Just finished writing out our business plan. Please take a look and let me know what you think. Missing anything? Any suggestions? This plan will be sent to prospective Equity Partners within the next week, any input is appreciated.
FIX AND FLIP/BUY AND HOLD BUSINESS PLAN
AS OF 15 AUGUST 2016
MISSION STATEMENT
We will strive to improve our properties to the best of our ability. We will improve the community by providing EXCEPTIONAL places to live. We will provide comfortable homes for renters at a reasonable cost. Our vision is to build a brand that is well liked and respected in the communities we are improving.
GOALS
SHORT TERM (1-5 yrs.)
Pay off student loans
Spend more time with family
Pay off car
2-3 fix and flips per year
5 buy and holds by end of year 5 (can be SFR or MFR)
LONG TERM (5-10 yrs.)
Travel
Quit JOB by age 40
Net worth of $1M by age 40
Passive income of at least $20k by age 45
STRATEGY
Our main source of capital will come from completing 2-3 fix and flips per year. Money from these investments will be used to fund more fix and flips and for every 5 completed fix and flips, we will use a portion of that capital to secure 1 rental property (either SFR or MFR).
TIME FRAME
See GOALS section for short and long term time frames. Fix and flips will be completed in 2-4 months per each property. Buy and hold rentals will be funded through use of fix and flip capital – 1 for every 5 fix and flips completed.
MARKET
Our markets for the immediate future will include: Phoenix metro and surrounding areas, Maricopa city, and Casa Grande. We will focus on rehabbing and BRRRR'ing (Buy Rehab Rent Refinance Repeat) SFR/MFR properties. SFR will be 1/1-3/2 properties in median income (B – C) neighborhoods requiring mainly cosmetic improvements.
CRITERIA
We would be looking at an initial LTV of as close to 100% as we can find – this number would change respective of how much capital we build and can reinvest from completed projects. We would like to see no less than $100/mo positive cash flow on all rental units, and the closer we can get this number to $200+, the better. Our max purchase+max rehab amount we want to keep under $150k to start out with. The max purchase amount and max rehab amount will fluctuate respective of each other for each project we undertake. Max time frame for projects is 3-4 months start to finish. Our goal is to complete 2-3 fix and flips per year, and at 3 per year, a time frame of 4 months would let us hit that goal.
MARKETING PLAN
Finding Deals
Wholesalers
Direct Mail
MLS
Bandit Signs
Selling
MLS
Bigger Pockets
Craigslist
FINANCING
Equity Partners
Private Money
Hard Money Lenders
Conventional Financing
Capital Earned from Completed Deals
HOW TO DO THE DEALS
We will locate and purchase undervalued properties through the use of our marketing strategies. Once we have secure the property, we will rehab it according to a conservative budget while also being mindful of what the property and location demand. We will create a system of cosmetic improvements that will be completed for each property we fix and flip, therefore making the rehab a more streamlined process once the property is under our ownership. Some properties will require different rehabbing than others, but we will stick as closely as possible to the system we have in place for ALL properties.
TEAMS AND SYSTEMS
In time, our team will grow to consist of the following:
Agent/Broker
CPA
Lawyer
Escrow Officer/Title Rep
Insurance Agent
Property Manager
Handyman
Private Lenders/Equity Partners
Contractors
We will follow the same rehab plan for all properties, as closely as we can, in order to streamline all decisions and maintain the desired budgets for each property.
EXIT STRATEGIES AND BACKUP PLANS
Our foremost exit strategy will be to sell the property once it has been rehabbed. Should this not occur, we will use our backup plan of BRRRR'ing (Buy Rehab Rent Refinance Repeat) the property and holding onto it as a rental unit, creating monthly cash flow which can then be reinvested into future and current projects. Our end game is to complete 5 fix and flips and then use capital from those completed deals to buy 1 rental unit, be it SFR or MFR, and then repeat this process.
EXAMPLE DEALS
By end of year 10 we plan to have completed at least 25 fix and flips, on either SFR or MFR properties. We also plan to have at least 5 rental properties, either SFR or MFR properties. Cash flow numbers will ideally be at $150-$200 per rental unit. Appreciation on BRRRR properties will follow, as closely as possible, a 10% forced appreciation in year 1, then a 3% appreciation for each additional year, on average. Cash flow from properties, as well as capital earned from fix and flips, will be reinvested in future projects until we reach our freedom number. The freedom number will be set at $6k passive income per month.
FINANCIALS
We are working on bringing our credit up, it is currently sitting at 675 and rising. We have $3k liquid cash that we are able to add to capital secured from Equity Partnerships and Private Lenders.
