Rental Properties Business Plan Template [Updated 2023]
Rental Properties Business Plan Template
If you want to start a Rental Property business or expand your current Rental Property business, you need a business plan.
The following Rental Property business plan template gives you the key elements to include in a winning Rental Properties business plan.
You can download our Business Plan Template (including a full, customizable financial model) to your computer here.
Rental Property Business Plan Example
Below are the key sections of a successful rental property business plan. Once you create your plan, download it to PDF to show banks and investors.
I. Executive Summary
[Company Name] is a rental property agency in [location name] that specializes in managing, renting and leasing properties. [Company Name] rents homes in dozens of markets across the country and has an online platform that allows customers to search by their specific criteria (number of bedrooms, region, amenities, etc.) to find a property that’s right for them in their preferred location.
Products Served/Service offering
The Company offers a variety of rental properties, listed below:
- 1-3 bedroom apartments
- Single family homes
- Multi-unit buildings
- Short-term rentals
- Rental of mobile homes or trailers
[Company Name] will primarily provide its offerings to local renters, students and local professionals. The demographics of the customers are given as below:
- First time renters-29%
- Young adults-21%
- Perma – renters-16%
- Middle income boomers-11%
[Company Name] is led by [Founder’s name], who has been in the rental property industry for [x] years. During his extensive experience in the rental property industry, he [founder] acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also holds rich experience in handling business management activities (i.e., staffing, marketing, etc.).
[Company Name] is qualified to succeed due to the following reasons:
- There is currently a high demand for rental property services in the community. In addition, the company surveyed the local population and received highly positive feedback pointing towards an explicit demand for the products, supporting the business after launch.
- The Company’s online marketplace offers a high-volume traffic area and will thus be highly convenient to a significant number of residents living anywhere.
- The management team has a track record of success in the rental property business.
- The rental property business has proven to be a successful industry in the United States.
[Company Name] is currently seeking $370,000 to launch its rental property business. Specifically, these funds will be used as follows:
- Website design/build and startup business expenses: $120,000
- Working capital: $250,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
II. Company Overview
Who is [company name].
[Company Name], located in [insert location here], is a rental property agency focusing on providing short-term and long-term rentals, as well as leased properties to the local community. [Company Name’s] rental properties have a clean and modern appearance that appeals to the current renter’s market. The [Company]’s properties will be fully furnished and include high-end technology and modern accessories.
[Company Name] is owned by [Founder’s Name]. While [Founder’s Name] has been in the rental property industry for some time, it was in [month, date] that he decided to launch [Company Name]. He evaluates that the growing number of students, working professionals, and overseas relocations create a need and expects growth in the country’s rental property market.
[Company Name]’s History
Upon surveying the local customer base and finding the potential retail location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].
[Founder’s Name] has selected an initial office location and is currently undergoing due diligence on each property and the local market to assess the most desirable location for additional offices.
[Company’s Name] operations are currently being run out of [Founder’s Name] home office.
Since incorporation, the company has achieved the following milestones:
- Developed the company’s name, logo, and website
- Determined rent/leasing and financing requirements
- Began recruiting key employees with experience in the rental homes/apartment industry
[Company Name]’s Products
Iii. industry analysis.
You can download our Rental Property Business Plan Template (including a full, customizable financial model) to your computer here. The market size of the rental property industry in the US increased immensely, and the market size, measured by revenue, of the rental property industry, is $174.2 billion. Rental income units are an increasingly important part of the US housing market. The return on expenditure in the property market is much better than in many economic sectors.
With tenant demand in the US increasing last year, this is thought to be related to tenants looking to downsize or move further out to save money. Most rental housing in the US is developed, financed, and owned by a diverse group of private, for-profit companies.
As the economy of the US began to grow and demand for rental apartments rose, industry revenue grew at a rapid pace, hence opening vast opportunities for rental property companies.
Another obvious trend that is common with rental property companies in the US is that most of them are improvising on more means of making money in the apartment rental industry; they are also acting as property developers and home staging agents, amongst other things.
IV. Customer Analysis
Demographic profile of target market.
[Company Name’s] target market include people of all demographics. The market [Company Name] serves is value-conscious and desires high comfort and basic amenities geared towards families, students, and the working population.
The Company will primarily target the following three customer segments:
- High-Income Individuals: The Company will attract individuals with higher incomes who are looking for a rental property with modern furnishings and technology.
- Families: The Company will attract families looking for turn-key properties that are furnished and offer an array of amenities to suit their busy family life.
- Working Professionals: [Company name] is located along a well-traveled commute route, by offering a smart property to working professionals with walking distance (not more than 10 minutes) to a means of transport.
V. Competitive Analysis
Direct & indirect competitors.
Leasing Inc Leasing Inc is a marketplace to find rental homes in the country. It originally started more than a century ago as a networking tool for real estate agents, but today it is a fully searchable online database of homes for both sale and rent. Leasing Inc offers an ideal rental property with different amenities that can best suit the customer’s requirements. Leasing Inc’s properties are well furnished with all modern accessories.
Rental Barn Rental Barn is the most visited real estate website in the United States. Rental Barn and its affiliates offer customers an on-demand experience for selling, buying, renting, and financing with transparency and nearly seamless end-to-end service. The Company provides multiple rental apartments according to the customer’s needs and requirements.
Homewood Properties Homewood Properties is a leading digital marketing solutions company that empowers millions nationwide to find apartments and houses for rent. Customers can click on the items that are important to them, from hardwood floors to walk-in closets, and select the property which they are looking for according to their needs.
[Company Name] enjoys several advantages over its competitors. These advantages include:
- Client-oriented service: [Company Name] will have a full-time sales manager to stay in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility to his clients and will further keep in touch with his clients through newsletters.
- Robust clientele base: Another possible competitive strategy for winning the competitors in this particular industry is to build a robust clientele base and ensure that the company’s properties are top-notch and trendy. The Company is well-positioned, key members of its team are highly competent, and can favorably compete with some of the best players in the industry.
- Management: The Company’s management team has X years of business and marketing experience that allows them to market and serve customers in an improved and sophisticated manner than the competitors.
- Relationships: Having lived in the community for xx years, [Founder’s Name] knows all leaders, newspapers, and other influencers, including the local leaders who fought the [Competitor] opening xx years ago. It will be relatively easy for the company to build branding and awareness of the rental property industry.
VI. Marketing Plan
The [company name] brand.
The [Company Name] brand will focus on the company’s unique value proposition:
- Offering homes/apartments for rent suited for families, students, working professionals, landowners, foreign investors, and international migrants.
- Offering a diverse range of rental homes in a prime location.
- Providing excellent customer service.
[Company Name] expects its target market to be students, international migrants, the working population, families mainly from surrounding locations in the [Location]. The Company’s promotions strategy to reach these individuals includes:
Phone Prospecting [Company Name] will assign salespeople to contact and work with clients to help them buy, sell or rent real estate properties. Salespeople will use their in-depth knowledge of the real estate market to help clients find rental properties and execute all the required formalities.
Advertisement Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its offerings in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.
Public Relations [Company Name] will hire an experienced PR agency/professional(s) to formulate a compelling PR campaign to boost its brand visibility among the target audience. It will look to garner stories about the company and its offerings in various media outlets like newspapers, podcasts, television stations, radio shows, etc.
Referrals [Company name] understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other businesses by providing economic or financial incentives for every new client produced. This strategy will increase effectiveness after the business has already been established. Additionally, [company name] will aggressively network with useful sources such as home contractors, real estate development companies, and businesses. This network will generate qualified referral leads.
Social Media Marketing Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand the changing customer needs.
Part of the [Company Name’s] business strategy is to ensure that it will work within the budget of its clients to deliver excellent properties. The real estate industry fluctuates and therefore, rental prices, for the most part, are usually out of a company’s control. However, the company will market their properties at a competitive rate to ensure they do no have vacant properties. They will also keep a tight control on costs in order to maximize profits.
VII. Operations Plan
To execute on [Company Name]’s business model, the company needs to perform many functions, including the following:
- General & administrative functions including legal, marketing, bookkeeping, etc.
- Hiring and training staff
Service and Operations Functions
- Rental property maintenance
- Website maintenance, updates, and bug-fixing
- Ongoing search engine optimization
VIII. Management Team
Management team members.
[Company Name] is led by [Founder’s Name], who has been in the rental property business for xx years. He has worked in the industry most recently as a [Position Name] and has held various different positions in the management chain over the last xx years. As such, [Founder] has an in-depth knowledge of the rental property business, including operations and business management.
[Founder] has also worked as a real estate consultant on a part-time basis over the past xx years.
[Founder] graduated from the University of ABC and has done Master of Professional Studies in Real Estate.
[Founder] will serve as the [Position Name]. In order to introduce the rental property business, the company needs to hire the following personnel:
- Real estate agent (should have real estate sales experience in residential and commercial property)
- Property Manager
- Marketing and Sales Executive
- Part-Time Bookkeeper (will manage accounts payable, create statements, and execute other administrative functions)
- Customer Service Manager
IX. Financial Plan
Revenue and cost drivers.
[Company Name]’s revenue will come from the renting properties. The major costs for the company will be staff salaries and property maintenance. In the initial years, the company’s marketing spend will be high to establish itself in the market.
Capital Requirements and Use of Funds
[Company Name] is currently seeking $370,000 to launch its rental property business. The capital will be used for funding capital expenditures, workforce costs, marketing expenses, and working capital. Specifically, these funds will be used as follows:
5 Year Annual Income Statement
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- Rental Property Business Plan
2.0 Company Description
- 3.0 Daily Operations and Production
4.0 Market Analysis
5.0 marketing strategy and implementation, 6.0 organization and management, 7.0 financial plan, 1.0 executive summary.
Real Estate Ventures, Inc. is a newly formed S-Corporation wholly owned by Steve and Linda Rogers for purposes of purchasing and owing income producing real estate. Real Estate Ventures, Inc. fills the void in the local Franklin, Tennessee rental housing market by providing clean, well cared for rental homes to well qualified tenants. Neither the homes nor the ten\ants are chosen on a hasty basis, but rather on purposeful, planned and methodical basis. The property selection process is rigorous and based on long term investment standards and tenants are personally evaluated by the owners. Real Estate Ventures, Inc. believes the key to successful property management is to be committed for the long term in both the property and tenant selection process.
The owners of Real Estate Ventures, Inc. are lifelong residents of the thriving Franklin, Tennessee area, a suburb of Nashville. Steve Rogers, an entrepreneur has owned his own company, ProStar Paints for 15+ years. Linda Rogers is a math teacher at Franklin Elementary. Both owners have access to additional sources of revenue to supplement expenses associated with the investment property. In addition to their outside revenue, the Rogers received a $100,000 inherence when Linda’s mother passed away recently.
Real Estate Ventures, Inc. is purchasing their first investment property, a well maintained single family home located in the highly sought after Red Mill Estates subdivision. Real Estate Ventures, Inc. has a contract on the house and the sales price is $107,500. The property is in need of some repair and maintenance (primarily cosmetic). Real Estate Ventures, Inc. will contract the work to a well known contractor that is personally known by Real Estate Ventures, Inc. for 15years. Steve Rogers will paint the property. It is estimated the repairs will take one month to complete at a cost of approximately $10,000.
A tenant, known by the owners with excellent credit and references, has been located and is ready take occupancy the following month. She has provided a security deposit.
