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Tips for building your 2023 real estate business plan
How to build a successful real estate business plan
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When it comes to real estate, business planning is one of those activities that agents either despise or don’t know where to begin. We’re told it’s important, but we’re not exactly sure why.
It’s been my experience that agents who set goals and execute those goals increase their business by 25%-50%! That’s no joke and nothing to take lightly.
The purpose of a business plan is to get to where you want to go. It is your road map. Think about it this way, let’s say you want to go to Disney World, you wouldn’t get into your car and drive aimlessly hoping to come upon it. The same is true for your business. Success happens when you’ve laid out your plan.
There are seven components of a business plan:
Know your audience.
A good friend told me, “Your niche is defined by who you are and what you do.” Don’t overthink it. Look around you, and you’ll see who you should be serving. Also, don’t try to be all things to all people. You’ll attract the wrong clients, you’ll get frustrated and you’ll burn out fast.
Complete a SWOT analysis.
Your SWOT (strengths, weaknesses, opportunities, and threats) analysis helps you to understand where you stand in the market against your competition and where and how to invest your time, money and resources most effectively. Your strengths are the things you do well. Your weaknesses are the things you procrastinate. Think about how and to who you can delegate these things. Your opportunities are openings for positive change.
Changes in the market, lifestyle changes and demographics can all provide opportunities that can significantly impact your success. Threats are anything that is out of your control and has a negative effect. Inflation, interest rates , a pandemic or a new competitor could all be considered threats. Often threats can be flipped to become opportunities. A changing market, for example, one where interest rates are increasing, is an opportunity for willing buyers to have less competition and more negotiating power.
Do a Stop/Start/Continue exercise.
This is your opportunity to reflect on what worked and what didn’t work last year. This exercise helps to identify the strategies that save you time and increase your overall return on investment. Continue activities that you love and attract the right clients to your business. Stop activities that had a negative return on investment. Start activities that could bring you better results. Look at your list of opportunities for ideas.
Know your numbers.
Numbers tell the story about your business. Expenses, source of business, all closed transactions, all closed volume, gross commission income, average sale price and average commission/transaction, average sale price and average commission/transaction all tell a story about who you serve and where your strengths are. Knowing your numbers allows you to identify areas to focus your efforts in the coming year.
Set realistic goals.
I’m a big believer that establishing a personal goal is the best way to ensure you maintain balance in your business and your life. Start by selecting your income goal and then choose your personal goal.
Define business-building activities.
This is where the fun comes in. Write down all the things you can do to reach your goals. I like to put activities into three buckets; revenue-generating, marketing, and personal growth.
Finally, be accountable. Our business can be lonely, making it easy to get distracted. Find an accountability partner, or as a friend suggested, your own Board of Directors. These are people who aren’t afraid to challenge you and push you. Time-blocking and creating routines are also great ways to stay accountable.
Completing your business plan will give you a sense of accomplishment. It’s the first milestone toward success, motivating you to take the next step or complete the next task. Your mindset will be critical as you move through the year. There will be road bumps and possibly even detours. When you come upon those, take deep breaths, make adjustments and continue to move forward. When you do this, you will succeed and be able to look back and feel proud of your accomplishment.
Christine George is the co-founder of Post & Beam Creative.
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Start 2023 With Fresh Business Planning Tips and Scripts
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- It’s never too late to reach out to a past client you haven’t talked to in a while.
- Approach your sphere by being of service to them.
- Outline professional and personal growth plans.
As you turn the page from 2022 and start to create your 2023 business plan, consider these tips for setting new goals and harnessing your database. If you already have a business plan for next year, start implementing it now using some suggested scripts for calls to past clients in the new year. “The biggest challenge for most agents is reaching out to clients who they haven’t talked to in a long time,” says Monica Reynolds, vice president of Keller Williams Realty’s coaching division.
While the real estate market is cooking across much of the country, no past client or lead should be taken for granted. Reynolds touts the acronym RER: relationships, experience, results. “In this day and age, everyone has a lot of choices; it’s about the relationship,” she says.
Reynolds suggests reaching out to past clients at least once a quarter to check in. With many people still experiencing hardships or isolation due to the COVID-19 pandemic, it’s important to show that you care. Reynolds offers her tips and scripts below to help real estate pros connect with their spheres and get a plan in shape for the year ahead.
Intent of Care Calls
Before you pick up the phone, Reynolds advises thinking through these points:
· How can you truly be of service to this person?
· Ask a series of questions to identify a core challenge in their life that you can help with.
· Listen deeply for cues in what they say.
· If time allows, and if applicable to the conversation on the call, discuss local real estate market conditions.
· If appropriate, ask if there are real estate options they may want to know more about.
Sample Care Call Script
Reynolds recommends this script for reaching out to clients during the new year.
Hello. It’s [NAME] with [COMPANY].
I am so glad that I caught you. Do you have a couple of minutes?
The purpose of my call is to wish you a happy new year!
- How are you doing?
- How is your family?
- Is everything going well at your job? (Or, is everything going well with your business/company?)
Some questions may offer a natural segue into a conversation about real estate.
- Do you have any questions about the state of the market?
- Have you recently compared the value of your home with price trends in the market?
- Do you know if your home insurance has kept pace with the market value of your home?
Thank you for your time. I would love to ask you a favor.
My business is based on referrals from great people like you. Who do you know who is thinking about buying or selling a home? I would love to help anyone you know. Thank you for thinking about that.
And if you, your family, or anyone you know is going through a challenging time, please let me know. I will do what I can to help find resources and answers. Please always consider me a resource for anything. I would love to help!
Happy New Year!
Business Planning for 2023
Reynolds also has five tips for the goal-setting component of your business plan for the upcoming year.
- Analyze your business in 2022. What were your biggest sources of leads? How much did you spend on marketing? What went right and what needs adjusting? Newer agents who don’t have a full year under their belts should be purposeful in finding leads. Reynolds suggests focusing on people you easily connect with, such as those from your place of worship or previous workplaces, parents from your kids’ sports teams, or your Facebook contacts.
- Write your goals down and make them visible in your office. First, take a 2023 calendar and circle your days off. Prioritize your family, she says, and don’t put them last. Then, fill out a business plan that includes how many contacts, listings, and sales you’ll need to meet your monthly, quarterly, and annual financial goals.
- Create a daily/weekly work schedule that supports your goals. Make sure you put a dollar sign next to activities that produce income, Reynolds says, such as lead generation, client follow-up, contract writing, roleplaying, and building new skills.
- Write a marketing plan for each of your sources of business. Reynolds recommends concentrating on the four business sources that work for you, such as social media, geographic farming, expired listings, new-home construction, etc.
- Outline professional and personal growth plans. A professional growth plan may include such goals as reading two books a month, taking a class, getting a designation, or attending a seminar or conference. Personal goals may include scheduling a date night with your spouse every Friday, a kid day every Saturday, pursuing a hobby or interest, or creating a savings plan.
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Creating a Winning Real Estate Business Plan (Updated in 2023)
Are you a real estate professional looking to build a successful and thriving business? If so, one of the crucial steps you need to take is creating a comprehensive business plan. A well-crafted business plan acts as a roadmap, guiding you toward your goals and helping you make informed decisions. This article will delve into the key components of creating a winning real estate business plan that sets you up for success.
Setting Goals and Objectives
The value strategy: creating and delivering value, defining the business model, products and services offered, unique value proposition, conducting market research, developing a marketing strategy, building a strong team, financial planning and budgeting, crafting sales and lead generation strategies, providing exceptional customer service, monitoring and evaluating performance, creating a long-term growth plan, networking and building relationships, attending real estate conferences and events, online platforms and investor networks, creating a compelling investment proposal, why is a business plan important for a real estate business, how can a real estate business plan attract investors, what should be included in a real estate agency business plan, how can a real estate agent benefit from having a business plan, what should a real estate business plan for 2023 include, where can i find real estate business plan samples for reference, what should be included in a commercial real estate business plan, how can a beginner create a real estate business plan, what are the essential steps to write a real estate business plan, how can i make my real estate business plan stand out.
The first step in creating your real estate business plan is defining your mission statement and setting goals and objectives. Your mission statement encapsulates the purpose and values of your business. It should be concise, inspiring, and reflective of your vision. Once you have a clear mission statement, you can proceed to set SMART goals—specific, measurable, achievable, relevant, and time-bound objectives that will drive your business forward.
A key business plan component is defining the value strategy, which outlines how a business creates value, its business model, and the products and services it provides. This section focuses on articulating the unique value proposition that sets your real estate business apart from competitors. By clearly defining your value strategy, you can effectively communicate what your business offers and how it addresses the needs and desires of your target audience.
The business model is the foundation upon which your real estate business operates. It outlines how you generate revenue, what resources and partnerships are necessary, and the key activities involved in delivering your services. In this section, you will explain your business model and highlight its strengths and advantages. Whether you focus on traditional real estate transactions, property management, or specialized niche markets, clearly define your business model to provide clarity and direction.
Detailing the products and services your real estate business offers is essential for potential clients to understand the scope of your expertise. This can include residential and commercial property sales, property leasing, property management, real estate consulting, or any other specialized services you provide. Clearly describe the benefits and value your offerings bring to clients, emphasizing what sets you apart and how you meet their unique needs.
Your unique value proposition (UVP) concisely summarizes the distinctive qualities and advantages of your real estate business. It encapsulates the reasons why potential clients should choose your services over competitors. Clearly articulate your UVP, highlighting the benefits and advantages that differentiate you in the market. This could include factors such as extensive market knowledge, exceptional customer service, innovative technology solutions, or specialized expertise in a particular niche.
Market research is a critical aspect of creating a successful real estate business plan. It involves analyzing the local real estate market, understanding trends, and identifying your target audience and competition. By conducting thorough market research, you gain valuable insights that can shape your marketing strategies, pricing decisions, and service offerings.
A well-defined marketing strategy is essential for attracting clients and growing your real estate business. Start by identifying the marketing channels that resonate with your target audience. This can include online platforms, such as social media and search engine advertising, as well as offline tactics, like networking events and traditional advertising. Additionally, create a branding strategy that differentiates your business and communicates your unique value proposition.
You need a competent and dedicated team to build a thriving real estate business. Invest time and effort in hiring qualified professionals who align with your company’s values and vision. Provide comprehensive training and delegate responsibilities effectively to ensure smooth operations. Cultivate a positive company culture that fosters collaboration, innovation, and growth.
Financial planning is a crucial aspect of any business plan. Start by estimating your startup costs, including expenses like licensing, office setup, and marketing materials. Create a budget that covers ongoing operational costs and allocate funds for marketing and growth. If needed, explore financing options available to real estate professionals.
An effective sales and lead-generation strategy is vital for acquiring clients and driving revenue. Develop a lead generation system that captures potential clients’ information and nurtures them through the sales funnel. Implement proven sales techniques and leverage technology to streamline lead management and conversion.
In the competitive real estate industry, providing exceptional customer service is key to success. Take the time to understand your customers’ needs, preferences, and pain points. Develop strategies to exceed their expectations, foster long-term relationships, and encourage referrals. Consider implementing a customer relationship management (CRM) system to streamline communication and enhance customer experience.
Regularly monitoring and evaluating your business’s performance is crucial for staying on track and making informed decisions. Identify key performance indicators (KPIs) that align with your goals, such as sales volume, conversion rates, or customer satisfaction metrics. Analyze sales and marketing data to identify trends and areas for improvement. Make necessary adjustments to your strategies to ensure continued growth and success.
As your real estate business evolves, it’s important to plan for long-term growth and expansion. Explore opportunities to expand into new markets or offer additional services. Seek strategic partnerships that can amplify your reach and enhance your value proposition. Continually assess market trends and competition to stay ahead of the curve and plan for future scalability.
Finding Investors for Your Real Estate Business
Once you have a solid business plan and a clear capital-raising strategy, the next step is to find investors who are willing to support your real estate venture. Here are some effective strategies to help you attract potential investors:
Networking is a powerful tool for finding potential investors in the real estate industry. Attend industry events, join real estate associations, and connect with professionals who may have access to investment opportunities. Building relationships and nurturing connections can lead to valuable partnerships and investor introductions.
Real estate conferences and events provide excellent opportunities to showcase your business, connect with industry experts, and attract potential investors. Participate as a speaker or exhibitor to increase your visibility and credibility within the real estate community.
Utilize online platforms and investor networks dedicated to real estate to expand your reach. Websites, forums, and social media groups focused on real estate investment can help you connect with investors actively seeking opportunities.
Crafting a compelling investment proposal is essential when approaching potential investors. Clearly articulate your value proposition, explain the benefits and potential returns on investment, and demonstrate a thorough understanding of the market and your competitive advantage.
Are you ready to take your business to new heights? Let Easy Capraise be your trusted partner in capital raising and fundraising . Start attracting investors today and unlock the potential for growth and success.
