In this episode, I discuss the role of a business plan in a real estate investing business. A lot of people will probably disagree with my opinion, but I’m sticking by it!
I received an email today from a listener of the show who had a few questions for me. One of the questions was whether or not they should have a business plan before they start their real estate investing business. I have heard various opinions on this subject from real estate investors over the last several years. Here’s my opinion: you do not need a business plan to run a successful real estate investing company. The only time a business plan would be required is if you were trying to get a loan from a traditional lending institution.
For the first flip I ever did, I used a mortgage company to purchase the house, and my own personal funds to complete the rehab. I did not need a business plan for this. However, if you are going to approach a bank and ask for a business loan to flip houses for example, they may want to see a business plan.
Since this is not the case for most new real estate investors, I say forget the business plan. As a new real estate investor you should be focusing your time and energy on two things:
- Finding a great deal.
- Finding money.
So, in my opinion, a business plan is just something to distract you from the truly important stuff. Don’t worry about a business plan until someone tells you have to have it. That time may never come. In all the years I have been investing in real estate, I have never been asked for, nor required to have a business plan.