The owners of Real Estate Ventures, Inc. are requesting a $53,750 commercial real estate loan to purchase the investment property. The credit facility will be based on 15 year amortization and have a loan to value ratio of 50%. The following business plan will provide a history of Real Estate Ventures, Inc., its current and future plans, and its ability to repay this financial obligation.
1.1 Business Objectives
- Invest in quality well cared for properties that are priced within the local market range
- Locate only well qualified tenants, desiring to lease long term
- Generate passive income
1.2 Mission Statement
Real Estate Ventures, Inc.’s goal is to invest in quality – both in its properties and in its tenants. One of the largest mistakes made by new real estate investors is in poor property selection. Even worse is their tenant selection process, often with little or no background and credit checks. At Real Estate Ventures, Inc., the owners are extremely devoted to their business and their commitment to the long term can be seen in their extreme dedication to both their properties and their meticulous selection process of finding long term tenants.
1.3 Guiding Principles
Real Estate Ventures, Inc. holds the following as its Guiding Principles.
- Treat the investment as a business first and foremost Many real estate owners will fail to take their investment seriously and keep sloppy or minimal business records. Over time this lack of discipline can permeate into other aspects of the business resulting in a downward slide of the business.
- Selective in tenant process Instead of accepting the first person in the door to accept the lease, Real Estate Ventures, Inc. will personally meet with each applicant for a personal interview. Real Estate Ventures, Inc. is seeking a long term lease with quality tenants. All applicants will be required to pass the credit and background check as well as provide the applicable deposits. References are a must and will always be verified.
- Provide exemplary service to tenants The goal of Real Estate Ventures, Inc. is to achieve long term occupancy levels. If the tenant has a broken A/C unit, then, they’ll fix it – that same day! Period! The property will be clean, well maintained and professionally managed.
1.4 Keys to Success
Real Estate Ventures, Inc. is fully committed to make its rental property business a long term success with future plans for expansion. It is this dedication and drive which will set them apart from their local peers. The following are what Real Estate Ventures, Inc. believes are its keys to success:
- Property management – The owners of Real Estate Ventures, Inc. will personally manage the rental property and not rely on an outside management team. This way, all repairs can be addressed immediately, rents will be collected in a timely manner and the accounting ledger will be kept current and up to date.
- Invest in only sustainable, high quality investments – Real Estate Ventures, Inc. is not interested in ‘flipping’ properties. Prior to making any purchases, the properties are fully evaluated to determine positive cash flow and long term sustainability.
Real Estate Ventures, Inc., (“Real Estate Ventures, Inc.”), is a newly formed S-Corporation formed for purposes of managing the underlying real estate located in Franklin, Tennessee, a principal city in the Nashville Metropolitan Statistical Area (“MSA”). Real Estate Ventures, Inc. is jointly owned by Steve and Linda Rogers, husband and wife.
Steve and Linda Rogers are lifelong residents of Franklin, Tennessee. Steve has an established business and has owned his paint business known as ProStar Paint for 15+ years. Linda Rogers, a graduate of Middle Tennessee State University, is a math teacher at Franklin Elementary School.
2.2 Legal Form
Real Estate Ventures, Inc. is an S-Corporation.
2.3 Start-Up Summary
Steve and Linda Rogers, the owners of Real Estate Ventures, Inc. have been interested in finding a means to supplement their income. When Linda’s mother passed away earlier this year, the couple received approximately $100,000 in inheritance and they decided to use this windfall to purchase and manage investment income properties. Together they attended several continuing education classes at their local community college and decided upon the subject property for their first purchase. The 1,356 SF house is located in the Red Mill Estates neighborhood. The house is in need of some cosmetic updates to bring the property to current rental market standards and is primarily comprised of new carpet, paint, and laminate tile.
The couple plans to subcontract the project and have build-out and completion within 30 days and the tenant taking occupancy thereafter.
Below is a detailed summary of the Construction Budget :
Steve Rogers personally knows the contractor, Ben Nelson, of Ben Nelson Construction, and has painted many houses for the contractor over the past 15 years. Mr. Nelson has approved the budget and believes that barring weather conditions, the project should be completed on schedule with minimal cost overruns. The contractor is reputable and is well known in the community for its integrity, finishing projects on time, and its quality of workmanship. Steve will do the painting himself. The estimated time to complete the renovation and rehabilitation is one month.
Real Estate Ventures, Inc. has located an approved tenant for the property as well. A teacher and acquaintance at Linda’s school has requested to occupy the unit. The single mother of two recently divorced and is currently living with a relative. The house is a wonderful opportunity for the teacher to launch a fresh start and the location is 5 minutes to the school where she teaches with Linda. The tenant has passed the credit and rigorous background checks and her references have all checked out. Real Estate Ventures, Inc. is holding her security deposit.
2.4 Location and Facilities
Real Estate Ventures, Inc. extensively researched the local market and found it met their key criterion. The Red Mill Estates neighborhood has lush landscaping, larger than average lots and is primarily owner occupied. The surrounding neighborhoods are middle class suburbs with five grocery stores within a 5 mile radius, various restaurants, and shopping malls 3 miles away near the easily accessible I-65. The property is located in the Franklin City Elementary School District.
The property is clean and well maintained by the original owner. Updates to the property will primarily be cosmetic to bring the property to current market standards.
3.1 products/services descriptions.
Real Estate Ventures, Inc. provides clean, quality homes in growing markets to well qualified tenants.
The primary source of revenue is rental income. Supplemental income will include:
Forfeited Deposits Bounced Check fees (NSF) Late charges Damage and Cleaning Charges Application fees Pet Charges Lease Termination charges
3.2 Competitive Comparison
There are seven rental income properties within a 1 mile radius of the subject along with several multifamily apartment units. For comparison purposes, the multifamily units have been excluded from this comparison. Rents per square foot range from a high of $1.11 to a low of $0.83 per square foot (“PSF”). The average market rent PSF in the Franklin market is $1.01. The subject rent PSF is $0.98 and compares favorably with the market.
Following is a table outlining the local comparables:
3.3 Product/Service Sourcing
3.4 inventory management, 3.5 warehousing and fulfillment, 3.6 future products/services.
Real Estate Ventures, Inc. has near term plans to purchase additional quality income producing properties sufficient to generate, passive income streams.
Franklin, Tennessee, located in Williamson County, is a Principal City in the in the Nashville Metropolitan Statistical Area (“MSA”) and is ranked 31 in the United States. According to the University Of Tennessee’s 2012 Economic Outlook, Williamson County is one of the fastest growing counties in the state, expanding by 44.7% over the prior year.
Health Spring, Community Health Systems, Healthways, Home Instead Senior Care, MedSolutions Inc, Magazines.com, the Provident Music Group, Renal Advantage Inc, World Christian Broadcasting and Nissan’s North American headquarters are based in Franklin.
There are over 1,600 businesses in the surrounding 3 mile radius of the subject. The majority of the local businesses are in the service category and comprise 40.1% of the local employment base followed by 20.8% in the retail trade.
Franklin vacancy levels were reported to be 6% compared to the industry average of 7.9%. SOURCE: Trulia, Bureau of Labor Statistics
4.1 Industry Analysis
The housing market recovery has remained true to the old real estate axiom of “location, location, location.” How your local market is faring today – and if it makes more sense to buy or rent, to sell now or to hold off if possible – is largely determined by unique, local factors and fundamentals. Timely and comprehensive local market information will be even more important in 2013 as buyers continue to seek bargains and sellers look to maximize returns. Source: Zillow Research
4.1.1 Market Size
A recent survey of Franklin, Tennessee revealed there are currently 67 single family residences available for rent. The average monthly rental charge ranges from $2,202 monthly to $1,058 monthly. The middle tier monthly rent is $1,283 or $1,031,532 annualized.
Real Estate Ventures, Inc.’s portion of the $1 million market represents 1.51% of market share.
4.1.2 Industry Participants
The primary participants in the rental real estate market are other single family residences and apartments. However, other indirect competitors include: condos, mobile homes, trailers, garage apartments and duplexes. Sellers of homes that offer rent to own options pose yet another form of competition.
4.1.3 Main Competitors
Within a one mile radius of the subject are 10 apartment complexes and 7 single family residences available for rent. For comparison, this analysis will focus only on the single family residences available for rent.
1101 Gown Blvd 2 BDR / 2 BA $1,200 month / 1,107 SF This property competes closely with the subject. However, the subject is superior with its extra square footage and additional bedroom.
1102 Gown Blvd 3 BDR / 2 BA $1,350 month / 1,445 SF This property is most comparable to the subject. Comparable Number Two has 119 additional square feet are and is $0.05 lower in monthly rent.
700 Fountain Blvd 3 BDR / 2 BA $2,595 month / 2,328 SF This property has the largest square footage of the comparables and is located on acreage. It is also the demanding the highest monthly rental charge. Based on these factors Comparable Number 3 is an indirect competitor.
3104 Travis Road 3 BDR / 2 BA $1,995 month / 2,083 SF This property competes directly with the subject. With an additional 757 square feet, this property is priced $0.02 PSF below the subject and could appeal to the value renter. The downside to this property is its inferior location – which is across the street from a landfill. The property has been vacant for four months and it is rumored the owner will be dropping the asking rental price.
308 Hardy Street 3 BDR / 2 BA $1,125 month / 1,200 SF Comparable Number 5 is slightly older and smaller the subject. Built in 1980, the property is 126 feet smaller than the subject. The property is clean and well maintained and is considered a direct competitor with the subject.
1200 Main Street 4 BDR / 3 BA $1,800 month / 1,700 SF This property is larger than the subject by over 300 feet. Asking rent is higher than the subject as well and higher than the $1,100-$1,400 range Real Estate Ventures, Inc. is hoping to attract. This property has an additional bedroom. Based on these factors; Comparable Number 6 is considered an indirect competitor.
3225 Bolen Drive 3 BDR / 3 BA $1,750 month / 2,100 SF Comparable Number 7, like Comps 3 and 4 is substantially larger than the subject. The asking monthly rent of $1,750 is also above the range Real Estate Ventures, Inc. is targeting. The property has exceptional value with rents per square foot the lowest in the market at $0.83 and will appeal to the value renter. The property is clean and well maintained. Based on its larger square footage and higher asking monthly rent, Comparable Number 7 represents an indirect competitor.
4.1.4 Market Segments
The 1 mile radius surrounding the subject had a population of 7,199 at the 2010 Census and is expected to grow to 7,363 by the Year 2017. The majority of the homes are owner occupied with 1,950 housing units and a reported 793 renter occupied units from the 2010 Census. Rental units are expected to grow to 854 by the Year 2017. The median age at 2010 was 34. Source: BUSINESSDECISION.INFO
Residents within a 1 mile radius of the subject are comprised primarily of two market segment groups: In Style represents 52.7% of the market share and Crossroads with 35.4% of the market or 88.1% cumulative market. The In Style market is comprised primarily of residents that live in the suburbs but prefer the city lifestyle. These residents prefer townhomes to traditional single family homes and have a median household income of $182,665. Real Estate Ventures, Inc. is targeting the latter group, Crossroads, as their primary target customer. Following is a brief summary of their target occupant:
Crossroads neighborhoods are growing communities in small towns. Married couples with and without children and single parents are the primary household types in these areas. They have a median age of 32.2 years. This population is growing at 1.6% annually faster than the US population. The median household income is $43,799. Children are the focus of their lives. They drive domestic cars and trucks and handle the maintenance themselves. Source: ESRI.COM/Tapestry
4.2 Market Tests
Prior to selecting the rental unit, Real Estate Ventures, Inc. placed an advertisement for rent with the online classifieds at Linda’s place of employment, Franklin Elementary. The response was overwhelming! Real Estate Ventures, Inc. had 14 candidates to choose from! The majority of these applicants were fellow teachers or friends of teachers. All applicants were families, both single income and dual income. Real Estate Ventures, Inc. had to inform the turned down applicants that the property was already leased.
