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How to write a business plan for your real estate development venture.

business plan for a real estate development venture

A real estate development venture can be a lucrative and rewarding business.

It offers the opportunity to create value in a tangible asset while also providing a steady stream of income.

But, first thing first, you need to write a business plan.

A business plan is a critical tool for any new project, especially a real estate development venture. It will help you to identify the financial and operational objectives of the project, and provide a clear roadmap for success.

In short, a good business plan will help make sure your real estate development venture is profitable .

What should you consider when writing a business plan for a real estate development venture? What components should be part of the structure? What metrics should be considered for the financial assessment? How can I write a business plan efficiently and effectively?

This article will address and answer all these questions.

Finally, please note that you don't have to start your business plan from scratch.

You can download our business plan for a real estate development venture and adapt it to suit your business needs.

business plan property developer

Building a business plan for a real estate development venture

Should you consider writing a business plan for your real estate development venture.

Yes, you should consider writing a business plan for your real estate development venture.

Developing a robust business plan will enable you to:

  • learn about the real estate development market
  • stay on top of the industry's emerging trends
  • uncover what makes a real estate development venture viable
  • understand the market demands, architectural preferences, and sustainability goals for real estate development projects
  • come up with a unique value proposition for your property construction project
  • evaluate competitive strategies
  • find distinctive competitive edges for your real estate development venture
  • find a business model that will generate positive cash flows
  • formulate an airtight strategy to maximize business growth
  • assess potential risks involved in a real estate development venture, such as financial feasibility, construction delays, and market demand

Our team has created a business plan for a real estate development venture that is designed to make it easier for you to achieve all the elements listed.

How to organize a business plan for a real estate development venture?

Inside a business plan, you'll find many facts, numbers, and indicators. It must be well structured, to make easy to read and digest.

When we made our business plan for a real estate development venture , we made sure it had a proper structure.

You'll see 5 different sections (Opportunity, Project, Market Research, Strategy and Finances).

1. Market Opportunity

The section number one is titled "Market Opportunity."

Explore this section to access comprehensive data and insights related to the real estate development venture, enabling you to understand market trends and pursue profitable real estate projects.

We revamp this section twice a year for up-to-date data.

2. Project Presentation

In the "Project" section, describe your real estate development venture, including the types of properties, innovative design approaches, sustainability initiatives, and highlight the unique value proposition for buyers and investors.

At the end of this section, provide a brief introduction about yourself and your qualifications for real estate development.

Highlight your experience in the industry, your track record of successful projects, and your vision for creating exceptional properties that meet market demands and enhance communities.

We've provided you with wording. You can modify it to fit your idea perfectly.

3. Market Research

After that, comes the "Market Research" section.

In this section, you will find a market segmentation analysis for your real estate development venture.

It includes a study of competing real estate development projects and emphasizes your venture's competitive advantages. A tailored SWOT analysis is also provided.

4. Strategy

Within the "Strategy" section, a detailed plan spanning three years is presented, highlighting the initiatives and actions necessary to make your real estate development venture highly profitable.

In addition, you'll find a marketing strategy, a risk management strategy, and a Business Model Canvas that has been filled in.

5. Finances

Ultimately, the "Finances" section presents a comprehensive view of the financials and estimates for your project.

business plan real estate development venture

How to write an Executive Summary for a real estate development venture?

The Executive Summary serves as an introduction to the business plan for your real estate development venture.

Don't go beyond 2 pages; concentrate on the crucial information.

The aim of this document is to make the reader want to explore your business plan.

In the Executive Summary of your real estate development venture, answer the following questions: what type of real estate development does your venture focus on? who is your target market? who are your competitors in the industry? how do you differentiate from them? what funding do you require?

How to do the market analysis for a real estate development venture?

The market study of your real estate development venture helps you understand external factors such as customer preferences for properties, competition within the real estate market, and emerging trends in property development.

By conducting an extensive market analysis, a real estate development venture can understand market demands, offer innovative real estate projects, optimize pricing strategies, and execute targeted marketing campaigns, ultimately leading to increased property sales, project success, and a prominent position in the real estate industry.

This is what we've outlined in the "Market Research" section of our business plan for a real estate development venture :

  • key insights and trends in real estate development, including property development projects, market demand for housing, and sustainable construction practices
  • a list of potential audiences for a real estate development venture
  • the competitive comparison
  • the competitive advantages to build for a real estate development venture

business plan real estate development venture

The key points of the business plan for a real estate development venture

What's the business model of a real estate development venture, business model of a real estate development venture.

A real estate development venture's business model revolves around acquiring land or properties and developing them into residential, commercial, or mixed-use projects for sale or lease. Revenue is generated through property sales or rental income.

The business model focuses on identifying development opportunities, conducting feasibility studies, effective marketing to target property buyers or tenants, and building strong relationships with architects, contractors, or real estate professionals.

Success depends on property market analysis, project planning and execution, delivering high-quality developments, fostering positive customer experiences and recommendations, and continuously identifying and evaluating profitable real estate development opportunities in the market.

Business model vs Business plan

Please don't mix up the terms "business plan" and "business model."

A business model describes how a company generates income and operates successfully.

In a business plan, you delineate your business model employing a resource called the Business Model Canvas.

Rest assured, there is a Business Model Canvas (already completed) in our business plan for a real estate development venture .

How do you identify the market segments of a real estate development venture?

Market segmentation for your real estate agency involves dividing your potential clients into different groups based on their real estate needs, property types, and preferences.

These categories may include factors such as residential properties, commercial properties, luxury properties, or clients seeking specific real estate services (e.g., buying, selling, renting).

By segmenting your market, you can offer specialized real estate services and expertise that cater to each segment's specific requirements. For example, you might provide comprehensive residential real estate services, including assistance with buying or selling homes, offer commercial real estate services for businesses seeking office spaces or retail properties, specialize in luxury properties and cater to high-end clients looking for premium real estate options, or focus on specific real estate services such as property management or rental assistance.

Market segmentation allows you to effectively target your marketing efforts, showcase your knowledge of specific property types or markets, and provide personalized and professional real estate services that meet the unique needs and preferences of each client segment.

In the business plan for a real estate development venture , you will find a detailed market segmentation that gives you insights into your potential customers.

How to conduct a competitor analysis for a real estate development venture?

It's clear that you won't be the only real estate development venture in the market. There are other developers working on projects to create residential and commercial properties.

To create a successful business plan, it's crucial to thoroughly analyze your competitors. This involves carefully identifying and studying their offer, while also evaluating their strengths and weaknesses.

Be mindful of their weaknesses (such as inadequate project planning, lack of market research, or poor construction quality).

Why is it crucial to address these aspects? Because these weaknesses can impact the success of real estate development ventures.

By focusing on these areas, you can conduct thorough market analysis, offer innovative and desirable properties, and provide exceptional customer service, positioning your real estate development venture as a trusted and sought-after player in the market.

It's what we call competitive advantages—work on developing them for a distinct business identity.

Here are some examples of competitive advantages for a real estate development venture: strategic property selection, innovative and sustainable designs, strong project management, efficient construction and timelines, attention to market demands and trends, comprehensive financial analysis, successful partnerships and investor relationships.

How to draft a SWOT analysis for a property developer?

A SWOT analysis can help identify strengths, weaknesses, opportunities, and threats, and provide valuable insights into the potential success of a real estate development venture.

As you can guess, there is indeed a completed and editable SWOT matrix in our business plan for a real estate development venture

The strengths for a real estate development venture

The "S" in SWOT symbolizes Strengths, indicating the project's internal factors that give it a competitive edge.

For a real estate development venture, potential strengths could include access to capital, a strong team of experienced professionals, expertise in local markets, and an established network of contacts.

The weaknesses for a real estate development venture

When we talk about the "W," we're talking about Weaknesses, which are the weaker parts of the project that need improvement.

For a real estate development venture, potential weaknesses include inadequate capital, lack of industry knowledge, poor market timing, and inadequate resources.

The opportunities for a real estate development venture

The letter "O" denotes Opportunities in SWOT, signifying the potential advantages or favorable external conditions for the project.

In the case of a real estate development venture, potential opportunities could include building a mixed-use complex, constructing an apartment complex, renovating a historic building, and developing a housing subdivision.

The threats for a real estate development venture

The letter "T" denotes Threats in SWOT, signifying the external risks or unfavorable factors that can impact the project's outcomes.

How to elaborate a marketing strategy for a property developer?

A marketing strategy is an important part of a business plan as it outlines how a business will attract customers and drive revenue.

A real estate development venture can attract potential buyers or investors by developing an effective marketing approach that showcases the venture's innovative architectural designs, prime locations, and investment potential.

Investors won't be interested in your property developer business without effective marketing; showcasing your successful projects, innovative designs, and potential for growth is crucial.

Are you utilizing marketing tactics to promote your real estate development venture? Consider creating visually appealing renderings or virtual tours of your properties, attending real estate industry conferences or trade shows, and leveraging online platforms to reach potential investors or homebuyers.

Don't fret if you lack knowledge in marketing and communication – there's no need to worry.

How to build a solid financial plan for a property developer?

A solid business plan must include detailed financial information such as projected income, expenses, cash flow, and balance sheets.

As part of your business planning process, you'll be required to predict the revenue for your real estate development venture.

Of course, this revenue forecast will have to make sense.

Our financial plan for a real estate development venture is easy to use and includes built-in checks to help you identify and correct any assumptions, ensuring you create reliable projections with confidence.

Without a doubt, you will be required to draft a provisional budget for your real estate development venture . Make certain to include all expenses without exception - you can find them all listed in our financial plan!

A key aspect of your financial plan is the break-even analysis, which helps determine whether your real estate development venture will become a profitable company or not.

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9 Real Estate Business Models To Consider With Rising Interest Rates or When Inventories Are Low

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Mike Blankenship

Last updated on September 29, 2023

real estate business models for 2021

It’s often said that more millionaires are made through real estate than any other type of business. But what real estate business models do they use?

demo

The Power of Carrot How many deals are you losing to your competitor’s website?

And while it’s difficult to measure the validity of that claim, one thing’s for sure: there’s a lot of money to be made in real estate.

Questions are often raised about whether you should become a wholesaler, a flipper, an agent or broker, or even a hybrid agent/investor.

These questions are common in market events, as we have experienced in recent years…

  • Housing prices are up
  • Housing sales are up
  • Mortgage rates are up
  • Housing inventory numbers are down
  • The number of days on the market is down
  • Affordability is down

Even in low inventory / high-value markets, one thing is sure: people will always buy or sell houses.

Our Carrot member data shows a Q4 quarterly increase of 6.24% in leads over Q3.

Carrot Member Leads Q3 2021 vs Q4 2021

And people who put their money into real estate — buying assets rather than liabilities — ensure a lucrative future for themselves and their families.

So the question is, how should you get into real estate?

Here are nine real estate business models to consider. Prepare yourself for low inventory and changing interest rates.

The Diversity of Real Estate Business Models

There used to be just a few different real estate business models.

If you had access to a lot of capital, you could place big bets with the fix-and-flip system and hope the market didn’t dip at the wrong time. You could also buy-and-hold real estate, steadily expanding your portfolio and net worth.

You could become a real estate agent or broker without big money, netting 3% to 6% per transaction.

Those were the options.

Now things are much more diverse.

Here are the real estate business models we will cover in this article…

  • Real estate agents
  • Wholesaling
  • Wholetailing
  • Buy and hold investing
  • House flipping
  • Remote investing
  • Listing service for FSBO
  • Hybrid agent/investor

The good news is… there’s a real estate business model that will work with any budget. So long as you have the discipline to get started and keep going, you can win at real estate.

The Main Challenge of These Real Estate Business Models

While the business models below present a ton of opportunity for entrepreneurs — indeed, at Carrot, we’ve seen many agents and investors build thriving businesses in just about every market — they’re not free of challenges.

These challenges include hiring the right people, being mathematical in approaching every transaction, and building trust with buyers and sellers.

But one challenge stands above all the rest: consistently generating leads .

For agents and investors, having a consistent flow of leads makes your monthly income more predictable and allows you to grow your business more quickly.

How do you do that?

At Carrot, we specialize in helping investors and agents create simple, effective websites that rank in Google (and thus drive traffic) and systematically convert visitors into leads.

We’ve generated over 2.5 million leads for thousands of investors and agents nationwide.

You can learn more about us over here .

1. Real Estate Agents

When someone thinks about getting into real estate, this is usually the first business model they consider — that of a real estate agent or broker.

Real estate agents make money by helping people buy and sell homes, usually pulling in between 3% and 6% of the sales price. A $250,000 home would net between $7,500 and $15,000.

To become a licensed realtor, you’ll need to research the requirements and processes in your local market — typically, this will include taking some courses and passing a test. You might also need to get sponsored by a real estate brokerage.

  • Low barrier to entry. Anyone with enough time, determination, and sales savvy can become a real estate agent.
  • Good profits on high-ticket homes.
  • Requires expertise in sales.
  • It takes time to build a name for yourself.
  • The average transaction takes about 3 months to complete.

2. Wholesaling

Wholesaling is a real estate investing business model that’s cropped up over the last decade or so.

As a wholesaler, rather than flipping real estate or buying and holding your properties, you work as a sort of “deal finder” for other cash buyers. Your job is to find good deals (motivated sellers) and get them under contract for a price you and your cash buyer can afford. When you pass the deal onto the cash buyer, you’ll typically make a $5,000 to $20,000 assignment fee.

The most significant benefit to wholesaling real estate is that you don’t need a massive amount of money to get started — just a few thousand dollars to send out your first mailers and secure your first deal.

  • No license is required (although that is steadily changing in some states)
  • Requires just a few thousand dollars in startup capital.
  • Tons of opportunities in most markets.
  • Can make up to $20,000 or more per deal.
  • Wholesaling has become highly competitive in most markets.
  • New regulations are being introduced in many states to regulate wholesaling.

real estate development company business model

“6 wholesale deals this month if all goes through. $124k… 4 ppc, 1 organic, 1 Facebook retargeting. 1 have closed the other 5 are under contract with a buyer and the last one waiting on a buyer. Carrot system is still rockin” – Brian Rockwell

3. Wholetailing

The word “wholetail” is a combination of “wholesale” and “retail”. In a wholetail deal, the investor buys a house for a low-ball price, makes just enough repairs so that it’s capable of selling on the MLS, and then sells it to a traditional buyer.

It’s not unusual to make $50,000 to $100,000 on a wholetail deal, but without nearly as much work as flipping takes.

We recommend wholetailing real estate when you’ve found a house that needs very few repairs, you can get it for a price that’s significantly under market value, and you have the cash to purchase the home (your own money or someone else’s).

  • Wholetailing requires very little work but has a big payoff.
  • Wholetail deals are hard to come by.
  • Wholetailing works better as a supplemental investing strategy than it does a primary business model.
  • Requires access to large amounts of cash.

4. Buy-And-Hold Investing

Buy-and-hold investing is probably the best business model for increasing long-term wealth and net worth. In the buy-and-hold strategy, the investor buys properties (ideally ones that are a good deal), fills them with tenants to create cash flow, and holds.

Buy-and-hold investing aims to collect as many properties as possible and build as big of a portfolio as possible.

The hardest part of this business model is securing the cash to purchase properties consistently — we recommend seeking out private money or hard money to fund your deals.

