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 ,nike air max 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 the same time, do not be so conservative that your assumptions don't make sense.
We're probably going to be going into a period of inflation, so make sure you factor in inflation in terms of rental rates and things like that.
3. Do not focus on long term projections.
One of the things I see a lot of is projections of 5 or 10 years, but they're just annual budgets. An annual budget in the next few months doesn't mean much. You want to be able to see it on a monthly basis. Beyond the fifth year it makes little or no sense. I'm not even sure five years makes sense. Three would probably be more than enough.
4. Do not overestimate your own skills.
If you've got a lot of skills,ghd iv styler, you're going to want to discuss those and bring them to bear. If you don't, then that's fine. If you're not good at the legal issues, fine. Tell them you have an attorney involved and discuss that person. If you're not a construction person, you would obviously have a contractor to offset that area you're not an expert in.
There is absolutely nothing wrong with telling somebody you do not have skills in that area, but you do have enough skills and knowledge to hire somebody that does. Everybody understands that you can't be an expert on everything. I don't think people are generally expecting you to be.
They do expect you to have enough sense to evaluate your own skills. If you're not strong in something, then make sure you've hired somebody to offset that weakness.
5. Do not hesitate to delegate things.
For instance, if you're not good at construction, delegate to your construction manager or contractor. The same applies for legal issues. Make sure you're delegating to an attorney. Make sure you are using your team the best you can.
6. Do not skip any steps in preparing the business plan.
We've talked about that. Make sure you're incorporating all six of the major steps. Go through the plan and go through each one of those.
Once you've got most of the back stuff done, the financial forecast, market analysis, your assumptions,christian louboutin, then you come back and prepare your Executive Summary. At that point your Executive Summary needs a lot of time, thought, and analysis. That's the one page every single person will read.
They'll read the Executive Summary and then they'll read the financial forecast. Those are the two areas you can be sure they're going to read. The rest of it you never know,rolex, but those two areas have to be spot-on in terms of capturing the essence of your business plan. Make sure your financial forecast is grounded in real assumptions.
1. Do not be optimistic or overestimate your assumptions.
We talked about that on Tuesday. If you bought two properties ,nike air max 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 the same time, do not be so conservative that your assumptions don't make sense.
We're probably going to be going into a period of inflation, so make sure you factor in inflation in terms of rental rates and things like that.
3. Do not focus on long term projections.
One of the things I see a lot of is projections of 5 or 10 years, but they're just annual budgets. An annual budget in the next few months doesn't mean much. You want to be able to see it on a monthly basis. Beyond the fifth year it makes little or no sense. I'm not even sure five years makes sense. Three would probably be more than enough.
4. Do not overestimate your own skills.
If you've got a lot of skills,ghd iv styler, you're going to want to discuss those and bring them to bear. If you don't, then that's fine. If you're not good at the legal issues, fine. Tell them you have an attorney involved and discuss that person. If you're not a construction person, you would obviously have a contractor to offset that area you're not an expert in.
There is absolutely nothing wrong with telling somebody you do not have skills in that area, but you do have enough skills and knowledge to hire somebody that does. Everybody understands that you can't be an expert on everything. I don't think people are generally expecting you to be.
They do expect you to have enough sense to evaluate your own skills. If you're not strong in something, then make sure you've hired somebody to offset that weakness.
5. Do not hesitate to delegate things.
For instance, if you're not good at construction, delegate to your construction manager or contractor. The same applies for legal issues. Make sure you're delegating to an attorney. Make sure you are using your team the best you can.
6. Do not skip any steps in preparing the business plan.
We've talked about that. Make sure you're incorporating all six of the major steps. Go through the plan and go through each one of those.
Once you've got most of the back stuff done, the financial forecast, market analysis, your assumptions,christian louboutin, then you come back and prepare your Executive Summary. At that point your Executive Summary needs a lot of time, thought, and analysis. That's the one page every single person will read.
They'll read the Executive Summary and then they'll read the financial forecast. Those are the two areas you can be sure they're going to read. The rest of it you never know,rolex, but those two areas have to be spot-on in terms of capturing the essence of your business plan. Make sure your financial forecast is grounded in real assumptions.
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