Based on this market ‘test’ Real Estate Ventures, Inc. decided to put the “pedal to the metal” and make an offer on the property.
4.3 Target Market Segment Strategy
Real Estate Ventures, Inc. is targeting families with children – single family households or dual income households. The target tenant is young, under the age of 35 and is likely to have some additional financial obligations, such as student loan debt and car note debt that they want to pay off prior to considering home ownership. Many of the new teachers at Linda’s school fit the target profile and Real Estate Ventures, Inc. will continue to pursue this target group as tenants. The target rent is the $1,100-$1,400 range.
4.3.1 Market Needs
Given the option of raising a family in a traditional single family home compared to an apartment complex, Real Estate Ventures, Inc.’s target tenant prefers the former. The Red Mill Estates neighborhood and surrounding neighborhoods are growing residential neighborhoods making the location ideal for Real Estate Ventures, Inc.’s tenants. With limited direct comparables, the demand for single family residences available for rental is high in this market.
4.3.2 Market Trends
- Homeownership make financial sense when the occupant is planning on staying 5+ years and has the cash flow cover the normal repair and maintenance costs. And as we leave the recession behind us over time tenants may vacate to pursue homeownership.
- Renting still makes financial sense for Real Estate Ventures, Inc.’s targeted tenant who does not want the additional cost/time burden of property maintenance.
4.3.3 Market Growth
The local single family rental home market increased 1.4% over the prior year. Source: Zillow Rent Index
Real Estate Ventures, Inc. will position itself as the rental property of choice when it comes to quality properties in solid neighborhoods, by actively staying current on local market conditions.
Real Estate Ventures, Inc. will own, operate, and lease clean, well maintained single family residences to well qualified tenants. Others often miss the mark by investing in low quality properties which will not provide sufficient ROI (return on investment). Additionally other landlords often fall short in responding to tenants needs for repairs. When a tenant calls requesting repairs to say a leaky faucet, Real Estate Ventures, Inc. will have a repairman on premises that same day and more than likely one of the owners will personally make the repair. What will set Real Estate Ventures, Inc. apart from other property managers will be its unique ability to bring quality properties and tenants together. The following sections address the various tactics that will contribute to this effort.
5.1 SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis is a method for strategic planning that evaluates these four elements as they relate to Real Estate Ventures, Inc.’s business objectives. The following section helps demonstrate Real Estate Ventures, Inc.’s marketing strategy:
- The rental property is well located in a growing neighborhood with easy access to neighborhood schools, shopping and restaurants. Located less than 5 minutes from I-65, the commute to Nashville is less than 20 minutes.
- Real Estate Ventures, Inc. has an approved tenant in place with a security deposit. The tenant has excellent credit and payment history. The tenant is known by Real Estate Ventures, Inc. and works as a teacher at the same school as Linda Rogers.
- Upgrades to the property will be made by a reputable contractor with a 15 year history with the owners of Real Estate Ventures, Inc.. The owners of Real Estate Ventures, Inc. will paint the property themselves which will further reduce expenses.
- Real Estate Ventures, Inc. will come out of pocket in excess of $67,000 toward the house purchase and capital improvements resulting a low, loan to value (LTV) ratio of 50%.
- The owners of Real Estate Ventures, Inc. have ‘day jobs’ and thus have additional income sources and savings to draw from to support business operations.
- New entrants into real estate property management, Real Estate Ventures, Inc. has limited experience owning and managing investment income properties.
- Franklin has low vacancy levels at 6% compared to the national average of 7.9%.
- The property is located in a strong growing community and the fastest growing county in the state.
- Real Estate Ventures, Inc. has an opportunity to participate in a $1 million local real estate rental market.
- Investment real estate is economically tied – changes in unemployment, rent spikes and changes in the economy could adversely impact demand for rental units.
- Declination in the local neighborhood could impact attractiveness of rents
- Cost overruns in the construction budget and failure to complete upgrades in time could impact Real Estate Ventures, Inc.’s cash flow.
5.2 Strategy Pyramid
Real Estate Ventures, Inc. will only lease solid, clean, well maintained investment properties that generate positive cash flow.
In order to meet these objectives, Real Estate Ventures, Inc. will not make the mistakes many new landlords make and perform thorough due diligence prior to purchasing any property; All perspective properties must meet the following requirements:
- Property must be clean and well maintained
- Property must be a growing community with low vacancy rates
- Rents will be priced within market range – typically between the $1,100-$1,400 range
- Property must generate positive passive income
- All tenants will be required to: Pass background and credit checks; Provide verifiable references
- Provide non-refundable application fee to cover the costs associated with these checks.
- All tenants will be required to provide a security deposit.
- Tenants will be required to make payments via EFT which will further ensure payments will be made as agreed and on time.
Real Estate Ventures, Inc. will strive to be a superlative landlord as well – by responding within one hour to any tenant issues regarding repairs and maintenance during normal business hours of operation. Weekend and evening calls will be answered the following business day unless it is a life threatening emergency (such as the smell of gas, water main breaks) in which case the owners will be paged immediately and an emergency response service will be sent.
On a monthly basis, Real Estate Ventures, Inc. will change and replace air filters and monitor smoke and radon detectors.
5.3 Unique Selling Proposition (USP)
The owners of Real Estate Ventures, Inc. love what they do! And it shows in from the quality of the properties they invest in to the caliber of tenants they lease to. They thoroughly review the property and analyze the real estate market. Real Estate Ventures, Inc. will continually monitor and evaluate the local market trends. They are in this for the long term!
5.4 Competitive Edge
Real Estate Ventures, Inc. utilizes a thorough due diligence process prior to purchasing and investing in any property. By doing their homework, Real Estate Ventures, Inc. can competitively price their rents – often at or below market. Thoroughly knowing their market gives Real Estate Ventures, Inc. the competitive edge over their competitors. Further, Steve’s background in painting and his extensive connections in the construction field in the local Franklin market, gives Real Estate Ventures, Inc. the competitive edge when in it comes to knowing the quality and caliber of the local contractors. Many competitors will fall short and subcontract often to the lowest bidder with unknown track records. If a major tenant repair is required, Real Estate Ventures, Inc. will be prepared and have the ability to select the best contractor at a fair price. This in turn will keep expenses down and profit margins and return on investment on target.
5.5 Marketing Strategy and Positioning
Real Estate Ventures, Inc.’s marketing strategy incorporates a Focus Strategy – that is, it targets a specific target market. Real Estate Ventures, Inc. concentrates their marketing efforts on attracting solid, credit worthy tenants that are motivated to live in growing, thriving comminutes.
5.5.1 Positioning Statement
Real Estate Ventures, Inc. is a high quality real estate investment corporation. Real Estate Ventures, Inc. carefully and methodically selects its rental properties in growing neighborhoods, with low vacancy rates. The properties are clean, well maintained and provide positive cash flow. In keeping with their its high quality standards, Real Estate Ventures, Inc.’s tenants, reflect these attributes as well and have exceptional credit scores, timely rental payment history and a strong desire to live long term with their families in a solid community. Real Estate Ventures, Inc. is committed to their properties for the long term – they do not foster a “here today gone tomorrow” mentality. Above all Real Estate Ventures, Inc.’s owners love what they do and are committed to the company for the long term.
5.5.2 Pricing Strategy
Real Estate Ventures, Inc. utilizes Competition Based Pricing – in which prices are based on the market. The company’s thorough due diligence process assures that they never buy the highest priced property or the lowest priced for that matter.
5.5.3 Promotion and Advertising Strategy
Real Estate Ventures, Inc. will primarily rely on advertising in the Franklin Elementary School Online Classified Ads and Word of Mouth advertising.
As properties become available, Real Estate Ventures, Inc. will post signage in front of the property. As a last resort, Real Estate Ventures, Inc. will post classified ads with the local newspaper and Craigslist.
Real Estate Ventures, Inc.’s website features properties available to rent, the business phone number to contact for information regarding renting or who to contact for repairs. Additionally the website will have links to complete an online application and links to key articles for tenants such as the importance of obtaining sufficient renters insurance for example.
In the event that a property is available, the site will feature photos of the property along with detailed description of the property, amenities, details of the surrounding neighborhood and any concessions that are currently available.
5.5.5 Marketing Programs
Real Estate Ventures, Inc. is uniquely sized to both personally own and manage its investment properties. Through their extensive contacts in the Franklin area, Real Estate Ventures, Inc. hopes to rely on Word of Mouth advertising and not be forced to allocate a large portion of their budget to advertising costs. However, in the event that a property remains vacant for 30+ days, Real Estate Ventures, Inc. has a policy in place to purchase classified advertising space in both the local newspaper and on Craigslist.
5.6 Sales Strategy
Real Estate Ventures, Inc. will meet with prospects right on site. The prospects will be greeted and treated with the utmost professionalism in a relaxed and respectful environment. The first meeting is an opportunity for the owners of Real Estate Ventures, Inc. to decide on leasing to the prospective tenant. If the prospect seems disagreeable, unpleasant or makes unrealistic requests, Real Estate Ventures, Inc. will not lease the property. If however the prospect is professional, and has reasonable requests, then this meeting will be considered along with the credit report and background check in making a decision to lease.
5.6.1 Sales Forecast
The following table represents the estimated sales from the rental unit the initial three years of operations. The analysis assumes 100% leased and no escalations in rent the initial two years.
Table 5.6.1 Annual Sales Forecast
5.6.2 Sales Programs
The owners of Real Estate Ventures, Inc. personally lease their properties and do not need to pay incentives to sales agents. However, just like sales agents, the owners of Real Estate Ventures, Inc. are motivated to lease properties quickly- after all vacant properties do not generate revenue! Although the owners of Real Estate Ventures, Inc. are motivated to get tenants in quickly they will not ‘rush’ at the expense of sacrificing quality. If Real Estate Ventures, Inc. is unable to find a perspective tenant in a reasonable amount of time (approximately 30 days) then the cost of doing business are the advertising costs associated with placing classified ads with the local newspaper and Craigslist.
Clean title and zoning, will be instrumental in purchasing investment real estate. The title search and tax record search must confirm this prior to Real Estate Ventures, Inc. purchasing any property. The title search must be free of liens.
All maintenance and repairs will be performed by bonded and licensed contractors that are in good standing with the state.
Following are the Milestones Real Estate Ventures, Inc. believes will allow them to meet their objectives.
Table 5.8 Milestones
5.9 Exit Strategy
In the event the rental unit remains vacant for an extended period of time or in the event that extreme repairs and depletes all cash reserves, the secondary recourse will be to the owners. After the owners have depleted their personal reserves, the property will be sold. Proceeds will be used to satisfy obligations to creditors and any surplus will be returned to the owners.
The following section highlights ownership and future staffing expectations of Real Estate Ventures, Inc.:
6.1 Organizational Structure
Both Linda and Steve Rogers will own and manage the subject real estate. Steve Rogers will perform routine maintenance requirements and repairs. Linda Rogers will manage the daily bookkeeping requirements. She will submit payments to vendors such as trash service and recycling service, and forward the required information to Real Estate Ventures, Inc.’s certified public accountant for preparation of the annual income taxes.
