What Is a Property Investment Business Plan and Why Do You Need One?
At its core, a property investment business plan needs to be a record of what your investment goal is, what your property investment journey will look like and how you intend to make a profit.
Many successful property investors have created in-depth property investment plans so maybe now is the time to create your own.
It doesn’t need to be complicated but sitting down and formalising your plans can be a great way to get your thoughts in order and gives you something to refer back to when a property investment opportunity comes your way. Creating a property investment plan with your property strategy can help you decide if a new investment opportunity is right for you and whether it will help you to achieve your goals.
While it can be simple, you do need to put some serious thought into it first. There are certain questions you can ask yourself to help you on your way:
- What is your current financial status?
- What do you want to achieve with your investments?
- When do you want to reach your goal?
- What actions are you able to take to get there?
- How much money do you currently have to invest?
- What money do you expect to be able to invest in the future?
- Where do you expect your money to come from in the future?
- How much time do you have to dedicate to your investments?
- Do you have the skills to manage a property portfolio?
- Do you need a set income from your investment?
- Are you most interested in capital gains or a monthly yield?
The main benefit of creating a business plan for your property investments and answering these questions is that it will help you to protect your finances and your future financial prospects.
Key Components of a Property Investment Business Plan
When creating your property investment business plan, there are some key components that you should include. These are as follows:
Establish your goal
Without a goal, your investments will float around aimlessly so this is arguably the most important part of your investment plan. Having a goal will allow you to understand why you are investing your money into property in the first place and will give you clarity on what you want to achieve.
Some of the most common goals are:
- Saving for retirement
- Saving for a significant life event
- A desire to protect family members’ futures
- Increasing your disposable income
Now is also a good time to determine the type of property investor you want to be:
- Do you want to be a hands-on investor and spend a lot of time managing property renovations and tenants?
- Do you want to trust in the professionals and simply own a portfolio but not have to deal with the day-to-day management?
- Do you have the time to look after an investment or are you comfortable trusting a specialist?
Decide what your property investment strategy will be
The actual strategy you plan to take is probably the lengthiest part of a property investment plan, so we will cover this in more detail later on. In a nutshell, though your strategy should do two things – fit the goals created within your property business plan and maximise your potential earnings.
Make a checklist
Maybe you could include a checklist of all the things you need to incorporate into your property investment strategy. This could be as simple as resources you want to research, opportunities you want to explore and financial checks you need to do but could also incorporate things like goals you want to reach and milestones you need to hit. This checklist will keep you organised and on-track of everything whilst making the whole process seem more manageable.
Include key contacts
Again, this is an easy list of contacts all in one place that you can easily refer to. This could include people like your mortgage adviser, your financial adviser or even your property investment partner (like Select Property Group).
Ensure it is easy to refer to
Finally, the last component of a property investment plan that you should definitely implement, is to keep it simple! A simply written and systematic plan that you can refer to regularly and provides a place where you can store your research is all you need.
Property Investment Strategies
There are different property investment strategies you can get involved with, whether your property investment ambitions lie with commercial, residential, rental, off-plan, city-centre, UK or even overseas property investment opportunities, getting your strategy in place from the start is essential.
Your property investment strategy should guide you on your way as you create your property investment business plan. It will help you to solve any problems you encounter and will outline what work you have to do in order to achieve your goals. Your property strategy will be individual to you, while taking into account your financial situation, long-term ambitions, short-term goals, approach to risk, experience and skills.
In formulating your property investment strategy as part of your property investment business plan, there are a number of things you need to do:
Do your research
Researching and understanding the investment property market has to be an essential part of your strategy. This includes looking at relevant legislation – such as the recent stamp duty land tax changes in the UK – as well as educating yourself on general property opportunities and ways to invest.
Unless you research things like single-let properties, student properties, HMOs, residential property investment opportunities, buy-to-sell properties, off-plan property investments, or even real estate investment trusts (REIT) then how do you know whether they are right for you or not?
Be diligent and don’t let key details slip through the net that may trip you up later on. As part of your research, it may also be wise to talk to other property investors to learn from their knowledge and to understand how they manage their property investment business plans.
Location, Location, Location
Successful property investors know that investing in property is not all about the bricks and mortar. The location of a property is invariably just as important as the actual building itself.
Staying abreast of property investment ‘hotspots’ can be the key to achieving your financial goals. Whether it’s an established location with a new property opportunity or an emerging location that’s said to be the next most sought-after area, it will pay dividends if you manage to stay ahead of the competition.
Identifying these locations and keeping your finger on the pulse should be a key part of your strategy.
The difference between a seasoned and an inexperienced investor is often their ability to stay ahead of trends and use this knowledge to inform their property investment business plan.
Keeping your knowledge updated by reading property headlines and professional forecasts will help you to identify growth hotspots in the property investment world.
Consider off-plan property investment
Off-plan property investment opportunities have become increasingly sought-after in recent years thanks to their ability to deliver on the two main property investment goals – strong capital appreciation and high rental yields.
Buying off-plan property can seem daunting to some property investors who always envisaged putting their money into something ‘tangible’ from the first instance. However, the benefits cannot be denied and therefore off-plan property should not be discounted just because it doesn’t fit into your original ‘vision’.