  • Great way to increase net worth.
  • Creates a ton of passive cash flow.
  • Need to manage properties and deal with tenants.
  • Need access to a lot of capital to maintain momentum.

5. House Flipping

House flipping is the HGTV method of real estate investing- perhaps the most popularized way to make it big.

What these TV shows don’t talk about, though, is how house flipping is also one of the riskier real estate business models — because during the time between when you buy a house and when you sell it (often 6 months or so), you’re just crossing your fingers that the market doesn’t take a hit.

Still, house flipping is a great real estate business model to add to your repertoire — it has higher risk but also a higher payoff, often upwards of $100,000 for a single deal.

  • Bigger cash payoff than any other investing model.
  • Requires a lot of fixer-upper work.
  • Has a higher risk.
  • Requires a lot of upfront cash.

6. Remote Investing

Remote real estate investing has only become possible for the everyday investor in the last decade.

Technology has advanced so that investors can generate leads, find deals, inspect homes, purchase properties, and more… all without even being in the same state as the property they’re purchasing.

Check out our guide here to learn more about virtual real estate investing .

This is a great option for people who don’t want their businesses tied down to a single location.

  • You can operate anywhere in the U.S., accessing the most profitable markets.
  • Gives you more time and freedom.
  • It requires a lot of research before entering into a new market.
  • Requires you to buy properties site unseen.
  • You must build a business with clear-cut systems and hire trustworthy people you can depend on.

7. Listing Service For FSBO

What’s great about this business model is that once it’s set up, it can be almost entirely passive — you’ll need to hire a VA to manage some basic tasks and keep up with customer requests.

Here’s how it works: you get your real estate license, set up a website attracting FSBO sellers who want to list their house on the MLS, and offer to do it for a flat fee.

You can charge upwards of $250 per listing, for instance.

And as mentioned above, you can train a VA to do a lot of the heavy lifting. So once you’ve built the website and found ways to drive traffic (paid ads and/or SEO), this will run almost entirely on autopilot.

  • Easy to set up and easy to manage.
  • Decent money maker with very little work.
  • Will need a real estate license.
  • Will be competing with other FSBO listers.
  • Will require a good chunk of upfront work to get everything set up.
  • Will need to find ways to drive traffic consistently.

The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) is a modified version of the buy-and-hold business model.

BRRRR is an ongoing process by which real estate investors can purchase multiple properties with very little capital relative to the growth of their portfolios. First, the investor finds a good deal and buys the property using cash, private money, or hard money. Then they rehab the property and fill it with tenants to start the cash flow.

After a seasoning period of 12-24 months, the investor does a cash-out refinance on the home — this is where a financial institution provides a new loan on the property and returns the cash that they used to purchase the property in the first place.

Then the investor repeats that process with their original funds. If the investor plays their card right, they can purchase many properties with the same funds .

  • Allows for faster portfolio growth.
  • Requires the investor to secure upfront funding.
  • Requires very accurate math.

9. Hybrid Real Estate Model

The hybrid real estate model is a strategy where an agent is also an investor. So, you are essentially serving sellers up with multiple different offers.

It’s a cash offer. Hey, if you’re looking for speed and convenience and are willing to take a bit of a shave in equity, here’s this.

Or, if they want top dollar, here’s what we can list for them in the market.

That’s all that it is.

  • Flexibility to work with different types of sellers.
  • Easier to adapt to market shifts.
  • Requires agents to be open to learning more about investing.

real estate development company business model

Carrot member,  Anthony Beckham , is a hybrid agent/investor. He always says his average profit per deal as an investor is around $20,000 to $30,000. His average agent commission is around the $7000 to $12,000 range .

Final Thoughts

There you have it!

Those are nine real estate business models- something for everyone.

If you don’t have much starting budget, wholesaling or becoming a real estate agent are wonderful options. If you have more capital, then you might consider flipping or BRRRR.

Whatever you decide, there’s plenty of opportunity in each business model.

Not a Carrot member yet? Take a free interactive tour now!

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real estate development company business model

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Property Development Business Plan Template

Written by Dave Lavinsky

Property Development Business Plan

You’ve come to the right place to create your Property Development business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their property development companies.

Below is a template to help you create each section of your Property Development business plan.

Executive Summary

Business overview.

Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.

Redstone Development is owned and operated by Jack Grant, a real estate development industry veteran who is well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Product Offering

Redstone Development will handle the entire development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.

The company focuses on building single-family homes and multi-family apartment complexes in the heart of Salt Lake City. All projects are designed to make these homes aesthetically appealing and luxurious. However, they will also be affordable to ensure that anyone in the Salt Lake City area can afford to live in our properties.

Customer Focus

Redstone Development will serve home buyers and real estate investors who live and work in Salt Lake City, Utah, or the surrounding area. Salt Lake City is a growing city in need of additional housing. More people come to this beautiful city every year, which reduces the number of available homes and apartment units. Therefore, we will target buyers who are struggling to find affordable housing.

Furthermore, there are thousands of first-time home buyers in the area. These buyers are an ideal target market for the company.

Management Team

Redstone Development will be owned and operated by Jack Grant. He recruited his former administrative assistant, Sheila Johnson, to be his Office Manager and help manage the office and operations.

Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful real estate development businesses.

Sheila Johnson has been Jack Grant’s loyal administrative assistant for over ten years at a former property development firm. Jack relies strongly on Sheila’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Sheila has worked in the property development industry for so long that she understands all aspects required to run a successful property development company.

Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business.

Success Factors

Redstone Development will be able to achieve success by offering the following competitive advantages:

  • Location: Redstone Development’s office is near the center of town, in the shopping district of the city. It is visible from the street, where many residents shop for both day-to-day and luxury items.
  • Client-oriented service: Redstone Development will have a full-time assistant with property development experience to keep in contact with clients and answer their everyday questions. Jack realizes the importance of accessibility and will further keep in touch with his clients through monthly newsletters.
  • Management: Jack has been highly successful working in the property development sector. His unique qualifications will serve customers in a much more sophisticated manner than many of Redstone Development’s competitors.
  • Relationships: Having worked and lived in the community his whole life, Jack knows many local leaders, real estate agents, and other influencers in the local property development industry.

Financial Highlights

Redstone Development is seeking $1,000,000 in debt financing to launch its property development business. The funding will be dedicated to purchasing our first property, construction costs, securing the office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:

  • Office space build-out: $50,000
  • Office equipment, supplies, and materials: $20,000
  • Land purchase and construction expenses: $530,000
  • Six months of overhead expenses (payroll, rent, utilities): $250,000
  • Marketing costs: $50,000
  • Working capital: $100,000

The following graph below outlines the pro forma financial projections for Redstone Development.

real estate development company business model

Company Overview

Who is redstone development.

Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the property development process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.

Redstone Development is owned and operated by Jack Grant, who is a real estate development industry veteran and well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Redstone Development’s History

After 30 years of working in the property development industry, Jack Grant began researching what it would take to create his own property development company. This included a thorough analysis of the costs, market, demographics, and competition. Jack has compiled enough information to develop his business plan and approach investors.

Once his market analysis was complete, Jack began surveying the local office spaces available and located an ideal location for the property development headquarters. Jack incorporated Redstone Development as a Limited Liability Corporation on October 1st, 2022.

Once the lease is finalized on the office space, renovations can be completed to make the office a welcoming environment to meet with clients.

Since incorporation, Redstone Development has achieved the following milestones:

  • Located available office space for rent that is ideal for meeting with clients
  • Identified the first property to develop
  • Developed the company’s name, logo, and website
  • Hired an interior designer for the decor and furniture layout
  • Determined equipment and fixture requirements
  • Began recruiting key employees

Redstone Development’s Services

Redstone Development will handle the entire property development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.

Industry Analysis

The real estate and property development industries have been strong over the past few years. As of 2021, the real estate industry was valued at $3.69 trillion and is expected to grow at a compound annual growth rate of 5.2% from now until 2030.

This growth will be driven by increasing demand for personal housing. Millennials and Gen-Z are beginning to rent their first apartments or buy their first homes. After years of living with family or roommates, they are ready to have a space to call their own. This trend is leading to a substantial demand for housing that many cities are struggling to supply.

The main challenge to the property development industry is the decrease in market size in the land development industry. Over the past five years, the industry saw an average annual decline of 0.7%. However, we believe that the pandemic was a considerable factor in this decline. Currently, the land development market is valued at $12 billion USD, and we expect it to grow substantially due to the growth of similar industries and the increasing demand for housing, as mentioned above.

Customer Analysis

Demographic profile of target market.

Redstone Development will serve home buyers and real estate investors in Salt Lake City, Utah, and its surrounding areas.

The community of Salt Lake City has thousands of first-time home buyers, residential real estate investment firms, and people looking for affordable housing options in the area. The company will also target millennials specifically since the majority of first-time home buyers are in this age group.

The precise demographics for Salt Lake City, Utah are:

Customer Segmentation

Redstone Development will primarily target the following customer profiles:

  • Home buyers
  • Real estate investors
  • Millennials
  • Apartment/Condominium management companies

Competitive Analysis

Direct and indirect competitors.

Redstone Development will face competition from other companies with similar business profiles. A description of each competitor company is below.

Upscale Property Developers, Inc.

Upscale Property Developers, Inc. is a property development company in Salt Lake City. In business for over 40 years, Upscale Property Developers, Inc. provides oversight for the entire property development process for new single-family and multi-family residences, commercial offices, and government buildings across the area. Upscale Property Developers, Inc also offers a variety of property renovation, demolition, and revitalization services for existing buildings.

Although Upscale Property Developers, Inc. provides homes with a luxury aesthetic, they are also the most expensive property developments on the market, thus resulting in many first-time home buyers being priced out of the market.

Premium Property Development Solutions

Established in 1990, Premium Property Development Solutions is a property developer of new commercial and residential properties in Salt Lake City. The company specializes in eco-friendly building materials and upscale design options for individual and corporate clients. Clients can customize their building design or choose from a variety of standard design options. The company employs experienced property developers and designers who are well-versed in green building design.

Premium Property Development Solutions is more affordable than Upscale Property Developers Inc. but is still out of most first-time home buyers’ price ranges.

Salt Lake Residential

Salt Lake Residential is also a local property development company that manages the complete property development process from sourcing and permitting to construction and sale. They are mostly known for their unique apartment complex designs but are equipped to take on a variety of different builds. The company has been in business for about ten years and has developed a reputation for building quality homes for affordable prices.

Although Salt Lake Residential has a similar value proposition of luxury homes at affordable prices, this company lacks the green building and eco-efficiency component to their business model, thus losing out on business from eco-conscious home buyers.

Competitive Advantage

Redstone Development enjoys several advantages over its competitors. Those advantages include:

  • Location: Redstone Development’s office is near the center of town, in the city’s shopping district. It is visible from the street, where many residents shop for both day-to-day and luxury items.

Marketing Plan

Brand & value proposition.

Redstone Development will offer the following unique value proposition to its clientele:

  • Service built on long-term relationships and personal attention
  • Big-firm expertise in a small-firm environment
  • Client-focused property development, where the company’s interests are aligned with the client
  • Effective project management
  • Affordable pricing

Promotions Strategy

The promotions strategy for Redstone Development is as follows:

Website/SEO

Redstone Development will invest heavily in developing a professional website that displays all of the features and benefits of the property development company. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Redstone Development will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Print Advertising

The company will invest in professionally designed advertisements to be printed in real estate publications. Redstone Development will also list its properties for sale in key local publications, including newspapers, area magazines, and its own newsletter.

Community Events/Organizations

The company will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.

Redstone Development’s pricing will be moderate so consumers feel they receive great value when purchasing properties from the company.

Operations Plan

The following will be the operations plan for Redstone Development.

Operation Functions:

  • Jack Grant will be the Owner and President of the company. He will oversee all staff and manage client relations. He will also oversee all major aspects of the development projects. Jack has spent the past year recruiting the following staff:
  • Sheila Johnson – Office Manager who will manage the office administration, client files, and accounts payable.
  • Kenneth Bohannon – Staff Accountant will provide all client accounting, tax payments, and monthly financial reporting.
  • Beth Martinez – Marketing Manager who will provide all marketing for Redstone Development and each property it manages.
  • Jack will also hire a team of architects, engineers, interior designers, and contractors to design and build the properties.

Milestones:

The following are a series of steps that lead to our vision of long-term success. Redstone Development expects to achieve the following milestones in the following six months:

1/1/202X         Finalize lease agreement

2/1/202X         Design and build out Redstone Development

3/1/202X         Hire and train initial staff

4/1/202X         Purchase first property for development

5/1/202X         Kickoff of promotional campaign

6/1/202X         Find second property for development

Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business as outlined in the Operations Plan.

Financial Plan

Key revenue & costs.

Redstone Development’s revenues will come primarily from the sale of completed properties. The company will sell new single-family homes, multi-family townhomes, and apartment complexes/condominium properties to individual buyers and investors.

The cost drivers will be the overhead costs required to staff a property development office. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

  • Average monthly payroll expenses: $50,000
  • Office lease per year: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, property development business plan faqs, what is a property development business plan.

A property development business plan is a plan to start and/or grow your property development business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Property Development business plan using our Property Development Business Plan Template here .

What are the Main Types of Property Development Businesses?

There are a number of different kinds of property development businesses , some examples include: Single-family detached housing, Multifamily housing, Developing and Subdividing Lots, and Commercial buildings.

How Do You Get Funding for Your Real Estate Development Business Plan?

Property Development businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate developer business plan and a real estate investment business plan template.

What are the Steps To Start a Property Development Business?

Starting a property development business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Write A Property Development Business Plan - The first step in starting a business is to create a detailed real estate development company business plan that outlines all aspects of the venture. This should include market research on the real estate market and potential target market size, information the services you will offer, marketing strategies, pricing details and a solid financial plan.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your property development business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your property development business is in compliance with local laws.

3. Register Your Property Development Business - Once you have chosen a legal structure, the next step is to register your property development business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your property development business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Property Development Equipment & Supplies - In order to start your property development business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your property development business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

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Real Estate Development Model

Refers to analyzing a property from the perspective of an Investor and deciding whether to invest or not based on the risks and potential returns.

Ranad Rashean

Matthew started his finance career working as an investment banking analyst for Falcon Capital Partners, a healthcare IT boutique, before moving on to  work for Raymond James  Financial, Inc in their specialty finance coverage group in Atlanta. Matthew then started in a role in corporate development at Babcock & Wilcox before moving to a corporate development associate role with Caesars Entertainment Corporation where he currently is. Matthew provides support to Caesars'  M&A  processes including evaluating inbound teasers/ CIMs  to identify possible acquisition targets, due diligence, constructing  financial models , corporate valuation, and interacting with potential acquisition targets.

Matthew has a Bachelor of Science in Accounting and Business Administration and a Bachelor of Arts in German from University of North Carolina.

  • What Is A Real Estate Development Model?

Real Estate Financial Modeling Types

  • What Is The Definition Of A Real Estate Development Model?

Financial Analysis of Real Estate: To Buy or Not to Buy?

To begin, 'real estate' is defined as land and buildings that generate revenue or have the potential to do so.

real estate development company business model

In this article, we will concentrate on commercial real estate (CRE) that is purchased and then rented out to individuals or businesses, as opposed to residential real estate, such as single-family homes, that is owner-occupied and not rented out.