6.2 Management Team
Steve Rogers will oversee the day to day maintenance of the rental unit. On a monthly basis he will replace air filters, inspect the grounds, and make notations of the overall physical condition of the property. The tenant will be put on notice for example if the yard needs to be mowed or weeds appear to be an issue. The tenant will have sufficient time to remedy the notice and will be fined daily until the issue has been resolved.
Steve has successfully owned and operated his painting business for 15+ years and is in the neighborhood on a daily basis. He will drive by the property frequently for visual inspections of the property. He is readily available in the event the tenant has any repair needs. Steve is also the author of this rental property business plan.
Linda Rogers will oversee the day to day bookkeeping needs for the rental property.
All tenants will be required to agree to EFT (electronic funds transfer) for monthly payments – which should minimize the need to collect rents.
6.3 Management Team Gaps
Real Estate Ventures, Inc. does not have an accountant or attorney on its staff. Income tax preparation and consulting services will be provided by the owner’s long term personal public accountant. Real Estate Ventures, Inc. will rely on their title company to verify clear title.
6.4 Personnel Plan
Steve and Linda Rogers will own and operate Real Estate Ventures, Inc. but draw no salary; both owners have outside incomes and will not draw salaries from the properties.
Table 6.4 Personnel Plan
Steve and Linda Rogers, owners and operators
6.5 Board of Directors
The following financial plan covers the following:
- Required Cost of Start-Up
- Profit and Loss
- Balance Sheet
- Financial Ratios
7.1 Important Assumptions
Construction Budget Real Estate Ventures, Inc. estimates a 1 month completion. Work will be performed by a contractor that is well known by the owners. The contractor is bonded, licensed and in good standing with the state.
Source of Funds The owners of Real Estate Ventures, Inc. received approximately $100,000 in inheritance and have access to liquidity to fund start up costs and meet operating shortfalls. However, they plan to invest a portion of these proceeds into additional rental income properties. Additional source of funds comes from both owners ‘day jobs’ – Steve Rogers owns his own house painting business and Linda Rogers is a math teacher at Franklin Elementary.
Profit and Loss Vacancy levels in Franklin are a low 6% and is substantially lower than the national average of 7.9%. The analysis assumes 100% occupancy over the 3 years reviewed.
7.2 Start-Up Costs
The following table represents start up costs.
Table 7.2 Start-Up Costs
7.3 Source and Use of Funds
The owners of Real Estate Ventures, Inc. received approximately $100,000 in inheritance and have access to liquidity to fund start up costs and meet operating shortfalls. However, they plan to invest a portion of these proceeds into additional rental income properties. Additional source of funds comes from both owners ‘day jobs’ – Steve Rogers owns his own house painting business and Linda Rogers is an elementary school math teacher at Franklin Elementary. The following table shows the proposed Source and Use of Funds:
Table 7.3 Source and Use of Funds
7.4 Break-Even Analysis
The rental income property is expected to generate $1,300 in monthly rent or $15,600 annually. Break even rents required are $14,020 or approximately 10.78 months of revenue. The following chart depicts break-even analysis:
Table 7.4 Break-Even Analysis
7.5.1 projected profit and loss.
The pro forma profit and loss is based on the initial 3 years associated with the subject property.
Table 7.5.1 Pro Forma Profit and Loss
7.5.2 Projected Cash Flow
The statement of cash flow shows the incoming and outgoing cash of the business.
Table 7.5.2 Pro Forma Cash Flow
7.5.3 Projected Balance Sheet
Table 7.5.3 Pro Forma Balance Sheet
7.6 Business Ratios
The business ratios are based on NAICS code 531110. The ratios demonstrate that Real Estate Ventures, Inc. is well capitalized, has a low leverage position and has good liquidity. Real Estate Ventures, Inc. compares more favorably to its industry peers primarily due to the owner’s injection in equity.
Table 7.6 Ratio Analysis
Rental Properties Business Plan Template
Written by Dave Lavinsky
Rental Property Business Plan
Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their rental property business. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a rental property business plan template step-by-step so you can create your plan today.
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What Is a Business Plan?
A business plan provides a snapshot of your rental property business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to purchase a rental property, multiple rental properties, or add to your existing rental properties business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your rental property business in order to improve your chances of success. Your rental property business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Rental Property Companies
With regards to funding, the main sources of funding for rental properties are personal savings, credit cards, mortgages, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.
The second most common form of funding for a rental property is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund a rental property company. They might consider funding a rental property company with a national presence, but never an individual location. This is because most venture capitalists are looking for millions of dollars in return when they make an investment, and an individual location could never achieve such results.
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How to write a business plan for a rental property company.
Your business plan should include 10 sections as follows:
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of rental property you are operating and the status; for example, are you a startup, or do you have a portfolio of existing rental properties that you would like to add to?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the rental properties industry. Discuss the type of rental property you are offering. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of rental properties you are offering.
For example, you might offer the following options:
- Single family homes – This type of rental property is often owned by a single individual, rather than a company, who acts as both landlord and property manager.
- Multi-family properties – These types of properties can be subcategorized by the number of units per site. Buildings with 2 – 4 units are the most common (17.5%), while multistory apartment complexes with more than 50 units represent the next-largest, at 12.6% of the industry.
- Short-Term Rental properties – These are fully furnished properties that are rented for a short period of time – usually on a weekly basis for vacation purposes.
In addition to explaining the type of rental property you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include occupancy goals you’ve reached, number of property acquisitions, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the rental properties industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the rental property industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy, particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your rental property business plan:
- How big is the rental properties industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your rental property. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population or tourist arrivals.
The customer analysis section of your rental property business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: households, tourists, etc.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of rental property you offer. Clearly, vacationers would want different amenities and services, and would respond to different marketing promotions than long-term tenants.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other rental property companies.
Indirect competitors are other options customers may use that aren’t direct competitors. This includes the housing market, or hotels. You need to mention such competition to show you understand that not everyone who needs housing or accommodation will seek out a rental property.
With regards to direct competition, you want to detail the other rental properties with which you compete. Most likely, your direct competitors will be rental properties in the vicinity.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What lease lengths or amenities do they offer?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide superior properties?
- Will you provide services that your competitors don’t offer?
- Will you make it easier or faster for customers to book the property or submit a lease application?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a rental property business plan, your marketing plan should include the following:
Product : in the product section you should reiterate the type of rental property business that you documented in your Company Analysis. Then, detail the specific options you will be offering. For example, in addition to long-term tenancy, are you offering month-to-month, or short-term rental?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the properties and term options you offer and their prices.
Place : Place refers to the location of your rental property. Document your location and mention how the location will impact your success. For example, is your rental property located in a tourist destination, or in an urban area, etc. Discuss how your location might draw customer interest.
Promotions : the final part of your rental property marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:
- Advertising in local papers and magazines
- Reaching out to local websites
- Social media marketing
- Local radio advertising
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your rental property business, such as customer service, maintenance, processing applications, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect 100% occupancy, or when you hope to reach $X in sales. It could also be when you expect to acquire a new property.
To demonstrate your rental property business’ ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally you and/or your team members have direct experience in rental property management. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in real estate, and/or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you have 1 rental unit or 10? And will revenue grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $200,000 on purchasing and renovating your rental property, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $200,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a rental property business:
- Location build-out including design fees, construction, etc.
- Cost of equipment like computers, software, etc.
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your property blueprint or map.
Putting together a business plan for your rental properties company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the rental property industry, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful rental properties business.
Rental Properties Business Plan FAQs
What is the easiest way to complete my rental properties business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Rental Properties Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of rental property business you are operating and the status; for example, are you a startup, do you have a rental properties business that you would like to grow, or are you operating multiple rental property businesses.
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Other Helpful Business Plan Articles & Templates
Rental Properties Business Plan Template
Rental properties business plan.
You’ve come to the right place to create your Rental Properties business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their rental property business.
Rental Property Business Plan Example
Below is a template to help you create each section of your Rental Properties business plan.
Noble Properties is a rental property agency in Seattle, Washington, that specializes in managing, renting, and leasing properties. Our mission is to provide luxury rentals that tenants can call home for years to come. Noble Properties rents out hundreds of homes across the Seattle area, including apartments, single-family homes, and trailers. To help prospective tenants find the perfect home, the company has created an online platform that allows them to search by their specific criteria (number of bedrooms, amenities, rent, etc.). We aim to be one of the most popular rental agencies in the area that customers can depend on again and again for their housing needs.
Noble Properties is founded and run by Joseph Pierce. He has worked in the industry for decades and has extensive knowledge of all aspects of the business. He will be in charge of most of the operations but will hire other staff to help with marketing, accounting, and managing the rentals.
Noble Properties offers a variety of rental properties for prospective tenants to choose from. Some of the options we provide include:
- 1-3 bedroom apartments
- Single-family homes
- Multi-unit buildings
- Short-term rentals
- Mobile homes or trailers
Noble Properties will target renters located throughout the Seattle area. Most renters are under the age of 40 and earn about the median income. This means that we will primarily market to younger demographics and those who earn around the local median income or more.
Noble Properties is led by Joseph Pierce, who has been in the rental property industry for 20 years. Throughout that time, he worked in various positions in local rental property agencies but is now eager to start a rental property business of his own. During his extensive experience in the rental property industry, he acquired an in-depth knowledge of the local area, local regulations, facilities, and the characteristics of different neighborhoods. He also has extensive experience in handling business management activities.
Karen Miller has been Joseph Pierce’s loyal administrative assistant for over ten years at his former rental agency. Joseph relies strongly on Karen’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Karen has worked in the rental agency industry for so long that she has a thorough knowledge of all aspects required to run a successful rental agency. She will help out with administrative tasks and some of the initial marketing efforts.
Noble Properties will be able to achieve success by offering the following competitive advantages:
- The founder, Joseph Pierce, has decades of extensive experience and knowledge of the industry that will prove invaluable for the company.
- The company will purchase rentals in popular areas around the city, putting our rentals in high demand.
- Noble Properties offers reasonable and affordable rates for all our rentals. Our pricing will be far more cost-effective than the competition.
Noble Properties is seeking $1,100,000 in debt financing to launch its rental property agency. The funding will be dedicated to securing initial rental spaces, securing an office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakdown of the funding is below:
- Purchasing initial rentals: $600,000
- Office space build-out: $20,000
- Office equipment, supplies, and materials: $20,000
- Six months of overhead expenses (payroll, rent, utilities): $350,000
- Marketing costs: $50,000
- Working capital: $60,000
Who is noble properties, noble properties’ history.
After decades of working for other rental agencies, Joseph Pierce decided to launch an agency of his own. He conducted extensive research on the rental market in the Seattle area. This helped him determine the best spots to find in-demand rentals and how much he should rent them out for. He also did extensive marketing research to determine the best customer segments to market to. After conducting this research and finding a potential office location, Joseph Pierce incorporated Noble Properties as an S-Corporation.
Noble Properties’ operations are currently being run out of Joseph Pierce’s home office but will move to the office location once the lease is finalized.
Since incorporation, Noble Properties has achieved the following milestones:
- Developed the company’s name, logo, and website
- Determined rent/leasing and financing requirements
- Found a potential office location and signed a Letter of Intent to lease it
- Began recruiting key employees with experience in the rental homes/apartment industry
Noble Properties’ Products
The rental market is expected to continue to grow over the next five years. According to RentCafe, the average rent for a Seattle apartment is around $2,300 per month. This value is only expected to increase as the demand for apartments and other rentals skyrockets. Furthermore, Seattle’s vacancy rate is incredibly low and expected to decrease further, meaning there aren’t enough rentals to keep up with demand.
