Construction Company business plan for starting your own building firm
Are you thinking of starting a real estate flipping houses business? Well, the business is extremely profitable provided that you manage it properly.
A real estate flipping business includes purchasing small/ large properties, work on their renovation to boost the property value, and then resell them. All you need to do to set up this business is acquiring the license and permits, invest a large amount and make timely decisions.
While the business is profitable it is also slightly difficult to manage as you’ll have to strictly adhere to time and finances. To ensure that your business runs according to your expectations, you should first create a business plan for real estate flipping. If you don’t know what to include in your business plan, you can take help from this sample plan written for the startup, George Real Estate.
Overview of the House Flipping Sector
The first thing to appreciate with the property flipping sector when writing your real estate flipping business plan is that the real estate niche is one of the preeminent contributors to the surge of a country’s economy throughout the whole wide earth. House flipping is a common and lucrative business plan in the real estate sector. For the flipping agent, there exist no caps to the amount of profits you can achieve given you stick to the stipulated regulations withal maintain a high degree of professionalism withal diligence. It is a no brainer that the house flipping sector has built a reputation for creating fortunes in the USA overnight.
According to published results of a study by the Department of Drudgery and Statistics, the house flipping sector will experience an 11.1% billet surge for the period betwixt 2012 withal 2022. The study also went ahead to reveal that more than 38,000 billets would be created in the house flipping sector alone, a clear reason why it has such a significant impact on the economy and the government. Keep this information in mind when planning to write a flipping house plan of a business.
In 2013, it estimates indicate that flipping of a single-family home stood at 156,862. This figure is 16% more than that recorded in 2012 and an overwhelming 114% jump in distinction to 2011. The biggest idiosyncrasy betwixt the sale price of the aboriginal and subsequent flip business is usually $58,081.
Here in the USA, bridle of the real estate sector is by the federal government to protect house owners against fraudsters. To contrive a real estate house flipping business plan in the house flipping sector, one needs to evoke a license from the relevant authorities. However, some states allow lawyers to work as flippers without having to apply for a permit. To get the permit, one has to sit for several precinct real estate exams and pass.
It is also important to note that a rental real estate business plan agent in this country should bestow the buying and vending parties, with punctilious withal precise dossier about the deal to warrant that everybody is reading from the same page from the start.
Similar to other investments, we have potential challenges and downsides, which a house flipper should keep in mind. This is to avert losses as well as disappointments. One such challenge is an unexpected downturn in a country’s economy or demand for homes. On average, it takes 2-3 years to sell properties, but this is strung out on the wampum deluge withal the capaciousness of the venture. Projects that require extensive repairs and renovations can take until five dotage or bounteous. Other unexpected factors can come into play thereby complicating the process such as an increase in cost due to inflation and currency devaluation. Delays by contractors can also lead to a sharp increase in price typically if the seller depends on coffer credit.
Creativity is crucial for the business success of a flipper. You ought to be capable to stock up on ideas that give you an added advantage in the flipping exposition. You should also consider your aptitude to adapt to the fast changes in the exposition.
2.1 The Business
George Real Estate will be a licensed and registered real estate startup based in Denver. The business will purchase buildings for homes, schools, offices, and small businesses to resell them after required restoration.
2.2 Management of Real Estate Flipping Company
If you are looking for how to set up a house flipping business you must realize that the business is primarily about efficient management. To run this business you will have to flip multiple properties at a time. And that means you’ll have to negotiate deals and complete legal requirements for many projects at the same time.
Therefore, to manage this business you need a large and skillful workforce. In this real estate flipping business plan we’ll provide all the details to help you in learning how to start a house flipping company.
2.3 Customers of Real Estate Flipping Company
The real estate flipping business if started on a large scale has its customers belonging to every field of life. However, George Home Flipping will be started on a small scale so the groups of target customers, in the beginning, are as follows:
- General Residential Community
- Commercial Sector (Stores, Private Hostels, Restaurants, Parking Lots, Schools)
- Rental Businesses
2.4 Business Target
Our targets are to expand our service area to two cities by the end of five years of launch and to earn a profit margin of $30.4k per month by the end of the first three years.