Get in touch with us now, and let’s discuss how Easy Capraise can help you secure the funding you need. Click here to schedule a consultation with our expert team and take the first step toward achieving your business goals.
Remember, opportunities don’t wait. Act now and elevate your business with Easy Capraise!
A business plan provides a roadmap and strategic direction for your real estate business. It helps you outline your goals, strategies, and financial projections, making it easier to attract investors and secure financing.
A well-written business plan demonstrates your understanding of the real estate market, your target audience, and the potential for growth. It showcases your profitability projections and highlights your unique value proposition, making it an attractive opportunity for investors.
A real estate agency business plan should include an overview of your agency, market analysis, marketing strategies, staffing plan, financial projections, and growth strategies. It should also outline how you plan to provide exceptional customer service and build strong relationships with clients.
A real estate agent business plan helps agents set goals, identify target markets, create marketing strategies, and develop a roadmap for success. It provides focus and direction, enabling agents to track their progress and make informed decisions to grow their business.
A real estate business plan for 2023 should reflect the current market conditions, trends, and challenges. It should outline strategies to adapt to changes in the industry, leverage technology, and meet clients’ evolving needs.
There are numerous resources available online where you can find real estate business plan samples. Websites of real estate associations, business planning websites, and industry publications often provide templates and examples that can serve as a starting point for creating your own plan.
A commercial real estate business plan should include an analysis of the local market, potential target industries, marketing strategies to attract commercial clients, financial projections for leasing and sales, and a comprehensive property management plan.
Beginners can create a real estate business plan by starting with a clear mission statement and setting SMART goals. They should conduct market research, identify target audiences, and develop marketing strategies tailored to their niche. Seeking guidance from mentors or attending industry workshops can also be helpful.
To write a real estate business plan, start with an executive summary, followed by sections on goals and objectives, market analysis, marketing strategies, financial projections, operational plans, and growth strategies. It’s important to revise and refine the plan regularly as the business evolves.
To make your real estate business plan stand out, focus on presenting a unique value proposition, showcasing your expertise and experience, providing comprehensive market analysis, and emphasizing innovative strategies for success. Incorporate visuals, charts, and graphs to enhance clarity and readability.
Creating a winning real estate business plan is a fundamental step toward building a successful venture. By setting clear goals, conducting thorough market research, developing a robust marketing strategy, and providing exceptional customer service, you can position your business for long-term growth and profitability. Remember to regularly evaluate your performance, make data-driven decisions, and adapt to the ever-changing real estate landscape.
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Follow these steps if you're experiencing issues with your download., 2023 real estate business plan template & consultation.
Now is the time to create certainty for yourself in 2023. And the only way that happens is by carving out time to complete your comprehensive 2023 business plan for real estate. Let us make it easy for you with our brand-new real estate business plan template and business plan consultation.
When you download our 2023 real estate business plan, we’ll help you:
- Gain total clarity on what you want
- Break down your goals into the specific actions needed to achieve them
- Remove the barriers to your success
- Fill you with confidence from knowing how you can start living the life you desire
We’ll also have one of our expert consultants walk you through the plan.
Follow these 3 steps today to best prepare yourself for 2023:
- Self-schedule your real estate business plan consultation so you can complete your plan as soon as possible
Here’s to your #BestYearEver in 2023!
P.S. We’re giving you access to the same comprehensive real estate business plan our coaching members complete and utilize with guidance from their coach. In the process of creating your business plan for real estate, you may realize that there’s more to being a successful agent than you imagined. If you need additional assistance beyond what you receive in your consultation, we’ve created a series of webinars available to our Sphere training subscribers that will walk you through the process.
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The Results Series: Business Planning 2023
- October 4, 2022
2023 is just around the corner, which means it’s time to start making a plan for next year’s business growth and success. But where do you begin?
We’re bringing together some of the best real estate thought leaders to share their insights and give you the tips you need to crush your 2023 goals. You won’t want to miss, so register today and join us live for a chance to win an iPad Pro*.
Part 1: How to Make Listings Your #1 Priority in 2023
Featuring Chris Smith , Best selling author, Sales & Marketing Expert Watch on-demand | Password: Realtor.com2022
Part 2: How to Create a Year’s Worth of Content
Featuring Katie Lance , CEO of Katie Lance Consulting & founder of the #GetSocialSmart Academy Watch on-demand | Password: Realtor.com2022
Part 3: Technology that Boosts Your Productivity & Saves Time
Featuring Jeff Lobb , International Speaker, Sales & Marketing Coach Watch on-demand | Password: Realtor.com2022
Attend a session for a chance to WIN an iPad Pro®*
*No purchase necessary. Void where prohibited. See Official Rules for eligibility, how to enter, and other important details.
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2023 Business Planning: What Must Be Considered
Greg Harrelson & Abe Safa discuss business planning for 2023 and what you should be considering when making your plan.
Most people in the real estate industry don’t lay out their business plan until December, but you’ll be three months behind if you do that.
In real estate, you don’t just take a listing today and then sell it to a lead right away. It can take months to post a listing, market it, screen interested buyers, and close deals, especially when you’re also busy gathering and warming leads.
That means it’s time to start your 2023 business planning. Read on for our breakdown of everything you need to keep in mind while nailing down your business plan.
Form Plans for Different Trends in the Market
This isn’t about predicting the ups and downs in market prices; this is about preparing for those ups and downs so you’re ready if and when they happen. How will you adapt to the changes that happen in the market next year?
You can’t just go with the flow of the market. If you do this and the market goes down, you risk going down with it also. That’s why effort and planning is so important.
Scale up Your Effort
If the market goes down by 40 – 50%, you’ll be at half of what you earn this year. You can’t control that — but you can control how you respond to it.
Making half as much for your effort? Well, put in twice or three times as much effort, then. Double down on calling and take charge of your success.
While working on phone calls and lead generation for three hours a day for 100 days is the same time commitment as doing this for an hour and a half for 200 days, consistency is king. Putting in an hour and a half each day for 200 days will have a far larger impact.
Refuse to Be Passive
Don’t just accept the loss that the market brought to you — fight it instead. Continue being an active participant in your own life and learn how to adapt and problem-solve if things get tough.
Track Your Numbers Closely
Your future depends on your numbers. Tracking your sales and losses is extremely important, as it gives you an overview of your business so you can make informed decisions.
One thing that keeps us from moving forward is distractions. If we’re constantly distracted, we can never get properly focused to do our best work. Shut your personal phone off and ignore any notifications that aren’t related to real estate; 2023 is the time to buckle down and get serious.
Keep Generating Leads
Your hot leads were probably only hot because they were excited about low-interest rates and swept up in the excitement of selling and buying properties. However, negative sentiment about real estate has seriously impacted almost every lead, meaning that your hot leads have probably cooled off a bit.
People who were motivated to buy six months ago are not nearly as motivated now. This means you need to focus on warming your leads back up and generating new leads to keep things moving.
The game has changed, but guess what?
We all have the tools and knowledge to win at this new game — we just have to change along with it.
Real Leads by Real Geeks is a highly efficient and effective marketing solution for generating, capturing and managing home buyer/seller leads. One of the best lead generation and management systems available. A fully integrated custom IDX and marketing solution to drive traffic, capture leads, manage-cultivate them and close more transactions.
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How to Plan, Start, & Grow a Real Estate Business: 27 Essential Tips
Published: January 10, 2023
Starting a real estate business isn’t for the faint of heart. What other industry requires you to cold call dozens of leads every day but only close five deals in your first year (if you're lucky)?
It’s a common adage that 3 out of 4 real estate agents fail within the first five years. But for those who have what it takes, starting your own real estate business can absolutely give you the seven-figure job of your dreams.
Here’s a down-to-earth look at how to start your own real estate business, plus advice for avoiding mistakes that hijack momentum as you grow.
Free Real Estate Planning Template
Use this free template to plan the marketing, sales, and growth for your real estate business.
- Company Overview
- Territory Overview
- Market Penetration Strategy
You're all set!
Click this link to access this resource at any time.
Know Before You Go
For many new agents, real estate is their second, third, or even fourth career. You loved the idea of “being your own boss” while making more than you did at your last job, but freedom has a very different meaning for an employee versus a business owner.
The question is ... which are you?
The first thing you need to know about starting a real estate business is that, yes, this is a business. Whether you’re a solo agent or new to a team, if you have dreams of outperforming the average real estate agent salar y ($44,507 per year), you need to start thinking like a business owner — and that means planning.
How to Start a Real Estate Business
- Craft your ideal personal plan.
- Write a real estate business plan.
- Build a consistent marketing plan.
- Get a website.
- Prospect consistently.
- Nurture leads.
- Have good time management.
1. Get a CRM.
At the end of the day, a business is a system.
Barry Jenkins is the broker-owner of the #2 Better Homes and Gardens Real Estate Team in the United States. He’s also a guy who hates inefficiency. “I, to a fault, like to make things easy. The reason my business is so successful is that it was built on the core principle of leverage.”
In order to bring that principle to life, Barry uses his CRM as a true lead conversion machine . A CRM is a Customer Relationship Management system that helps you organize your contacts and come up with actionable insights. With it, you can walk leads through relevant nurture campaigns based on lead source or automate the entire transaction process.
This is incredibly useful in real estate because the home buying process is so long with many different steps, multiplied across many agents and even more leads and customers.
Using a CRM to achieve boss-level organization is how Barry and his team sold 240 homes in 2017. And it’s not all about the front end, either. Barry also uses his CRM to send automated onboarding drips to new team members and keep the business admin completely streamlined so that nothing important ever falls through the cracks.
2. Craft your ideal personal plan.
Before you set the right financial goals for your business, you need clear financial goals for your life.
Commissions are great but — let's face it — we all came into this business wanting something bigger and better than what we had.
Whether that’s the 187-foot yacht of your dreams or the ability to leave the office at 2:00 PM so you can pick up your kids from school, take time to think through what your ideal life would look like.
Consider the following questions:
- What time do you want to start work?
- What time do you want to finish?
- How do you want to feel each day?
- How much money do you want to make?
Want to retire at 65? Pay your kids’ college in full? Figure out how much you need to put aside every month in order to make that happen.
It’s so much easier to keep picking up that phone when you know exactly where your profits and commissions are going.
3. Write a real estate business plan.
Now that you’ve put pen to paper to figure out exactly what your biggest, most anti-paycheck-to-paycheck life looks like, it’s time to talk business.
Start writing your real estate business plan, paying special attention to the things that set you apart from other businesses in your area. Give it some real thought. This is where your personal and business identities can really come together to make profit-driving magic.
Start with these questions:
- How does selling real estate make a meaningful difference for you, your prospects, and even the world?
- What are the values and principles that drive your real estate business?
- How are those different from the real estate business next door?
- What are the three to five things you are going to own completely in the business?
- Who will take care of the rest?
Even if you’re just looking to take administrative work off your plate by hiring your first virtual assistant, it's critical to create that big-picture vision to keep your team inspired and avoid repeating unproductive patterns.
Featured Resource: Free Business Plan Template
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4. Build a consistent marketing plan.
In the beginning, it was all about passing your licensing exam, selecting your best-fit brokerage, and building up your database without coming across as “ salesy ” to the friends and family in your sphere of influence (SOI).
However, kicking back and coasting as soon as the referrals start rolling in is one of the biggest mistakes growing agents make. Whether your dream is to become the next Facebook ads guru or a master of Zillow conversions, the only thing you really need to know about marketing is that it’s the one part of your business that never sleeps.
Let these questions guide your marketing plan:
- What does your unique approach and personality bring to the table for your prospects?
- What can you offer that no one else can?
- What are the latest buying, selling, and pricing trends in your market?
- What are some creative ways to discuss these trends (including the numbers) with prospects?
First, nail down your unique value proposition. This will drive all your future marketing.
Featured Resource: Free Marketing Plan Template
5. Get a website.
97% of all buyers now use the internet as part of their home search.
This means that no matter how much local marketing you do, you need a web presence to attract and engage online leads. It may cost a little money upfront, but a solid, SEO-focused website is essential to success.
Your site should allow you to integrate internet data exchange (IDX) listings and usher those leads right into your CRM.
Once you have this asset in place, you can start moving toward a consistent blogging and social media strategy to generate more leads.
6. Prospect consistently.
Shiny object syndrome is a big problem in real estate. But the most consistent agent always wins, so choose your prospecting system and stick to it.
In the early days, it’s never a bad idea to optimize your SOI. In fact, the Atlanta-based Graham Seeby Group transformed a list of just 279 contacts into $90 million in home sales in just four years by consistently marketing to their past clients and sphere.
Here’s how co-founder Justin Seeby tells it:
“We focused on the ‘mets’ in our database and it was amazing the volume of transactions we started doing right out of the gate! For example, we did $2 million worth of sales from one couple I hadn’t talked to in 13 years. I mailed them a postcard, because I was afraid to pick up the phone and call them. I didn’t know if they’d know who I was. When they got the postcard, they called me. They ended up spending $1.2 million on a new house and selling an $800,000 house.”