The growth is primarily driven by increasing housing prices. Now that housing prices have increased substantially, fewer and fewer people can afford to buy a home. Therefore, many people seek out rentals to live in since they are far more affordable.
Another factor that will help the Seattle rental market is the increasing population. More people are moving to the city, meaning the demand for homes and rentals will continue to soar. This will only push rental prices even higher, which will increase the local rental market’s value substantially.
This is a great market to start a rental agency in. By capitalizing on these trends, Noble Properties is expected to have great success.
Demographic profile of target market.
Noble Properties’ target market includes people of all demographics. We are open to offering rentals to people of all ages and groups as long as they can afford to pay their rent. From our initial market research, we expect most of our marketing efforts will target young adults, medium and high-income individuals, and families.
The precise demographics for Seattle, Washington, are:
Noble Properties will primarily target the following customer profiles:
- Young adults
- Individuals who earn the region’s median income or more
Direct and indirect competitors.
Noble Properties will face competition from other companies with similar business profiles. A description of each competitor company is below.
Leasing Inc. is a marketplace for finding rental homes and apartments in multiple metropolitan areas around the country. It originally started more than a decade ago as a networking tool for real estate agents, but today it is a fully searchable online database of homes for both sale and rent. Leasing Inc. offers ideal rental properties, all with different amenities that can best suit the tenant’s requirements. Leasing Inc.’s properties are well furnished with all modern accessories and priced competitively.
Rental Barn is the most visited rental agency website in the United States. Rental Barn and its affiliates offer customers an on-demand experience for selling, buying, renting, and financing with transparency and nearly seamless end-to-end service. The company provides multiple rental apartments according to the customer’s needs and requirements.
Seattle Properties is a local rental properties business that has dominated the market since 1982. The company manages and rents out hundreds of properties all across the city, including apartments, single-family homes, and mobile homes. All prices are competitive, and some rentals qualify for government programs to help low-income individuals. The company also utilizes a well-designed website to help prospective tenants find their perfect home based on rent, location, and accessories.
- The company will purchase rentals in popular areas around the city, making our rentals in high demand.
Brand & value proposition.
The Noble Properties brand will focus on the company’s unique value proposition:
- Offering homes/apartments for rent suited for families and working professionals.
- Offering a diverse range of rental homes in a prime location for a competitive rate.
- Providing excellent customer service.
The promotions strategy for Noble Properties is as follows:
Noble Properties will invest in professionally designed print ads to display in programs or flyers at industry networking events and relevant local establishments.
Noble Properties has designed a website that is well-organized and informative, and lists all our available properties. The website also lists the company’s contact information and other services it provides. We will utilize SEO marketing tactics so that anytime someone types in the Google or Bing search engine “Seattle rental properties” or “rentals near me,” Noble Properties will be listed at the top of the search results.
Noble Properties understands that the best promotion comes from satisfied tenants. The company will encourage its tenants to refer other individuals by providing economic or financial incentives for every new tenant produced. This strategy will increase effectiveness after the business has already been established.
Social Media Marketing
Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The company will use social media to develop engaging content that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand the changing customer needs.
The real estate industry fluctuates, and therefore, rental prices, for the most part, are usually out of a company’s control. However, Noble Properties will market its properties at a competitive rate to ensure we do not have vacant properties. We will also keep tight control of costs in order to maximize profits.
The following will be the operations plan for Noble Properties.
- Joseph Pierce will be the Owner and President of the company. He will oversee all staff and manage tenant relations. Jay has spent the past year recruiting the following staff:
- Karen Miller will serve as the Office Manager. She will manage the office administration, client files, and accounts payable. She will also handle much of the marketing efforts until the agency becomes large enough to hire a marketing team.
- Tim Johnson will be the Maintenance Director, who will provide all maintenance at the properties.
- Joseph will outsource professionals to handle the accounting and human resources aspects of the business.
- Joseph will also hire Rental Managers for the various properties as the agency continues to grow.
Noble Properties will have the following milestones completed in the next six months.
5/1/202X – Finalize contract to lease office space.
5/15/202X – Finalize personnel and staff employment contracts for the Noble Properties team.
6/1/202X – Begin moving into Noble Properties office.
7/1/202X – Finalize purchases of initial properties that will be rented.
7/15/202X – Begin networking and marketing efforts.
8/1/202X – Noble Properties opens its office and rentals for business.
Key revenue & costs.
Noble Properties’ revenue will come from the rent and deposits received from tenants.
The major costs for the company will be staff salaries and property maintenance. In the initial years, the company’s marketing spending will be high to establish itself in the market.
Funding Requirements and Use of Funds
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.
- Number of Managed Properties Per Month: 10
- Average Rent Per Month: $2,300
- Office Lease per Year: $100,000
Income statement, balance sheet, cash flow statement, rental properties business plan faqs, what is a rental properties business plan.
A rental properties business plan is a plan to start and/or grow your rental properties business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your rental properties business plan using our rental properties Business Plan Template here .
What are the Main Types of Rental Properties?
There are a number of different kinds of rental properties , some examples include: Single family homes, Multi-family properties, or Short-Term Rental properties.
How Do You Get Funding for Your Rental Property Business Plan?
Rental Properties Businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate rental business plan or a rental property business plan.
What are the Steps To Start a Rental Properties Business?
Starting a rental properties business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Rental Properties Business Plan - The first step in starting a business is to create a detailed business plan for a rental property that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your rental properties business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your rental properties business is in compliance with local laws.
3. Register Your Rental Properties Business - Once you have chosen a legal structure, the next step is to register your rental properties business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your rental properties business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Rental Properties Equipment & Supplies - In order to start your rental properties business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your rental properties business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful rental properties business:
- How to Start a Rental Properties Business
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11+ Rental Property Business Plan Examples in PDF | MS Word | Pages | Google Docs
Rental Property Business Plan Pdf
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1. What is your goal as a property investor?
2. do you understand the different types of investment properties, 3. where will the property be located compared to your current home, 4. what will it cost, 5. how will you market your property, 6. how will you manage the property, 7. how will you manage tenants, 8. how will you maintain the property, 9. do you have a plan if your investment fails, 3. objectives, 4. strategies, 5. high-level plans, 6. daily plans, 1. know who your market is., 2. set aside a budget., 3. have everything in writing., 4. keep track of your cash flow., 5. fulfill your duties and obligations as landlord and property owner., more design, 8+ self-catering business plan examples, 8+ rental inventory examples, 7+rental application examples, 6+ real estate investor marketing plan examples, 6+ lease receipt examples, 5+ property inventory examples, 4+ property contract examples, sample receipt, 39+ inspection report examples.
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How to Write a Business Plan as a Landlord
Editor's Note: This post was originally published in April 2020 and has been completely revamped and updated for accuracy and comprehensiveness.
Buying investment properties and renting them out to tenants is a great way to diversify your real estate portfolio and earn passive income. If you are considering becoming a landlord, writing a rental property business plan is vital to make your investment thoughtfully and deliberately. A well-crafted business plan can help you secure financing from lenders. A business plan demonstrates that you clearly understand your business and its potential, making you more attractive to potential lenders. Let's begin! This piece will walk you through what a rental property business plan is, why you should create one, and how to put one together.
What is a rental property business plan?
Most simply, a rental property business plan is a document that describes the following:
- You and your rental business.
- What your intentions and goals are with a property.
- Your plan for executing these goals.
Your rental property business plan will outline the strategies and goals for managing your properties.
Why should you develop a rental business plan?
Here are some reasons why you should create a rental property business plan:
- Provides a clear direction: A business plan outlines the goals and objectives of the rental property business, which helps you stay focused on achieving your vision. It also provides a roadmap for decision-making and ensures all activities align with the overall strategy.
- Helps secure financing: A business plan shows that you understand your business well, making your business more appealing to lenders.
- Identifies potential risks: A business plan identifies potential risks associated with the rental property business and provides strategies to mitigate them. This helps to avoid costly mistakes and ensures that you're well-prepared for any challenges that may arise.
- Enhances property management: A business plan includes a strategy outlining how you will manage your rental properties effectively.
- Enables monitoring and evaluation: A business plan provides performance metrics that will help you to monitor and evaluate your progress. This also allows you to identify areas for improvement and adjust your strategy accordingly.
First things first — set your business plan objectives.
Before creating your business plan, consider your specific objectives for your rental business. By setting your objectives, you're providing yourself with a target to aim for. A SMART goal incorporates all of these criteria to help focus your efforts and increase the chances of achieving your goal. This is a specific, measurable, achievable, relevant, and time-bound goal commonly used in business and project management to set and achieve goals.
The acronym SMART stands for:
- S - Specific: The objective should be clear and well-defined so everyone involved understands what they need to accomplish.
- M - Measurable: The objective should be quantifiable to measure and track progress over time.
- A - Achievable: The objective should be realistic and achievable based on available resources and the timeframe.
- R - Relevant: The objective should be relevant to your business's or project's overall mission or goals.
- T - Time-bound: The objective should have a specific deadline or timeframe for completion so you can monitor progress and make adjustments as needed.
Here are some examples of SMART goals for a rental investment business:
- Own four properties by the end of the year
- Earn $5k in rental revenue per month
- Earn $150k in rental profit by the end of year 5
- Hire a team of 4 business partners and open an office in Nashville, TN, in the next five years
- Find 15 tenants by the end of next year
You may only have one key objective or multiple, but each goal should have strategies and tactics to help achieve it.
Strategies and tactics for your SMART objectives
Let's take the relatively straightforward objective — own four properties by the end of the year. Easier said than done, right? Your strategy will be your rough game plan to achieve this goal. Here are some examples of strategies you may employ:
- Study local housing markets to find undervalued neighborhoods.
- Use hard money lending groups and meetups to help secure capital.
- Specialize in and become a master of a specific housing type (single-family homes, duplexes, apartments, townhouses, etc.)
You can then drill down each strategy into specific tactics. Here's what that looks like:
Study local housing markets to find undervalued neighborhoods:
- Study Zillow and MLS listings to see locations and figures of sales.
- Physical drive-thrus of neighborhoods to see house styles, number of For Sale signs
- Attend foreclosure auctions in different Tennessee counties
- Leverage social media to identify potential properties
- Try creative methods to find undervalued properties beyond the MLS
Use hard money lending groups and meetups to secure affordable and scalable financing:
- Join online hard money communities and see which lenders offer low rates, good terms, etc.
- Go to real estate conferences and network with lenders, wholesalers, etc.
Specialize in and become a master of a specific housing type:
Focus on 3br/2b single-family homes between 1500-2500 sq feet
How to write a rental property business plan
Now that you've thought about precisely why and how you will structure your business and execute your investment, it's time to write it! A rental property business plan should have the following components: The business plan typically includes the following elements:
- Executive Summary
- Business Description
- Market Analysis
- Marketing and Advertising
- Tenant Screening
- Financial Projections
- Exit Strategy
Let's go through each of them separately.
