You’ve probably heard that if you fail to plan then you plan to fail. That’s good advice, especially when it comes to buying apartment buildings for sale.
Planning is the key to success in any business and it’s no different in the multifamily investing business. I’m going to show you how to create a super-simple business plan based on my own business plan.
Now, I should tell you first that there really are two different kinds of business plans. One is the kind you use to present to potential investors if you are looking for capital, or the bank if you are going after a loan. It’s clean and polished and looks pretty. That’s not the kind I’m talking about.
The other kind is a down-and-dirty, roll-up-your-sleeves, dog-eared document that you pull out every single day and review. (After a while, you’ll be so familiar with it that you will pull it out every other day, then every other week, and soon you will know it by heart, as I do.) It’s what I call a “living document” because you’re always in it, always changing it and making it useful to you. No one else will see it, and you’ll use this plan to drive your business.
A business plan should be a document where if you were to wake up with total amnesia one morning your spouse could say to you, “you are a successful apartment building investor and this is the step-by-step plan of what you’ve done,” and then you go out there and repeat the same success. So, your business plan should be useful, user-friendly and enjoyable to interact with. (Unfortunately, too many people think that their business plan needs to be the first kind—the polished kind—so it sits on a shelf and collects dust.) You can create it on your computer, print it out and carry it with you, making notes and updating it regularly.
So, what does your plan include? Well, mine includes the three main activities I perform: Acquire, Operate and Improve. I started by writing one page for each step with ideas and best practices and reminders to myself, all in a step-by-step format. “Acquire” is about finding multifamily apartment buildings and determining my exit strategy, “Operate” is about running them and “Improve” is about making them better.
As my business grew and my processes developed, I began to hone my plan. I aggressively modified each one the things I learned from every new investment. Today, my plan’s structure isn’t that different from my early days when I performed those three tasks, but you can be sure that each of those steps is tightly defined and rich in value. If I were to suddenly lose everything I had, that plan would still be worth millions to me.
Under each of the three headings I include the steps around what I do, where I do it, how long it should take, who I work with, what my intended outcomes are and what happens if things go off the rails. It’s in a step-by-step format so that I can simply follow step one, step two, step three, etc. Of course, I rely on my instincts and bank of experience, but this plan makes sure it gets done. But, I’ve added a fourth heading—teach.
Today, I not only acquire, operate, and improve multifamily investments, I also teach others how to do the same. Your plan will probably start with the first three, and you might find in time that it may grow to include the fourth as well. But, you need to start somewhere. So, start with a 3-point Acquire, Operate and Improve business plan and make it the most valuable pieces of paper you own.