Justin’s prospecting strategy was based on a simple schedule of mailers, emails, and phone calls. A winning system doesn’t have to be complicated, but it absolutely must be consistent.
7. Nurture leads.
If a lead contacts you, they expect to hear from you.
Mike Pannell is a master lead generator and the leader behind Nu Home Source Realty . According to Mike, a follow-up system is crucial to long-term lead conversion.
“I tell my agents that 70% of people are not going to buy for 180.5 days. If you’re waiting on those new leads to buy, you’re only going to close 3%,” he says. “That will make you enough money to survive, but your goal is six months and beyond. You’ve got to follow up to get to those; you’ve got to build that pipeline to get to those people.”
In addition to avid blogging and website optimization, Mike also checks up on the competition to see what's happening on the ground.
“I sign up on a lot of different websites out there. I don’t give them a real name, but I give them a real phone number,” he says. “And I can tell you what, I don’t get a lot of calls."
Be the agent who’s always there, and you’ll automatically beat the herd.
8. Have good time management.
If you’re like most of us, a big part of the dream is to have more time and energy for the things that really light you up.
But most agents who set out to build a real estate business haven’t built that into the plan. They end up with a revolving door of team members and have to outwork the business problem du jour. But it doesn’t have to be that way.
For experts in automation, a motivating factor is saving time. By eliminating manual work through automation, you can free up time to focus on the activities that actually drive revenue.
The ability to do marketing automation further underscores your need for a CRM, which ends up acting as the engine that supports your efforts.
How to Start in Real Estate
- Get a real estate license.
- Find a brokerage.
- Join the National Association of Realtors (NAR).
- Pay your dues.
- Find a mentor.
- Get crystal clear on who your ideal customer is.
- Build your personal brand.
Once you've created your personal vision, business plan, and unique value prop, it's time to get down to brass tacks.
How do you enter the real estate field and develop as a real estate professional? Here's what you’ll need to do.
1. Get a real estate license.
Obtaining a real estate license is an important first step in your real estate career. The timeline, qualifications, and costs of getting your real estate license are different from state to state, so consult your local real estate bureau to understand what’s required.
Many states require pre-licensing and renewal courses as well. Once you have your license, however, you can legally sell, broker, or rent real estate in the state in which you’ve obtained your license. There’s one caveat here: Most states require you to work with a brokerage for the first two to three years as an agent. So let’s dive into what that means.
2. Find a brokerage.
A real estate brokerage is an agency where real estate agents work. You might choose to work for a national franchise like Keller Williams Realty or a local boutique brokerage in your area. There are also virtual brokerages popping up around the internet, so do a little digging and find out which option best aligns with your goals.
Consider company culture, commission structure, and possible mentorships when you’re selecting a brokerage. Choose where you’d feel you’d thrive, be fairly compensated, and be able to learn from skilled people.
3. Join the National Association of Realtors (NAR).
Want to call yourself a REALTOR®? Until you join the National Association of Realtors , you can’t. A NAR membership will also earn you access to the Multiple Listing Services (MLS) where you’ll be able to search through all of the listings in the network.
4. Pay your dues.
Don’t expect to get your license, join a brokerage, and start selling million-dollar homes.
Digital marketing strategist Hillary Robert says , “New real estate agents need to know that building a business takes time, hard work, and effort. To build a sustainable career in real estate, they need to be willing to put in the elbow grease to build an audience and database of contacts. Then they need to learn how to work it, provide value, and be consistent.”
Prepare to roll up your sleeves, do the hard work networking and supporting more seasoned realtors for a few years, and don’t expect to be bringing in the big bucks right away.
5. Find a mentor.
Learn from those around you. Is there someone in your brokerage who specializes in for sale by owner (FSBOs) or has a knack for running Facebook ads?
Schedule time to grab coffee with them once a month, see if you can shadow them for a day, or offer to help with a project they’re spearheading.
Spend time and build relationships with people who are good at the things you’d like to be good at. It will pay dividends in the years to come.
6. Get crystal clear on who your ideal customer is.
Working with first-time home buyers is vastly different than working with retirees who are downsizing into an active adult community. Both of those groups are different from second-chance home buyers who are entering the market again after recovering from foreclosure.
Not only does each of these subsets require different considerations and industry knowledge, but they’re also different audiences. This means they do not share the same needs, concerns, or goals.
If you want to resonate with prospects, you must understand their pains, problems, desires, and triumphs. The first step toward doing that is to create a buyer persona .
This exercise can lead to information and perspective that will inform your marketing efforts, your messaging, and even how you present your personal brand.
7. Build your personal brand.
One thing that seasoned real estate agents know to be true is that real estate is a lead-generation business. You should always be building your personal brand and expanding your network.
You can do this by building a personal real estate website outside of the one you have on your brokerage’s site. Create a social media presence for your professional brand. And host happy hours and networking events that will get your name out in the community.
Read on for even more tips on building your personal brand and lead generation engine.
How to Grow Your Real Estate Business
- Leverage your sphere of influence.
- Start networking.
- Learn how to use sites such as Zillow to your advantage.
- Check the cost for Google Ads in your area.
- Run Facebook ads.
- Optimize your website for organic search.
- Start blogging.
1. Leverage your sphere of influence.
When you’re just starting out, you won’t have much of a lead generation engine outside of your SOI, so make sure that your sphere knows that you’re in the industry if they need anything.
Many real estate agents worry about being too pushy with family, friends, and acquaintances, but if you avoid spamming and only work your profession into conversations organically, you won’t have an issue. This is a big part of your life, and they should know about it.
2. Start networking.
Your sphere is as powerful as its size, and you don’t want to draw from the same well over and over again. One way to widen your SOI is by going to networking events and interacting with other business owners in the community. After all, they might also be potential home buyers.
Just keep in mind the Law of Reciprocity, making sure to give in these situations just as much as you take. The more you interact and engage, the more your name will stick in their minds. You definitely want that in case they ever need you in the future.
3. Learn how to use sites such as Zillow to your advantage.
Zillow and similar sites have more authority and larger audiences than you, so it only makes sense to use them as tools for growing your business.
Many of these sites allow you to create an account, connect your listings, add contact information, and more. Should someone stumble on one of your listings or your profile, they’ll be able to connect with you.
4. Check the cost of Google Ads in your area.
Because real estate is such a competitive industry, especially in metro areas, Google Ads may not be a cost-effective strategy. However, it doesn’t hurt to check the cost for Google Ads.
Remember people are taking to Google at the beginning of their home-buying journey. Google Ads is one of the quickest ways to drive traffic to your website, so if the cost per click isn’t too high for your target keywords, it is a viable option.
Featured Resource: PPC Planning Kit & Templates
5. Run Facebook ads.
Sixty-nine percent of adults in the U.S. use Facebook. Chances are that your audience is on this platform. By running location-based ads, you can increase your brand awareness in your area and get highly targeted views on your ads.
Featured Resource: Facebook Ads Checklist
6. Optimize your website for organic search.
Search engine optimization takes a while to work, especially in competitive industries, but if you’re going to have a website, it should be optimized for search. Make sure that each page has a purpose, is crawlable by Google, and contains keywords you’d like to be found for.
7. Start blogging.
Since Google ranks pages, not websites, one way to get more search engine visibility is by blogging. Choose topics that your target audience wants to read, and be sure to also promote each post on social media.
Featured Resource: Blog Post Templates
Once you’ve leveraged business and marketing strategies to your advantage, you’ll begin to see the fruits of your efforts in the form of leads, sales, and revenue.
Common Professional Pitfalls (and How to Avoid Them
1. losing momentum..
You’ve put in the work. Early mornings and late nights following up on leads, arranging showings, and putting out purchase fires have yielded the desired result: consistent sales.
The problem? For many agents just starting their careers, it’s easy to get caught up in this initial rush of success and start relying on their laurels instead of pushing forward. While this may work for a few months or even a year, the loss of momentum can be devastating over time.
To keep sales flowing, it’s critical to keep your foot on the gas and keep looking for new leads.
2. Making social media mistakes.
Connecting with prospective clients means using social media. But the scale and scope of this platform mean that any faux pas — no matter how small — can negatively impact your reputation and your business.
To help reduce the risk of mistakes, follow these three rules.
First, be clear and concise. Don’t use 50 words when 10 will do. This limits the chance of a social media gaffe.
Next, only speak about what you know . This means that if you have a property that’s potentially coming up for sale, don’t post about it until you know for sure. This helps engender client trust and improves your reputation online.
Last but never least? Apologize if you get it wrong. Despite your best efforts, everyone eventually makes a mistake on social media. When it happens, don’t minimize it or pretend it never happened. Instead, own it, apologize, and move on.
3. Trying to do it all alone.
When you start your business, chances are you can handle the workload on your own. As you start to see success, however, you’ll want to scale — and this means bringing in help.
At first, this could be someone to help with sales and purchase documentation or to provide assistance finding and calling leads. Eventually, it may lead to hiring another real estate agent along with a larger complement of office staff.
The takeaway? As success scales, so does complexity: Get ahead of the challenges by bringing in help sooner rather than later.
4. Prioritizing paper.
Despite digital advancements, many real estate processes remain paper-based. But this doesn’t mean your business has to follow suit.
Here, robust CRM tools are a great way to ensure you’ve got access to the data you need, when you need it. While you’ll still have to handle paper reports, you can reduce the risk of lost or duplicate data by digitizing these documents and adding them to your database.
5. Thinking short-term.
Success in real estate means thinking about what comes next — the next client, the next sale, or the next purchase.
The problem? This can lead to short-term thinking that ignores what got you success in the first place: your clients.
As a result, it’s critical to forge a relationship with clients you’ve helped in the past. Not only does this increase the chances that they’ll come back to you if they choose to sell their current home or purchase a new one, but they may also refer you to their friends and family.
Let’s Get Real
Success in real estate is not simple — or easy. With the right approach to business planning, service marketing, and lead generation, however, it’s possible to build a real estate business that helps you achieve life goals and establish a firm financial future.
Best bet? Know why you’re getting into the industry, be prepared to put in the work, and learn from your mistakes.
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How to Write a Solid Real Estate Business Plan in 2023
May 17, 2023
If you hope to grow your real estate business , it helps to know where you want to go.
According to research from the Harvard Business Review, “ it pays to plan. ” Based on their reporting, entrepreneurs who develop formal business plans were 16% more likely to achieve viability versus those who didn’t. Another study suggests business planning helps a firm grow 30% faster.
Additional data even suggests that how much time you commit to writing your business plan and when you write it can increase the likelihood of your business’ success.
Those reports—and many more like them—emphasize that writing a business plan is worthwhile. It can guide you and your team toward (and beyond) your real estate goals.
Let’s take a look at what a business plan is, why you need one, and the necessary elements to lay the foundation of your real estate business for the next 10 years.
What is a real estate business plan?
A business plan is a strategy outlining the major points of a business and how that business will grow and succeed in the marketplace—in our case, residential real estate.
The most common analogy is that of a map. A business plan lays out your road to success, including critical waypoints or milestones along the way and how you intend to accomplish them.
Why do you need a business plan?
In terms of real estate, business plans provide a clear outline of who you are and what you bring to the table, the foundation for your business, and how you plan to build upon that foundation.
Business plans can serve any number of purposes. They’re often used to secure capital or sources of financing, compel potential investors or partners to join or invest or help solidify joint ventures or partnerships. A great business plan can even attract skilled employees and top-level talent.
Understand the real estate professional you want to be
As a real estate professional, the services you provide might be fairly obvious. Whether you’re an individual agent, broker, or part of a larger team, identifying strengths, weaknesses, and the intangibles that set you apart directs your planning. Taking stock of who you are now and what you hope to achieve will allow you to better dissect and outline your future career.
Business plan timeframe
It’s worth noting that most business plans adhere to a timeframe of three to five years. Some are as short as one year, others as long as seven. Although everything in this article provides recommendations for a three to five-year plan, it’s worth looking beyond your short- to midterm goals.
As an agent, for a 10-year plan, consider such growth initiatives as joining a brokerage, partnering with other agents, or earning your broker’s license. If you’re already at the broker level, you might be ready to start your own brokerage or expand a small operation.
Regardless of your starting point and how big your ambitions are, ensure your business plan is objective and honest and includes reasonable and attainable goals.
Elements of a real estate business plan
A business plan can be narrow or broad, succinct or highly detailed. When constructing your business plan through the lens of real estate, particularly as an individual agent, it’s best to keep things simple, manageable, and achievable. Focus on where you are now, where you want to go, and how to get there.
Let’s review the individual elements of a simple business plan and what each section should include.
