bharatbhasha.com
Free Articles  >>  Business And Finance >>  Page 2378  >> 

Real Estate Investors The Business Plan and Your Financial Forecast Part II





When presenting a financial forecast, you really need to lay out exactly what your revenues are going to be. If you've not bought any properties at all, obviously you're going to have zero revenue until you purchase your first property, and then maybe rehab it for a month or two, maybe a month to find a tenant, but then you should start to see some revenue, and the investor should see that.

So a three-month purchase period, two months rehab, one month finding a tenant, and then boom, they can see the revenues starting to come in. Then maybe you start a second property and then you see that also. You see that takes some time, and then eventually you see some revenue.

Include Historical Numbers When Possible

If you've already got properties, you may want to show some actual historical numbers, what you did last year with that property or the year prior, or even both years. If you can show the property made $10,000 last year, $11,000 the year before, I expect it this year to make $12,000, so you can kind of see the normal progression, maybe as the rents have increased.

Include Expense Report

Lay out your financial forecast, and obviously you've got to include expenses, and make sure that as part of this process you lay out all of the expenses. Don't shortcut it and certainly don't be too tight with your assumptions here. I mean maintenance happens. Do not ignore it. Make sure you've got plenty of money in there for maintenance.

Make sure you've got money in there for vacancies. Make sure you've got some things in there for insurance and your property taxes, and then just administrative costs. All of your costs - if you're going to be running to the property, your mileage and all those things - need to be incorporated into your financial forecast, but you need to think these things through.

How Are You Going to Finance the Deal?

Part of that is where you need to demonstrate to your private lender how you're going to finance your deals. Are you going to use private lenders as the primary source of funding? Or are you going to use banks as the primary source of funding and a private lender as the secondary? You need to lay that out as part of your financial forecast.

Ultimately that leads to the discussion with the private lender, and at that point you'll say, "I need some secondary money. I'm going to borrow the money from my local community bank, 80% of the purchase price, and I need a private lender to help me out with another 10%, 15%, 20%," and obviously your financial forecast would reflect that. You need to think these things through in terms of developing your business plan.

Mistakes to Avoid with the Financial Forecast

One of the things that I see a lot of times on business plans is 1) they're not really specific enough, they're too general, but 2) their assumptions are too tight. They're not including enough costs. They're assuming too many properties. They're going to do five properties this year and they've never done a property before, so their assumptions I think are too aggressive and too strong.

I would try to be conservative, don't be over-optimistic. I beat that home with some of my coaching students. I tried to parry that down and make them very realistic, so when they talk to a private lender their historical background and expertise makes sense given their business plan.

You don't have a background where you've bought one property and a business plan where you're projected to buy 12. That doesn't make sense and people see right through that.


About Author Michel Lautensack :

I invite you to learn more about Private Lending and get my new FREE 20-page eBook titled "Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders!" by clicking here <a href="http://realestatewealthtoday.com/FREE-eBook.html" target="_blank">http://realestatewealthtoday.com/FREE-eBook.html</a> . Mike Lautensack is a full-time real estate entrepreneur and creator of the Private Lending Presentation Kit. To learn more go to <a href="http://realestatewealthtoday.com/Private-Lending-Presentatio" target="_blank">http://realestatewealthtoday.com/Private-Lending-Presentatio</a> n-Kit.html .


Article Source: https://www.bharatbhasha.com
Article Url: https://www.bharatbhasha.com/finance-and-business.php/252994


Article Added on Saturday, August 14, 2010
LD
Other Articles by Michel Lautensack

Real Estate Investors The Business Plan and Your Financial Forecast Part I
Let's go to the financial forecast area of your real estate investment business plan. That's a fairly important area, certainly one that most people, if they are a pretty sophisticated private lender, they are probably going to go to the financial forecast next, after the Executive Summary. They're going to read the Executive Summary and then they're going to want to go see the numbers. Provide the Big Picture As far as a financial forecast is concerned, there are a lot of ways you can do...

Private Investors for Real Estate Finding the Right One
If you are thinking about starting your own real estate project but are strapped for cash, then the following information may be very important in assisting you to find the right private investors for real estate. Anyone who is into the business will clearly tell you that it is a big-money game and although you may have the knack for it, you may not have the finances to support it. If this is your case then you may be looking for some investors for your project. Investors are not easy to...

How to Prepare a Real Estate Investor Financial Report
If you are looking for information regarding preparing a real estate investor financial report then you just might have stumbled onto the right information. I will try to provide you with some very simplified guidelines towards preparing a financial report for your real estate investment. Whether you are a property investor or looking for investors it is equally important that you have a properly prepared financial report in order to facilitate the transaction and allow for smoother...

