call and email directly to sellers until I have enough money to direct market 2000 sellers on a rotational basis. I will study short sales and foreclosures and network with bankers until I can close a deal through the bank with either my money or a partners or a combination of both. I will mainly drive for dollars and use Craigslist. I will search out tax liens and possible foreclosures through the city and county.

I will work with an agent (Marcee) to find deals on the MLS and to build my team of contractors, brokers, and lawyers.

Financing Deals

I will finance my first deals in either 2 ways. The first and quickest will be to find a partner and silent partner that I will give the majority of ownership to as long as I can have the cash flow for closing and doing the leg work.

The second will be to use the equity in my first home to finance a traditional loan for my first buy and hold.

Once I have a property or 2, I will refinance on it and buy another property.

If opportunity presents itself to “subject to” or lease to own, I will attempt that avenue as well.

In the meantime I will wholesale until I make the funds, as traditional saving is not very lucrative.

How to do my Deals

Find a mentor and learn

Teams and Systems

Using Excel spreads to track each deals current path, I will also use a:

• Realtor (Marcee Merritt) to help find deals and get advice, as well as close deals. Additionally, I’ll get this through experts that she will connect me with. They are:
  • Brokers
  • Lawyers
  • And Inspectors
• General Contractor to estimate costs and to get rehabs done (I will do all demo and minor repairs that are within my grasp. Meanwhile I will learn from him/her.
• I will manage my own properties with the help of a maintenance expert(s). I’ll find them through my contractor. They are:
  • General Maintenance
  • Electrician
  • Plumber
  • Landscaper
  • Carpenter

Financials

Today they are not worth listing. I owe for my vehicles, I’m renting (though I just put an offer in on a house) and my combined bank accounts and 401k – today – add up to roughly 6k (a little over $1000 in each savings account, roughly $1000 at any given time in checking though sometimes closer to 0, and about $4000 in my 401).

Again, if you have any suggestions, tips, or remarks, feel free to dish them out. I am a US Marine Corps veteran and my skin is thicker than most peoples. I only cry at the end of Disney movies. Damn Tangled get's me every time.

Until next time.