The executive summary serves as a brief overview of who you are, your purpose, and your goals. A good summary is typically one to two pages (although one is optimal) and should include the following:
- Description of services
- Summary of objectives
- Brief market snapshot
- Overview of market opportunities and competition
- Capital or partnership requirements, if applicable
Your executive summary is the one part of your business plan you can recite from memory. There’s no fluff. This is your elevator pitch to sell your vision and convince others to join you on your mission.
Overview and objectives
The overview and objectives section can vary somewhat based on your individual needs, but they should include three critical elements:
- Your mission statement
- Your history
- Your objectives
Your mission statement is why you do what you do, the guiding principle, or principles for your business. If you’re looking for inspiration, two excellent examples from the world of real estate include:
- Compass: Our mission is to help everyone find their place in the world. Compass is building the first modern real estate platform, pairing the industry’s top talent with technology to make the search and sell experience intelligent and seamless.
- Sotheby’s Realty: Built on centuries of tradition and dedicated to innovation, the Sotheby’s International Realty brand artfully unites connoisseurs of life with their aspirations through a deeply connected global network of exceptional people.
Your history is just that—when you started, location, leadership, milestones, and any notable services or specializations.
Objectives are your primary-stated goals. A common technique for establishing your goals is through the “SMART” method, ensuring your goals are Specific, Measurable, Achievable, Relevant, and Time-bound.
Objectives that might cover the course of a 10-year plan include:
- Rebrand the company website in 30 days.
- Establish social media presence in 90 days.
- Close five transactions per month in year one, and double transaction volume by year three.
- Double the size of the firm by year five.
- Expand operations to include two additional offices by year seven.
- Attain broker license and open independent brokerage within a decade
Again, these are just examples. Make sure your goals are targeted and realistic to achieve within your set time frame.
Pro tip: if you’re on a team, designate key decision-makers
Often, your business will need to make progress on multiple objectives at the same time. These can include finding new leads, staying connected to old clients, and continuing to grow into new markets. To ensure all your team objectives remain active, group them based on category and designate a member of the team who will be responsible for managing achievements, setting milestones, and assessing progress.
For example, you may have a team member who manages marketing objectives. Another will manage networking and community outreach goals, while someone else presides over revenue goals and forecasting. While these team members are not solely responsible for achieving the objectives, they can take responsibility for pursuing progress and ensuring that everything aligns.
The goal of designating key decision-makers is to ensure that someone takes ownership over each critical pursuit of your team. If you have a lot of objectives but not enough decision-makers to manage the load, prioritize the most business-critical objectives by considering short-term vs. long-term needs.
You should also determine who has the final say. One of your team members may be the final decision-maker on publications: they review, approve, and assign for publishing all of your team’s articles and periodical material. Another team member may be the key decision-maker on approvals for expenses, while another may be the go-to expert for real estate negotiations that fall outside of normal operating procedures.
This step removes potential bottlenecks caused by indecision or lack of ownership. When there’s not a clear decision-maker, things can stagnate.
Market opportunities and competitive analysis
The best business plans outline where market conditions are ideal for the rapid growth of a business. This involves taking stock of the market’s demographics and existing opportunities, both current and future. Points to consider:
- Size and stability of the market. Is it on an upward trajectory? Downward spiral?
- What segment of the market will I target? What demographics make up the market?
- Is there a demand for a particular type of housing? Is there a type of homebuyer (first-time, luxury, young professional with children) that’s more prevalent than others?
- Are there more sellers than buyers? Is the opposite true?
- What do I offer clients that the competition does not? Can I stand out in this market and generate revenue?
Also, pinpoint specific market changes or circumstances that could significantly impact your business and others in your segment. Make sure you document them.
In many business plans, competitive analysis is worthy of its own standalone section. Regardless of how you present it, devote some space to your competition.
Include both immediate and secondary competitors, and note if the market is primed for new competitors in the future. Also, identify the risks and opportunities present when comparing your service and niche market versus others vying for the same or similar business.
Pro tip: focus on client needs first and your abilities second
Service-oriented real estate teams don’t focus on securing sales or conversions first. Instead, they freely extend value that authentically addresses the pain points of their clients and community. To start, consider some common sources of frustration, anxiety, and uncertainty among your clients. These might be:
- Uncertainty about market shifts
- Lack of connection to the community, especially if they’re new in town
- Confusion about property taxes
- Distrust toward real estate agents
- Unique weather and climate patterns in their area
Although these pain points are not directly solved by real estate services, trying to sell a property or promote yourself as an option for selling their current property does not align with what they need. Instead, the key is to act as an advisor and become a trusted resource in real estate-related concerns:
- Uncertainty about market shifts: Email prospects regularly about changes in mortgage rates, real estate inventory trends, and house-buying/selling trends in their neighborhood or a neighborhood they’re interested in.
- Lack of connection to the community, especially if they’re new in town: Provide resources about local sites, community events, and popular attractions based on their interests.
- Confusion about property taxes: Send reminders about property tax protest deadlines and homestead exemption filing deadlines. Offer to meet and discuss “comps” in their neighborhood, so they can protest their property taxes effectively.
- Distrust toward real estate agents: Provide helpful advice and referrals to other professionals in your network (i.e., plumbers, electricians, etc.) with no mention of real estate.
- Unique weather and climate patterns in their area: Send content about timely home maintenance and protection reminders before hurricane season, the first snowfall, or other relevant weather events in your area.
These actions address your clients’ needs, not yours. In doing so, you maintain open channels of communication and strengthen your brand identity.
A SWOT analysis is a useful tool for framing different attributes within your real estate team and determining your strategic position. Through its matrix-like formatting, you can identify your team’s strengths, weaknesses, opportunities, and threats. Use data-backed facts to fill out this analysis. Consider:
- Strengths: Is your team brand recognizable? Do you have an in-house expert for each specialization within residential or commercial real estate (or both)? Do you have an active pipeline of new leads ? What is your unique selling proposition (USP)?
- Weaknesses: Do you lack social media or online content? Is your team brand relatively new or unrecognizable ?
- Opportunities: Has your team just branched out to a new area of real estate? Is market demand growing in your area? Have you uncovered a new source of referrals ?
- Threats: Is there a new team that covers the same niche and offers the same USP as your team? Are mortgage rates rising enough to slow down demand?
By uncovering and specifying factors in each grid of the SWOT analysis matrix, you can identify areas that need immediate attention or business factors that can be capitalized on. For a more strategic use of SWOT analyses, use these best practices:
- Revise your SWOT analysis every month or quarter to address changes.
- Create competitive SWOT analyses of key competitors within your niche. This strategic work allows you to discover your competitive advantage over other businesses in more detail. You can also determine factors in which your competitors have an advantage and move to counter them.
- Digitize your SWOT analysis. This ensures every member of the team can readily access it and make suggestions.
Pro tip: differentiate yourself
Once you’ve completed your SWOT analysis, focus on the strengths section first and hone in on your unique selling proposition .
- Do you offer more personalized attention than other teams?
- Do you have an expert real estate agent for first-time homebuyers?
- Or do you have a well-earned reputation for always preparing the right pricing strategy for clients who want to sell their homes?
No matter what your USP is, be sure to showcase it in all of your marketing materials, pitches, and communications.
If you don’t have a single USP, review both your mission statement and your SWOT analysis. These two documents can help you identify the factors that differentiate your real estate team from others.
The marketing plan identifies and details how you will reach and attract your target market. Effectively, it’s an exercise in the type of real estate client your services will appeal to most and having a plan that ensures they take notice. Key points to outline:
- Demographics of your ideal client, including age, location, income, and profession.
- What attracts this client? Turns them off?
- What type of neighborhoods, amenities, or lifestyle are they seeking?
- Which marketing and advertising channels are they most receptive to? Which ones do your competitors frequent?
- Are you positioned better than your competitors to attract this client?
- What are the benefits your real services offer to attract your ideal client?
From there, you can build a reasonably detailed profile of your ideal client—buyers and sellers drawn to your real estate services. After that, your advertising and outreach efforts will take shape and should feature:
- Marketing and advertising budget
- Planned marketing channels
- Digital footprint, including website, social media, or digital outreach marketing (such as email)
- Plans to nurture non-specific outreach efforts such as referrals, SEO , open houses, etc.
- How will you measure your marketing success? How will you address changes to your strategy if necessary?
- In addition to attracting clients, how will you market your business as a whole?
It doesn’t hurt to include marketing materials in your plan if you already have them. Items like brochures, print ads, website descriptions or screenshots, or advertising contracts are worthy of inclusion.
Pro tip: consider investing in a client relationship management (CRM) tool
Instead of keeping paper notes or an old-fashioned Rolodex, organize all of your client information in a Client Relationship Management (CRM) system . This type of platform allows you to create and maintain a detailed profile of your prospects and clients. You can include data such as:
- Personal details
- Real estate preferences
- Budget considerations
- Important dates
- In-progress and past transactions
Not only can you use this information to stay on top of your client network, but you can also use it to create personalized emails and automated communications .
If you use a real estate email marketing tool, for example, you can send certain segments of your network emails based on specifics in their profile. It’s a lot easier than manual communication and ensures no one falls off your team’s radar.
A financial plan is a fairly straightforward snapshot of the economic health of your business. It should feature basic elements such as:
- Profit and loss statement: also called income statement or pro forma, this shows a company’s profitability (or loss) over a certain length of time
- Cash flow statement: an overview of your actual cash position
- Balance sheet: where you stand regarding assets, liabilities, and equity at a specific point in time
- Operating budget: detail of your income and expenses, usually over 12 months
- Break-even analysis: outlines the revenues necessary to cover all costs and your business’s potential to be profitable
Depending on your real estate business position or if you’re an individual broker or agent, you can simplify this area with just an operating budget and break-even analysis.
Finally, it’s critical to understand that your real estate business plan is not a one-and-done proposition or something to be written, tossed in a drawer, and forgotten. Make time to periodically reevaluate your progress and see where you stand in reaching your goals. Once every 90 days is a good rule of thumb, but feel free to be more or less frequent as necessary.
If you find yourself behind schedule, don’t be afraid to make strategic decisions to correct course and get you and your real estate career goals back on track. And if you start hitting those goals early, it might be time to make some new ones.
Revamping your real estate business plan?
From beautifully crafted websites and property pages to stunning photography and virtual tours, our platform provides a suite of digital tools to help you stand out from the competition. Contact our team of experts today to begin refining your online presence.
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Realtor Business Plan 2023 Template
Use this Realtor business plan 2023 template to help real estate agents focus on activities to increase production throughout the entire year.
Do you have a Realtor business plan for 2023? If you don’t already, it’s not too late. Arguably, it’s never too late to get your business plan in order.
You may be intimidated to get your business plan on paper. There is pressure around building out an effective business plan — we get it. Plus, creating the traditional business plan is time-consuming and rarely effective. You’re more likely to find it under a pile of documents on your desk, or shoved into a folder and forgotten about.
This is NOT the kind of business plan we built.
Once you use our 1-3-5, single-page business plan template, you’ll understand why it is revolutionary. And, we hope you’ll learn to love it so much that you’ll use it every year.
VIDEO: Realtor Business Plan 2023 Template
Realtor business plan 2023: the 1-3-5 plan.
At ICC, we coach many of the highest producing agents, teams, and brokerages across the country . Because we are mostly known for coaching the “heavy hitters,” some don’t realize that we have a wide range of agents that we work with.
I say this so that you know, from the get-go, that ICC has a lot of credibility when it comes to getting business models of all sizes and shapes on track for growth with our revolutionary 1-3-5 business plan .
Today, we are going to teach you about the best Realtor business plan for 2023. We will walk you through the 1-3-5 business plan, and the example we will use is for solo agents.
This content is highly valuable not only for solo agents, but also for anyone who leads agents.
Learn how to use the 1-3-5 Realtor Business Plan 2023
Here is the basic breakdown of how the 1-3-5 Realtor business plan 2023 works.
- 1 big goal on top
- 3 focus areas that support that goal
- 5 objectives that support each of the 3 focus areas
Remember, the objectives you use to fill in your Realtor business plan 2023 should be growth activities that are in direct alignment with your 1 big goal. (More essential tips like this later.)
The objectives you use to fill in your Realtor business plan 2023 should be growth activities that are in direct alignment with your 1 big goal . Brian Icenhower
How to create your Realtor business plan 2023
- Your 1 big goal should be a production goal (units closed, sales volume, or gross commission income). This type of goal is measurable — you can use a number to quantify it.
- Your 3 focus areas (and your subsequent 5 objectives each) should all be directly related to your 1 big goal . Something like “attend a real estate conference” is an example of what not to use as a focus area or objective.
- Ensure that your objectives are not busy work. They need to be business-generating activities. It’s easy to fall into a trap of adding busy-work activities to your 1-3-5, because they are easy to accomplish. One way to ensure you are choosing good items for your 1-3-5 is to ensure that they are all SMART (specific, measurable, achievable, realistic, and time-bound).