Individuals or businesses, known as tenants, pay rent to property owners to use their space.

The rent provides income to the owners, who use a portion of it to cover expenses such as utilities, property taxes, and insurance; in some cases, tenants are also responsible for a portion of these costs.

All of this leads us to the following definition of Real Estate Financial Modeling (aka REFM):

In real estate financial modeling (REFM), you analyze a property from the perspective of an Equity Investor (owner) or Debt Investor (lender) and decide whether or not the Equity or Debt Investor should invest based on the risks and potential returns.

For example, if you buy a multifamily property (i.e., an apartment building) for $50 million and hold it for five years, could you earn a 12% annualized return?

Could you, for example, develop a new office building by spending $100 million on land and construction, find tenants, lease out the property, sell it, and earn a 20% annualized return?

real estate development company business model

Real estate financial modeling can help you answer these questions by identifying the most important assumptions and correctly setting up your analysis.

Because all investing is probabilistic, a simple model cannot tell whether a property will generate an annualized return of 11.2% or 13.5%.

A good analysis, however, can tell you whether that range of returns – 10% to 15% – is plausible. These are the questions that real estate private equity firms spend their entire day debating before making investment decisions.

Key Takeaways

Real Estate Financial Modeling (REFM) involves analyzing a property from the perspective of an Equity Investor or Debt Investor to determine whether the investment is viable based on risks and potential returns.

There are three main strategies/types in real estate financial modeling: Core (stabilized property), Value-Added (renovations), and Opportunistic (development or redevelopment).

A real estate development model includes a Deal Summary and Cash Flow Model. The Deal Summary lists key assumptions, while the Cash Flow Model calculates revenues, expenses, funding costs, capital repayment proceeds, IRR, and leveraged free cash flows.

Real estate development models provide a holistic view of a project's financial performance, essential for informed decision-making in real estate investments.

Real estate combines equities and fixed income elements and can provide a risk/return profile that falls in the middle.

real estate development company business model

A  Core real estate transaction  in which a firm acquires a stabilized property, makes minor changes, and then resells it, for example, may offer risk and potential returns comparable to those of an investment-grade corporate bond.

A  Value-Added transaction , in which a firm acquires property with a low occupancy rate, makes significant renovations to improve it, and intends to sell the property for a significantly higher price. On the other hand, this may offer risk and potential returns similar to those of stocks.

An  Opportunistic transaction  in which a company builds a new property from the ground up ("development") or ultimately converts or rebuilds an existing one ("redevelopment") may carry an even higher risk than stocks but also higher potential returns.

These descriptions highlight the three main real estate financial modeling strategies and types:

  • Real Estate Acquisition Modeling :  Buy an existing property, make minor changes, and sell it.
  • Real Estate Renovation Modeling:  Purchase an existing property, make significant changes, and sell it.
  • Real Estate Development Modeling:  Purchase land, build a new property, find tenants, and sell once stabilized.
  • There is a fourth strategy:  build a new property but pre-sell units before completion rather than leasing and selling the entire property at the end.

This is a subset of real estate development modeling, and it primarily applies to condominiums (residential real estate).

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What is the definition of a Real Estate Development Model?

A typical real estate development model is divided into two sections:

  • Deal Summary
  • Cash Flow Model

All important assumptions are listed in the Deal Summary, including the schedule (which lays out the timeline), property statistics, development costs, financing assumptions, and sales assumptions, and are used to calculate the economics and profitability Index. 

The  Profitability Index  (PI) is a ratio that calculates the present value of future cash flows versus the initial investment. The index is a component of the project.

real estate development company business model

The Cash Flow Model begins with revenue generation, followed by monthly operating expenses. An operating budget is a set of revenues and expenditures for a specific period, usually a quarter or a year, that a company uses to plan its operations.

When performing financial analysis in Excel, the monthly budgeting template has a column for each month and totals to be the full year annual figures, financing, and finally levered free cash flows, NPV (net present value), and NPV formula guide to the NPV formula.

It is critical to understand how the NPV formula in Excel works and the math behind it. 

NPV = F / [(1 + r)n], 

PV  = Present Value, 

F  = Future payment (cash flow),

r  = Discount rate,

n  = number of future periods,

IRR  (internal rate of return) of the project.

In the following sections, we will discuss the key steps to creating a well-organized real estate development model.

1. Deal summary

a) Property Statistics and Schedule:

The first step in developing a real estate development model is to fill in the schedule and property statistics assumptions. The following items should be included:

  • Transaction date.
  • Sales Start Date.
  • Construction Start Date.
  • Construction End Date.
  • Transaction Month Date.
  • Sale Commencement Date.
  • Units Sold/Month.
  • Completion of Construction Closed.
  • Units Closed Per Month.

real estate development company business model

  • Gross Site Area.
  • Deductions.
  • Net Site Area.
  • Density (FSR).
  • Number of Units.
  • Construction GBA.
  • Net Salable.
  • Average Unit Size.

b) Costs of Development:

The next step in developing a real estate development model will be to enter the assumptions for development costs in terms of the total amount, cost per unit, and cost per square foot. 

Development costs include land costs, building costs, servicing, hard and soft contingencies, marketing, etc. We can calculate the numbers and complete the development costs section using the property statistics we filled out earlier.

real estate development company business model

c) Sales Predictions:

We will calculate the total revenue from this project in sales assumptions. Assume that market research has been conducted and that, based on comparables, we believe that $500 per square foot is a reasonable starting point for the sales price.

We will then use this as a revenue generator. We can calculate the net proceeds from this project by calculating sales (total, $/unit, $/SF), sales commissions (e.g., 50%), and warranty.

d) Assumptions Regarding Financing:

There are three critical assumptions for financing: loan-to-cost percentage, interest rate, and land loan.

Before calculating the total loan amount, we must first determine the total development cost. Because we haven't figured out the interest expense yet, we can link the cell to the cash flow model for the time being and get the value once the cash flow model is completed.

The commissions are the same as those described in the section on sales assumptions. The total development costs are as follows:

Total Development Cost = Land Cost + Development Cost + Interest and Commissions Added Together

We can now fill in the remaining financing assumptions.

  • The maximum loan amount obtained for this project is equal to the total development cost multiplied by the loan-to-cost percentage.
  • Total Development Cost – Maximum Loan Amount = Equity

real estate development company business model

2. Cash Flow Model

a) Increased Revenue:

The first step in calculating revenues is determining townhomes' absorption and closings. The number of available homes sold during a given period is referred to as absorption. In contrast, the number of homes closed once construction is completed is called closings.

real estate development company business model

Using the absorption and closing data, we can now calculate revenue.

  • Sales of townhomes = Sales Price/Unit x Townhome Closings
  • First 50% commissions (charged when homes are sold) = Townhome absorption x Sales Price/Unit x (Commission % /2)
  • Second, fifty percent commissions (charged when homes are closed) =Townhome closings x Sales Price/Unit x (Commission % /2)
  • Warranty = Warranty cost per unit x Townhome closings 
  • Total Net Revenue = SUM(Townhome sales + 50% Commissions + 50% Commissions + Warranty).

b) Expenses:

Now we'll look at the development costs, which include the cost of land acquisition, pre-construction spending, and construction spending. The figures can be found in the Deal Summary's development costs assumption section.

  • Cost of Land Acquisition = Cost of Land
  • Spending on pre-construction = Spending on pre-construction ($/month)
  • Construction spending = (Development costs – Pre-construction spending)/number of construction months
  • SUM of Total Development Costs
  • (Land acquisition costs + Pre-construction costs + Construction costs)

c) Funding Cost and Capital Repayment Proceeds:

The Cost to Fund is the project cash flow shortfall that must be financed. When total net revenue exceeds total development costs, we have a negative cash flow that must be covered.

real estate development company business model

When total net revenue exceeds total development costs, we will have positive proceeds that we can use to repay borrowed capital. To compute the two numbers, we can use the following formulas:

Costs to Fund = ((Total Net Revenue – Total Development Costs) > 0 (Total Net Revenue – Total Development Costs), 0)

Return on Capital = IF((Total Net Revenue – Total Development Costs) 0, (Total Net Revenue – Total Development Costs), 0)

d) Financing:

Following that, we compute the loan balances, draws, repayments, and Interest accrued. The calculations for the first and subsequent periods are summarized below:

We should also check quickly to ensure that none of the ending balances exceed the maximum loan amount.

e) IRR and free cash flow:

We can compute the project's levered free cash flows and resulting IRR.

  • Equity Balance = SUM(Costs to Fund, Proceeds to Payback Capital, Loan Draws, Loan Repayments)
  • Leveraged Free Cash Flow = first-period balance
  • Previous Balance – Levered Free Cash Flow = Following Period Balances

Finally, we can compute the Levered IRR for this project using the XIRR formula:

  • IRR levered = XIRR (All Levered Free Cash Flows, Corresponding period)

In most cases, REFM is less complicated than traditional financial modelling.

This is due to the more limited purpose: we do not require 3-statement models, credit models, valuation,  DCF models , merger models, or LBO models.

Furthermore, revenue and expense projections do not vary as much for companies in different industries.

The majority of real estate financial models can be summed up by a slight variation on Shakespeare's most famous quote:

"To buy, or not to buy?"

  • Should you buy or build a property at the stated price?
  • Is it possible to achieve the desired returns, or would that necessitate completely unrealistic assumptions?
  • Would you lose money in the worst-case scenario, or would you survive even if the returns were disappointing?

Real estate financial modelling provides straightforward but powerful methods for answering these questions and making investment decisions.

real estate development company business model

Is real estate development a good career?

A real estate career in project development can generate the highest profits of any real estate career choice, particularly when developing commercial real estate. However, a failed real estate development project entails the most significant risk and loss.

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To continue learning and advancing your career, check out these additional helpful  WSO  resources:

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  • Foundations of Real Estate Financial Modeling
  • Monthly Cash Flow Forecast Model
  • Real Estate Financial Analysis

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How To Write A Real Estate Business Plan

real estate development company business model

What is a real estate business plan?

8 must-haves in a business plan

How to write a business plan

Real estate business plan tips

Success in the real estate investing industry won’t happen overnight, and it definitely won’t happen without proper planning or implementation. For entrepreneurs, a  real estate development business plan can serve as a road map to all of your business operations. Simply put, a real estate business plan will serve an essential role in forming your investing career.

Investors will need to strategize several key elements to create a successful business plan. These include future goals, company values, financing strategies, and more. Once complete, a business plan can create the foundation for smooth operations and outline a future with unlimited potential for your investing career. Keep reading to learn how to create a real estate investment business plan today.

What Is A Real Estate Investing Business Plan?

A real estate business plan is a living document that provides the framework for business operations and goals. A business plan will include future goals for the company and organized steps to get there. While business plans can vary from investor to investor, they will typically include planning for one to five years at a time.

Drafting a business plan for real estate investing purposes is, without a doubt, one of the single most important steps a new investor can take. An REI business plan will help you avoid potential obstacles while simultaneously placing you in a position to succeed. It is a blueprint to follow when things are going according to plan and even when they veer off course. If for nothing else, a real estate company’s business plan will ensure that investors know which steps to follow to achieve their goals. In many ways, nothing is more valuable to today’s investors. It is the plan, after all, to follow the most direct path to success.

real estate investing business plan

8 Must-Haves In A Real Estate Business Plan

As a whole, a real estate business plan should address a company’s short and long-term goals. To accurately portray a company’s vision, the right business plan will require more information than a future vision. A strong real estate investing business plan will provide a detailed look at its ins and outs. This can include the organizational structure, financial information, marketing outline, and more.  When done right, it will serve as a comprehensive overview for anyone who interacts with your business, whether internally or externally.

That said, creating an REI business plan will require a persistent attention to detail. For new investors drafting a real estate company business plan may seem like a daunting task, and quite honestly it is. The secret is knowing which ingredients must be added (and when). Below are seven must-haves for a well executed business plan:

Outline the company values and mission statement.

Break down future goals into short and long term.

Strategize the strengths and weaknesses of the company.

Formulate the best investment strategy for each property and your respective goals.

Include potential marketing and branding efforts.

State how the company will be financed (and by whom).

Explain who is working for the business.

Answer any “what ifs” with backup plans and exit strategies.

These components matter the most, and a quality real estate business plan will delve into each category to ensure maximum optimization.

A company vision statement is essentially your mission statement and values. While these may not be the first step in planning your company, a vision will be crucial to the success of your business. Company values will guide you through investment decisions and inspire others to work with your business time and time again. They should align potential employees, lenders, and possible tenants with the motivations behind your company.

Before writing your company vision, think through examples you like both in and out of the real estate industry. Is there a company whose values you identify with? Or, are there mission statements you dislike? Use other companies as a starting point when creating your own set of values. Feel free to reach out to your mentor or other network connections for feedback as you plan. Most importantly, think about the qualities you value and how they can fit into your business plan.

Goals are one of the most important elements in a successful business plan. This is because not only do goals provide an end goal for your company, but they also outline the steps required to get there. It can be helpful to think about goals in two categories: short-term and long-term. Long-term goals will typically outline your plans for the company. These can include ideal investment types, profit numbers, and company size. Short-term goals are the smaller, actionable steps required to get there.

For example, one long-term business goal could be to land four wholesale deals by the end of the year. Short-term goals will make this more achievable by breaking it into smaller steps. A few short-term goals that might help you land those four wholesale deals could be to create a direct mail campaign for your market area, establish a buyers list with 50 contacts, and secure your first property under contract. Breaking down long-term goals is a great way to hold yourself accountable, create deadlines and accomplish what you set out to.

3. SWOT Analysis

SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis involves thinking through each of these areas as you evaluate your company and potential competitors. This framework allows business owners to better understand what is working for the company and identify potential areas for improvement. SWOT analyses are used across industries as a way to create more actionable solutions to potential issues.

To think through a SWOT analysis for your real estate business plan, first, identify your company’s potential strengths and weaknesses. Do you have high-quality tenants? Are you struggling to raise capital? Be honest with yourself as you write out each category. Then, take a step back and look at your market area and competitors to identify threats and opportunities. A potential threat could be whether or not your rental prices are in line with comparable properties. On the other hand, a potential opportunity could boost your property’s amenities to be more competitive in the area.

4. Investment Strategy

Any good real estate investment business plan requires the ability to implement a sound investment strategy. If for nothing else, there are several exit strategies a business may execute to secure profits: rehabbing, wholesaling, and renting — to name a few. Investors will want to analyze their market and determine which strategy will best suit their goals. Those with long-term retirement goals may want to consider leaning heavily into rental properties. However, those without the funds to build a rental portfolio may want to consider getting started by wholesaling. Whatever the case may be, now is the time to figure out what you want to do with each property you come across. It is important to note, however, that this strategy will change from property to property. Therefore, investors need to determine their exit strategy based on the asset and their current goals. This section needs to be added to a real estate investment business plan because it will come in handy once a prospective deal is found.

5. Marketing Plan

While marketing may seem like the cherry on top of a sound business plan, marketing efforts will actually play an integral role in your business’s foundation. A marketing plan should include your business logo, website, social media outlets, and advertising efforts. Together these elements can build a solid brand for your business, which will help you build a strong business reputation and ultimately build trust with investors, clients, and more.