The executive summary of a rental property business plan provides an overview of the key points of the plan, highlighting the most critical aspects. Here's an example of an executive summary:
[Your Business Name] is a real estate investment firm focused on acquiring and managing rental properties in [location]. The business aims to provide tenants high-quality rental properties while generating a steady income stream for investors. The rental property portfolio comprises [number] properties, including [type of properties]. These properties are located in [location], a growing market with a high demand for rental properties. The market analysis shows that rental rates in the area are stable, and the demand for rental properties is expected to increase in the coming years. The business's marketing and advertising strategies include online advertising, signage, and word-of-mouth referrals. The tenant screening process is thorough and includes income verification, credit checks, and rental history verification. The property management structure is designed to provide tenants with excellent service and to maintain the properties in excellent condition. The business works with a team of experienced property managers, maintenance staff, and contractors to ensure that the properties are well-maintained and repairs are made promptly. The financial projections for the rental property portfolio are promising, with projected revenue of [revenue] and net income of [net income] over the next [timeframe]. The risks associated with owning and managing rental properties are mitigated through careful screening of tenants, regular maintenance, and appropriate insurance coverage. Overall, [Your Business Name] is well-positioned to succeed in the rental property market in [location], thanks to its experienced team, careful management, and commitment to providing high-quality rental properties to tenants while generating a steady stream of income for investors.
Your executive summary is the Cliff Notes version of the complete business plan. Someone should be able to understand the full scope of the project just by reading this section. When writing your executive summary, assume it is the only part of your plan that someone reads. Aim for a half-page to full-page in length.
The business description section of a rental property business plan provides an overview of the company, including its mission, history, ownership structure, and management team. Here's an example of a company description section:
[Your Company Name] is a real estate investment company focused on acquiring and managing rental properties in [location]. The company was founded in [year] by [founder's name], who has [number] years of experience in the real estate industry.
Mission: Our mission is to provide high-quality rental properties to tenants while generating a steady income stream for our investors. We aim to be a trusted and reliable partner for tenants, investors, and stakeholders in our communities.
Ownership structure: [Your Company Name] is a privately held company with [number] of shareholders. The majority shareholder is [majority shareholder name], who holds [percentage] of the company's shares.
Management team: The management team of [Your Company Name] includes experienced professionals with a proven track record of success in the real estate industry. The team is led by [CEO/Managing Director's name], who has [number] years of experience in real estate investment and management. The other members of the management team include:
[Name and position]: [Brief description of their experience and role in the company] [Name and position]: [Brief description of their experience and role in the company]
Researching neighborhood trends can help you identify areas poised for long-term growth. This can enable you to make strategic investments that will appreciate over time, providing a stable source of income for years to come. The Market Analysis section of a rental property business plan for landlords should provide a comprehensive overview of the local rental market. Below are some key elements you should include in the Market Analysis section of your rental property business plan.
- Property Value: The value of a rental property is highly dependent on its location. By researching neighborhood trends, landlords can stay updated on changes in property values, both positive and negative. They can make informed decisions about whether to purchase, hold or sell their properties based on changes in the area.
- Rental Rates: Knowing the rental rates in a neighborhood can help landlords determine how much to charge for rent. Understanding how much other landlords charge for similar properties in the area can help a landlord price their property competitively and attract quality tenants.
- Tenant Preferences: Different neighborhoods appeal to different types of tenants. For example, families with children may prefer neighborhoods with good schools and parks, while young professionals may prefer areas with trendy restaurants and nightlife. By understanding neighborhood trends, landlords can cater to the preferences of their target tenants.
- Neighborhood Safety: Safety is a significant concern for tenants, and landlords can be held liable for any harm that befalls their tenants due to unsafe conditions on the property. Competitive landscape: There are several steps that landlords can take to research the competitive landscape of a rental market. These include identifying competitors, analyzing rental rates, researching amenities offered by competitors, and checking their online reviews.
- Growth potential: Consider external factors that may affect the rental market, such as population growth, job growth, or changes in zoning laws. This can help landlords identify potential growth opportunities in the market.
The marketing strategy section of your rental property business plan outlines how you will promote and advertise your rental properties to potential tenants. Below are some key elements to include in this section.
- Target Market: Identify the target market for rental properties, such as young professionals, families, or retirees. Describe their demographics, interests, and needs, and explain how the rental properties cater to these groups.
- Unique Selling Proposition: Identify the unique selling proposition of the rental properties, such as location, amenities, or affordability. Explain how these factors differentiate the properties from competitors in the market.
- Advertising Channels: Describe the advertising channels you'll use to promote the rental properties, such as online rental listings, social media, or local newspapers. Explain how you'll use these channels to reach the target market.
- Promotion Strategy: Describe the promotion strategy to attract tenants to the rental properties, such as discounts, referral bonuses, or move-in incentives. Explain how you'll communicate promotions to potential tenants and how they will be tracked and measured for effectiveness.
- Branding: Develop a branding strategy for the rental properties, including a logo, website, and promotional materials. Explain how the branding will reflect the unique selling proposition of the properties and how it will be used consistently across all marketing channels.
- Budget: Develop a marketing budget outlining each advertising channel's expected costs and promotion strategy. Explain how you'll track and adjust the budget as needed to ensure maximum return on investment.
This section should outline the steps you or your property manager will take to evaluate potential tenants and ensure they fit your rental property well. This can ensure that your company has a thorough and fair process for evaluating potential tenants and selecting the best fit for their rental property. B elow are some critical components to include in this section.
- Criteria for Screening: Define the criteria you will use to evaluate potential tenants. This includes credit score, income, employment, criminal, and rental history.
- Application Process: Detail the application process that potential tenants will go through. This may include the application form, application fee, and required documentation such as pay stubs, rental history, and references.
- Background Checks: Describe the background checks you'll conduct on potential tenants. This may include a credit check, criminal background check, and reference checks with previous landlords.
- Approval Process: Outline the process for approving or denying a tenant application. This may include a review of the applicant's qualifications, background check results, and a decision based on the landlord's discretion.
- Fair Housing Compliance: Include a statement about compliance with fair housing laws. Landlords and property managers must ensure they do not discriminate against applicants based on protected classes such as race, color, religion, sex, national origin, disability, or familial status.
This section should outline the steps you or the property manager you have hired will take to manage the rental property effectively and ensure a positive experience for tenants. Below are some key components to include in the property management section of a rental property business plan.
- Maintenance and Repairs: Outline the process for addressing maintenance and repair issues. This may include a description of how tenants can report problems, the timeline for responding to requests, and the types of repairs that are the landlord's responsibility versus the tenant's responsibility.
- Rent Collection: Detail the process for collecting rent from tenants. This may include the due date for rent payments, late fees, and consequences for non-payment.
- Lease Agreement: Describe the lease agreement that tenants will sign. This may include the length of the lease, rent amount, security deposit, and rules and regulations for the property.
- Tenant Communications: Outline your approach to communicating with tenants. This may include regular newsletters or updates on property maintenance, a process for addressing tenant concerns, and emergency contact information.
- Compliance and Risk Management: Include a statement about compliance with regulations and risk management. This may include descriptions of insurance coverage, safety protocols, and any regulatory requirements the business must follow.
The financials section of your rental property business plan is crucial for demonstrating the business's financial feasibility and potential profitability of the investment. Let's take a look at what you can include.
- Income projections: Start by estimating the expected rental income from the property. This should be based on market rates for similar properties in the area, considering location, size, amenities, and condition. Consider any potential income streams beyond rent, such as laundry facilities or parking fees.
- Expense projections: Next, estimate the ongoing expenses associated with owning and managing the property, including mortgage payments, property taxes, insurance, utilities, maintenance and repairs, and property management fees, if applicable. Be sure to factor in seasonal or irregular expenses, such as snow removal or landscaping.
- Cash flow projections: Based on the income and expense projections, calculate the expected net cash flow for the property monthly and annually. This will give you a sense of how much income the property will likely generate after paying expenses.
- Financing plan: If you plan to finance the purchase of the property, outline your financing plan, including the loan amount, interest rate, and repayment terms. Be sure to calculate the impact of financing on your cash flow projections.
- Return on investment: Calculate the property's expected ROI based on the initial investment and projected cash flows over a specified time (e.g., five years). This will give you a sense of whether the investment will likely be profitable in the long term.
- Sensitivity analysis: Conduct sensitivity analysis to assess the potential impact of changes in key assumptions (e.g., vacancy rate, rental income, expenses) on your cash flow projections and ROI. This will help you identify potential risks and make informed decisions about the investment.
As a landlord, you must include a risk management section in your rental property business plan to address potential risks and establish strategies for mitigating them. Below are some key steps you can take to create a risk management section for your business plan.
- Identify potential risks: Identify risks associated with your rental property business. This may include risks related to property damage, tenant safety, liability, financial loss, and legal compliance.
- Assess the likelihood and impact of each risk: Once you have identified potential risks, assess the likelihood and potential impact of each risk on your rental property business. This will help you prioritize which risks to address first and determine the resources you must allocate to manage each risk.
- Establish risk management strategies: Develop a plan for managing each identified risk. This may include measures to prevent the risk from occurring, as well as steps to mitigate the impact of the risk if it does happen. For example, you may establish a routine property inspection program to identify and address maintenance issues before they become significant problems. You may also require tenants to carry renters' insurance to mitigate financial loss if they cause damage to the property.
- Review and update your risk management plan regularly: Risks can change over time, so it's essential to review and update your plan regularly. This will help you ensure that your strategies are still effective and that you are prepared to manage new risks as they arise.
- Seek professional advice: Consider seeking professional advice from a lawyer, insurance agent, or another expert to help you identify potential risks and develop effective risk management strategies. This can help you ensure your business is well-protected and minimize risk exposure.
By including a comprehensive risk management section in your rental property business plan, you can demonstrate to potential investors, lenders, and tenants that you are committed to running a safe and sustainable rental property business.
An exit strategy is integral to any rental property business plan as it helps you plan for the future and maximize your ROI. You most likely plan on renting out your property for a long or indefinite time. If you have a shorter or more definite timeline, like renting it out for ten years and then selling it, mention it here. Should your property go vacant for a long time, or economic circumstances, cause rent prices to fall dramatically, maintaining your property may no longer be sustainable. You should have a plan, or at least a framework, to decide what to do if this happens. Otherwise, your exit strategy should be your backup plan if things don't go as planned.
Creating a comprehensive rental property business plan provides you with a clear direction for your business, helps secure financing, identifies potential risks, enhances property management, and enables monitoring and evaluation of performance. A business plan is valuable for landlords who want to run a successful rental property business.
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The above is provided as a convenience and for informational purposes only; it does not constitute an endorsement or an approval by Kiavi of any of the products, services or opinions of the corporation or organization or individual. The information provided does not, and is not intended to, constitute legal, tax, or investment advice. Kiavi bears no responsibility for the accuracy, legality, or content of any external content sources.
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Rental Property Business Plan
Used 4,872 times
Develop a rental property business plan tailored to serve as a valuable resource for entrepreneurs to organize their rental business.
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[Sender.Company] is a reputable rental business located in [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] (Company Location), specializing in property management, rental, and leasing.
Through expert knowledge and technological innovation, [Sender.Company] strives to make the property rental journey as straightforward as possible. The online platform, in particular, serves as a user-friendly hub where clients can effortlessly navigate and find properties that precisely align with their unique preferences and requirements. This emphasis on simplification ensures clients enjoy a hassle-free and tailored experience throughout their rental process.
[Sender.Company] 's commitment to enhancing the rental experience underscores its mission to provide clients with a seamless and customized journey, setting it apart as a leader in the industry.
Who is [sender.company] .
[Sender.Company] is located in [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] and operates as a rental property agency specializing in providing short-term and long-term rentals and leased properties to the local community. The rental properties offered by [Sender.Company] are distinguished by their clean and modern aesthetics, perfectly aligned with the preferences of today's renters.