- Everything needs to be geared to getting you more business now (over the course of this single year). Not way down the road. This is your plan for one year.
Homework before you begin your Realtor business plan 2023
In order to create a solid Realtor business plan 2023, you should know (and understand) your current numbers.
The ICC Business Tracker is crucial in helping our clients establish a gross commission income (GCI) goal based on the unit count or sales volume needed. This tool helps determine how many leads you need, what the conversion rates are, and gets you really dialed in tight before planning your Realtor business plan 2023.
This is why many clients come to us at ICC . They need a coach to help them get all their numbers dialed in so they can move forward and grow their business the way they want to. And, along with their coach, they also get the systems to back it up, like the ICC Business Tracker.
Once these crucial numbers are determined, you can move forward with your Realtor business plan 2023, and filling out the 1-3-5.
This is why many clients come to us at ICC . They need a coach to help them get all their numbers dialed in so they can move forward and grow their business the way they want to. And, along with their coach, they also get the systems to back it up. Brian Icenhower
FREE DOWNLOAD: Solo Agent 1-3-5 Business Plan
Today, we are giving subscribers a free copy of our Solo Agent 1-3-5 Business Plan . This PDF is a fillable form, so you will be able to customize your Realtor business plan for 2023. Be sure to watch the video at the beginning of this blog to learn more about how to effectively create your single page business plan.
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10-step checklist for writing a 2023 real estate business plan
If you're a real estate agent planning on opening a real estate company, you need a business planning lesson. Every successful business operates off a template defining its operations and goals. Your real estate business plan is the founding document of your organization, and every new business owner must take the time to plan their venture.
If it's your first time writing a business plan, you probably have mixed feelings of excitement and frustration. It's a thrilling experience to bring all the elements of your new company into realization, but it's upsetting when you realize you don't know what you're doing.
Writing a business plan helps to show you the flaws in your business skillset. You might be a marketing genius, but you have no idea how to manage operations cash flow. Similarly, you could have excellent administration skills but know nothing about marketing.
Writing out your business plan shows you where you need assistance. You identify areas where you're weak and build a strong team around you to support the places you need help. In this post, we'll unpack a 10-step checklist for writing your first real estate business plan.
Step 1 – Define your real estate business
The first step in writing your real estate business plan is understanding your limitations and strengths as a real estate broker and a business owner. Do you know what you want to achieve with your business? Your real estate brokerage needs defined goals and targets to chase, or your organization has no purpose.
Every small business relies on a team. The team you select needs to complement your strengths and weaknesses. Use this stage of your plan to define the organizational roles of each team member. Identify their skillsets and what they bring to your company.
Real estate brokerages need to understand the type of business you want to run and the personality types of the agents you wish to attract to your company. As the firm's founding partner, you get to decide who you want to add to your team.
After identifying the team, and each member's roles, it's time to work on your mission statement and executive summary.
An executive summary defines the aspects of your business plan and what you want to achieve with your business outcomes. It also describes the culture of the firm and your values.
The mission statement clarifies the purpose of your business and what you're trying to achieve. It also mentions how you intend to get to those goals. We recommend writing out both your mission statement and executive summary and revisiting them after completing your business plan.
In the initial planning stage, wiring out your mission statement and executive summary helps you clear the cobwebs and focus on the task at hand. However, when revisiting your mission statement and executive summary at the end, you might find you left something out or want to make a change to clarify your business directives.
After you have an understanding of your business, it's time to work on your goals.
Establishing your business goals is the most crucial part of the planning process. Your real estate business plan needs clear and defined goals for growth, sales, finances, marketing, and every aspect of your business.
Each section, like finance, for example, drills down into sub-goals for each category. For instance, your financial goals should feature an overall sales target for the year. However, there should be sub-goals in each section for monthly sales targets, and you can break that down into a different sub-category with targets for individual agents.
The idea of goal setting is to set achievable business goals with measurable results. You'll have both short term and long-term goals attributed to each of your business functions. Here are some examples of measurable goals you can use in your planning process.
- How many transactions do you want your company to do each week, month, year?
- How many leads do you need to capture in a day, week, month, or year?
- How many new agents do you want to work on your team?
- What's your earnings goal for the year?
- What do you want to achieve with your brand?
All these questions are vital to setting targets for your business. Without goals, you're like a car rolling down the hill with no engine. You'll hurtle down the hill at first, but when you reach the bottom, and the momentum dies out, you have no engine to pull you along. It's the same with your business planning and goal setting. If you don't have goals, you have no targets, and you'll run out of enthusiasm in a few months when the momentum in your company starts to fade.
Step 2 – Identify your target market
The first stage of the planning process involves structuring your company and defining your business goals and purpose. The second step of building your real estate agent business plan consists of understanding your target market.
What market are you operating in with your business? Do you want to sell luxury homes? Or are you looking at specializing in selling single-family units or condos? Specialization is a popular strategy for real estate firms, giving you the chance to build a reputation in a specific market segment.
Take your time identifying your target market, and dig into the MLS listings to determine which areas offer you the best return. As a real estate agency, you'll have to specialize in a specific region and build your reputation in that area.
Look for the following metrics when examining potential markets.
- What is the average price of properties in the area?
- How many days do they stay on the market?
- What is the average listing commission?
- What is the average pricing trend for properties in a prospective market?
- How many new listings come up in your target market each week, month, or year?
- How does the data compare month-on-month and year-on-year?
Step 3 – Complete a competitive analysis
All business owners need to understand the competitive landscape. The real estate industry has thousands of operators, and there are probably dozens of firms in your local area. Understanding the performance and structure of your competitors allows you to uncover the most successful firms.
When you identify the leaders, you can model what they're doing right and bring it into your real estate business plan. Check out your competitor's websites and review their social media accounts to gain insight into their marketing strategy and operations.
Who are the realtors that have the most industry clout in your area? Who are the leading firms, and what makes them stand out? Ask yourself these questions and unpack the top real estate firms' characteristics and components in your local area.
Step 4 – What services are you offering?
Real estate is a massive industry, and there are dozens of sub-industries within the real estate market. You need to understand your business model, specializing in a specific segment of the market. For instance, do you want to sell single-family homes to first-time homebuyers? Are you looking at providing commercial leases? Maybe you want to build a rental portfolio?
Spreading yourself thin across too many markets results in a lack of focus and direction. Startups will do better if they identify a profitable market and specialize in servicing that specific niche. Identify the areas with the biggest opportunities, and set up your services to cater to those areas.
Step 5 – Identify customer personas
Without accurately defined customer personas, you diminish your marketing efforts and prospecting outcomes. Understanding your customer profile and persona in the real estate market is essential to formulating your marketing strategy.
Your customer persona needs to describe demographic elements like average age, income, occupation, and other defying criteria that help you nail down your ideal customer. If you're a brokerage or realtor offering multiple services like sales and rentals, make sure you identify customer personas in each category.
You can further drill-down on your personas by identifying demographics in clients that buy luxury homes, single-family units, apartments, and condos.
Understanding your client persona gives you a better direction for your marketing strategy. For example, if you specialize in selling apartments to young professionals under 30, you're going to need to advertise through social media. Mediums like outdoor and print bring you less ROI on your advertising dollars.
Step 6 – Complete a SWOT analysis
Completing a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) is an essential component of real estate business plan templates. In this analysis, you unpack everything you know about the strengths and weaknesses in yourself, your company structure, and your team.
Think of the SWOT analysis as a basic summary of everything you've done with your real estate business planning so far. Combine the know your learning during the exercise with what you know about your working habits and personality characteristics.
For instance, you might be a champ in closing deals, but your prospecting skills are weak. That's an example of identifying your limitations and performance parameters.
Maybe there is no real estate brokerage in your area that catering specifically to millennial first-time homebuyers? That's an example of a market opportunity your business can fill.
Perhaps your target market involves new construction, and industry news states that there's a big strike happening at the end of next month. That's an example of a threat facing your business. Revisit your SWOT analysis every quarter to see if you can identify any new developments to add to your business plan.
Step 7 – Build a marketing plan
Now we get into the serious stuff with the development of your marketing strategy. Marketing is the single-most-important function of your business. The purpose of marketing is to drive new real estate leads to your business, allowing you to convert them into customers.
Your marketing strategy needs to focus on the things you learned when completing your customer persona. Where are you going to get the best bang for your marketing buck? Real estate marketing is a competitive space, and you need to make every dollar in your budget count.
Your marketing plan needs to include your online and offline strategy development. Your online strategy is the most important, and you'll need to build a website to promote your company and your listings. Social media marketing, referrals, brand building, sales funnels, and lead generation are essential online marketing strategies you need to succeed in your business.
Today, all your customers are online, and you need to market where your audience is hanging out. Most of them are on social media. Therefore, you'll need a social media marketing expert on your team to develop and direct your social strategy across all platforms.
CRM (Customer Relationship Management) software is another critical component of your business that integrates with your company's function. The CRM helps you manage clients, your sales funnels, and your marketing efforts through one dedicated platform.
You'll need to hire a marketing team to help you develop and implement your marketing strategy and CRM. Experts create a dedicated online marketing plan that includes all team members.
Your marketing plan is the foundation of your business plan. Investors will want to know your strategy and the results you expect to implement in your target market.
Related: 20 easy real estate marketing ideas to grow your agency
Step 8 – Complete your financial plan
Your financial plan is crucial if you intend to seek investment for your company. Whether you're dealing with private angel investors or the bank, they want to see your financials and sales projections to complete due diligence on loans.
If they decide to loan your money, they need to know when they can expect you to return the money and the ROI you offer on the deal.
You'll need to include information like your commission pricing and average commissions, your sales forecasts for three years, and cash flow projections. When completing this section of your real estate business plan, you'll need to sit down with your accountant and get their advice on structuring your financials.
You'll need to account for your business expenses and the costs of setting up your company with a website, CRM, and digital marketing services. Remember to include memberships to marketing sites like Zillow Premier Agent and ProspectPLUS.
Your financial plan forms the backbone of your investor's interest in involvement with your real estate firm. The numbers need to make sense, so make sure you run them past your accountant.
Step 9 – Periodically revisit your real estate business plan
Your business plan is a living document, and it changes with your business. Having a rigid plan won't work. The reality is that nothing in business works out 100% the way we plan. You'll need to have a flexible document you can update as your business grows.
During the first year of your operations, we recommend revisiting your business plan every quarter. As the business matures, you can push this exercise back to once every six months or once a year.
Revisiting your business plan gives you a chance to follow up on your goals and targets, giving you ideas on where you need to improve. Real estate professionals understand the importance of remaining responsive to change in a dynamic business environment.
Periodically revisiting your business plan gives you a chance to reflect on your progress and plan the future with clarity and certainty.
Step 10 – Visit B12 for your digital business needs
Your real estate website forms the foundation of your marketing efforts. It acts as the touchstone for your company online, providing a virtual storefront to your prospective clients. Inefficient and ineffective website design can derail your business plans, costing your company vital leads during the startup phase, where you need to generate as much income as possible. For website design inspiration, check out the best real estate websites and this guide on how to design a website !
If you need help with your real estate business website, reach out to the professionals at B12.
B12 specializes in helping professional services companies create beautiful sites that enable them to operate effectively online. Built-in tools like SEO , email marketing, and online scheduling make it easier to reach your audience.
Plan with Professionals
As an individual starting out a new real estate business, you have many things to consider for your real estate business plan and might not have the time to create a website from scratch. Relying on the expertise of design professionals ensures you get a website that helps you achieve your business goals.
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How to Plan, Start, & Grow a Real Estate Business 2023
Real estate business 2023.
The real estate industry offers immense opportunities for aspiring entrepreneurs looking to establish a successful business. Whether you’re interested in property development, real estate investing, or brokerage services, having a well-thought-out plan is crucial for launching and growing your venture. In this article, we will provide you with a comprehensive guide on how to plan, start, and grow a real estate business in 2023.
- Define Your Business Model: Before diving into the real estate market, it’s essential to determine your business model. Are you interested in residential or commercial real estate? Will you focus on property development, rental properties, or real estate sales? Defining your niche will help you narrow down your target audience and develop a tailored marketing strategy to reach potential clients.
- Create a Business Plan: A solid business plan serves as a roadmap for your real estate venture. Outline your mission statement, business goals, target market, competitive analysis, marketing strategies, and financial projections. Consider factors such as startup costs, operational expenses, and projected revenue. Additionally, identify potential challenges and devise contingency plans to mitigate risks.
- Obtain Necessary Licenses and Permits: Compliance with legal requirements is crucial in the real estate industry. Research and understand the licensing and permit obligations specific to your region or country. Determine whether you need a real estate license, broker’s license, or any other certifications. Familiarize yourself with local regulations governing property transactions, leasing agreements, and property development.
