I have been remodeling homes for 6 years. I live in Columbia, Missouri and it is the #1 growing city in the United States and the third wealthiest city in the United States. I know that bumps in the road will happend, but I truly believe I can make this work.
The company is a start-up business venture developed by myself for the sole purpose of investing in residential real estate. My business plan lays out a simple strategy for developing a long-term real estate investment company by leveraging an initial investment of $83,000. My business model is to market the company to a consistent stream of motivated sellers that are willing to accept discounted wholesale prices for their property or foreclosed properties. The properties are primarily resold at retail prices to generate working capital for the company. We pay all closing costs and do not use real estate agents to execute the transaction, thus eliminating agent’s fees. Often, there is not a substantial difference between our offer and the net cash an owner would receive by listing their property with an agent. The owner will pay 6% of the sales price in agent’s fees and 4% in closing costs. We can close on a property in as little as seven days, while the average days on the market for a house listed with an agent is fifty to sixty in our region, in addition to a thirty-day escrow. Our value proposition of an all-cash offer with a fast escrow close is often a good option for the owner/seller who recognizes the benefit of speed to cure their financial situation. As home prices rose dramatically in the past several years, individuals who were only marginally qualified to purchase increasingly expensive homes resorted to zero-down and low-down mortgages, along with adjustable rate mortgages, made available by the mortgage industry. The result was an affordable, low monthly payment on properties that had little or no equity. As interest rates rise and balloon payments come due, marginally qualified property owners are less able to meet their mortgage obligations. It’s these property owners that become motivated sellers and the primary focus of our marketing efforts. The financial goal is to leverage $43,000 in seed money into a stable company with a Balance Sheet in excess of $1 million in assets after the first three years of operations. To achieve this goal, we intend to buy twenty-four properties by the end of our third year, generating net revenue of $532,000 from the sale of nineteen properties and equity of $150,000 from holding five rental properties. Primarily, revenue is forecast from two primary streams of income.
The company’s revenue for the first twelve months is $112,000, consisting of net sales from the sale of four of four properties acquired in that year. Revenue increases to $242,292 in the second year based on acquiring an additional eight properties, selling six of the properties and retaining two as long-term rental properties. Revenue rises only moderately in the third year to $296,822 based on acquiring an additional twelve properties, selling nine of the properties and retaining three as long-term rental properties. The company’s net profit in the first year is $94,680 in the first year, decreasing to $44,792 in the second year due to payroll and benefit costs and decreasing slightly again in the third year to $11,692. The company’s Total Liabilities and Capital for its first three years of operations are $138,018, $517,529, and $1,107,697 respectively.
I have discussed my business plan with my attorney. I have discussed plans and came to terms with 17 Realtors. I have a team of birddogs that will help me spot potential properties. I have a CPA that will work with Alton Innovations as well.
Alton Innovations will initially focus on two primary models for generating a consistent stream of profitable business. We will concentrate on these two models exclusively for the first 6 to 12 months so se can develop a solid foudation of revenue to further build the business for the future.
Our two primary profit models will revolve around:
1. Rehabbing distressed properties found from foreclosures, vacant properties and deal buys with an end goal of selling to retail buyers within 6 months of purchase.
2. Wholesaling distressed properties found from foreclosures, vacant properties and deal buys to our team of rehab partners for a consistent profit.
These two methods of real estate investing will help Alton Innovations to build a solid company which is focused on becoming the area’s experts in rehabbing and wholesaling foreclosures and vacant properties. Our business model will expand to include other types of real estate investing activities to further broaden our revenue streams within 12 months of starting the business. As of now, our plan is to continue to focus on rahabbing and wholesaling foreclosures and vacant homes as our primary area of expertise and source of revenue for at least 24 months. During that time we will expand our revenue streams, but will keep our focus on our primary area of expertise.
My Unique Selling Proposition puts my company above the rest.
1.) Extremely fast closings and high price offers.
2.) A combined 10 years in the real estate and rehab industry.
3.) I am connected with a full service real estate company including financing, realtor services and property management.
4.) 10years in marketing expertise that will result in more qualified prospects and house offerings.
5.) Fastest decision and deal makers in the market.
6.) Best quality in the industry.
This is a small part of my business plan. If anyone has any suggestions or ideas for financing, please let me know.