First, to plan your marketing, think about how your brand can illustrate the company values and mission statement you have created. Consider the ways you can incorporate your vision into your logo or website. Remember, in addition to attracting new clients, marketing efforts can also help maintain relationships with existing connections. For a step by step guide to drafting a real estate marketing plan , be sure to read this guide.

6. Financing Plan

Writing the financial portion of a business plan can be tricky, especially if you are starting your business. As a general rule, a financial plan will include the income statement, cash flow, and balance sheet for a business. A financial plan should also include short and long-term goals regarding the profits and losses of a company. Together, this information will help make business decisions, raise capital, and report on business performance.

Perhaps the most important factor when creating a financial plan is accuracy. While many investors want to report on high profits or low losses, manipulating data will not boost your business performance in any way. Come up with a system of organization that works for you and always ensure your financial statements are authentic. As a whole, a financial plan should help you identify what is and isn’t working for your business.

7. Teams & Small Business Systems

No successful business plan is complete without an outline of the operations and management. Think: how your business is being run and by whom. This information will include the organizational structure, office management (if any), and an outline of any ongoing projects or properties. Investors can even include future goals for team growth and operational changes when planning this information.

Even if you are just starting or have yet to launch your business, it is still necessary to plan your business structure. Start by planning what tasks you will be responsible for, and look for areas you will need help with. If you have a business partner, think through your strengths and weaknesses and look for areas you can best complement each other. For additional guidance, set up a meeting with your real estate mentor. They can provide valuable insights into their own business structure, which can serve as a jumping-off point for your planning.

8. Exit Strategies & Back Up Plans

Believe it or not, every successful company out there has a backup plan. Businesses fail every day, but investors can position themselves to survive even the worst-case scenario by creating a backup plan. That’s why it’s crucial to strategize alternative exit strategies and backup plans for your investment business. These will help you create a plan of action if something goes wrong and help you address any potential problems before they happen.

This section of a business plan should answer all of the “what if” questions a potential lender, employee, or client might have. What if a property remains on the market for longer than expected? What if a seller backs out before closing? What if a property has a higher than average vacancy rate? These questions (and many more) are worth thinking through as you create your business plan.

How To Write A Real Estate Investment Business Plan: Template

The impact of a truly great real estate investment business plan can last for the duration of your entire career, whereas a poor plan can get in the way of your future goals. The truth is: a real estate business plan is of the utmost importance, and as a new investor it deserves your undivided attention. Again, writing a business plan for real estate investing is no simple task, but it can be done correctly. Follow our real estate investment business plan template to ensure you get it right the first time around:

Write an executive summary that provides a birds eye view of the company.

Include a description of company goals and how you plan to achieve them.

Demonstrate your expertise with a thorough market analysis.

Specify who is working at your company and their qualifications.

Summarize what products and services your business has to offer.

Outline the intended marketing strategy for each aspect of your business.

1. Executive Summary

The first step is to define your mission and vision. In a nutshell, your executive summary is a snapshot of your business as a whole, and it will generally include a mission statement, company description, growth data, products and services, financial strategy, and future aspirations. This is the “why” of your business plan, and it should be clearly defined.

2. Company Description

The next step is to examine your business and provide a high-level review of the various elements, including goals and how you intend to achieve them. Investors should describe the nature of their business, as well as their targeted marketplace. Explain how services or products will meet said needs, address specific customers, organizations, or businesses the company will serve, and explain the competitive advantage the business offers.

3. Market Analysis

This section will identify and illustrate your knowledge of the industry. It will generally consist of information about your target market, including distinguishing characteristics, size, market shares, and pricing and gross margin targets. A thorough market outline will also include your SWOT analysis.

4. Organization & Management

This is where you explain who does what in your business. This section should include your company’s organizational structure, details of the ownership, profiles on the management team, and qualifications. While this may seem unnecessary as a real estate investor, the people reading your business plan may want to know who’s in charge. Make sure you leave no stone unturned.

5. Services Or Products

What are you selling? How will it benefit your customers? This is the part of your real estate business plan where you provide information on your product or service, including its benefits over competitors. In essence, it will offer a description of your product/service, details on its life cycle, information on intellectual property, as well as research and development activities, which could include future R&D activities and efforts. Since real estate investment is more of a service, beginner investors must identify why their service is better than others in the industry. It could include experience.

6. Marketing Strategy

A marketing strategy will generally encompass how a business owner intends to market or sell their product and service. This includes a market penetration strategy, a plan for future growth, distribution channels, and a comprehensive communication strategy. When creating a marketing strategy for a real estate business plan, investors should think about how they plan to identify and contact new leads. They should then think about the various communication options: social media, direct mail, a company website, etc. Your business plan’s marketing portion should essentially cover the practical steps of operating and growing your business.

real estate investor business plan

Additional Real Estate Business Plan Tips

A successful business plan is no impossible to create; however, it will take time to get it right. Here are a few extra tips to keep in mind as you develop a plan for your real estate investing business:

Tailor Your Executive Summary To Different Audiences: An executive summary will open your business plan and introduce the company. Though the bulk of your business plan will remain consistent, the executive summary should be tailored to the specific audience at hand. A business plan is not only for you but potential investors, lenders, and clients. Keep your intended audience in mind when drafting the executive summary and answer any potential questions they may have.

Articulate What You Want: Too often, investors working on their business plan will hide what they are looking for, whether it be funding or a joint venture. Do not bury the lede when trying to get your point across. Be clear about your goals up front in a business plan, and get your point across early.

Prove You Know The Market: When you write the company description, it is crucial to include information about your market area. This could include average sale prices, median income, vacancy rates, and more. If you intend to acquire rental properties, you may even want to go a step further and answer questions about new developments and housing trends. Show that you have your finger on the pulse of a market, and your business plan will be much more compelling for those who read it.

Do Homework On The Competition: Many real estate business plans fail to fully analyze the competition. This may be partly because it can be difficult to see what your competitors are doing, unlike a business with tangible products. While you won’t get a tour of a competitor’s company, you can play prospect and see what they offer. Subscribe to their newsletter, check out their website, or visit their open house. Getting a first-hand look at what others are doing in your market can greatly help create a business plan.

Be Realistic With Your Operations & Management: It can be easy to overestimate your projections when creating a business plan, specifically when it comes to the organization and management section. Some investors will claim they do everything themselves, while others predict hiring a much larger team than they do. It is important to really think through how your business will operate regularly. When writing your business plan, be realistic about what needs to be done and who will be doing it.

Create Example Deals: At this point, investors will want to find a way to illustrate their plans moving forward. Literally or figuratively, illustrate the steps involved in future deals: purchases, cash flow, appreciation, sales, trades, 1031 exchanges, cash-on-cash return, and more. Doing so should give investors a good idea of what their deals will look like in the future. While it’s not guaranteed to happen, envisioning things has a way of making them easier in the future.

Schedule Business Update Sessions: Your real estate business plan is not an ironclad document that you complete and then never look at again. It’s an evolving outline that should continually be reviewed and tweaked. One good technique is to schedule regular review sessions to go over your business plan. Look for ways to improve and streamline your business plan so it’s as clear and persuasive as you want it to be.

Reevauating Your Real Estate Business Plan

A business plan will serve as a guide for every decision you make in your company, which is exactly why it should be reevaluated regularly. It is recommended to reassess your business plan each year to account for growth and changes. This will allow you to update your business goals, accounting books, and organizational structures. While you want to avoid changing things like your logo or branding too frequently, it can be helpful to update department budgets or business procedures each year.

The size of your business is crucial to keep in mind as you reevaluate annually. Not only in terms of employees and management structures but also in terms of marketing plans and business activities. Always incorporate new expenses and income into your business plan to help ensure you make the most of your resources. This will help your business stay on an upward trajectory over time and allow you to stay focused on your end goals.

Above all else, a  real estate development business plan will be inspiring and informative. It should reveal why your business is more than just a dream and include actionable steps to make your vision a reality. No matter where you are with your investing career, a detailed business plan can guide your future in more ways than one. After all, a thorough plan will anticipate the best path to success. Follow the template above as you plan your real estate business, and make sure it’s a good one.

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Property Development Business Plan Template

Written by Dave Lavinsky

property development business plan

Property Development Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their property development companies.

If you’re unfamiliar with creating a business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a property development business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your property development business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a property development business or grow your existing property development company, you need a business plan. A proper property development business plan will help you raise funding, if needed, and plan out the growth of your business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Property Development Companies

With regards to funding, the main sources of funding for a property development company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for property development companies.

Finish Your Business Plan Today!

How to write a business plan for a property development company.

If you want to start a property development company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your property development business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of property development business you are running and the status. For example, are you a startup, do you have a business that you would like to grow, or are you operating property development businesses in multiple markets?

Next, provide an overview of each of the subsequent sections of your plan.

  • Give a brief overview of the property development and real estate industry.
  • Discuss the type of property development business you are operating.
  • Detail your direct competitors. Give an overview of your target market.
  • Provide a snapshot of your marketing strategy. Identify the key members of your team.
  • Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of business you are operating.

For example, you might specialize in one of the following types of property development businesses:

  • Single-family detached housing : these types of property developers build free-standing residential buildings for sale.
  • Multifamily housing: these types of property developers build apartment buildings, condos, and mixed-use developments.
  • Developing and Subdividing Lots: these types of property developers purchase property, either developed or undeveloped, and clear it and prepare it for sale to builders.
  • Commercial buildings: these types of property developers build and manage commercial buildings such as shopping centers or offices.

In addition to explaining the type of property development company you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

  • When and why did you start the property business?
  • What milestones have you achieved to date? Milestones could include the number of properties developed, reaching X percentage of vacancy/occupancy, reaching X amount of revenue, etc.
  • Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the property development industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the property development industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your property development business plan:

  • How big is the property development industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential target market for your property development company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your property development business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, families, and small businesses.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of property development business you operate. Clearly, families would respond to different marketing promotions than businesses, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other property development businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes realtors, foreclosure markets, rental housing, or companies purchasing and remodeling their own building. You need to mention such competition as well.

property development competition

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

  • What types of customers do they serve?
  • What type of property development company are they?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you provide finance packages?
  • Will you offer amenities or services that your competition doesn’t?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a property development company, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of property development company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you specialize in single-family detached housing, mixed use developments, or shopping centers?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the project types and/or services you offer and their prices.

Place : Place refers to the site of your property development company. Document where your company is situated and mention how the site will impact your success. For example, is your property development business located in a business or industrial district, or is it a standalone office surrounded by models? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your property development marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

  • Advertise in local papers, radio stations and/or magazines
  • Reach out to websites
  • Distribute flyers
  • Engage in email marketing
  • Advertise on social media platforms
  • Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday Short-Term Processes

In this section, include all of the tasks involved in running your property development business, including answering calls, meeting with potential customers, performing construction, showing properties, etc.

Long-Term Goals

Your long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your Xth home, or when you hope to reach $X in revenue. It could also be when you expect to expand your business to a new city.  

Management Team

To demonstrate your property development business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing property development businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your management team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a property development business or successfully running a construction project management firm.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you develop 5 or 25 properties per quarter, and/or offer property management services? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your property development business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a property development business:

  • Cost of construction equipment and supplies
  • Cost of contract labor
  • Cost of office space and office supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your model properties’ blueprints or a breakdown of development types you offer.  

Writing a business plan for your property development company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the property development industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful property development business.  

Property Development Company Business Plan Template FAQs

What is the easiest way to complete my property development business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your business plan.

How Do You Start a Property Development Business?

Starting a property development business is easy with these 14 steps:

  • Choose the Name for Your Property Development Company
  • Create Your Property Development Business Plan
  • Choose the Legal Structure for Your Property Development Company
  • Secure Startup Funding for Your Property Development Business (If Needed)
  • Secure a Location for Your Business
  • Register Your Property Development Company with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Property Development Company
  • Buy or Lease the Right Property Development Equipment
  • Develop Your Property Development Business Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Business
  • Open for Business

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Real Estate-as-a-Service: From ‘product and space’ to‘ system and service’

A new business model for commercial real estate.

Real estate is undergoing a fundamental business model redesign enabled by digitalization and a growing market of smart buildings. A redesign that is important in a (post) pandemic era when so many businesses are evaluating what their property brings to the company by providing on-demand, customizable and scalable access to space, amenities and services. What business model will be successful in the future? What can the real estate industry learn from tech? What is Real Estate-as-a-Service? And what is the impact on strategy and organizational performance?

Written by Marco Macagnano | Deloitte ZA

In a world of bits and bytes, the value of Real Estate for businesses is increasingly determined by a different yardstick. Square footage is being replaced by data, and services that enable work are taking the place of the traditional space to work. Where the adage for property value once declared: location, location, location, the reality of today’s real estate is location, insights, experience. To unpack this further, property owners need to consider how the space is being used, not whether it is being occupied. Real Estate-as-a-Service (REaaS) creates the conditions for property owners to ask themselves what the real value of their property is. REaaS, an innovation that is being enabled through smart and connected buildings, augments bottom line benefits from savings to new revenue and shifts the value focus from offering space to offering digital and physical services to users.

Real Estate-as-a-Service

The evolved real estate value proposition.

In the era of the ”new normal”, work doesn’t strictly depend on office space. The function of corporate real estate has therefore evolved from somewhere to work, to a workplace that enables users to perform better than they would do anywhere else. It is a place of high impact and superior experience, offering a curated and scalable ”homefield advantage” to businesses, and transforming real estate from a ”space to work” into a ”business tool”.

Updating the business model: becoming a service provider

Enter “Real Estate-as-a-Service”, or ReaaS. The term “As-a-Service” became mainstream through high-speed connectivity whereby technology companies leveraged their infrastructure and software, offering an alternative model for use by targeting consumer behavior, as opposed to monetizing the product. REaaS generates revenue based on the outcome of improved experience and productivity. These improvements are provided to the occupants working in the connected building, where each digital service to support outcomes is charged for on demand.

Lessons from the tech industry

To understand the evolved business model, the real estate industry can learn new ways to generate revenue from the tech industry. Internet-based and physical ”sites” have similar requirements: people amassed in a single location in need of a personal outcome with predictable frequency. ”Locality” is leveraged to support experience, productizing the user rather than the infrastructure. Value emphasizes rendering services to support what people do and how they do it, instead of just where they do it. Real estate is therefore transformed from ”fixed product” (space and infrastructure) to ”connected system” (information and services).

Smart building: connecting users and occupants to services

The location where people work is deprioritized, whereas the smart building connects users and occupants to services, so that work becomes more advanced and connected to benefit the business. User output is monetized through services that leverage the physical infrastructure as an enabler. This fundamentally changes the business model of property owners who are now in the position to become service providers as custodians of physical and digital infrastructure.

Understanding digital services in real estate

The smart building creates conditions to aggregate and contain all building data. These are used for targeted analytics to inform decision-making. The data is contained within a digital platform and can therefore be leveraged to provide customizable features and services. A service is defined as the provision of information that is contextual or personalized to any customer or user. A digital service is one that is commoditized and provided electronically across multiple platforms such as internet or mobile devices. Digital services include e.g. insights through analytics, features and facilities rights management, location-based services, and a digital marketplace for third parties. They can be monetized in various ways, offering additional revenue to property owners and tenants – e.g. by means of subscriptions, consumptionbased models, data monetization, API monetization, digital marketplace, and marketing & advertising.