- Build a Professional Network: Networking plays a vital role in the real estate industry. Connect with professionals such as real estate agents, brokers, lawyers, appraisers, contractors, and lenders. Attend industry events, join real estate associations, and actively engage with professionals on social media platforms. Building a robust network will provide valuable opportunities for collaboration, referrals, and staying updated on market trends.
- Establish an Online Presence: In today’s digital age, establishing a strong online presence is crucial for success. Create a professional website that showcases your services, properties, and contact information. Optimize your website for search engines by incorporating relevant keywords in your content and meta tags. Leverage social media platforms to engage with potential clients, share valuable content, and advertise your listings.
- Develop Effective Marketing Strategies: To attract clients and generate leads, implement effective marketing strategies. Utilize both traditional and digital marketing methods, such as direct mail campaigns, print advertisements, online listings, email marketing, and social media advertising. Identify your target audience and tailor your marketing messages accordingly. Provide valuable content, such as blog articles, videos, and webinars, to establish yourself as an industry expert.
- Provide Exceptional Customer Service: In the real estate business, reputation is everything. Provide exceptional customer service to build trust and establish long-term relationships with clients. Be responsive, transparent, and knowledgeable. Communicate regularly, address client concerns promptly, and exceed expectations whenever possible. Positive client experiences will lead to referrals and repeat business, contributing to the growth of your real estate venture.
- Expand Your Services and Portfolio: As your real estate business grows, consider expanding your services and portfolio. Diversify your offerings by venturing into complementary areas such as property management, real estate investment consulting, or real estate development. Explore new markets or target different segments within your existing market. Continuously analyze market trends, adapt your strategies, and stay updated with industry regulations to stay ahead of the competition.
Planning, starting, and growing a real estate business requires careful consideration, strategic thinking, and relentless dedication. By defining your business model, creating a comprehensive plan, obtaining the necessary licenses, building a professional network, establishing an online presence, implementing effective marketing strategies, prioritizing customer service, and expanding your services, you can set a strong foundation for a successful real estate venture in 2023. Remember to adapt to market dynamics, embrace innovation, and continuously strive for excellence to achieve sustainable growth and profitability.
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Real Estate Business Plan Examples (2023)
Several of our real estate clients have graciously provided permission for us to share their plans with you. A professional real estate business plan is an important step towards building a business in this challenging industry. Here are two examples of real estate business plans created by Cayenne Consulting:
Baxter Development Company
This plan is an example of what we can create when visual impact is a top priority.
Jolly Roger Storage
This plan is an example of a business plan for a large self-storage facility in need of debt financing.
Daari Real Estate
This plan is an example of what we will produce for a real estate client seeking a moderate amount of debt financing.
CONTACT US NOW For a complimentary assessment of your situation and needs
How to Create a Commercial Real Estate Business Plan
My step-by-step blueprint for success.
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Cayenne maintains a very active practice in real estate business plans – including funds and development plans for commercial, residential, and agricultural uses, along with many specialty projects aimed at mixed-use, live-work, hospitality, medical, entertainment centers, smart/sustainable developments, and others. Also created for our clients are detailed “ capital stacks ,” including debt, equity, “impact/cause funding” along with consideration of public investment, grants, and special tax opportunities.
Cayenne’s practice in real estate is broad, but commercial real estate (CRE) makes up a large portion of Cayenne’s real estate consulting services to developers, sponsors, owners, contractors, and vendors.
While each client project is unique and is accorded special consideration and treatment, there are some important issues that arise in many commercial real estate business plan projects.
This post will mention a few of the types of issues that owners, developers, sponsors, or other stakeholders in commercial real estate might take into consideration when you create a commercial real estate business plan.
Keep it Exciting, Simple, and Digestible
While any commercial real estate project will have many details, it’s important to create a compelling, simple, and understandable story.
Who is the audience for the business plan? Funders come in every shape and color. On the debt side, there are direct lenders, traditional banks, convertible debt lenders, etc. On the equity side, real estate investors range from family offices to angels, to angel funds, to private investors who may be HNW (high net worth) or to F&F (friends and family) investing from a self-directed IRA. Your business plan will differ depending on what types of funders are going to see it.
On that note, it’s always a good idea to include two things: (i) a simple Guidance and Disclaimer that the business plan is for funder/stakeholder information and not a securities offering; and (ii) a Glossary of commercial real estate terms which not only helps the reader, but reinforces the reader’s impression that the project’s team is expert in commercial real estate concepts. By way of example, while a funder might be very familiar with IRR (internal rate of return), he/she/it might not be as conversant with terms like CRA (Community Reinvestment Act), FAR/Bonus FAR (Floor Area Ratio/Bonus Floor Area Ratio), flex (multi-use) space, MSA/CSA (Metropolitan Statistical Area/Combined Statistical Area) or New Market Tax Credits. A good business plan helps educate the reader on these items.
Text, Deck, Financials, Artwork, or All?
A commercial real estate business plan can be scribbles on a napkin, 120 pages of text, a 10-slide deck, or a 50-slide beautifully illustrated digital presentation . For example, if the format you want is a presentation deck, it’s good to decide in advance approximately how long it should be, what type of content, and what type of visual look you desire. Should it be page after page of charts and colored shapes, or should it be a nice, illustrated presentation of your concept and market?
For sizable commercial real estate business projects, multiple documents may be needed, that can range from, and include one or all of, Financial Book, Market Study, Business Plan, Deck, FAQs (frequently asked questions), Term Sheets, LOIs (letters of intent), Plats, Renderings, GC (general contractor) bids, 3D imagery, and so on. Much of the time, the whole menu isn’t needed up-front, but many, or all, could come into play before the project reaches completion.
Bottom line, there isn’t a “one size fits all” in commercial real estate business plans. So, before you opt for a Do-It-Yourself template, it’s always good to take a hard look at the actual Scope of Work, identify your end goals, the detailed stages that your business plan and fundings may proceed through, and in what order.
What’s the Simple Story?
Whatever the project is, there should be a way to encapsulate it in one or two sentences.
The idea is not to dumb it down, but to be able to say simply to any funder or stakeholder – here is what it is. The right one sentence can then beckon an audience to longer discussions of the concept.
What’s The Opportunity in the Market?
One key goal is to present to a potential funder or stakeholder the fundamental issue of how valuable the concept can be.
Sometimes this is obvious. Sometimes it isn’t, or it won’t be to your audience, so you will need a clear statement of how much money your company stands to make out of the target market. Far too many entrepreneurs, plans, and providers opt for high-level online overviews that say things like “The 2021 global market in multi-use commercial real estate is $__ billion and CAGR (cumulative annual growth rate) of 21% is expected over the next 5 years.” Those are positive statistics, but they don’t say anything about your project’s potential.
Rather, the core issue to include in your plan is – how much of that global market are you going to grab with your business model? And then prove it with defendable numbers.
Another great addition is a section on “market drivers” which can include concepts such as reduced risk, effective land use, limited competition in the area, a captive tenant base, portfolio diversification, diversity of tenants (e.g., in a multi-use project that combines retail, hospitality, and housing), convenience, and demographic appeal.
Who’s the Visionary/Sponsor/Developer and Who’s on the Team?
One thing we see again and again is that, after all the numbers are crunched, the i’s dotted and the t’s crossed, a funding decision comes down to this: does your funding audience have confidence that you and your team will execute on your commercial real estate business plan? A great team, with a great track record, helps get you past this speedbump, and you should try to include fairly detailed bios of the team showing experience, time in the commercial real estate industry, former companies, former titles and responsibilities, and educational background.
Another plus in this part of the story is a tight, powerful listing of key goals that the team has already accomplished, and a projection of what the next several years will bring.
The Business Model
It’s easy to look at commercial real estate as a familiar concept without a lot of new ideas. But there are many special aspects that a specific project can point to, such as: (i) the market niche is hot at the moment; (ii) planned diversification across regions, cities, and neighborhoods, or (iii) that the project arose from the owner/developer’s “nine-point” project evaluation set of criteria that profile the area, amenities, transportation, funding benefits, target project size and typical time to completion, occupancy rates in the area, expected hold until stabilization, and liquidity solutions available for funders.
Innovations and Success Drivers in the Business Model
While real estate is one of the oldest industries in the world, it is constantly changing in exciting ways. If your project is a multi-family development, why is it different – and hopefully better – than the apartment complex across the street? What are the “success drivers”? Is it better-constructed, greener, smarter, more sustainable, technology-enhanced, more likely to hold value, better designed, more attractive, or in an area with public funding or tax benefits available, etc.? One concept that is increasingly dominant in commercial real estate business plans is presenting amenities. What special amenities separate your development from the rest of the neighborhood?
Another consideration is the huge upsurge in “cause-related,” “social benefit,” or “impact” investing. If your project is designed to provide some real social benefit , it is great to flag this for funders and stakeholders. It can also open up new funding opportunities with CRE investors/funders who are seeking, or are required to seek, social benefit in their portfolios.
What is the Funding Opportunity?
Your commercial real estate business plan should explain how much funding is needed, and in detail, what it will be used for – e.g., development, acquisition, construction, construction take-out, and limited-term senior debt.
In commercial real estate, a presentation of the capital stack is critical, and it is often quite detailed. For example, the project’s capital stack might involve a combination of senior secured debt, additional subordinate debt, and equity financing, as well as grants and tax credits, in accordance with local community development, economic development, and workforce development interests in the municipality, plus tax incentive programs related to Historical Structures, New Markets, Low Income Housing, Opportunity Zones, and Business Improvement Districts.
Building Your Commercial Real Estate Financial Model
While simplicity in telling the story is always important, your financial model could often present a laundry list of benefits. You might point to five to seven different ways that the funding model uses leverage; or you might point to abundant collateralization, or to regulatory benefits such as CRA ( Community Reinvestment Act ) portfolio points, or to tax benefits for investing in an Opportunity Zone , or to the simple point that commercial real estate is, traditionally, a very safe investment, that goes up with inflation and, as a hard asset, it will always maintain some level of value and worth.
For prospective stakeholders, projected yield, MOIC (multiple on invested cash), IRR, and any special liquidity solutions are great to mention. At the end of the day, one point can always be made – commercial real estate is the type of investment that is safer than most, can provide steady income, and offers special financial protections from property value, lease payments, and, often, government incentives.
If the plan is for a commercial real estate fund, it’s always good to identify the special nature and characteristics of the fund, e.g., the fund might be a closed-end, leveraged, managed distribution fund that will only invest in certain types of assets, with certain target capitalization rates (a measure of how risky commercial real estate investment is).
It’s always good to have a section in the Plan that speaks to the property, or to possible properties that may be selected. This can be exemplified with photos, maps, renderings, drawings, plats, descriptions of the property, amenities, and the locale – in short, a part of the Plan that brings the concept to life – a moment of punctuation that delivers a moment of “Wow, there it is, that’s where the project will be built.”
A key question is always “how do the project and the funding opportunity stand apart from other developers and profit-seekers that focus on similar property investments?”
What helps here is to identify why the developer/sponsor/owner has a plan for development that is innovative, data-driven, and fueled by ground-level experience.
Another concept that helps here is to identify strategies for enhancing the value in the property/project, or, if applicable, in the portfolio.
Writing Your Commercial Real Estate Business Plan
Now that you’ve thought through all these issues, get ready to craft your commercial real estate business plan that features all the essential sections including: the business plan’s Highlights (a powerful type of Executive Summary), Introduction, the Company, Management, the Market, the Property, the Funding Opportunity, the Financial Strategy, and how you are different from, and better prepared for success than, the Competition.
If this all of this sounds overwhelming and you would like help preparing your commercial real estate business plan, contact us and we would be happy to help.
- See more business plan examples .
- Learn more about our business plan preparation services .
- Learn more about our construction and real estate business planning experience .
- Read testimonials by our construction and real estate clients .
What are the 5 basic elements of a business plan? ›
- Executive summary. This is your five-minute elevator pitch. ...
- Business description and structure. This is where you explain why you're in business and what you're selling. ...
- Market research and strategies. ...
- Management and personnel. ...
- Financial documents.
Mission statement: a brief summary of the business and its objectives. Company information: introduces the founders, with their biographies. Growth projections: outlines and quantifies the earning potential of the business. Products or services: describes what products and services are offered by the business.
Rather, she explained, at the most basic level it really only needs three key elements: a financial plan, a basic understanding of the competitive landscape, and a clear definition of the company's values, vision and mission .
The biggest reason that they fail is that the action elements are not applied, monitored regularly or refined when required . This results in lack of focus and direction. It also results in lack of energy…if actions aren't being completed then nothing can be achieved.”
Good plans are usually highly detailed and include information on all aspects of the business, including the industry, marketing, finance, personnel and various operating procedures . They are specific, communicate to all company employees and require commitment from everyone.
Your plan's length should mirror its audience The more standard start-up and expansion plans developed for showing outsiders normally run 20-40 pages of text – easy to read, well-spaced text, formatted in bullets, illustrated by business charts and short financial tables – plus financial details in appendices.