3.1 Company Owner
George Home Flipping will be owned by George Martin. George is a graduate in business administration. He has worked in a rental agency for two years and is considered a man who is unbeatable in negotiations.
3.2 Why the real estate flipping company is being started
George is starting a business flipping houses because this is a type of business where he can utilize his skills the most.
3.3 How the real estate flipping company will be started
Step1: Make a real estate flipping business plan template
Starting and running a real estate flipping business is a difficult venture. As it needs quick decisions and time management. According to flipping a house business definition, this business requires reselling the purchased property for making profits. This indicates that you’ll have to ensure a timely resell. Because the more you keep the property to yourself, the more will be its expenses and maintenance costs.
Keeping in view the importance of time and management in this business, it is essential to plan everything before actually initiating the startup. In this sample real estate flipping business plan we are providing all the details of how George will run his business. And how he’ll ensure quick work delivery.
Step2: Get registrations, licenses, EIN, and permits
After making your business plan, the next step is to get the required licenses, permits, and employer identification number.
Step3: Establish your office
After completing the initial requirements, you should start setting up your office and a place where you can keep the inventory and machinery.
Step4: Hire the staff
George decided to hire his staff after strict tests and interviews. He will hire real estate agents, attorneys, remodeling contractors, real estate CPA and appraisers.
Step5: Promote, market, establish a web presence
To reach the target audience, George will promote his services through advertisement, social media, and website.
|Research and Development||$29,000|
|TOTAL START-UP EXPENSES||$415,200|
|Other Current Assets||$229,000|
|Start-up Expenses to Fund||$415,200|
|Start-up Assets to Fund||$1,254,000|
|TOTAL FUNDING REQUIRED||$1,669,200|
|Non-cash Assets from Start-up||$1,644,000|
|Cash Requirements from Start-up||$330,000|
|Additional Cash Raised||$65,000|
|Cash Balance on Starting Date||$41,000|
|Liabilities and Capital|
|Accounts Payable (Outstanding Bills)||$38,000|
|Other Current Liabilities (interest-free)||$0|
|Additional Investment Requirement||$0|
|TOTAL PLANNED INVESTMENT||$1,669,200|
|Loss at Start-up (Start-up Expenses)||$342,800|
|TOTAL CAPITAL AND LIABILITIES||$2,080,000|
Any questions? Get in Touch!
Before starting this business, you should decide which flipping real estate properties you’ll be buying and reselling. This decision should be based on your target market, your money reserves, and the legal requirements in your operating vicinity.
George decided to start his real estate flipping business on an intermediate scale. In this house flipping business plan example we are listing the properties he’ll be flipping in the first five years.
We will purchase and sell newly constructed as well as old residential buildings throughout Denver. They will include
- Single Family Homes
- Vacation Homes
- Small and Large Flats/ Apartments
- Rental Homes
In this service, we’ll also furnish the homes so that people who live independently would have to do little to no effort in arranging their houses.
We will also purchase, renovate and resell business offices and small buildings to be used as business headquarters.
This service will include real estate flipping of all small and medium-sized properties that can be used as
- Retail Stores
- Parking Lots
- Private Hostels
- Public Library
Lastly, we will also resell school buildings after the required renovation. However, this service will be offered for small school buildings only.
Marketing Analysis of Real Estate Flipping Company
Before starting a house flipping business you should carry out a detailed house flipping market analysis. This will help you in understanding the market ups and downs and the prevailing situation of buyers’ trends. Moreover, it will enable you to recognize your customers and the market competitors so that you could define a suitable pricing strategy.
In this real estate flipping business plan pdf we’re providing the market analysis done for George Real Estate. So that you can learn the components of accurate marketing to make your own real estate flipping and management company business plan.
5.1 Market Trends
According to IBISWorld, real estate sales businesses have grown at a rate of 2.6% during the past five years i.e. from 2015 to 2020. The real estate flipping companies are expected to grow more in the coming years as the country recovers from COVID-19.
At present, more than 955k real estate businesses are successfully running in the United States. Collectively they are holding a market size of $164 billion. Moreover, the industry employment of these businesses is reported to be over 1.137 million by the same source.
Thus, the market stats show that you can not be at loss by starting this business provided that you plan and run it effectively.