Improving organizational performance

In order to deliver a digital service, the provider must be in control of the flow of data to the end device that benefits the user (e.g. a mobile device, lighting, or audio visual equipment). In real estate terms, this will incentivize the property owner to take direct control of provisioning the infrastructure that is typically fulfilled by a tenant as a part of their initial fit-out. This creates a technological backbone that not only renders basic connectivity and functionality (e.g. lighting and Wi-Fi), but also helps tenants to improve their organizational performance – by means of data about how the space is being used and by whom.

Digital Masterplan and Platform Strategy

To exploit the potential offered by REaaS, a Digital Masterplan and Platform Strategy is required. This masterplan can act as the architectural design for smart buildings, avoiding the pitfalls of capitalizing separate point-solutions that provide limited benefits outside of core functionality.

A masterplan will:

  • align the connected building to the enterprise architecture of the tenant or occupant
  • define and design what data is required, how it is generated and analyzed
  • support the revenue model, and
  • determine the infrastructure required to support the digital agenda and the features that support the digitally augmented Real Estate.

REaaS combines and cross-leverages capabilities across systems to enable platform-based features and analytics that were not possible before. This platform unlocks the potential to sell these features and services to end-users. This will enable businesses to quantifiably improve their experience, productivity, and space usage, and it will help property owners transform from their “product and space” offering to a new value-adding and future-proof role as a service provider.

Real Estate Predictions 2021

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Would you like to know more about the Real Estate Predictions, and its effects on your organization? Please contact us via the details below.

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Real Estate Development Business Plan

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Real estate industry has grown tremendously over the past few years, and we don’t anticipate any significant shifts any time soon. Incredible profit potential, income diversification, and various tax benefits make it an excellent consideration.

Are you looking to start writing a business plan for your real estate development business? Creating a business plan is essential to starting, growing, and securing funding for your business. So we have prepared a real estate development business plan template to help you start writing yours.

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How to Write a Real Estate Development Business Plan?

Writing a real estate development business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:

Start with a brief introduction:

Market opportunity:, mention your services:, management team:, financial highlights:, call to action:.

Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.

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real estate development company business model

2. Business Overview

Depending on what details of your business are important, you’ll need different elements in your business overview. Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:

About the business:

  • The name and type of your real estate development company: mention whether you are a development company focusing on residential, commercial, resort & hospitality development, or industrial development. Maybe, you offer a mix of some of these services—so mention it.
  • Company structure of your real estate business, whether it is an LLC, partnership firm, or something else.
  • Location of your property development company and why you selected that place.

Mission statement:

Business history:, future goals:.

This section should provide an in-depth understanding of your real estate development business. Also, the business overview section should be engaging and precise.

3. Market Analysis

Market analysis provides a clear understanding of the market in which your real estate development business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:

Target market:

Market size and growth potential:, competitive analysis:, market trends:, regulatory environment:.

Some additional tips for writing the market analysis section of your business plan:

  • Use a variety of sources to gather data, including industry reports, market research studies, and surveys.
  • Be specific and provide detailed information wherever possible.
  • Include charts and graphs to help illustrate your key points.
  • Keep your target audience in mind while writing the business plan

4. Products And Services

The product and services section of a property development business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:

List the services:

  • Create a list of services your development business will offer, including construction and project management, architectural designing and planning, property acquisition, financing services, etc.
  • Describe each service: Provide a detailed description of what it entails, the time required, and the qualifications of the professionals who will provide it. For example, a project manager is responsible for overseeing the day-to-day operations of a project.

Emphasize safety and quality:

Overall, a business plan’s product and services section should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Develop your unique selling proposition (USP):

Determine your pricing strategy:, marketing strategies:, sales strategies:, customer retention:.

Overall, the sales and marketing strategies section of your business plan should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.

6. Operations Plan

When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:

Hiring plan:

Operational process:, equipment and machinery:.

By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your real estate development business.

7. Management Team

The management team section provides an overview of the individuals responsible for running the real estate development business. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.

Key managers:

Organizational structure:, compensation plan:, board of advisors:.

Describe your company’s key personnel and highlight why your business has the fittest team.

8. Financial Plan

When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:, financing needs:.

Remember to be realistic with your financial projections and provide supporting evidence for your estimates.

9. Appendix

When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.

  • Include a table of contents for the appendix section to make it easy for readers to find specific information.
  • Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
  • Provide market research data, such as statistics on the size of the real estate development industry, consumer demographics, and trends in the industry.
  • Include any legal documents such as permits, licenses, and contracts.
  • Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
  • Use clear headings and labels for each section of the appendix so that readers can easily find the information they need.

Remember, the appendix section of your real estate development business should only include relevant and essential information supporting your plan’s main content.

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This real estate development business plan sample will provide an idea for writing a successful real estate development plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready real estate business plan to impress your audience, download our real estate development business plan pdf .

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Frequently asked questions, why do you need a real estate development business plan.

A business plan is an essential tool for anyone looking to start or run a successful real estate development company. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your real estate business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your real estate business.

How to get funding for your real estate development business?

There are several ways to get funding for your real estate business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are:

  • Bank loan – You may apply for a loan in government or private banks.
  • Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
  • Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your development business, usually online.
  • Angel investors – Getting funds from angel investors is one of the most sought options for startups.
  • Venture capital – Venture capitalists will invest in your business in exchange for a percentage of shares, so this funding option is also viable.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your real estate development business?

There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your real estate development business plan and outline your vision as you have in your mind.

What is the easiest way to write your real estate development business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any real estate development business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

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Shared value business model reshaping real estate

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This trend, to set out goals to achieve success beyond solely making profit, is going to be a driving force in influencing real estate decisions over the course of 2022 and beyond. 

In a 2021 KPMG CEO survey, 81% of CEOs said that their response to the pandemic caused their strategic focus to shift toward the social component of their ESG programmes. Furthermore, 87% said that purpose is now central to building their brand reputation. It is clear that around the world companies are evaluating what they stand for and reorienting around the goals of making a difference to society whilst still turning a profit.

Further evidence of the rapid adoption of purpose-driven business models can be found in the growing community of over 4,000 certified B-Corporations (As of April 2020 there were 3,000 certified B-Corporations). Becoming a B-Corporation requires evidence that a company is balancing profit with purpose. Certified B-Corporations are legally required to consider the impact of their decisions, not only on the environment but also on their workers, customers and community.

Finally, PwC, EY, Unilever and Infosys are among the companies that have joined The Purposeful Company – a not for profit organisation whose mission is to help firms to place people and planet on an equal footing with profit. Businesses signed up to the initiative will need to let key stakeholders, including staff and community members, have a “say on purpose”, outlining their wants and needs.

What is a shared value or purpose-driven business model and why is it growing in popularity?

A purpose-driven business model is one where a company has a clear purpose beyond short-term profit. It serves to benefit all stakeholders.

In 2011, Professor Michael E. Porter of Harvard Business School and Mark Kramer, co-founder and a managing director of FSG, coined the concept “shared value business model”. They defined shared value as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.”

The move to the shared value business model is gaining traction due to a number of reasons, including:

The pandemic experience:

Covid-19 has put greater pressure on corporates to be active participants in creating solutions to the world’s societal and environmental challenges. It is also forcing corporates to have a moment of introspection, re-imagining how they operate and what they stand for in a changing world. According to the aforementioned 2021 KPMG CEO survey, 79% of respondents said they had to re-evaluate their purpose as a direct result of Covid-19.

Proven impact on employee attraction, engagement and retention:

Mercer’s Global Talent survey found that 1 in 3 employees would prefer to work for a business that shows responsibility towards all stakeholders, not just its shareholders.

Proven positive impact on brand image and customer attraction and retention:

A global study by the Zeno Group found that consumers are four to six times more likely to buy from, trust, champion and defend companies with a strong purpose.

Proven financial out-performance:

Analysis of “purposeful” companies by the Corporate Board/EY Global Leadership calculated that purposeful companies outperform the stock market by 42%.

Getting ahead of legislation:

In the UK, B Lab UK is seeking to modify part of the Companies Act 2006 to impose a duty on directors to advance the purpose of the company, rather than to solely promote the success of the company.

Ability to attract Investment:

Investors such as BlackRock are pivoting towards impact investment strategies, whereby investments are made into corporates that generate a measurable, beneficial social or environmental impact alongside a financial return.

Real estate supports business strategy:

Our (Y)OUR SPACE survey of almost 400 global real estate decision makers found that 90% regard real estate as a device that supports, facilitates or portrays business strategy. In light of this, purpose-driven occupiers will seek to reconfigure their global real estate portfolios and remodel their workplaces in order to align with this new purposeful strategic intent.

In practice this will mean occupying real estate that supports the achievement of the nine practices set out below. It could lead to companies locating in innovation ecosystems that enable open innovation and other forms of collaboration, or in an amenity-rich environment that addresses the wellness agenda and supports employees to be at their most creative. It will support the growing appetite for highly sustainable and inclusive buildings that reflect corporate ambition and culture. It may even increase focus on how the building or development a company occupies can integrate with and directly benefit the local community.

There are already examples of product being delivered to meet these requirements. The planned re-purposing of Blackfriars Crown Court in London, for example will deliver sustainable office, commercial and crucially community space. This will include an urban forest rooftop with extensive access for the local community and general public. Wider purpose and societal benefit are the centre of major masterplanning initiatives. The Earls Court and Canada Water schemes in London are two such examples.

On the occupier side an exemplar is AstraZeneca’s new HQ and R&D centre in Cambridge. The centre is designed to foster collaboration and interaction and enable open innovation. The ambition is that the centre will expand its reach across the local community, inviting all stakeholders to see the science within, amongst other community-driven initiatives. Another key “purposeful” feature of the building is sustainability. The design includes the largest ground source heat pump in Europe.

What do purpose-driven businesses look like?

The Shared Value Initiative have identified nine practices of a purpose-driven business. These are:

• Embracing an open innovation process. • Selecting opportunities that create distinction from the competition. • Developing strategies and allocating resources in line with aspirations. Establish a strong governance process. • Bringing together players, resources and systems needed to deliver shared value in new and unexpected ways. • Strong measurement and reporting against objectives. • Guided at all times by company purpose and shared value. • Creating a culture and organisational structure that embraces creativity, learning from mistakes and challenging the status-quo. • Leading in diversity and inclusivity. • Engaging people internally and externally through purpose and a commitment to shared value.

Companies are changing fast, pivoting towards balancing profit with doing good. It has long-been recognised that real estate is a strategic device for business. It should be no surprise, therefore, that greater corporate purpose will be reflected in properties that align with those goals and bring positive benefits to local environments and communities.

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15 proven real estate business models to launch in 2024.

  • November 11, 2022
  • , How to , Real Estate Investing Tips

The stock market might crash. Inflation might cripple the value of the dollar. And exotic collectibles might suddenly lose their appeal.

But people will  always need a place to live.

That is what makes real estate such a great investment.

The return ebbs and flows like every other investment, but you never have to question the integrity of the assets themselves. The dollar is only valuable because our government says it’s valuable. Real estate is inherently valuable.

But what real estate business model should you use? And how do you get started?

Here are 15 proven real estate business models to launch this year.

1. Wholesaling

What is it.

In a nutshell, wholesaling is the process of finding deeply discounted properties and then assigning the contract to another investor or cash buyer for a fee (called an assignment fee ). It’s common to make between $5,000 to $15,000 per deal as a wholesaler.

You find someone who is motivated to sell their home. This could be because they are behind on taxes, need to relocate for a job, or are going through a divorce.

You then enter into a contract with the seller and find a buyer who is willing to pay more than the purchase agreement (that’s your profit).

The greatest benefit of wholesaling is you don’t have to actually buy real estate or have much upfront capital. Marketing to find deals will be your only upfront cost (such as data and mailers).

How to get started

Check out the video below!

2. Virtual Wholesaling

Virtual wholesaling is a new twist on the wholesaling business model. Rather than finding, contracting, and selling properties locally, you do it all online.

This could include using technology to find deals nationwide (or even internationally), as well as digital marketing to reach buyers.

The benefit of virtual wholesaling is you’re not limited to your geographical area. You can find and sell deals anywhere in the world without ever having to leave your home.

3. Buy-and-Hold

The buy-and-hold strategy is exactly what it sounds like. You buy an investment property and hold on to it for the long haul, usually 10 years or more.

During that time, you collect rent and let the tenants pay down the mortgage… all the while building equity and creating cash flow. When you eventually sell the property, hopefully, it will be worth more than what you paid for it (this is called appreciation).

Buy-and-hold real estate investing is great for building long-term wealth and increasing your net worth. It takes some time to create a hefty portfolio (depending on your access to private money , hard money, or other lenders). But over the long term, real estate has always appreciated in value.

Check out the video below…

The BRRRR method is an acronym for “buy, rehab, rent, refinance, repeat.”

It’s a strategy made popular by BiggerPockets founder Joshua Dorkin and has been used by countless investors to build wealth and create cash flow.

The BRRRR strategy starts with finding a deeply discounted property. This could be a fixer-upper, a vacant property , or even a distressed seller.

You then rehab the property to increase its value and make it appealing to tenants. Once it’s rented out, you refinance the property (hopefully at a lower interest rate) and pull out cash to buy more properties.

You repeat the process until you have a large portfolio of rental properties generating positive cash flow.

5. Vacation Rentals

The vacation rental business model is pretty self-explanatory. You buy or build a property in a desirable location and rent it out to travelers, usually through platforms like Airbnb or VRBO. This is similar to buy-and-hold but instead of renting to long-term tenants, you’re renting to vacationers.

Vacation rentals are great because you can make a lot of money in a short amount of time. And, if you’re strategic about it, you can even turn your vacation rental into a passive income stream by hiring a property manager .

6. Fix-and-Flip

This is probably the most famous form of real estate investing (thanks to HGTV). Fix-and-flip investing involves buying a property, fixing it up, and then selling it for a profit.

The key to fix-and-flip success is to buy low, make ONLY the necessary repairs, and sell at market value. This usually means finding properties that are in need of significant repairs but are being sold at a discounted price.

You’ll then need to factor in the cost of repairs, holding costs (such as interest on the loan and insurance), and selling costs (real estate commissions and closing costs).

If you do it right, you should be able to make a decent profit. But if you’re not careful, it’s easy to lose money on a fix-and-flip.

7. Wholetailing

Wholetailing is a combination of wholesaling and retailing.

The goal with wholetailing is to find deeply discounted properties that need very little work. You then make cosmetic repairs, put the property back on the market, and sell it at a higher price than you paid for it.

This strategy is similar to fix-and-flip but with wholetailing, you’re not focused on making lots of repairs or a huge profit. You’re more interested in selling the property quickly so you can move on to your next deal.

8. Real Estate Agent

Becoming a real estate agent is probably the most traditional way to get involved in the industry.

As a real estate agent, you’ll help people buy and sell properties. You’ll work with buyers to find the perfect home and then help them negotiate a fair price. You’ll also work with sellers to list their property, market it, and find the right buyer.

For your services, you’ll earn a commission (usually around 5-6% of the sale price).

Becoming a real estate agent is a great way to get started in the industry. It’s also a good way to make some extra money if you’re already an investor.

9. Real Estate Broker

A real estate broker is similar to a real estate agent but with a few key differences.