All properties managed by [Sender.Company] are fully furnished and equipped with high-end technology and modern accessories, ensuring tenants a hassle-free and comfortable living experience.
[Sender.Company] is under the ownership of (Owner Name), a seasoned professional in the rental property industry. [Sender.FirstName] [Sender.LastName] (Founder's Name) decided to launch [Sender.Company] in (month, date), driven by a recognition of the growing demand from students, working professionals, and individuals relocating from overseas.
With a keen focus on meeting the diverse housing needs of the local community, [Sender.Company] is committed to delivering outstanding rental property services. Under (Owner Name)'s guidance, the company is well-positioned to thrive and make a lasting impact in the rental property industry.
[Sender.Company] ’s Products
Some of the offerings available through [Sender.Company] include:
(Company Product/Option): (Insert description)
Customer analysis, profile of target market.
The target market of [Sender.Company] includes consumers from all demographics. The market [Sender.Company] serves value-conscious, with a preference for excellent comfort and basic amenities aimed at families, students, and the working population.
The following are the exact demographics of (Location) where the business is located:
[Sender.Company] will target the following customer segments:
(Competitor Name 1) – (Brief Overview of Competitor 1)
(Competitor Name 2) – (Brief Overview of Competitor 2)
(Competitor Name 3) – (Brief Overview of Competitor 3)
[Sender.Company] has several competitive edges over its competitors. These edges are the following:
(Competitive Advantage 1)
(Competitive Advantage 2)
(Competitive Advantage 3)
Marketing and Strategy Implementation
[sender.company] ’s branding and positioning.
[Sender.Company] places a strong emphasis on its unique value proposition, which encompasses several key aspects:
[Sender.Company] specializes in offering various rental properties designed to meet different customer segments' specific needs and preferences. From spacious family homes to budget-friendly options for students, upscale residences for working professionals, and welcoming accommodations for international migrants.
[Sender.Company] is dedicated to offering a broad range of rental homes in carefully selected areas. This variety in locations means that residents can enjoy different amenities and services and choose the lifestyle that best suits their preferences and requirements.
Exceptional Customer Service
Exceptional customer service is the cornerstone of the [Sender.Company] . Their dedicated team is always available to assist with inquiries, property viewings, lease agreements, and maintenance requests.
Innovative Technology Integration
[Sender.Company] stays at the forefront of technology trends by integrating smart home solutions and digital platforms to enhance convenience and security for their tenants. This includes keyless entry systems, remote property management tools, and online rent payment options.
[Sender.Company] anticipates its primary target audience to consist of students, international migrants, the working population, and local families residing primarily in the [Sender.StreetAddress] [Sender.City] [Sender.State] [Sender.PostalCode] . To effectively engage with these potential clients, the company has developed a comprehensive promotion strategy, which encompasses the following key elements:
Public Relations: (Description).
Social Media Marketing: (Description).
Print Advertising: (Description).
Website/SEO Marketing: (Description).
[Sender.Company] is dedicated to offering a variety of flexible payment alternatives tailored to accommodate diverse customer preferences. The following list provides a comprehensive overview of these payment options, which can be customized as necessary:
(Payment Option 1)
(Payment Option 2)
(Payment Option 3)
By offering these flexible payment choices, [Sender.Company] aims to ensure that its valued customers have a range of selections to suit their financial requirements and preferences, thus enhancing their overall satisfaction.
At [Sender.Company] , the rental property management team is composed of a diverse and skilled group of individuals, each contributing their unique talents to drive the success of the company's property ventures.
As the visionary leader of the rental property management team, (Mr./Mrs./Ms.) (Name) is deeply committed to excellence. He/she lays the foundation for the creative journey while guiding everyone towards new heights of achievement in the rental property sector.
(Mr./Mrs./Ms.) (Name) is the creative force behind [Sender.Company] 's property management efforts, ensuring rental properties provide exceptional living experiences. He/she meticulously oversees property details, from maintenance to tenant satisfaction.
(Mr./Mrs./Ms.) (Name) leads maintenance and property improvement initiatives, consistently exceeding industry standards in property upkeep, repairs, and enhancement.
Additional Team Members
Beyond the core team, [Sender.Company] has a dedicated group of professionals, including property managers, maintenance staff, leasing agents, and administrative personnel, who work cohesively to deliver exceptional rental property management services.
Over the following (Number of Months) months, [Sender.Company] has set ambitious milestones to accomplish in its journey toward establishing a strong and prosperous presence in the (Industry Name).
Source and use of funds.
[Sender.Company] will get (Amount) from (Source of Fund) to start its rental property business.
[Sender.Company] will use the funds to secure the initial rental and office space and purchase supplies and equipment. The proposed startup costs are shown in the table below:
These are [Sender.Company] 's pro forma financial statements for the next five (5) years. It contains the business's income statement, balance sheet, and cash flow statement.
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Vacation Rental Business Plan: 15 Steps for Success (Free Template)
Investing in a vacation rental business isn’t a decision that’s made lightly. There are many factors to consider; however, as the short-term rental industry continues to grow , 2023 could be the perfect time to do so.
The success of any short-term rental business will depend on having actionable goals and clear objectives based on thorough market research, whether you’re a newbie or an experienced property investor.
It’s crucial to create a strategic vacation rental business plan before you hand over a deposit or receive the keys. A viable business and management plan will help you identify the risks and prepare you for the challenges ahead.
Don’t see the form to download our Business Plan? Click here .
In this article, we look at what a business plan is, give you samples and templates to use, and analyze the 15 steps your vacation rental business plan needs to help you get started.
What is a vacation rental business plan?
Simply put, your business plan is an overarching set of rules, goals, and frameworks to help you make decisions for your new business and its future.
Not only will a vacation rental business plan help you define your strategy, but you can repeatedly refer back to it to ensure you are going in the right direction.
Why do you need a business plan for your vacation rental property?
Vacation rental owners are eager to hit the ground running when they buy their first properties – who wouldn’t be? Any vacancy or downtime on the property means more money that’s coming out of your pocket. A vacation rental business plan will guide you through the initial steps and beyond, helping you maximize your profit and success as a host.
Beyond just making money, having a good business plan for your vacation rental will allow you to measure success and identify areas for improvement accurately. For example, it will help you focus on key metrics, such as your budget, local market insights, and expansion opportunities.
What’s the secret to a good short-term rental business plan?
It’s all about timing. Writing a business plan before buying the rental home is advisable, so you can truly judge if it is a worthwhile investment and business venture. Remember that a vacation rental is no small project, so before being strapped with $200,000+ of debt, make sure the ends justify the means by guaranteeing a secure investment through a well-thought-out business plan.
If you want to succeed with your business, we also recommend asking the experts; those who already have a thriving and profitable business in the rental market and those who work daily with rental owners worldwide.
That’s exactly what we did to write this article. We contacted Antonio Bortolotti , Cynthia Chan and Karen Spencer – all professionals in the field who are ready to get you through your business plan.
We asked them a few questions to help you craft the perfect vacation rental business plan template.
What should my vacation rental business plan include?
Knowing what to include in your strategic plan can be confusing for those venturing into business for the first time.
We want to make things easier for budding vacation rental entrepreneurs, so below, you’ll find the 15 steps to help you succeed.
You can follow this template with sample questions and example answers to make it easier to understand how to create your short-term rental management and business plan.
Step 1. Executive summary
For people outside Fortune 500 companies, writing an ‘executive summary’ can be a bit scary. However, it’s a lot simpler than you may think!
When you go to a bookstore searching for a new book to buy, you usually read the synopsis on the back to get a short, comprehensive idea of what it’s about, right? That’s exactly what an executive summary is.
It’s just a few sentences that summarize your vacation rental business and includes all the essential information you want to get across. This is so that anyone can read the first page of your plan and know, at a glance, what your business entails.
Start by asking yourself the famous five W’s: Who? What? Where? When? Why? This will ensure you include the key details.
Ask yourself the following questions:
Where is my vacation house located?
- Is it by the beach?
- Is it in the middle of the city?
- Is it in the countryside?
What is it?
- Is it a family vacation home?
- Is it suited to business travelers ?
- Is it a glamping accommodation ?
Who is it for?
- Large groups of friends?
When is it best to stay at my rental?
- Is it a summer rental?
- Is it suitable all year round?
- Is it perfect for winter vacations ?
Why do you have this property?
- Is this a spare room you’re renting out for extra cash?
- Is this to top up your pension if you’re retired?
- Is this your main form of income?
Of course, you do not need to follow this structure, but this will help you outline what information you would like to include in your executive summary, which you can then rewrite to make sure it sounds professional and eye-catching to the reader.
Note: If you are still unsure about the details of your Executive Summary, feel free to do it at the end of your business plan – it’s a case of saving the best until last!
Step 2. Business goals
Your executive summary is going to give you a broad overview of where your business is going, but the goals section will help to further solidify this vision. Goals are what help you to set markers for what success in your business looks like.
Are you satisfied with a couple of bookings a month, or are you expecting a full reservation calendar by the end of the year? You’ll need to set goals to help pin this down.
It might sound elementary, but it will help your business succeed.
Is your business goal Smart? Is it Measurable? Attainable? Relevant? Time-based? Setting good goals is the basis for any successful vacation rental business plan.
Step 3. Value proposition
As with any business, you’ll need to state why customers are going to choose your business. It’s difficult to take yourself out of the equation when evaluating your business. After all, you’ve poured your blood, sweat, and tears into this project, so why wouldn’t guests choose you?
No amount of effort is enough if it’s not adding any value to your vacation rental. Consider how your vacation rental will provide a guest experience that the other properties in your area simply can’t provide.
Step 4. Company analysis
In this section, you should aim to explain the Unique Selling Points (USP) of your new vacation rental business, outlining the unique characteristics and offerings it will bring to the existing market.
Ok, but how?
Performing a short analysis of your company and finding your USP is much easier than you think. All it takes is a few simple questions to figure out how you’re different (and better) than other rental properties out there. After all, once you are confident in your strengths, your guests will be, too!
Here are a few examples:
Is it better than others because of its location?
- Is it close to the beach?
- Main public transport lines?
- Is it off-the-grid?
Is the price of your accommodation better?
- Are you the cheapest accommodation around?
- Are you the best value?
- Do you offer discounts at certain times of the year?
Are the interiors of your property different or better than the rest?
- Do you offer a cozy, rustic getaway?
- Do you offer a fireplace where a family can sit at night?
- Is it a themed vacation rental ?
Step 5. Industry analysis
If you want to be successful in the rental business industry, you’ll need to be strategic and competitive in your company management plan. So, this section is where you state some key facts about current trends and expectations.
One of the ways to do this is by carrying out an industry analysis – this is basically looking at other vacation rental businesses and evaluating them.
This will help you develop a successful business strategy and ensure you’re the owner that comes out on top. After all, knowledge is power!
Here are some sample questions that will help start your industry analysis:
What do vacation rentals near me charge per night?
- Would you class it as affordable or good value?
- Is it less than $50 per night? Or Is it more than $300?
- Think about the figures you come up with in relative terms, weighing up the value of what the business is offering against the price they charge – this will help you start to price competitively.
Who is their target audience and clientele?
- Are they families?
- Couples looking for a romantic break?
- Do they target students and school groups who need large but basic accommodations?
Are they luxury units or more basic rentals?
- Are they upmarket rentals in the most expensive parts of your area?
- Or are they modest vacation home rentals that students could afford?
- Do the rentals tend to fall in one end of the price range, leaving a gap in the market?