5.2 Marketing Segmentation
Knowing your target customers is essential before you start a real estate business. Because the type of property you purchase, renovation, furnishings, pricing will all be dependent on the buying behaviors of your customers.
To explore the interests and expectations of his target customers, George divided them into the following groups:
5.2.1 Residential Community
Our primary customers will be the residents i.e. families living in our city. Such people want to save themselves from the hassle of searching for an available and suitable property for their needs. And spending time and money on the required renovation.
Therefore, they are expected to seek our services to buy a property. With us, they will also be saved from keeping track of legal processes.
5.2.2 Commercial Sector
Our second primary customers will be the people who want to own property for commercial purposes. They may include school owners, retailers, hostel owners, restaurant owners, etc.
5.2.3 Rental Businesses
Lastly, businesses who purchase properties such as flats and apartments to give them on rent will also be our target customers.
|Potential Customers||Growth||Year 1||Year 2||Year 3||Year 4||Year 5||CAGR|
5.3 Business Target
- To earn a net profit of $30.4k per month within three years of our launch
- To expand our business to also include large commercial buildings by the end of the five years of our launch
- To achieve and maintain a CSAT score above 95% within a year of our launch
5.4 Product Pricing
Our prices are a little higher than our competitors’. It is because of the exclusive benefits we’ll be offering our customers. Those benefits will be listed in detail in our sales strategy.
To convince your target customers to utilize your services, you’ll have to develop an effective marketing strategy. In your property strategy template you must mention your competitive aspects and your policies to facilitate your buyers. In this house flipping business model we are providing the marketing strategy developed for George Real Estate.
6.1 Competitive Analysis
- We are launching a website and mobile app so that our customers can explore the available properties remotely.
- We do have remodeling staff. However, to manage large projects we’ll be outsourcing renovation work so that the work delivery and quality aren’t compromised.
- Lastly, we are working in partnership with some real estate agents so we expect to get more customers as compared to our market competitors.
6.2 Sales Strategy
To advertise our services:
- We’ll run a campaign through social media (Facebook & Instagram).
- We’ll promote our startup through Google Local ads and local magazines.
- We’ll offer a 20% discount on all of our services for the first month of our launch.
- We’ll provide free electrician and plumbing services to our property purchasers.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
|Unit Sales||Year 1||Year 2||Year 3|
|TOTAL UNIT SALES||155,000||164,300||174,158|
|Unit Prices||Year 1||Year 2||Year 3|
|Direct Unit Costs||Year 1||Year 2||Year 3|
|Direct Cost of Sales|
|Subtotal Direct Cost of Sales||$7,218,000.00||$8,712,140.00||$10,564,087.20|
Any questions? Get in Touch!
The real estate flipping business is mainly related to time management and negotiations. Therefore, the success of this business largely depends on your employees. Your employees must have adequate skills to judge the property value, negotiate contracts with property sellers, and explore the potential buyers.
In this flipping real estate business plan, we’re providing the personnel plan developed for George Real Estate.
7.1 Company Staff
George will supervise all the business operations and deals himself. However, he’ll hire the following people for his help:
- 1 Co-Manager to help in management
- 1 Real Estate CPA to maintain financial records
- 1 Appraiser to estimate property value
- 1 Real Estate Attorney to fulfill legal requirements
- 3 Sales Executives to negotiate deals
- 1 Remodelling Contractor to renovate properties
- 1 Advertising Manager to promote business
- 1 Web Developer to manage websites, social sites, and mobile app
- 2 Renovating Assistants
- 2 Drivers
- 1 Call Operator
7.2 Average Salary of Employees
|Year 1||Year 2||Year 3|
|Real Estate CPA||$12,000||$13,200||$14,520|
|Real Estate Attorney||$10,000||$11,000||$12,100|
Roles and Responsibilities
Chief Executive Officer (CEO)
- Boost the efficiency of the directorate through carefully electing, acclimatizing, teaching, augmenting, tutoring, admonishing, as well as ennobling supervisors. Disseminating the purpose, artifices, and ambitions to the staff members
- Create a sample communication artifice as well as oversee the enforcing of the institution’s vision, purpose, and intentions.