The three A's are for when you mess up—and that's why they're so hard for most businesses to swallow, because business people tend to like to avoid the hard part: apologizing. But here's where you get the magic formula, and it goes like this: acknowledge, apologize, act .
- Step 1: Establish your mission. In essence, your mission statement explains why your business exists. ...
- Step 2: Analyse your SWOT. ...
- Step 3: Develop a plan. ...
- Step 4: Create a budget. ...
- Step 5: Put it in writing. ...
- Step 6: Make it a living document.
A business plan is a document that is prepared by the entrepreneur , which describes all the relevant internal as well as external information that is required in starting a new business.
If you're a good writer you can probably write a business plan yourself, at least with some assistance . Software and samples are available to help prepare business plans. Additionally, the SBA is a terrific resource for guiding you through the process.
How do I start a business plan with no money? ›
- Vet Your Business Idea. ...
- Tap Into Free Resources. ...
- Network With Communities of Support. ...
- Live on Personal Savings. ...
- Look for Alternate Funding Options.
- Unrealistic Financial Projections. ...
- Not Defining the Target Audience. ...
- Over-Hype. ...
- Bad Research. ...
- No Focus on your Competition. ...
- Hiding Your Weaknesses. ...
- Not Knowing your Distribution Channels. ...
- Including Too Much Information.
- Conduct market research. Market research will tell you if there's an opportunity to turn your idea into a successful business. ...
- Write your business plan. ...
- Fund your business. ...
- Pick your business location. ...
- Choose a business structure. ...
- Choose your business name. ...
- Register your business. ...
- Get federal and state tax IDs.
- Get Organized. To achieve business success you need to be organized. ...
- Keep Detailed Records. All successful businesses keep detailed records. ...
- Analyze Your Competition. Competition breeds the best results. ...
- Understand the Risks and Rewards. ...
- Be Creative. ...
- Stay Focused. ...
- Prepare to Make Sacrifices. ...
- Provide Great Service.
- Design and sell print-on-demand t-shirts. ...
- Launch your own book. ...
- Create digital products or online courses. ...
- Sell print-on-demand posters, greeting cards, and prints. ...
- Start a charitable business. ...
- Sell a service. ...
- Create an online fashion boutique. ...
- Sell handcrafted and homemade goods.
- Product. A product should be simple, concise and honest. ...
- Market. To be successful, a business needs to know their market and cater towards it. ...
- Money. Money is always an issue when starting any new business. ...
A traditional business plan typically includes—an executive summary, an overview of your products and services, thorough market and industry research, a marketing and sales strategy, operational details, financial projections, and an appendix.
The 3 most important purposes of a business plan are 1) to create an effective strategy for growth, 2) to determine your future financial needs, and 3) to attract investors (including angel investors and VC funding) and lenders .
How Much Should I Pay For a Business Plan Writing Service? Professional business plan writers and consultants generally charge between $2,000 and $25,000 . However, the cost largely depends on the required quality of your plan, the complexity of your business plan, and the length of the document.
In fact, it's possible to write your initial business plan in less than an hour . After all, you're always thinking about your business and the strategies you're going to use to grow, so getting those ideas down on paper shouldn't be hard—it can even be an enjoyable experience.
Which type of startups are most profitable? ›
- Online Courses. In the past year alone, with more people at home than ever, online courses have seen a huge increase in enrollment. ...
- Social Media Consulting. ...
- Web Design. ...
- Logo Design. ...
- Delivery Service. ...
- Cleaning Business. ...
- Business Consulting. ...
- Health and Wellness Business.
- Executive summary. ...
- Description and bios of your leadership/executive team. ...
- Description of your product(s) or service(s) ...
- Market/competitive analysis. ...
- Financials (how much cash you need and when you'll pay it back) ...
- Marketing plan.
The most common and essential highlights are management team, product-market fit, potential market, potential growth, defensibility (some hard-to-copy elements like technology or knowhow), scalability and potential return for investors.
Executive summary . This is one of the shortest components of a business plan, but the one you should spend the most time working on.
Business planning gives you a solid foundation for growth A business plan can help you identify clear, deliberate next steps for your business, even if you never plan to pitch investors—and it can help you see gaps in your plan before they become issues.
Can you hire someone to write a business plan? Yes, you can hire a quality business plan writer . The best business plan writers will have a degree in business administration, a long track record of success writing business plans inside and outside your industry, and reviews from previous clients.
- Sales & Marketing is responsible for driving the revenue. From creating a marketing strategy, to making the actual sales, all the way through closing the deal.
- Operations & Fulfillment is what you do for your customers or clients. ...
- Finance is the fuel that ensures that your business runs.
- A great idea. “No business can develop in the absence of a great idea. ...
- Funding and budget. ...
- What is your business plan? ...
- Legal documentation. ...
- Passion. ...
- Find the right equipment. ...
- Know when you need help.
Business models come in a variety of forms. Direct sales, franchise, freemium, and subscription models are among the common kinds.
- Make a business plan.
- Secure funding.
- Surround yourself with the right people.
- Follow the right legal procedures.
- Establish a location.
- Develop a marketing plan.
- Build your customer base.
- Plan to change.
How do I start my own business from home? ›
- Come up with your business idea. ...
- Decide what you're going to sell. ...
- Write a business plan. ...
- Decide on your business's legal structure. ...
- Apply for your EIN. ...
- Set up a business bank account. ...
- Look into insurance. ...
- Set up a home office.
- Your spouse. One of the first people you should talk with about this new venture is your spouse. ...
- A lawyer. ...
- An accountant and trusted advisor. ...
- A business coach or mentor. ...
Executive Summary Your executive summary should appear first in your business plan. It should summarize what you expect your business to accomplish. Since it's meant to highlight what you intend to discuss in the rest of the plan, the Small Business Administration suggests that you write this section last.
The executive summary is arguably the most important section of the business plan. It must be concise, specific, and well-written. Many of the people who review your business plan will decide, based solely on the executive summary, whether to continue reading.
- Your mission statement;
- The philosophy, vision and goals of your company;
- Your industry and target audience;
- The structure of your business, detailing your customers, suppliers, partners and competitors;
- Your products and services and the problem they solve;
- Unique Selling Point(s).
- 2: Perception.
- 3: Leadership.
- 4: Reputation.
- 5: Consistency.
- A Strong Leadership Team.
- Hire and Retain Quality People.
- Disciplined Approach To Their Business.
- Ability To Strategically Use Tools.
- The Wise Use of Trusted Outside Providers.
Start with a quick elevator pitch that answers the what, why, and how of your proposal . Think of this presentation as your chance to explain the current business need, how your proposal addresses the need, and what the business benefits are. Make sure to address any risks or concerns you think your audience would have.
- Know the industry and your competitors. ...
- Build a qualified team. ...
- Create a high-quality product. ...
- Define your goals. ...
- Promote your products or services. ...
- Understand organizational structure. ...
- Know the principles of finance and accounting. ...
- Understand operational systems and processes.
What is the most profitable business in 2022? ›
- 22 Profitable Businesses to Start in 2022. ...
- Ecommerce Business. ...
- Dropshipping Business. ...
- Vacation or Home Rental. ...
- Online Courses. ...
- Bookkeeping or Accounting Services. ...
- Graphic Design Business. ...
- Digital Agency.
- Business Consulting. If you're an expert in your industry and have been working at it for years, you should consider consulting. ...
- IT Support, Technology Consulting, and Repair. ...
- Cleaning Services. ...
- Accounting and Tax Preparation. ...
- Auto Repair. ...
- Real Estate. ...
- Online courses. ...
- Marketing and PR Services.
- Willingness to take chances. Business owners who are willing to take chances tend to achieve more than those who play it safe. ...
- Unique value. ...
- Tenacity. ...
- Customer-centric approach. ...
- Good marketing. ...
- Strong vision. ...
- Passionate leaders. ...
- Empowered employees.
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Developers file big plans on the industrial edge of South Boston
Oxford and pappas are planning an eight-building campus along the w.b. mason site at the reserved channel.
Real estate developers Oxford Properties and Pappas Enterprises are teaming up on a long-planned mixed-use project in South Boston, on what’s now a swath of mostly industrial land off Summer Street and the Reserved Channel.
Oxford and Pappas this month filed documentation with the Boston Planning & Development Agency detailing an eight-building, 1.7 million-square-foot lab, residential and commercial campus at 300 W. First St. and 647B Summer St., adjacent to the W.B. Mason warehouse. The project includes two residential buildings with 205 units, four lab buildings spanning 1.3 million square feet, along with retail and commercial space.
“The project aims to address needs, both present and future, with its new public open spaces, needed housing, and flexible commercial space,” Oxford’s Mark McGowan and Timothy Pappas wrote in a Nov. 17 letter to the BPDA. “Paramount to long term success are the project’s ambitions in multi-modal connectivity, sustainability and resiliency, and community planning.”
The project team did not specify whether the residential units would be rental or for sale; they are “exploring various options with potential development partners,” the BPDA filing said.
The eight buildings will range from 89 to 209 feet in height, and Skidmore, Owings & Merrill is the master plan architect.
Oxford and Pappas’s proposal aims to bring activity to what’s long been an underutilized stretch of industrial property. Across the other side of Summer Street, developers in recent years have transformed the entrance to the Raymond L. Flynn Marine Industrial Park with lab, office, and hospitality buildings, while work is well underway on preparing the decommissioned former Edison power plant at 776 Summer St. for a large-scale mixed-use project.
The Oxford and Pappas project filing did not give a specified timeline, but said “construction is anticipated to commence upon receipt of full project entitlements.”
It will now undergo community and BPDA review.
Catherine Carlock can be reached at [email protected] . Follow her @bycathcarlock .
- Main content
Housing economists have a great idea that could fix just about everything
- Cities and towns across the country are struggling with underused land and a shortage of housing.
- One relatively simple policy could address both problems and help solve the affordability crisis.
- Land-value taxes would more efficiently and equitably rebalance real estate.
Cities and towns across America are dealing with either an abundance of underused land or a shortage of housing — or both.
Economists and policymakers are increasingly promoting a relatively simple policy that could go a long way to addressing both of these crises, simultaneously bringing housing costs down in the most expensive places and boosting investments in struggling communities.
It all started in 1879 when the American political economist Henry George published a bestselling book: " Progress and Poverty ." The opus, decrying industrial capitalism and the oppression of the working class, made George a popular hero and, eventually, spawned a whole school of thought called Georgism.
The ideology is centered on the idea that natural resources should be shared by everybody, rather than monopolized by the wealthy elite. Fast-forward nearly 150 years, and a Georgist proposal — land-value taxation — is being promoted by urbanists and pro-development advocates as a solution to the housing affordability crisis and much more.
The idea is to tax landowners annually based on the value of their land and reduce or eliminate taxes on any developments made to it, such as apartments, office buildings, or retails stores.
The principle is: "tax what you take out of the natural world, not what you make," said Stephen Hoskins, research director at Resource Justice and a self-described Georgist.
Land-value taxation has gotten some mainstream attention in recent years. "A land value tax would fix that" has become a popular, and sometimes comedic , Twitter response to a range of policy conundrums among urbanists and YIMBYs.
A girl can dream, right? pic.twitter.com/BZ5X3Lh7mU — Daryl Fairweather ⛅ (@FairweatherPhD) August 26, 2023
While the politics of any new tax are tricky, land value taxes have appeal across the political spectrum. Those on the left like that it's a more progressive tax, while free-market conservatives and libertarians like how efficient and pro-development it is.
Just a handful of American cities — and countries around the world — are experimenting with it. More than a dozen cities in Pennsylvania have had success with land value taxes. Since the taxes were first levied, new construction has shot up in places like Pittsburgh, Harrisburg, and Allentown.
Lawmakers in Detroit and Minnesota have also proposed versions of the tax. Detroit Mayor Mike Duggan is a passionate advocate for raising taxes on land and lowering them on homeowners as a way to fight blight and encourage building. He wants to make it more expensive for investors to buy up and sit on scrapyards, parking lots, and vacant property in the city, just waiting for it to appreciate while actively hurting the neighborhood.
Raising more revenue in a fairer way
Land value taxes encourage investment and the most efficient use of land — fixing a problem created by property taxes, which tax the investments made to land. It would incentivize landowners to maximize the revenue from their property — building an apartment building instead of, for example, a parking lot.
The tax is both more efficient and more equitable than other kinds of taxes. While taxes on capital and labor penalize and reduce the amount of both, land isn't going anywhere. And because rich individuals and corporations own most land in cities and towns, land taxes would disproportionately fall on the wealthiest.
"The main point is that the supply of land will not be reduced by the tax and so you're not discouraging economic activities," said Gregor Schwerhoff, an economist in the Structural and Climate Policies Division at the International Monetary Fund.