The 6 Things NOT To Do When Developing Your Real Estate Investing Business Plan
When developing a business plan for real estate investing there certain things you should not do as follows: 1. Do not be optimistic or overestimate your assumptions. We talked about that on Tuesday. If you bought two properties in the last year, don't assume you're buying 10 next year. If you've never bought a property don't assume you're doing six the first year. That's way too optimistic. Be realistic with your assumptions. It's probably one of the number one mistakes people make. 2. At...

Metropolitan Real Estate Investors
When you are interest in making an investment such as a real estate investment, for example you want to be able to talk to as many people that are in the know as possible. This may be more so in the case for individuals that are just starting out in this type of investment but it is applicable to any realty investor. This is what makes the Association a real asset. This is a group that has been formed specifically for those interested in the investment of real estate. It is a New Jersey...

Private Lender Transactions and Your Credibility Kit One Key Element
The bio resume is probably the single most important element of all. They're all important, but certainly this one is the key. This is where you are really going to hit home. The bio is not just, I went to school here, I attended this school, I got these grades. I call it bio or resume. It really is more of a bio. It is somewhat of a resume, but it clearly is not a resume that you would send out on a job application. It's not the point to list all your background and experience. A bio...

Real Estate Investors A Few Marketing Resources That Will Help to Get Motivated Sellers to Call You
Understanding Direct Response Marketing You need to understand the pros and cons, how to do it, the various techniques that are involved, and really, if you want to become a serious real estate entrepreneur, you need to understand marketing because you are going to be constantly marketing for sellers. You're going to be constantly marketing for private lenders. You're going to be constantly marketing for tenants and tenant buyers. You're going to be constantly marketing for vendors and...

Real Estate Investor Wanted
If you are a property developer and in dire need of money, never design a marketing campaign to look like real estate investor wanted. Though this may seem as a straightforward approach and even be considered as eye-catching, still it does not seem very professional to potential big investors who are usually looking to invest in some very professional developers. In order to create a successful marketing campaign every developer should consider a very subtle yet aggressive approach in order to...

Private Lending How to Connect With a Private Mortgage Lender
Although conventional lending institutions have long been considered the popular choice for obtaining a property mortgage, the increasingly fast paced environment has prompted real estate investors to turn to private mortgage lenders to fund their property ventures. This is due in part to the snags and red tape in the convention mortgage lending process and the increased competition in the global real estate marketplace. Connecting with private mortgage organization that can sometimes be...

Mortgages for Real Estate Investors
It is most exciting and somewhat frightening when you make that first decision to do some real estate investment. No doubt you have a sum of money of your own that you are going to invest but you also have a need for mortgages for real estate investors. This is an entirely different financial world compared to just going and obtaining the mortgage you had for your personal mortgage. Now you are in the investment world and if you are new to it then you have much to learn. To begin with, you...

Click here to see More Articles by Michel Lautensack
Publishers / Webmasters
Article ID: 252994
DELINK URL from Authors Bio
REMOVE Article
Tell A Friend
Leave A Comment!
Download this article in PDF
Report Article!
Search through all the articles:


162 Users Online !
Related Articles:
Latest Articles:
 
Business And Finance >> Top 50 Articles on Business And Finance
Category - >
Advertising Advice Affiliate Programs Automobiles
Be Your Own Mentor Careers Communication Consumers
CopyWriting Crime Domain Names DoT com Entrepreneur Corner
Ebooks Ecommerce Education Email
Entertainment Environment Family Finance And Business
Food & Drink Gardening Health & Fitness Hobbies
Home Business Home Improvement Humour House Holds
Internet And Computers Kiddos and Teens Legal Matters Mail Order
Management Marketing Marriage MetaPhysical
Motivational MultiMedia Multi Level Marketing NewsLetters
Pets Psychology Religion Parenting
Politics Sales Science Search Engine Optimization
Site Promotion Sports Technology Travel
Web Development Web Hosting WeightLoss Women's Corner
Writing Miscellaneous Articles Real Estate Arts And Crafts
Aging


Disclaimer: The information presented and opinions expressed in the articles are those of the authors
and do not necessarily represent the views of bharatbhasha.com and/or its owners.


Copyright AwareINDIA. All rights reserved || Privacy Policy || Terms Of Use || Author Guidelines || Free Articles
FAQs Link To Us || Submit An Article || Free Downloads|| Contact Us || Site Map  || Advertise with Us ||
Click here for Special webhosting packages for visitors of this website only!
Vastu Shastra

Linux Web Hosting Provided By AwareIndia







Company IDS