- Fix tariffs and sign deals on the countenance of the house flipping company
- Steer the house flipping company in the proper direction
- Create and oversee exertion of the comprehensive subtlety
- Sign checks and deeds for the house flipping company
- Evaluate and monitor the ascendancy of the house flipping company
- Prepare and present reports to the board
- Supervise house projects
- Confirm that the business conveyance complies with the house executions
- Offer professional advice to the company’s directorate regarding the house projects
- Carry out risk assessment
- Plan, manage, and coordinate all house flipping projects on countenance of the house company
- Oversee the invoicing, nicking, and reckoning of all house projects
- Keep level of the progress of a house project and IT systems
- Make sure that the inveterate house project results are achieved using the resources available efficiently
HR Manager and Admin
- Define job positions to enable the contracting and administering of practices goes smoothly and correctly
- Oversee the bland running of the jurisdictional and human resource departments
- Oversee induction of new employees
- Organize the appraisal, coaching, and reckoning of staff
- Manage the office operations on a circadian basis
Head of Acquisitions, and Dispositions
- Manage druthers and accretion
- Pinpoint and thoroughly analyze the purchasing fortuity and accretion
- Identify business fortuity to fast track the accretion of new residences and assets
- Conduct periodic house flipping market and research studies to know the estimated amount of properties
- Contact conceivable buyers and intermediaries
- Structure house sales transactions
Head of Asset Management
- Monitor the business valise of realty holdings under the company
- Provide cardinal oversight of all quiescent and extant assets in various geographic areas
- Manage strategies and fiscal estimates for acreage
- Oversee aliment of the assigned residences and acreage
Sales and Marketing Officer
- Add available resources to the indexing for sale of the conjunct
- Grab market space, locate tenants and take part in house leasing negotiations
- Prepare and present acreage status acknowledgment documents to embryonic clients
- Prepare all necessary documents to facilitate advertising, marketing, and sale of residences
- Organize open house shows
- Prepare business pecuniary statements, pecuniary affidavits, and fiscal estimates of the entire company
- Coeval work and mercantile accounting reports, assay, and augmenting resources to managers
- Carefully analyze financial feasibility of complex proposed house projects
- Ensure the company complies with taxation legislation
- Be the in-house bookkeeper of our house flipping company
- Oversee all pecuniary proceedings carried out on countenance of the company
Customer Service Officer
- Distribute letters in the organization
- Receive clients and visitors to the organization
- Receive company deeds and parcels
- Ensure the contact information of our house flipping clients’ are captured
- Keep a record of all information on all houses owned by the company
A house flipping business model is not complete without a SWOT assay. The house flipping company is lucrative, however, there are some challenges that one should be aware of at all times to continue making profits in the company.
Immigration Consultant Business Plan
One of our strengths is the ability to create formidable relationships with the various stakeholders and customers. Conjointly, our ability to gain ingress financing and a profound boisterous commission program will warrant that we abide to offer quality house flipping services to our customers.
As a new entry in the house reselling company, one of our sample challenges will be competing alongside the sector leaders. We have an able team of marketers with skills and dexterity to generate strong house reselling strategies on how we will handle this challenge and emerge victorious in the house reselling company.
The positive economic proliferation in the nation has opened numerous opportunities for house reselling sectors. The sky is no longer the limit, but a milestone.
The presage that we are apt to face includes calamitous government guidelines, international mercantile deterioration, and the list continues. There is little that we can do to curtail and protect ourselves from these threats, but with a buoyant mentality, we will be dexterous to establish the house reselling company.
Any questions? Get in Touch
A financial plan is the most important part of a real estate flipping business. To successfully run this business, you have to design a financial strategy for major business aspects, such as:
- Which type of property should you purchase to ensure quick resell?
- How to buy and sell real estate for profit?
- How much money you should spend on the renovation?
- How to manage loss in the case of holding a property for long?
To manage your finances, while keeping all these phenomena in prospect, you must make a financial plan. To help you in making an accurate and detailed financial plan, we’re providing loss and profit projections, balance sheets, break-even analysis, and cash flow tables developed for George Real Estate.
