Any residence with two or more units in the same building is referred to as a multi-family property or multi-dwelling unit (MDU). This kind of home comes in various structures, including the,
How Do You Develop A Rental Property Business Plan?
Dated: July 14 2020
Real estate or not, the right planning will prevent a business from falling apart. If you are looking to go into rental property investment, then you need a solid business plan. In this article, we will be discussing five easy steps to create one by yourself.
Step 1 – Identify your goals.
Without goals, it may be difficult to track performance and progress. If a set goal is not met, it is easier to evaluate and see where things went wrong and how to rectify things. Let’s work with the SMART acronym here in explaining the concept of setting goals. S – Specific, M – Measurable, A – Attainable, R – Relevant, and T-Time-bound. Setting a SMART goal starts with determining your vision and mission. What is your business all out to achieve? Once you know this, next is to find out how to achieve these goals. Do you have any tactics or objectives? For instance, the goal may be to make $2000 in a month from your Airbnb investment property. The targets for this goal may be excellent publicity, securing convincing reviews, price regulation, and overall improved marketing. If you still cannot reach your goal after all these objectives, you need to re-evaluate the goal. Perhaps, it is unattainable? Revisit your real estate business plan and make necessary adjustments before trying again.
Step 2 – Choose your rental strategy.
Now that you have your goals, tactics, and objectives in place, the next step is to choose a rental strategy that will guide you to achieve these goals. There is two options to choose from – the short-term (Airbnb) or long-term (traditional) rental strategy. The traditional strategy entails renting out your property to only one tenant for not lesser than six months. Conversely, the short-term rental investment lets you list your rental property on home-sharing platforms like Airbnb and get per-night tenants. Your business plan will be designed in line with the rental strategy you have chosen. This is another reason to make your research carefully before deciding. The determining factors are your goals, the location of investment, and your availability. For instance, potential investors in New York City will be better off with the long-term strategy, considering Airbnb’s legal status in the area. The opposite is the case in a city like Philadelphia.
Step 3 – Create a financial plan.
Financial planning is key in any real estate investment strategy. You must factor in the potential revenue and costs involved when calculating the potential rental income on any property. Look for data on expected rental incomes, potential profits, and cost analyses over the past years. These will help you to decide if the investment is right for you. Another crucial question is how much money do you have to play around with? Assessing your financial situation helps you to determine the best way to finance your real estate investment. Are you using your personal cash? Do you want to partner with an investor? Is mortgage your best bet? Find answers to these questions and factor them in when designing your rental property business plan.
Step 4 – Look for the right tenants.
A rental property business plan is nothing without a viable marketing strategy. In fact, your chances of success depend on how well you market your rental property. Your marketing strategy will be determined by your choice rental strategy. For instance, Airbnb is designed to complement your marketing efforts. Your use of the Airbnb website can turn the algorithms to your advantage. Catchy descriptions, well-detailed pictures, and positive Airbnb reviews will increase your chances of finding the right tenants on Airbnb.com. The aim here is to bag a Superhost Badge. The approach to marketing in long-term rental properties is slightly different. Both online and offline advertisements work fine. You can even put the word out to your real estate network. The magazines and newspapers are also viable means of passing your messages, especially if you are targeting seniors and older adults. Social media marketing and digital marketing work better for younger people, in addition to being more efficient and easier.
Step 5 – Come up with a clear team structure.
You will find out some tasks that need to be done once you draw your business plan. This is the point you need a clear team structure. This arm of your real estate team will oversee the execution of the tasks in your business plan. In addition to assembling the team, you must designate roles and perform oversight functions to avoid overlapping. If you are just joining the rental property business, you may have no team. In this case, you may proceed with other steps. However, ensure that you set up an execution team as soon as possible.
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