First, real estate agents can only work under the supervision of a broker. Second, brokers are usually more experienced than agents and have taken additional courses. If you want to build your own business without working for someone else, then you might consider beoming a real estate broker.

10. Passive Investor

A passive investor is someone who invests in real estate but doesn’t actively manage the property.

There are a few ways to be a passive investor. One way is to invest in a REIT ( real estate investment trust) . A REIT is a company that owns and operates income-producing real estate (such as Fundrise).

Another way is to invest with a real estate investment agency or personally with a real estate investor who you know. You can expect to make a return on your investment that is able to compete with the stock market… but you won’t be actively involved in the property.

Find someone who own properties and need investors. Ask them them how much return you can expect and what they’re minimum investment is.

Or keep it super simple by using an REIT like Fundrise.

11. Developer

Developers are responsible for taking a piece of land and turning it into something that can be sold or leased.

Developers typically buy raw land, get the necessary permits, and then build homes, apartments, stores, or office buildings. They may also be responsible for selling or leasing the property once it’s completed.

Developing is a risky business and it’s best if you’re experienced… but it can be very profitable if everything goes according to plan.

If you’re not interested in the development process, you can simply buy land for cheap and hold onto it until the value goes up.

Land is a finite resource so it’s always going to be in demand. And as the population continues to grow, the demand for land will only go up. You can buy cheap, sit on it, and sell high.

13. Utility Space

Another option is what we’re calling “utility space” — we’re talking about properties like parking garages, storage units, office spaces, and other useful hands-off spaces that people might use in their daily lives.

While these types of properties don’t have the potential to appreciate in value like a home or a piece of land, they can generate a lot of income (through rent) with very little effort on your part.

14. FSBO Services

FSBO stands for “For Sale By Owner” and it’s exactly what it sounds like.

There are a lot of people who want to sell their homes without using a real estate agent. And there are a lot of people who are happy to help them do it… for a fee.

If you have some experience in real estate, you can offer your services to FSBO sellers. You might help them list their homes, show the homes to potential buyers, or even negotiate the sale.

Since they’re not using a real estate agent, they’ll be happy to pay you a lower fee than they would an agent (usually a flat fee).

Check out the video below for some inspiration!

15. Property Management

If you don’t want to deal with the hassle of selling or leasing property, you can become a property manager.

As a property manager, you’ll be responsible for taking care of the day-to-day tasks associated with owning and operating income-producing real estate. This includes things like collecting rent, maintaining the property, and dealing with tenants.

Property management is a great way to get involved in real estate without having to invest a lot of money upfront. And it can be a very lucrative business if you do it right.

Final Thoughts

Getting started as a real estate investor or agent is no easy task.

But allow me to share two quotes with you that I always remind myself of when I’m hesitating to do something that I know I should probably do. The first is this…

“The best time to plant a tree was 20 years ago. The second best time is today.”

In other words, you’ll always wish you had started earlier… which means the best time to start is right now. Yes, it’ll take time. But in 10 or 20 years, you’ll be glad you didn’t wait. Here’s the second quote…

“Never give up on a dream just because of the time it will take to accomplish it. The time will pass anyway.”

Life is here. And living it means  doing stuff , some of which is scary, ambitious, and frightening.

But the time is going to pass anyway.

Might as well dive right in!

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Real Estate Financial Modeling (REFM): The Ultimate Guide, With Templates & Examples

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REFM Real Estate Financial Modeling Guide

Step 6: Make an Investment Decision

When it comes to real estate financial modeling (REFM) , there’s a ton of information out there…

…which, ironically, makes it harder to understand.

It can be nearly impossible to find one source that clearly explains the key points from start to finish.

We go into great depth in our full Real Estate Financial Modeling course , so I’m not going to attempt to replicate everything here.

However, I will summarize the most important parts, give you a few sample Excel (XLS) models to download, and explain the step-by-step process for modeling the three most common deal types:

  • Acquisition
  • Development

So let’s get started…

Real Estate Financial Modeling: Sample Excel (XLS) Files

Here are the sample Excel files (both simplified real estate models). Below, we’ll move on to the explanation and tutorials.

  • Multifamily Acquisition Model – Arcadia Gardens (XLSX)
  • Industrial Development Model – 4216 61 Ave SE (XLSX)

What’s the Point of Real Estate Financial Modeling?

First, some definitions: we define “real estate” as land and buildings that generate revenue or have the potential to do so .

We focus on commercial real estate (CRE) that is purchased and then rented out to individuals or businesses, as opposed to residential real estate, such as single-family homes, that is owner-occupied and not rented out to others.

In CRE, individuals or businesses, i.e., tenants, pay rent to property owners to use their space.

The owners earn income from this rent, and they use part of it to pay for expenses such as utilities, property taxes, and insurance; in some cases, tenants are responsible for portions of these expenses as well.

All of this allows us to come up with the following definition of Real Estate Financial Modeling (aka REFM):

In real estate financial modeling (REFM), you analyze a property from the perspective of an Equity Investor (owner) or Debt Investor (lender) in the property and determine whether or not the Equity or Debt Investor should invest, based on the risks and potential returns.

For example, if you acquire a “multifamily” property (i.e., an apartment building) for $50 million and hold it for 5 years, could you earn a 12% annualized return on your investment?

Or, if you develop a new office building by spending $100 million on the land and construction, and then you find tenants, lease out the property, and sell it, could you earn a 20% annualized return?

If you identify the most important assumptions and set up your analysis correctly, real estate financial modeling helps you answer these types of questions.

All investing is probabilistic, so a simple model cannot tell you if a property will generate an 11.2% or 13.5% annualized return.

But a decent analysis can tell you whether or not that range of returns – 10% to 15% – is plausible.

These are the questions that real estate private equity firms think about all day, and they spend significant time doing the analysis before making investment decisions.

Types of Real Estate Financial Modeling

Real estate combines elements of equities and fixed income and can offer a risk / potential return profile that is somewhere in between them.

For example, a Core real estate deal where a firm acquires a stabilized property, changes very little, and then re-sells it, might offer risk and potential returns closer to those of an investment-grade corporate bond.

On the other hand, a “Value-Added” deal where a firm acquires a property with a low occupancy rate, make significant renovations to improve it, and aims to sell the property for a significantly higher price might offer risk and potential returns closer to those of stocks.

And an “Opportunistic” deal where a firm develops a new property from the ground up (“development”) or completely converts or re-builds an existing one (“redevelopment”) might offer even higher risk than stocks, but also higher potential returns.

These descriptions highlight the three main strategies and the three main types of real estate financial modeling:

  • Real Estate Acquisition Modeling: Acquire an Existing Property, Change Little to Nothing, and Sell It.
  • Real Estate Renovation Modeling: Acquire an Existing Property, Change It Significantly, and Sell It.
  • Real Estate Development Modeling: Buy Land, Pay to Build a New Property, Find Tenants, and Sell It Upon Stabilization.

There is a fourth strategy as well: develop a new property, but pre-sell units before completion rather than leasing it out and selling the entire property at the end.

This type is just a subset of real estate development modeling, and it mostly applies to condominiums (residential real estate), so it’s not our focus.

In addition to these strategies, there are also different property types:

REFM: Property and Deal Types

The lease types explain the key differences here.

Office, retail, and industrial properties tend to use more granular financial modeling because lease terms vary significantly, and there are fewer tenants or guests than in multifamily or hotel properties.

By contrast, hotels use assumptions and drivers that you’d see for many normal companies, and multifamily properties (apartment buildings) are somewhere in between.

You can think of the property spectrum like this:

REFM: Property Types vs. Normal Companies

For more about individual properties and how the differences translate into revenue and expenses, please see our detailed article on the real estate pro-forma .

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The Step-by-Step Process to Real Estate Financial Modeling

The exact steps vary based on the type of financial model, but they’ll always be something like this:

  • Step 1: Set up the Transaction Assumptions , including those for the size of the property, the purchase price or development costs, and the exit (i.e., how much you might sell the property for at the end).
  • Step 2: For a development model, project the Construction Period , usually on a monthly basis, and draw on Debt and Equity over time – not all upfront – to fund the construction.
  • Step 3: Build the Operating Assumptions for the property, which could be very high-level (e.g., Average Rent per Unit * # Units) or very granular (revenue, expenses, and concessions for individual tenants) depending on the property type.
  • Step 4: Build the Pro-Forma , including revenue and expenses down to the Net Operating Income (NOI) line, capital costs below that to calculate Adjusted NOI, and Debt Service (interest and principal repayments) below that to calculate Cash Flows to Equity.
  • Step 5: Make the Returns Calculations , including the initial investment and any additional investments over time, the Cash Flows to Equity each year, and the exit proceeds, including repayment of Debt and transaction fees. You focus on the Internal Rate of Return (IRR) and Cash-on-Cash or Money-on-Money multiples here.
  • Step 6: Make an Investment Decision based on your criteria and the output of the model in different cases.

Deal Type #1: Real Estate Acquisition Modeling

Let’s begin by looking at a very simple example of a real estate acquisition model for a multifamily property in Arizona. You can download the Excel file here:

This is a 76-unit property that we plan to acquire for just under $10 million USD.

We will change it a little bit because we plan to boost rents up to market rates by lightly renovating the units.

You can determine what these “market rates” might be with some commercial real estate market analysis .

We will also be less generous with concessions, bargain for higher utility expense reimbursements, and accept a higher vacancy rate in exchange for those.

These changes are minor compared with a true renovation or redevelopment, so this deal falls under the “Core” or “Core-Plus” category.

NOTE: In all the screenshots below, you can always click the screenshot to view a larger, higher-resolution version .

Step 1: Set Up the Transaction Assumptions

First, we need to determine the size of the property, which is usually based on the Units times the Average Square Feet per Unit in the multifamily sector:

A portion of the building will not be rentable because it corresponds to hallways, elevators, lobbies, etc., so we also distinguish between gross and rentable square feet:

Multifamily Acquisition Assumptions

We then make assumptions for the Acquisition Price , Exit Price , and the Loan-to-Value (LTV) Ratio :

Multifamily Acquisition Assumptions

We’ve hard-coded the acquisition price here, but it’s based on a Cap Rate of 5.80%.

That means that we take the Year 1 Net Operating Income (NOI) of the property ($567K) and divide by the 5.80% to determine the price.

NOI is a bit like EBITDA for normal companies: it includes operating revenue and expenses, but not Debt Service – and it may include the capital cost reserves as well, which makes it different from EBITDA.

In real estate financial modeling, property valuation is almost always based on the NOI divided by a Cap Rate or range of Cap Rates.

Cap Rates represent the property’s location, quality, and overall desirability, and lower Cap Rates mean the property is more expensive, while higher Cap Rates mean the opposite.

A multifamily property in Manhattan might sell for a Cap Rate of 3-4%, while a similar one in Columbus, Ohio might sell for a Cap Rate in the 6-8% range.

If the property does not change significantly, it’s best to make a conservative assumption that the Cap Rates rise over time.

We assume here that the Cap Rate rises from 5.80% upon purchase to 6.00% upon exit.

The LTV is 65%, which means that ~$6.4 million of this ~$9.8 million purchase price will be funded with a Senior Loan.

This amount of leverage is very high, but it’s common for properties because:

  • Property margins tend to be much higher than “normal company” margins, which gives properties more cash flow to service their Debt.
  • Permanent real estate loans tend to amortize over long periods, such as 30 years, which means only ~3.3% of the principal must be repaid each year. Interest-only periods, in the beginning, are common as well.

Using these assumptions, we create a Sources & Uses schedule that shows where the money is coming from and where it’s going to:

Multifamily Acquisition - Sources & Uses Schedule

Step 2: Project the Construction Period

This step is not applicable here since there is no construction.

Step 3: Build the Operating Assumptions

The key assumptions for a multifamily property include the rent per unit or rent per square foot, the parking income, the utility reimbursements and concessions, and the expenses: insurance, utilities, sales & marketing, property taxes, maintenance, and other operating costs.

The growth rates for all of those, especially the income sources, are also important.

For more, please see the real estate pro-forma for full explanations of these categories:

Real Estate Financial Modeling - Multifamily Operating Assumptions

We use a simple approach here and make the rent and expenses grow at specific annual rates.

Some items are projected on a per-unit or per-square-foot basis, while others are linked to Effective Gross Income (EGI), which is similar to Revenue.

Step 4: Build the Pro-Forma

With all these assumptions, we can create the real estate pro-forma:

Real Estate Financial Modeling - Multifamily Pro-Forma

We use the IPMT and PPMT Excel functions to calculate the Interest Expense and Principal Repayments:

  • =IPMT(Loan Interest Rate, Year #, Loan Amortization Period, Loan Amount)
  • =PPMT(Loan Interest Rate, Year #, Loan Amortization Period, Loan Amount)

Using these functions ensures that the total amount of Debt Service will be the same each year.

That’s fine here because the terms of the Debt are simple: there’s a fixed annual interest rate, fixed amortization period, no accrued interest (also known as PIK Interest ), and no interest-only period.

The Debt Yield equals NOI / Initial Debt Amount, the Interest Coverage Ratio equals NOI / Interest, and the Debt Service Coverage Ratio equals NOI / (Interest + Principal Repayments).

In real estate financial modeling, these metrics are important for both lenders (they indicate downside risk) and owners (they indicate Debt capacity).

Step 5: Make the Returns Calculations

The calculations are straightforward when there’s a fixed exit date in Year 5.

We calculate the returns on an unleveraged basis (as if no Debt were used, meaning no Debt Service and no principal repayment at the end, but a higher upfront purchase price) and a leveraged basis (the traditional method):

Multifamily Acquisition - Returns Calculations

We calculate both types of returns to assess how dependent the deal is on leverage.

High dependency could be a red flag since leverage also hurts us if the deal goes poorly.

As always, the answer depends on the IRR our firm is targeting.

For “Core” deals, an Equity IRR of 8-10% is often the target, so by that metric, this deal is a clear “Yes.”

However, to answer this question in real life, we’d have to build Excel sensitivity tables or scenarios and examine other outcomes.

If the IRR drops to 0% with slightly more negative assumptions, then it might be a “No” decision since that indicates too much risk.

It’s also worth evaluating the operating assumptions to see whether or not they’re plausible – if not, then this could also be a “No” decision.

The Cap Rate assumptions seem OK since the Exit Cap Rate rises slightly, and the NOI increases at an annualized rate of around 5%, which is not crazy for a stabilized property.

One potential red flag, though, is that there are no assumptions for Leasing Commissions (LCs) or Tenant Improvements (TIs), even though there will be significant tenant turnover.

Multifamily properties tend to have low LCs and TIs because individual tenants have little bargaining power, but there’s usually at least something in these categories.

Deal Type #2: Real Estate Renovation Modeling

Real Estate Renovation Modeling is quite similar to Acquisition Modeling, and the basic steps in the process are the same.

The key difference is that something significant about the property changes during the holding period, and the owners spend something to enact this change.

For example, maybe they complete a major renovation that boosts a property from Class B to Class A, or they boost the Occupancy Rate from 70% to 90%, or they modify the ground floor of an office building and add retail units.