8.1 Important Assumptions
|Year 1||Year 2||Year 3|
|Current Interest Rate||8.02%||8.18%||8.27%|
|Long-term Interest Rate||8.27%||8.31%||8.36%|
8.2 Break-even Analysis
|Monthly Units Break-even||5346|
|Monthly Revenue Break-even||$136,200|
|Average Per-Unit Revenue||$238.00|
|Average Per-Unit Variable Cost||$0.69|
|Estimated Monthly Fixed Cost||$164,000|
8.3 Projected Profit and Loss
|Pro Forma Profit And Loss|
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||$7,218,000||$8,712,140||$10,564,087|
|TOTAL COST OF SALES||$7,218,000||$8,712,140||$10,564,087|
|Gross Margin %||4.12%||5.88%||7.18%|
|Sales and Marketing and Other Expenses||$130,000||$140,000||$145,000|
|Total Operating Expenses||$312,860||$338,440||$360,630|
|Profit Before Interest and Taxes||($2,860)||$205,849||$456,988|
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
|Pro Forma Cash Flow|
|Cash Received||Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash from Receivables||$19,000||$20,520||$22,162|
|SUBTOTAL CASH FROM OPERATIONS||$75,000||$81,750||$88,290|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0||$0||$0|
|New Current Borrowing||$0||$0||$0|
|New Other Liabilities (interest-free)||$0||$0||$0|
|New Long-term Liabilities||$0||$0||$0|
|Sales of Other Current Assets||$0||$0||$0|
|Sales of Long-term Assets||$0||$0||$0|
|New Investment Received||$0||$0||$0|
|SUBTOTAL CASH RECEIVED||$75,000||$82,000||$89,000|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|SUBTOTAL SPENT ON OPERATIONS||$67,000||$71,000||$74,000|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0||$0||$0|
|Principal Repayment of Current Borrowing||$0||$0||$0|
|Other Liabilities Principal Repayment||$0||$0||$0|
|Long-term Liabilities Principal Repayment||$0||$0||$0|
|Purchase Other Current Assets||$0||$0||$0|
|Purchase Long-term Assets||$0||$0||$0|
|SUBTOTAL CASH SPENT||$68,000||$73,440||$79,315|
|Net Cash Flow||$16,000||$17,000||$18,000|
8.5 Projected Balance Sheet
|Pro Forma Balance Sheet|
|Assets||Year 1||Year 2||Year 3|
|Other Current Assets||$1,000||$1,000||$1,000|
|TOTAL CURRENT ASSETS||$301,000||$337,120||$378,923|
|TOTAL LONG-TERM ASSETS||$26,000||$29,120||$32,760|
|Liabilities and Capital||Year 4||Year 5||Year 6|
|Other Current Liabilities||$0||$0||$0|
|SUBTOTAL CURRENT LIABILITIES||$13,900||$15,568||$17,498|
|TOTAL LIABILITIES AND CAPITAL||$292,000||$338,240||$380,520|
8.6 Business Ratios
|Year 1||Year 2||Year 3||INDUSTRY PROFILE|
|Percent of Total Assets|
|Other Current Assets||2.09%||2.32%||2.57%||2.40%|
|Total Current Assets||151.20%||151.80%||152.40%||158.00%|
|Percent of Sales|
|Selling, General & Administrative Expenses||93.90%||96.44%||99.14%||97.80%|
|Profit Before Interest and Taxes||39.88%||40.96%||42.10%||33.90%|
|Total Debt to Total Assets||0.18%||0.17%||0.17%||0.40%|
|Pre-tax Return on Net Worth||74.33%||74.80%||75.20%||75.00%|
|Pre-tax Return on Assets||93.77%||98.46%||103.38%||111.30%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||33.04%||34.06%||35.12%||N.A.|
|Return on Equity||55.99%||57.73%||59.52%||N.A.|
|Accounts Receivable Turnover||7.6||7.6||7.8||N.A.|
|Accounts Payable Turnover||16.3||16.4||16.5||N.A.|
|Total Asset Turnover||2.3||2.4||2.6||N.A.|
|Debt to Net Worth||-0.03||-0.04||-0.03||N.A.|
|Current Liab. to Liab.||1||1||1||N.A.|
|Net Working Capital||$251,000||$265,056||$279,899||N.A.|
|Assets to Sales||0.85||0.87||0.88||N.A.|
|Current Debt/Total Assets||0%||0%||0%||N.A.|
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