Pure Georgists advocate for abolishing all taxes besides land value taxes. But most proponents won't go that far. Instead, they want to see more regressive levies — like sales taxes — or those that penalize investment — like property taxes — reduced.
People who don't own land or whose land isn't very valuable would benefit hugely under this scheme.
"If you could reduce your sales taxes to some extent, and replace them with land value taxes, that is a very big win for progressive causes or for equity because these taxes are disproportionately paid by the poorest households," said Shane Phillips, a housing researcher at UCLA's Lewis Center for Regional Policy Studies.
There's another fairness element to it: Under our current tax scheme, even if you do nothing to improve a building, home, or any other kind of structure, the land it sits in will appreciate if it's in desirable area. That means wealthy landowners can end up making money by doing nothing other than holding property in a hot location.
Land appreciates in value when demand for it increases. Demand rises when a neighborhood sees an influx of new residents or visitors, an investment in infrastructure, new jobs in the area, or new amenities, including restaurants, schools, and public spaces. This value isn't created by the landowner, but instead by the community.
"People can end up getting very lucky just based on where they happen to own land and there's, I think, a justified perspective that they oftentimes did not do much or anything to create that value," Phillips said.
Land value taxes are particularly attractive for cities facing either a shortage of housing or an abundance of underused or ill-used land.
But passing any kind of tax reform is notoriously difficult. And re-thinking how we value property gets to some fundamental dynamics in the American economy. Most Americans — and certainly most voters — own their homes and rely on those homes as their most valuable asset.
Doing something that could devalue some Americans' biggest investment "sounds really scary and daunting," Hoskins said.
"We are in a world where speculation on land or building your wealth through owning a piece of real estate that just rises and rises in value is the main mechanism to get into the American middle- and upper-middle class," he added.
So the trickiest challenge is protecting those who own valuable property, but don't have enough income to pay a land tax, including retired, low-income, and recent homeowners.
There are a few practical ways to address this. Land taxes could be deferred until a property is sold or the owner dies. The tax could be phased in at a certain land value, or exempt primary residences. The tax could also be paired with a universal basic income or a significant decrease in property, income, and other taxes that would help homeowners pay the new tax.
"In the real world, this is gonna happen in tiny increments anyway," Hoskins said. "There'll be little ones here and there and it'll start at half a percent or 1% or whatever. Those make it a lot easier to slowly transition."
Watch: One in every 10 Americans moved during the pandemic. Here's where they went.
Real Estate | New plans unveiled for massive Broadway…
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Subscriber only, real estate | new plans unveiled for massive broadway junction office and housing plan in brooklyn.
A plan to build hundreds of new apartments by Broadway Junction, a key Brooklyn transit hub, has reached a key milestone with developers publicly filing long-awaited rezoning plans with the city last week.
The project, dubbed “Herkimer-Williams,” is expected to bring about 600 affordable units and hundreds of square feet of office and retail space, according to developers Totem . The development would be spread across four buildings between approximately 20 and 30 floors high, with four phases of construction over a decade.
“This would allow for a very vibrant, transit-oriented new development that would take into account, hopefully, a reflection of what the needs of the community have been asking for over many decades now, which is affordable housing, retail and space for jobs to grow,” said Tucker Reed, a principal at Totem.
The new filings with the Department of City Planning mark the earliest stages of the lengthy land use process , which likely won’t formally begin until 2025.
The area Totem wants to rezone contains three blocks in a roughly triangular shape divided by Williams Place and Herkimer Street. It’s bordered by Fulton Street to the north, Van Sinderen Avenue to the west, Atlantic Avenue to the south and East New York Avenue to the east.
Totem already owns most of the land, which includes parking, empty lots and an MTA facility.
While the developers have committed to have 100% of units be affordable, little else is set in stone. Reed said affordability levels and even building heights will be worked out with input from the community during the formal land use process.
Per the filings, Totem “intends to work with” the city’s Department of Housing and Preservation in “exploring financing opportunities” to, as Reed put it, figure out “what affordable program is the right fit here.”
Herkimer-Williams would tower over the surrounding, largely industrial neighborhood of East New York, and Totem principal Vivian Liao acknowledged that height is a concern in the community.
“I would be lying if we said height wasn’t something that folks are concerned about, but they also understand that the height also is what helps make jobs and affordable housing possible here,” she said.
Another possible point of contention could be the elimination of Herkimer Street between Williams Place and Fulton Street. The filings call for the “confusing intersection” where Herkimer and Fulton meet to be removed so the developers can “create a contiguous parcel of land.”
Boris Santos is a director of the East New York Community Land Trust , a local organization focused on preserving affordability that previously protested Herkimer-Williams, citing displacement concerns. He said the group is still formalizing its position on the plan, but that residents have lingering qualms about the project.
“Right now some of the points of concern speak to height, usage, demapping of a street, offering maximal public benefits and more,” Santos said. “We are in the understanding that those are the conversations that the developer will be entering with the community, and we look forward to affecting the proposal to our wants and needs.”
Brooklyn Community Board 5 and other local stakeholders have expressed an interest in a CUNY presence at the site. A representative of the board did not respond to multiple requests for comment.
“Since before coming into office, I have been proactively engaging with Totem and the local community about the Herkimer-Williams project through town halls, extensive outreach, and conversations with labor,” local Councilmember Sandy Nurse, whose support will be critical for the project, said in a statement.
“Now that the project has reached this milestone, we are able to get more specific about our wishes, concerns, and timelines, particularly how they would intersect with the many public dollars coming to Broadway Junction for long overdue infrastructure and streetscape improvements.”
However she stressed her concern about having such high-rise commercial office space, saying “it’s hard to imagine people coming back to the office in droves anytime in the near future.” She questioned the office density, “among other elements of the project” but said she looked forward to “productive conversations.”
Broadway Junction is the MTA’s third-busiest station complex in Brooklyn, with some 100,000 daily users.
While the surrounding area has historically been underserved and overlooked for investment, about half a billion dollars in city and state funding was announced in May with the aim of overhauling the Broadway Junction station to upgrade accessibility, improve street safety and create two new plazas.
The Human Resources Administration will move into a new office at 2440 Fulton Street near the proposed Herkimer-Williams site; and the newly refurbished Callahan-Kelly Playground near Broadway Junction was unveiled last week.
Herkimer-Williams falls just outside the chunk of East New York that was included in a controversial 2016 rezoning, which has since been criticized for falling short and breaking promises to the community, particularly around housing .
Reed knows the community is wary as a result.
“I think the proof will be in the pudding for them as we move through the process,” he said. “But we’re optimistic that we can arrive at something that everyone can be really proud of here.”
According to the filings the formal land use and environmental review processes likely wouldn’t finish until 2026, at which point ten years of construction could begin, with occupancy not expected until 2036.
A public scoping meeting on the matter hosted by City Planning is set for December 19.
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More Semiconductors, Less Housing: China’s New Economic Plan
Policymakers, wary of inciting reckless borrowing in real estate, are instead investing heavily in factories and trying to help indebted local governments.
By Keith Bradsher
Reporting from Guangzhou and Weifang, China
China’s political leaders, under pressure to support the country’s fragile recovery, are slowly steering the economy on a new course. No longer able to rely on real estate and local debt to drive growth, they are instead investing more heavily in manufacturing and increasing borrowing by the central government.
For the first time since 2005, when comparable record keeping in China began, banks controlled by the state have started a sustained reduction in real estate lending, data released last week showed. Enormous sums are instead being channeled to manufacturers, particularly in fast-growing industries like electric cars and semiconductors.
There are risks to the approach. China has a chronic oversupply of factories, well more than it needs for its domestic market. A greater emphasis on manufacturing will probably lead to more exports , an increase that could antagonize China’s trading partners. China’s extra lending also poses a challenge for the West, which is trying to foster extra investment in some of the same industries through legislation like the Biden administration’s Inflation Reduction Act.
The shift to manufacturing loans underlines Beijing’s reluctance to bail out China’s debt-burdened property market. Construction and housing account for about a quarter of the economy and are now suffering from steep declines in prices, sales and investment.
China’s investment push might stir more growth in the coming months, partly offsetting troubles in the housing sector. But more central government borrowing, as a replacement for local borrowing, will do little to defuse the long-term drag on growth caused by accumulating debt.
“I don’t think there is a problem for short-term development, but we have to be concerned about medium and long-term development,” Ding Shuang, the chief economist for China at Standard Chartered, said at a recent forum of Chinese economists and finance experts in Guangzhou. “It’s fair to say real estate is not at a floor.”
China’s housing crisis has its roots in four decades of debt-fueled speculation that drove prices to levels far above what could normally be justified by rents or household incomes. China’s policymakers triggered the sector’s recent decline by starting to rein in lending several years ago, and now are reluctant to rescue the sector by kicking off another binge of housing loans.
The government believed that China’s economy would snap back in 2023 after the country’s leaders lifted most “zero Covid” restrictions that quashed the economy last year. But after an initial burst of activity, growth lagged in the spring and summer. Vulnerabilities remain: Manufacturing activity stumbled again last month, after showing growth in August and September.
Last week, at a conference presided over by Xi Jinping, China’s top leader, Communist Party and government officials met in private to discuss finance policy. According to an official statement afterward, the conference ordered that more financial resources be channeled to advanced manufacturing industries , as well as assistance to local governments.
While the housing market struggles, factory construction fueled by government-backed financing is in high gear.
China has already built enough solar panel factories to supply the entire world’s needs. It has built enough auto factories to make every car sold in China, Europe and the United States. And by the end of 2024, China will have built in just five years as many petrochemical factories as all of those now running in Europe plus Japan and South Korea.
Economists at the recent gathering in Guangzhou, held by the International Finance Forum, a Chinese think tank, acknowledged that the country faced challenges not encountered since the years immediately after Mao’s death in 1976. But they predicted that big investments in new manufacturing technologies would pay off.
“Today we have comparable difficulties as 1978, so the question now is what will be the future of innovation-driven growth?” said Zhang Yansheng, a former senior official in the central government’s economic planning agency who is now at the China Center for International Economic Exchanges.
The China banking system’s switch from real estate loans to manufacturing started several years ago, Bert Hofman, the director of the East Asian Institute at the National University of Singapore, said at the Guangzhou event.
Before the pandemic, China’s banks were increasing their lending to real estate by more than $700 billion a year. In the 12 months through September, the total loans outstanding to real estate fell slightly. Banks lent less to developers, and households paid off old mortgages while taking out fewer new ones.
By comparison, net lending to industrial companies skyrocketed from $63 billion in the first nine months of 2019 to $680 billion in the first nine months of this year. That money has gone partly toward building a semiconductor industry that may allow China to wean itself from imports and bypass American export controls, as well as toward categories like electric car manufacturing and shipbuilding.
Many economists have expressed concern that throwing more money at manufacturing might not fix the broader economy. The real estate sector is still decaying and is so large that offsetting its troubles with growth in industries like car manufacturing, which is 6 to 7 percent of economic output, won’t be easy.
The factory construction splurge threatens to antagonize other countries: Much of the additional output is likely to be exported because many Chinese households have curtailed spending.
But the United States and the European Union have become less willing to accept further increases in their trade deficits with China. The European Union is already investigating the use of government subsidies by China’s electric vehicle industry, opening a new trade rift between Brussels and Beijing.
Aware of these risks, China is wooing developing countries. These countries still have sizable but often aging manufacturing sectors that provide an opening for exports from newly built, highly efficient factories in China. Many developing countries are struggling to renegotiate large debts owed to Beijing for infrastructure projects, which puts them in a weak position to raise tariffs on Chinese goods.
China’s factories have been gaining dominance for decades. The country’s share of global manufacturing has grown nearly five times, to 31 percent, since 2000, according to data from the United Nations Industrial Development Organization. The United States’ share has tumbled to 16 percent, while the share of developing countries not including China has stayed level at 19 percent.
Of course, one thing isn’t changing in China’s approach: its reliance on borrowing to fuel growth.
Officials have tried repeatedly for years to tame its debt addiction. Liu He, a vice premier, promised in a speech in 2018 that it would happen within three years.
Instead, local government debt has surged since 2020, reaching nearly $8 trillion last year, and the semi-independent borrowing units of local governments have accumulated trillions of dollars more in loans. China’s overall debt has ballooned until it is considerably larger, relative to the country’s economic output , than debt in the United States and many other developed countries.
Yao Yang, the director of the National School of Development at Peking University, said in September that debt control efforts had not succeeded.
“Between 2014 and 2018, which should have been a window for defusing debt, the debt skyrocketed; the situation became worse after 2020,” he said in a speech. “This indicates that previous debt-defusing measures were ineffective and, in some cases, counterproductive.”
Siyi Zhao contributed research.
Keith Bradsher is the Beijing bureau chief for The Times. He previously served as bureau chief in Shanghai, Hong Kong and Detroit and as a Washington correspondent. He has lived and reported in mainland China through the pandemic. More about Keith Bradsher