These differences translate into the following real estate financial modeling additions:

  • Renovation Costs – These will reduce Cash Flow to Equity; you might also assume a higher upfront purchase price to cover these costs, depending on the timing.
  • Penalty During the Renovation Period – For example, a hotel’s occupancy rate might drop as rooms become unavailable due to the renovation.
  • Benefit Following the Renovation – For example, the occupancy rate or average rent might increase once the renovation is done.
  • Permanent Loan Refinancing – There is often a loan refinancing as the renovation finishes and the property stabilizes, both to boost returns for the Equity Investors and to bring in a different set of lenders.
  • Exit Assumptions – It is reasonable to assume a lower Cap Rate upon exit because the property should become more valuable as a result of the renovation.

We’re not going to cover a full renovation example because it’s not much different from acquisition modeling, and this article is already very long.

However, you can get a sense of how the cash flows differ by reviewing the Returns Calculations in a hotel renovation deal:

Real Estate Renovation Modeling - Cash Flows and Returns

You can also see why the owners choose to refinance here: doing so at a higher LTV, based on higher NOI, generates around $50 million of Cash Flow to Equity in Year 2, boosting the IRR and Cash-on-Cash Multiple.

Deal Type #3: Real Estate Development Modeling

Real estate Development Modeling could be described as “startup meets leveraged buyout.”

It’s a bit like modeling a tech or biotech startup because you assume an asset gets created from the ground up , but you use both Debt and Equity to fund it – similar to a leveraged buyout.

That setup works because Equity must be contributed first .

Lenders will only sign onto deals once the investors/owners/developers have contributed sufficient Equity to pay for the initial costs – similar to how venture lenders operate .

The last steps in a real estate development model, such as the operating assumptions, pro-forma, and returns calculations, are similar to the ones in the acquisition model above.

The major differences occur in the first few steps because the “purchase price” is based on land and construction costs (not Cap Rates and NOI), Debt and Equity are drawn on over time (not all upfront), and the construction could take years to complete.

We’ll look at a simplified industrial development model here for a plot of land in Alberta, Canada:

We plan to purchase 18 acres of land, build a warehouse-like facility, and lease it out to two major tenants.

It will cost $12.6 million for the land, $16.9 million for the construction, and $600K for the Replacement Reserves just before tenant move-in, for a total of ~$30 million.

Once the tenants have moved in and the property has stabilized, we’ll sell the excess land and eventually sell the property itself.

First, we make assumptions about the construction start date, the plot of land, and the construction costs per gross square foot or gross square meter:

Industrial Development - Transaction Assumptions

Next, we assume that a Construction Loan is used to fund part of the development costs.

As discussed in our coverage of commercial real estate lending , Construction Loans have higher interest rates than Permanent Loans, and interest is capitalized when the property is under construction:

Industrial Development - Construction Loan

The IRR hurdles here create a “ waterfall model ” because the deal’s overall performance changes the percentage that goes to the Developers vs. Investors.

In real estate development deals like this one, Developers often earn higher percentages when the deal’s IRR increases; the waterfall structure incentivizes them to perform well.

Finally, we set up a Sources & Uses schedule:

Industrial Development - Sources & Uses Schedule

In the next step, we project the Construction Costs over the year required to build this warehouse (the cost distributions here come from an “instructions” document):

Industrial Development - Construction Projections

Initially, we draw on Equity to pay for the construction, but we switch to the Construction Loan once the maximum amount of Equity has been drawn ($15 million, roughly half the total costs):

Industrial Development - Debt and Equity Draws

The Debt balance must include both capitalized interest and capitalized loan fees – but we base the interest on the beginning balance each month to avoid circular references (see our tutorial on how to remove circular references in Excel ).

After setting this up, we extend these projections until the end of the Construction Period to get the ending Debt and Equity balances.

They do not represent an exact 50/50 split due to the capitalized loan fees and interest.

In more complex real estate financial modeling exercises, we fix this issue by making the entire calculation circular, but it’s not worth the time/hassle/headache in a quick model like this one.

The tenant-by-tenant projections are similar to the setup in the real estate pro-forma article: we assume a rent-per-square-foot figure for each tenant, an annual growth rate, and we use that to calculate the Base Rental Income.

Then, we calculate the Absorption & Turnover Vacancy in periods when tenants might cancel and leave space vacant, calculate Free Rent when new tenants move in, and factor in Expense Reimbursements.

We also calculate the TIs and LCs for each tenant based on the lease start dates and renewal dates.

With the tenant assumptions in place, we create the pro-forma:

Real Estate Financial Modeling - Industrial Pro-Forma

The Debt Service is a bit trickier because we assume that the Construction Loan is refinanced with a Permanent Loan.

To determine the Permanent Loan amount, we need to estimate the property’s value when the refinancing takes place and then multiply its value by an LTV.

But the property is not yet stabilized when the refinancing takes places, so we retrieve its value one year after the refinancing and discount it back one year:

Real Estate Financial Modeling - Permanent Loan Refinancing

Next, we project the interest and principal repayments for this Permanent Loan.

There is only one tranche of Debt here, the interest rate is fixed, there’s no interest-only period, and there’s no capitalized interest, so we use the built-in IPMT and PPMT functions in Excel:

Real Estate Financial Modeling - Debt Service for Industrial Development

We can now calculate the IRR to Equity Investors based on their initial contributions, the refinancing, the annual cash flows, and the eventual sale of the property.

We’ll also factor in the fees associated with the refinancing, the sale of excess land, the costs associated with the sale of the property, the repayment of Debt upon exit, and prepayment penalties associated with that.

Here’s the calculation with an assumed exit in the final year:

Industrial Development - Returns Calculations

We are simplifying this setup by pretending that the Equity Draws occur all at the end of the first year, not over the first several months of that year.

Also, this model does not support variable exit dates.

Past this point, we create a waterfall schedule to split up the cash flows to the Developers and Investors based on the overall Equity IRR.

We’re not going to cover that here, but please see our real estate waterfall model tutorial for a video walk-through of the rest of this same model.

It’s difficult to give a clear answer here because we have not examined the outcomes in different scenarios, such as longer/shorter construction periods, higher/lower construction costs, and Base/Upside/Downside market environments.

But if we’re targeting a 20% IRR, this deal seems like a “No” since the IRR to Investors is only 19% and the overall Equity IRR is just barely above 20%.

The excess land purchased in the beginning hurts us because it only appreciates by ~3% per year, and the waterfall structure also works against us because a 10% IRR hurdle for Tier 1 is low for a new development.

Some of the credit stats and ratios are also “iffy” in the first year following construction.

So, we would not recommend this deal as it is presented here, but we might be open to it if some of the terms changed and we could analyze the outcome in different scenarios.

Real Estate Financial Analysis: To Buy, or Not to Buy?

Real Estate Financial Modeling is simpler than normal financial modeling… in most cases.

That’s because the purpose is more limited: we don’t need 3-statement models, credit models, valuation, DCF models , merger models, or LBO models.

Also, revenue and expense projections do not differ as dramatically as they do for companies in different industries.

Most real estate financial models can be summarized by a slight variation on Shakespeare’s most famous quote:

“To buy, or not to buy?”

Should you acquire or develop a property at the stated terms?

Is it plausible to achieve the returns you are seeking, or would that require completely unrealistic assumptions?

In the worst-case scenario, would you lose money, or would you survive, even if the returns disappoint?

Real estate financial modeling gives you simple but effective methods for answering these questions and making investment decisions.

You might be interested in Opportunistic Real Estate: An Undiscovered Gem, or Another WeWork Waiting to Happen?  or Value-Add Real Estate: What Makes It Different, and Why You Should Invest – Maybe .

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About the Author

Brian DeChesare is the Founder of Mergers & Inquisitions and Breaking Into Wall Street . In his spare time, he enjoys lifting weights, running, traveling, obsessively watching TV shows, and defeating Sauron.

Free Exclusive Report: 57-page guide with the action plan you need to break into investment banking - how to tell your story, network, craft a winning resume, and dominate your interviews

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11 thoughts on “ Real Estate Financial Modeling (REFM): The Ultimate Guide, With Templates & Examples ”

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Hello Brian, My name is Ignacio and I’m writing this from Argentina. I enjoyed very much your article about Real Estate financial modeling. You see, I studied Economics, although I am currently shifting into Real Estate. I am looking for a course in REFM, perhaps a “certification” which is recognized in the industry. In this sense, I was wondering if you could recommend one, based on your knowledge and experience. I see there are lots of online platforms offering these type of courses and I’m trying to find one that is well acknowledged by employers and the industry, in general. I look fwd to hearing from you. Thank you for your attention and I appreciate your help. Best regards, Ignacio Antonio

real estate development company business model

We have our own Real Estate Financial Modeling course: https://breakingintowallstreet.com/real-estate-modeling/

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Is it not the case that most loans are quoted with an interest rate assuming a 30/360 interest rate, as opposed to the annual effective interest rate you are using here? Interested as to why you are using (1+Interest rate)^(1/N)-1, when it seems that most loans in the industry would be quoted assuming (interest rate)*(30/360) or (/12).

Yes, some loans are quoted like that, but this is a minor point, and this is a simplified model where 30/360 vs. the calculation here does not matter.

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I have a question on the IRR calculations in these models. I see this repeatedly.

IRR in excel assumes all equal periods, right? yet, every-time i see it, i see the acquisition equity as one cell, incoming rents for the 1st year in the 2nd cell. But these aren’t equal periods.

Since the 1st year is an equal period, shouldn’t the acquisition costs then be offset by the year 1 net income?

With the IRR calculation, all that matters is the *interval* between cash flows. The standard IRR function assumes 1 year between each cell. So as long as the cash flows arrive one year after the acquisition, on average, then it’s fine.

If your point is that the cash flows do not all arrive at the end of year 1, yes, that is true, but adjusting the cash flows to arrive midway through the year makes a very small difference and isn’t usually worth the effort. We do sometimes use the mid-year convention in DCF analyses, but usually not when calculating returns.

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hey , what would have an example for the 4th strategy ? buying building and pre sell ??

No, but there is a development/opportunistic example here: https://mergersandinquisitions.com/opportunistic-real-estate/

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Nice job Brian!

' src=

Wonderful write up! May Almighty always enlighten your journey called life. Stay Blessed

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Just wanted to say I love this platform. To everyone who contributes to this, thank you for your existence!

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Real Estate Management – Strategy and operational business model for achieving greater efficiency

The demand for real estate is increasing, the real estate market is on the move, all forms of existing real estate are professionally and efficiently managed, tenant demands are getting more complex and expected returns on yield are ambitious: to deal with this changing real estate environment, coordinated strategies and suitable business models are essential, but often also across borders. With over 300 billion euro gross value added and over 85% share in German fixed assets, paying attention to the real estate market and its developments definitely pays off, particularly as it is the largest sector of the economy in Germany.

Institutional quality and industrial strength for professional real estate manager

In the real estate sector, the demands for transparency and efficiency in management of real estate assets are vigorously increasing. Especially the demands for transparency are being intensified on and on not least by; owners, users, authorities and outside creditors. Real estate businesses must meet these demands and adapt their planning and taxation, management concepts, organisation, outsourcing processes and systems, purchasing strategies and employees, in order to deliver a competitive performance in line with the real estate market. They have to reinforce their competitive factors.

Corporate real estate management

Land intensive industries such as trade, production, transport and logistics also regularly review their real estate strategy and their real estate and infrastructure management in order to improve both efficiency and effectiveness. Achieving consistent value as well as infrastructure and work in line with market conditions is paramount in order to identify fields of activity in the development of solutions and their implementation.

PwC develops tailored solutions for the real estate market, supporting companies with future sustainable orientation.

Range of consultancy services available:

  • Corporate strategy – International growth, digitalization, flexibility, operational excellence, market entry strategies, investment platform strategies
  • Portfolio strategy – value-based portfolio and risk management, portfolio and investments strategy, flexible and bundled investments structures, manager selection, optimization of costs and income
  • Efficiency – strategic and organizational setup, benchmarking, process optimization, lean management, capacity measurement, strategic cost reduction
  • In- and outsourcing – purchase strategy, economic efficiency analyses of make-or-buy, development of performance specifications and service-level-agreements (SLA), selection of manager and partners through structured tendering: e.g. funds manager, administrators, depositories, property manager
  • Risk management and compliance – regulatory risk controlling, strategic and tactical opportunities and risk management, reporting, government and compliance, control systems
  • Finance market and monopoly regulation – KAGB, Mifid, EMIR, Solvency II, InvStG identification – strategic and operational implementation of industry regulations in strategy, business and operating model and/or reporting
  • Reporting, technology and digitalization – digitalization strategy, big- and smart-data, Business Intelligence, process automation, E-Reporting, requirements and selection of systems for property management, technical concepts

Industry expertise

  • Asset / Investment Management – optimization of processes e.g. purchase and sale, leasing, data management, controlling etc. for operational excellence or lean management, international location strategy, adjustment of the real net output ratio along the interfaces for external services
  • Corporate / Public real estate Management – management and IT-concepts for areas and infrastructure, control and valuations models (KPIs) for real estates, demand-oriented space utilization, benchmarking of the costs of real estate and management according to location / property
  • Housing economy – organization of new buildings, portfolio management, maintenance strategy, process optimization and capacity adjustment
  • Property and Facility Management – Transparency of the Service Level and costs to do with acquisition and purchase, tendering procedure and negotiations, optimization of contracts, ancillary costs analysis

With our worldwide network PwC advises; corporates, property companies, real estate portfolio managers and the public sector. We offer comprehensive solutions at global and local levels and comprehensive expertise in all types of usage such as housing, offices and trade to operational and specialist properties.

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The Real Estate Development Process: Understanding Stages, Risks and Opportunities

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With a clear goal of creating value, both monetarily and societally, having a firm understanding of each stage of the real estate development process helps investors in wisely vetting, entering, and exiting projects that best match with overall investment goals.

The real estate development process is such that it goes through phases, each one incurring unique risk while also delivering unique value. While there are several different asset classes developers can focus on producing, for simplicity we will focus on the commercial assets, be it condos or multi-residential units, starting from raw land to constructing new buildings for sale or lease.

1. Selecting and Assessing a Development Site and Opportunity

It all begins here. Regardless of the asset class, every developer starts with and goes through the process of identifying a development site and undertaking thorough assessment and due diligence. This process is to determine the value that can be created from land assembly, project development, or project acquisitions, and the asset improvements which can be made to positively impact a community while driving investment value and return.

At Parvis, partnerships are a key component of our business model.  We co-invest in real estate projects with developers who have a winning track record of success: identifying opportunistic land or targeted acquisitions which are only chosen once a comprehensive analysis of the overall market and the projects return is clearly understood. This critical element of our investment and partnership strategy enables us to align attractive real estate opportunities with proven partners where we can confidently generate targeted returns for our investors. 

In assessing a project, we at Parvis also undertake all the traditional requirements you would expect in vetting a real estate investment opportunity. Our Investment Committee carefully analyzes project and market data to ensure that every investment chosen for our platform fits our value-driven approach to real estate investing. 

Typical areas of review within our due diligence include:

  • Pro Forma/Dynamic Cash Flow Model 
  • Leases & Development Budgets
  • Lender Term Sheets
  • Project Offering Memorandum & Investment Package
  • Branding and Marketing Material
  • Architecture Plans
  • Transportations Impact Assessment
  • Geotechnical Investigation
  • Development Servicing & Stormwater
  • Zoning & Building Permits
  • Corporate Structure/Track Record

All of these considerations and intelligence lead to the analysis of a disciplined project pro forma to ascertain the feasibility of a given development project. From here we are able to identify areas of risk adjusted investment opportunities across the country. Be it developing residential condos, multi-family rentals, or even acquiring and improving existing net operating income, we are focused on enhancing existing revenues and delivering optimal investment returns.

