Are You Investing in Real Estate with Clear Intentions? Do You Have a Plan?

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Take a look at this picture.  What do you see?  I mean besides the nice Lexus. 

Check out the signage.  In this store you can get a haircut, sell your gold and electronics, have an alternation done on your suit and get the sole of a shoe repaired.  Now that’s what I call one-stop shopping.

I pass by this establishment occasionally on my way out of the office for lunch.  It sits next to a Kentucky Fried Chicken I like to drive thru when I’m in the mood for those yummy mashed potatoes and gravy.  I often wonder how the person or persons who own this store are doing financially.  Are they the very best barber, speculator, tailor and cobbler around?  Is the owner of this business known throughout the community as the best at these trades?

Have you ever heard the phrase jack of all trades but master of none?  It means you can do a lot of things in an ordinary way but none of them in an extraordinary way.

So do you want be an ordinary real estate investor or an extraordinary one? 

Ordinary real estate investors bounce around from one opportunity to the next with little thought given to the end goal.  They’re doing lease-options one day and pre-foreclosures the next (that’s what I used to do and if you saw my bank account you would agree I was very ordinary.)

The extraordinary real estate investors I know or have read about all have clear intentions.

Writing a Business Plan

There is no better way to clarify your intentions then by writing a business plan.  In it you identify your acquisition strategy – exit strategy – strengths and weaknesses – target areas – buying criteria – price points – and marketing plan.  This helps you maintain your focus.  For example, just today I was asked if any of my investors would be interested in a land project near Prescott, Arizona.  It was easy to say no because this type of investment does not fit into our business plan.

I’ve also discovered that having clear intentions and a solid business plan has made me more magnetic.  I’m attracting investment opportunities that are in line with our goals because I’m very clear about what I want (too bad I didn’t know about this in college.) 

Last fall we decided to start incorporating seller financing as an exit strategy.  The steady cash flow without the headaches of property management was very appealing. 

With our target buyer and investor partner criteria established we raised a little capital and have been growing ever since.  At first our leads came from simple marketing techniques (CraigsList, signs).  But now we’re getting calls from the most unlikely places.  My landscaper just referred me to a very solid buyer.  And get this – the buyer knows an investor from California that may want to partner with us on a few of these deals.

junk drawerYou probably have a junk drawer at home right?  If so, what does it have in it?  If it’s anything like mine it has pens, pencils, paperclips, coupons, restaurant menus, spare parts and garage door openers.  I have a friend that says if you invest without a business plan and clear intent you are a junk drawer real estate investor.  That crumpled up dish detergent coupon?  That is a short sale you’re trying to close.  The pencil with the teeth marks in it?  Could it be the duplex you’re trying to flip?

It is said that the road to hell is paved with good intentions.  If that’s the case then the road to success in real estate investing must be paved with clear intentions.  So grab a pen and paper – get started on a business plan.  And while you’re at it clean out that messy junk drawer.

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

30 Comments

  1. Fantastic article, Marty! The one piece of advice that often leads to the difference between a successful investor and failure is the advice to draft a business plan. I tell all newbies that once they make a decision that they want to do real estate they need to first start educating themselves, and must follow that up with writing their plan. Thanks for offering this help on the BP Blog.

      • i would love to see business plan.I have been builder ,developer for last 15 years.mostly single family homes.But my business has turned up side down in last 3 years.In 2010 i bought 4 homes ,each has $200 to $300t of cash flow.plan on buying and holding rental properties.prices in boise area have dropped in half of what i was selling just 3 years ago.trying to put business plan .need investors for down payments.have proven record of managing properties.

      • Marty, I would love to see your busness plan.

        I have been educating myself by reading books, blogs, listening to podcasts, videos, all on real estate investing for the last 8 months.I have been to a weekend seminar that cost me $300.00 at a REI club, It’s time for me to get STARTED! I know what I will invest in (SFR), my exit strategy (s). I found a missing piece to my puzzle, and that was to write out my business plan.. to keep me focused

        Thank you.

        Mark Gould

      • Thanks Marty. I would also like to see your business plan. I am currently educating myself on the different aspects of real estate investing. I am in the process of writing a business plan. I have never drawn up a business plan before and have never purchased a real estate property before. My family is committed to financing this investment and appreciate your sharing your experience.

      • Hi Marty,

        I am just starting last year, and right now i am on “incubation” study from BP ( and i listen your interview on podcast, so inspiring me, you went down and get back to what you are right now ), and I want to start with plan, so I would love to get your biz plan.

        Thank

      • Marty,

        Thank you for offering to send your business plan. I’m trying to get started in Los Angeles and I’m a firm believer in education and preparation. I greatly appreciate your support and expertise. I read your book on fixing and flipping and various posts you’ve written. They were very helpful.

        Thank you for your help!

        Sincerely,

        Greg Avak

  2. Bill Patterson on

    A Business Plan is great! Just remember to review it on a regular basis to see if any adjustments may be needed (for instance…your adjustment “Last fall we decided to start incorporating seller financing as an exit strategy. “). Real Estate investing is an ever changing beast with opportunities coming and going all the time.
    Bill

  3. In Tennessee, the Tennessee Association of Realtors legal interpretation of The Safe Act does not permit seller financing unless it is an individual (i,e~~no Trust, LLC or other business entity). How do you circumvent that issue in Arizona ??

  4. HI Marty, I agree investing with a Plan is essential, we have been doing it for 20 years, the one caution that I would add is to keep updating your plan as markets change and different opportunities will be more viable at different stages of the markets.
    And, be careful not to tie up all of your assets in one type of real estate.

  5. Valerie Fulford on

    Thanks for the article. I appreciate the encouragement to write a business plan. I see how a business plan can help a new investor like myself be able to solidify why I chose this path and what steps I need to take in order to make my dream a reality. I don’t want to bounce around not having any real success, I want to be an extraordinary real estate investor.

  6. Hi Marty,

    Thanks for writing this great article. I’m fairly new to Biggerbuckets and am a newbie to real estate investing. I’m educating myself right now and am going to start working on my Business Plan. I would love to see your business plan if possible.

    Thanks,

    Alejandra

  7. But why would you not get involved in the land project if it could make you money? Just because it wasn’t part of the plan? Are you saying never stray from the plan? At the end of the day isn’t it about making as much money as you can?

  8. Thanks Marty !

    I love this sentence:

    “So do you want be an ordinary real estate investor or an extraordinary one?”

    You’re right…I need to go “all in” or subject myself to mediocre.

    Thanks,

    Frank

  9. Hi Marty I am a new investor reading through the ebook and getting familiar with bigger pockets. So far the information has been indispensable! If you don’t mind, I would love a copy of your business plan in order to get mine established also. I really appreciate it. And thanks for the help!

  10. Darien Gaston

    Hey Marty,

    Great article! I’ve never seen one business with that many labels on it. That was pretty amusing. Anyways, It seems as though your business plan PDF is in high demand, as I too would love to check out a copy.

    I appreciate your time, giving your wisdom to newbies like me. I wish you the best success in your future endeavors.

  11. Jane Mogboh

    Nice article. But would like to have a more detailed business plan on turning into profit properties in our portfolio worth over millions ( residential, office spaces and shops). The properties are already on ground for take off. Possibly as the properties are sold,options of building more and further generation of profits. Please mostly on the cashflows.Thanks

  12. Travis Shaw

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