Development of real estate poses higher risk relative to some other businesses due to the length of time associated with bringing projects to market, along with many variables beyond the control of the developer. As such, having an experienced or mature understanding of market dynamics, supported by a sound financial feasibility analysis helps to mitigate risk and inform if and how a project should proceed. 

Given the number of questions to be answered during this initial stage of project analysis it carries a somewhat higher risk classification. That said, developers that carry depth of experience and make accurate interpretations of the marketplace and project opportunity are the ones who capture targeted returns while minimizing and incurring moderate risks. 

2. Defining and Creating Value

Results from the first phase of site and project analysis unlocks and reveals the true value creation potential and investment return profile. Delivering this value is where an experienced team is critical to understanding key market criteria, from stages of the entitlement process and construction, to the competitive landscape, absorption, sales, lease-up/stabilization, and valuation upon disposition. 

Value is added at each stage throughout the development process. In the case of a new project, value increases and risks reduce as progress is made from: site validation, acquisition, DP/BP approvals, through working with the best professional teams to plan and construct an asset while effectively marketing, pre-selling, and or leasing the units in achieving stabilization. 

In the case of an existing asset, acquisition experience again plays a critical factor in understanding the optimal cost-benefit structure to effectively upgrade and manage a real estate asset in order to drive net operating income and resulting investor returns. 

When taken together, each of these areas form to generate project and market value, which in turn creates attractive returns for investors aligning with our four separate investment strategies options offered:

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3. Capturing Value and Delivering Investment Return

Along with physical construction or renovation of an asset, the sales/leasing and marketing function in the development process is an important contributor to a project’s viability and success. For everything that leads to the sales and marketing stage—from site purchase, to assembly of consultant teams, through to project and entitlement processes—the completion of any for-sale or lease-up project (residential or otherwise) requires a successful strategic marketing and sales program.

Each project has its own sales strategy, but the goal is always the same for every developer: efficiently match the right homes to the right buyers. Depending on the project, however, various well documented opportunities and challenges present themselves. For example, projects situated in established transit nodes or along frequent transit corridors tend to generate higher initial demand relative to their less transit-centric counterparts.

Conversely, projects in newer, less established neighborhoods (think “urban sprawl”) can require a longer period of engagement with potential buyers in order to  allow them to build purchasing confidence with the notion of being pioneers in an up-and-coming neighborhood.

Successful developers, such as those we are partnered with, have taken all these factors into consideration in order to mitigate project risks, and diligently worked to deliver targeted returns to investors. 

Flexibility Throughout The Project Lifecycle

At Parvis, we enable flexibility for investors via the Parvis Secondary Market . As projects progress, we continue to monitor and provide visibility to an asset’s increase in value, which can create opportunities for both existing and new investors.

The Parvis Secondary Market provides existing investors opportunities to realize gains by exiting before the end of the investment horizon; and potential investors the opportunity to enter investments at a different stage of the project lifecycle, accompanied by the transparency of how the project has performed over the given timeline. 

With a clear understanding of the complete horizon, new investors can confidently enter our secondary market offerings, in turn providing highly sought after liquidity to our initial investor base within a specific asset.

Once asset turnover is complete and stabilization occurs, a project is highly de-risked for investors, reflecting more modest risk adjusted returns. 

To view our institutional-grade investment opportunities or take advantage of our the Parvis Secondary Market, sign up to the platform today.

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Press Releases

CBRE Named Top Real Estate Brand in Lipsey Survey for 23rd Consecutive Year

Trammell Crow Company Remains Top Pure Development Company

DALLAS--(BUSINESS WIRE)-- CBRE Group, Inc. (NYSE: CBRE) has been named the top global brand in commercial real estate by The Lipsey Company for the 23rd consecutive year. CBRE’s development services subsidiary, Trammell Crow Company, was the top-ranked pure development company for the sixth consecutive year.

A training and professional development firm specializing in commercial real estate, Lipsey has surveyed commercial real estate professionals on their perceptions of the industry’s leading brands since 2002. CBRE has been ranked number one every year that Lipsey has conducted its survey of property owners, investors, lenders, occupiers, brokers and property managers.

“CBRE is filled with high-performing people who do impactful work,” said Bob Sulentic, the company’s chair and chief executive officer. “Their shared commitment to excellence and thoughtful collaboration is why we are known for delivering great client outcomes and consistently garner accolades from our industry peers.”

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com . We routinely post important information on our website, including corporate and investor presentations and financial information. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Such disclosures will be included in the Investor Relations section of our website at https://ir.cbre.com . Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221315376/en/

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Source: CBRE Group, Inc.

Released February 21, 2024

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Chicago Tribune

World Business Chicago CEO joins Clayco, real estate firm behind Obama Center and O’Hare expansion projects

M ichael Fassnacht, the outgoing CEO of World Business Chicago, has landed a new gig as president of the Chicago region and chief growth officer for Clayco, a real estate development and construction powerhouse.

Clayco, which moved its headquarters to Chicago from St. Louis more than a decade ago, has its hands in a number of major projects, from building the new Rivian EV truck plant in Georgia to the Obama Presidential Center and the slow-to-liftoff O’Hare expansion in Chicago.

“The great thing is I can continue to focus on promoting Chicagoland and Chicago, but also have influence across the organization nationwide,” Fassnacht told the Tribune.

Fassnacht, a former advertising executive, announced his decision to step down at World Business Chicago in December after nearly four years as the city’s top corporate pitchman. In addition to being head of the city’s public-private economic development arm, Fassnacht served as chief marketing officer of Chicago.

In his new dual role, Fassnacht will oversee the Chicago operations while expanding marketing efforts companywide. In 2022,Clayco generated $5.2 billion in revenue, and Fassnacht said the number will be closer to $7 billion last year.

“Michael brings an unmatched passion for business growth, an understanding of the economic ecosystem in Chicagoland as well as a strategic and creative mindset that will be highly beneficial for our clients and our Clayco team,” Bob Clark, founder and executive chairman of Clayco, said in a news release.

Fassnacht’s move follows a political pipeline for top Chicago municipal executives at Clayco. In 2019, Lori Healey stepped down as chief executive officer of the Metropolitan Pier and Exposition Authority to become Chicago regional president at Clayco. One year later she left to oversee development of the Obama Presidential Center rising up in Jackson Park on Chicago’s South Side.

In 2019, Clayco also hired David Reifman, the city’s former planning and development commissioner during the Emanuel administration, as senior vice president for strategic development at the company’s development and real estate investment arm, CRG. Reifman, who took over as Chicago regional president upon Healey’s departure, left Clayco in January to build a real estate practice at Chicago law firm Croke Fairchild Duarte & Beres.

A German immigrant who moved to Chicago in 2006 to work in advertising, Fassnacht became president of ad agency FCB Chicago in 2014. In January 2020, he left FCB Chicago and three months later became the city’s first chief marketing officer under then-Mayor Lori Lightfoot.

When Andrea Zopp stepped down as CEO of World Business Chicago at the end of 2020, Fassnacht added a dual role as interim CEO of the economic development agency. In May 2021, after a national search, Fassnacht was named president and CEO of World Business Chicago.

Fassnacht plans to leave World Business Chicago and start his new job at Clayco this month. He will remain on the World Business Chicago board and is helping to find his replacement. The organization previously said it expected to name Fassnacht’s successor in February.

In January, Mellody Hobson, co-CEO and president of Ariel Investments, stepped down as vice chair of World Business Chicago. She was replaced by Charles E. Smith, CEO of CS Insurance Strategies.

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©2024 Chicago Tribune. Visit chicagotribune.com. Distributed by Tribune Content Agency, LLC.

Michael Fassnacht, CEO of World Business Chicago, on Sept. 12, 2017.

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Real estate investor will 'immediately discontinue' working in NYC over Trump verdict, eyeing Florida, Texas

Us businesses fleeing empire state over alleged legal and regulation politicization.

Real estate investor Grant Cardone joined 'FOX & Friends' to discuss why he left California and why some businesses are re-routing their transactions to other states post-ruling.  

Real estate investors re-think doing business in New York after Trump ruling

Real estate investor Grant Cardone joined 'FOX & Friends' to discuss why he left California and why some businesses are re-routing their transactions to other states post-ruling.  

Some nationwide real estate investors, like Cardone Capital’s Grant Cardone, have started telling their teams to pack their bags and leave New York after the verdict in former President Trump’s fraud trial.

"We thought this year was the opportunity to come into Chicago, California and New York City. I've been waiting for 40 years now to invest in that marketplace. I was completely confident this was the year to come," Cardone told Steve Doocy on "FOX & Friends" on Wednesday. "And when that ruling happened, it was like, pencils down. Don't touch it. Don't go there."

The business leader gained recent recognition after he posted on X that his firm would "immediately discontinue" all underwriting on New York City real estate to focus on other markets like Texas and Florida.

Cardone further claimed that New York has risks "that outweigh the opportunities" in terms of property value — and the blue state has shown its politicization when it comes to doing business.

TRUMP ASSETS, INCLUDING N.Y.C. TOWER, COULD BE ON THE CHOPPING BLOCK TO PAY MASSIVE $355M CIVIL FRAUD RULING

"We invest for 14,000 investors at Cardone Capital that depend on cash flow. And if I can't predict the cash flow because of some ruling, or because of the migrants, or because I can't evict people, New York City just keeps doing every single thing they can to sell real estate in Florida, not sell real estate in New York," the fund manager explained.

Grant Cardone on Trump fraud verdict

Former President Trump's New York fraud trial ruling will likely have impact on the Empire State's property values, Cardone Capital's Grant Cardone, right, said on "FOX & Friends." (Fox News)

Additional financial concerns exist in New York for pension funds, lenders and public real estate investment trusts following civil implications from the $355 million Trump ruling , Cardone noted, potentially causing a decline in property value and an increase in loan defaults that could roll over to regional banks.

"Loan proceeds are based on the value of the property. They're going to require me to actually underwrite my property on the cash flow, the income of the property and what valuation I believe that property's worth. The broker also put a valuation on it," the investor expanded, "and then the bank is also going to use at least one other appraisal, maybe two, or independent of me."

"There could be as many as five appraisals on that. The value that I'm going to put on the property. Keep in mind, when I'm buying something, I'm not thinking about selling it the next day. In the case of Trump, he's not selling any of this stuff," Cardone continued. "We want the property for the cash flow… every seller is always going to push the price value up based on the future, not based on fraud."

O'Leary Ventures Chairman Kevin O'Leary discusses the impact of Trump's fraud ruling on business owners as New York Gov. Kathy Hochul attempts to quell fears.

I would never invest in New York now: Kevin O'Leary

O'Leary Ventures Chairman Kevin O'Leary discusses the impact of Trump's fraud ruling on business owners as New York Gov. Kathy Hochul attempts to quell fears.

O'Leary Ventures chief and "Shark Tank's" "Mr. Wonderful" Kevin O'Leary echoed similar concerns as Cardone on "Cavuto: Coast to Coast," warning against developing in New York in the Trump trial aftermath.

"New York was already a loser state, like California is a loser state. There are many loser states because of policy, high taxes on competitive regulation,' he said. 'I would never invest in New York now. And I'm not the only person saying that."

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'The Bottom Line' panelists John Carney and Paul Mauro discuss the ramifications of Judge Arthur Engoron's ruling in the Trump New York civil fraud case.

The New York civil fraud case was a 'political prosecution': John Carney

'The Bottom Line' panelists John Carney and Paul Mauro discuss the ramifications of Judge Arthur Engoron's ruling in the Trump New York civil fraud case.

Cardone cautioned of a business ripple effect, and that "nobody" in real estate will put "big money" in New York anytime soon.

"We were going to put $1 billion in New York City this year. We were going to put $1 billion in Chicago and maybe another billion in Los Angeles. And we won't touch any of them now," he said. "Texas, Florida, Arizona: go hard, go big and go long."

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Fox News’ Charles Creitz contributed to this report.

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hochul gestures while speaking at podium

New York governor seeks to quell business owners’ fears after Trump ruling

Kathy Hochul says law-abiding businesspeople have ‘nothing to worry about’ after question on state’s commercial climate

The New York governor has told business owners in her state that there is “nothing to worry about” after Donald Trump was fined $355m and temporarily banned from engaging in commerce in the state when he lost his civil fraud trial on Friday.

In an interview on the New York radio show the Cats Roundtable with the supermarket billionaire John Catsimatidis, Kathy Hochul sought to quell fears in some quarters that the penalties handed to Trump for engaging in fraudulent business practices could chill the state’s commercial climate.

Asked if businesspeople should be worried that if prosecutors could “do that to the former president, they can do that to anybody”, Hochul said: “Law-abiding and rule-following New Yorkers who are businesspeople have nothing to worry about because they’re very different than Donald Trump and his behavior.”

She added that the fraud case against Trump resulted from “really an extraordinary, unusual circumstance”.

Hochul’s comments were directed at some New York business leaders who said they were concerned that the attorney general Letitia James ’s case against Trump could deter businesses and investment from coming to the state. Hochul noted James’s case demonstrated how Trump and some allies obtained favorable bank loans and insurance rates with inflated real estate values.

The governor said most New York business owners were “honest people, and they’re not trying to hide their assets and they’re following the rules”.

Hochul said most business owners would not merit state intervention.

“This judge determined that Donald Trump did not follow the rules,” Hochul added. “He was prosecuted and truly, the governor of the state of New York does not have a say in the size of a fine, and we want to make sure that we don’t have that level of interference.”

Trump, who denied wrongdoing in the case and maintained there were no victims, now has 30 days to come up with a non-recoverable $35m to secure a bond – a third-party guarantee – against his real estate holdings to show that he can pay the full fine if his appeals fail.

Alternatively, he could put the $355m into an escrow account but would get the money back if he wins on appeal.

Either way, the ruling is a blow to the developer-politician whose sense of self is tied to financial success. And James has said Trump is actually in line to pay more than $463m when interest is taken into account.

In September, Trump’s former lawyer Christopher Kise argued in court that the decision against the ex-president would cause “irreparable impact on numerous companies”. It would also threaten 1,000 employees within the Trump empire, Kise maintained.

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But the judge, Arthur Engoron, who found the former president liable for fraud and assessed the fine and three-year disqualification from doing business in New York, dropped an earlier ruling to dissolve all the companies that Trump owns in the state that could have led to a liquidation.

“This is a venial sin, not a mortal sin,” Engoron wrote in a 92-page ruling that allowed the Trump businesses to keep operating and appointed two overseers to monitor “major activities that could lead to fraud”.

Engoron said he could renew his call for “restructuring and potential dissolution” based on “substantial evidence”.

Trump has lashed out at the ruling, vowing to appeal and calling James and Engoron “corrupt”.

But James said on Friday: “This long-running fraud was intentional, egregious, illegal.” She added: “There cannot be different rules for different people in this country, and former presidents are no exception.”

This article was amended on 18 February 2024 to correct a misspelling. An earlier version referred to “venal” rather than “venial” sin.

  • Donald Trump
  • US politics
  • Kathy Hochul

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