Are they self-catered or Bed & Breakfast?
- Do they offer a light breakfast?
- Or do they offer a breakfast buffet?
What websites/agencies do they use for bookings and advertisements?
- Are all your competitors advertising on Airbnb, TripAdvisor, etc.?
- Do they collaborate with local tourism agencies?
- Are they all missing out on a popular booking website that only you know about?
“I recommend owners to focus on profit per booking, not occupancy rates. We’re in it to make money, not fill as many nights as possible (that comes next). We could all be 100% full if we undervalued what we were offering. That doesn’t make good business sense. Be prepared to spend more when you first start out, to bring a quality product to the market – you’ll soon reap the rewards mid-term this investment in your future business will bring.” – Karen Spencer
Step 6. Customer analysis
Your customers – or rather, your guests – are how you are going to make your money. That’s why it’s important to understand and target them properly. In your plan, create different buyer personas based on the types of guests you want to attract.
This is like a profile of your ideal customer, from age to income. You should try to make it as detailed as possible because it will help your business grow later.
These buyer personas will be used repeatedly in all aspects of your business to help you achieve more bookings.
People say that the customer is always right – but if you truly get to know your customers and what they want, you can ensure that you and your business are always right.
A customer analysis is just getting to know your customers and what they want and need from a rental property and a vacation.
Here are some key questions you should ask yourself about your ideal guest:
What’s their name?
- This may seem silly to name a fictional person, but it will bring your customer analysis to life and help you imagine the buyer persona.
What do they work as?
- Is he/she a high-flying banker?
- Is he/she a medical professional?
- Is he/she involved with a local school?
What age are they?
Do they have a family?
- No, they are single.
- Yes, only one child.
- Yes, several children.
Keep going with questions like this until you’ve built an entire profile of the person, which will then help you understand their values and spending habits.
Sometimes old cliches can be true – if you fail to prepare, you prepare to fail! Through this, you’ll be able to understand common complaints you will face, likes and dislikes they have in a property rental, and amenities the travelers will expect to find within the property.
Step 7. Competitive analysis
As well as focusing on your business, one element of your vacation rental business plan is conducting competitor research.
Take a look at the market to find your direct competitors and analyze them to see how your business can thrive.
Competitive analysis is similar to industry analysis, but this time you’re going to focus on your immediate competitors rather than the industry as a whole.
For example, if your short-term rental is a house by the beach, your direct competitors would be other accommodation providers on the beach.
With competitive analysis, you want to look at the people who may win a booking over you and use what you find to put yourself on top.
How much are my competitors charging per night?
- Competitor 1 – $100
- Competitor 2 – $150
- Competitor 3 – $200
- Using this information, you may decide to drop your prices below $100 to become the cheapest option among your competitors and increase your booking rates.
What standard of accommodation do they offer?
- Are they all standard camping sites?
- Or are they high-end units?
- Are they somewhere in between, suitable for most travelers?
Do they offer airport transfers/pick-up service?
- Yes, but for a very high price.
- Yes, and for a reasonable price.
Do they offer a wide range of amenities in the house?
- No, most don’t even offer WiFi.
- Yes, some offer basic things like a washing machine and television.
- Yes, all offer basic amenities, and some even include luxury amenities (like a swimming pool or gym).
Step 8. Operations plan
The operations plan is quite simply, an insight into how you are going to run your new business on a day-to-day basis.
It will consider whether you will hire any staff, what standards you will set, and how you will keep track of inventory and other administrative duties.
This will be one of the most straightforward parts of your business plan; chances are, you already have all of this planned.
Here are a few helpful prompts and examples in case you get stuck:
Am I going to hire any staff?
- No, I’m only renting out one room in my home, which I can do myself.
- Yes, I’m renting out several large apartments, and I have a separate, full-time job.
- No, my partner and I will do the work together.
Who is going to clean the rentals between guests?
- A cleaning agency?
- A neighbor?
Do I need to hire an accountant to help me handle the finances of my business?
- No, I’m comfortable dealing with all of those things.
- Yes! I don’t know the first place to start when dealing with taxes or business records.
Who will deal with bookings and customer complaints?
- Myself, with only one room it will be very manageable.
- I will hire an assistant to help with all of this administration stuff, I won’t have time!
- My daughter/son, it will be a good part-time job for them to give them an allowance.
- To keep things simple, you can also use software such as our own Lodgify vacation rental booking system and channel manager tool.
Step 9. Marketing plan
Explain which strategies you have decided will be best to use when targeting your key markets to achieve bookings.
Think about both online and offline marketing, as well as any campaigns or promotions you plan to run externally.
Your marketing plan is just how you’ll advertise your business to customers and how you’ll generate bookings. This is when your buyer persona (which you created earlier) will come in handy.
If you know the people you’re trying to target, you’ll know what websites they use and what type of marketing will be suitable for them.
Your marketing strategy can be really diverse and varied. For example, you could use several online marketing strategies like Google Ads and listing your property on different rental websites (or your own !). Still, you can also use offline strategies like leaving flyers or business cards at local tourist attractions.
For example, here are some questions that can help you sketch out your marketing plan:
What methods of online marketing should I use?
- I will just list my bookings on one travel website because that is enough for me.
- I will have my own, personal vacation rental website . My site, my rules!
- I have several properties to rent, so I will list them on several websites to increase traffic and booking numbers.
- I will pay for Google Ads in my local area.
What methods of offline marketing should I use?
- None, online marketing will be enough for me.
- I will print flyers and leave them in local tourist offices.
- I will give each guest business cards and ask them to recommend me to friends and colleagues.
Do I have a website?
- No, I don’t want/need to create one.
- No, but I want one! I need to hire someone to create one for me or try a professional website builder .
- Yes, I have one, and I’m going to hire a Search Engine Optimization specialist to help me increase the number of visits to it.
Have I got business cards ?
- No, I don’t need any.
- Yes, I have some but I won’t use them.
- Yes, I have some, and I’m going to use them as part of my marketing strategy.
“As all good things, being successful and keeping up with everything takes time, elbow grease, long nights and hard work. But if you have the passion, the clarity and the determination to succeed, you’ll find the formula to make your rental business successful.
While I’m not sure there is a one-formula-fits-all, there are a few things that helped me: a great website, awesome warm-hearted, personal communication skills, finely tweaked standards, procedures and operations, an open mind and willingness to widen your horizon by questioning what you’ve achieved and learning what’s next. Because we are in an ever-changing and challenging world and only those willing to adapt to the changes will survive.” – Antonio Bortolotti
Step 10. Task delegation and employee management plan
It pays off to dream big, but make sure you have the capacity to do so. How will you manage guest turnover if you’re planning to rent your property every night? Better yet, who will manage guest turnover? Depending on the scale, your goals will take some serious work to get there – make sure you’ve factored in how you will manage it alone or how you plan to delegate tasks.
If you know that you’ll need to hire some staff, be it a property manager, cleaning service , or maintenance person, you’ll have to plan for how you’re going to distribute and delegate the work. Using task management tools and including them in your business plan outline will help you to make the most of your teams’ efforts.
Step 11. Distribution plan
Websites like Airbnb and Vrbo are referred to as OTAs ( Online Travel Agencies ). For all new hosts, presence on OTAs and listing sites to get bookings is essential.
Your distribution plan should consider which channels you’ll be advertising on, how much they’ll cost you, and how you’ll manage them (hint: you might need a channel manager ).
A distribution plan will help you understand how you’re going to advertise your business to generate bookings, and it will help you identify what websites you want to be on to help your visitors find out about and book a stay with you.
Here are some helpful example questions that should get you started writing a distribution plan:
Which OTAs do I want to list my property on?
- Every OTA that is available? I need lots of bookings!
How much will this cost me?
- Is it free?
- Do you have to pay monthly to list on these websites?
- Do they take a commission off bookings you receive from that website?
Are there any tools available to help me manage all of this?
- Yes! A channel manager .
- A channel manager is a tool you can use to ensure all of your bookings, dates and arrangements remain in one place so you don’t get overwhelmed managing calendars from several different OTAs you’re using.
When I do get a booking, how will I receive the payment?
- PayPal account.
- Bank transfer.
- Cash/card payments directly from guests upon arrival.
“If a host’s goal is to maximize their revenue and bookings, it definitely makes sense to list on several platforms. Based on research from one of our partners, Tokeet, they found that some of their hosts had reported a 20% increase in bookings once they used a channel manager to list across several home-sharing sites. I would recommend that if a host is listing across several platforms, they should utilize a channel management program to make it easier to manage their listings and their calendars so they don’t double book.” – Cynthia Chan
Step 12. Revenue management plan
So, this is the numbers part. But don’t worry – revenue management is not as scary as it sounds!
In this section, you’ll have to include information about the rates you plan to charge for your vacation rental, alongside any details about pricing or yield management tools you will use.
When running a vacation rental business, you need to keep on top of your incomings, outgoings and general overall finances.
For people who feel overwhelmed by this, there are a lot of tools and software out there to help. To start with, we’ve written some quick questions to cover the basics of your revenue management plan to make sure your accounts and business stay well in the green.
How much will I charge per night?
- Fixed price: $100 per night
- I’ll use smart pricing, increasing the amount during busy periods.
- I’m still undecided.
What level of taxes will I have to pay to the government?
- I’m not sure – I need to research this before writing my revenue management plan.
What will my utility bills be?
- Water is $20 a month.
- Trash collection is $30 a month.
- Electricity will vary depending on how many guests I’ll have.
What will my staff costs be?
- Zero, I’m doing all of the work myself.
- Low, I’m paying my teenage children an allowance to help me with some household chores.
- High, I’m going to hire a cleaning agency, a marketing specialist, a website developer, etc.
What’s my target monthly income?
- Anything above $0 at the beginning?
“Set stretching yet realistic prices. Quality holiday homes can charge more (because they are worth more) than an average place. When it comes to setting your prices, you need to know what it costs you to welcome each set of guests and work up from there, ensuring a healthy profit per booking every time. The more you charge per week, the more revenue per booking, yet your changeover costs, your marketing costs, your time spent, will be the same.” – Karen Spencer
Step 13. Financial plan example
Think about how you are going to finance your new business. Of course, you’ve often asked yourself this question, ‘How am I going to afford this rental business?’ Will it be self-financed or are you planning on taking out a loan? Do you have no plan to spend any money because you’re simply renting out a spare bedroom?
These questions form your financial plan . It is just writing out, ‘Well, how am I going to pay for all of this?’ As we all know, money doesn’t grow on trees. Note down your estimates of expenditure and projected income for the first five years.
As with anything in life, proper budgeting and planning your finances will prevent any stress in the future, and it will mean that your business is ready to thrive.
So, what kind of information makes up a financial plan?
Will I need to take out a loan?
- No, I’m just renting out an existing property with everything ready to go.
- Yes, I will need a small loan to renovate this property.
- Yes, I will need a substantial loan to purchase the property/land where I’m going to build my rental.
What will the interest rates be?
Do I have savings I’m ready to invest into it?
- I don’t want to put my savings into it.
- Yes, I have a small amount that I’ll use for redecoration.
- Yes, I have lots of savings that I’ve been keeping for a project like this!
What level of monthly loan payments can I manage?
- None, my business has small incomings, so I don’t want to take a loan.
- $100 for a small loan?
- $750+ for substantial mortgage repayments?
“Sometimes not factoring in the cost of educating yourself is a luxury you can’t afford. The reason I’m part of online communities (I go to industry conferences like VRMA and I put together the Vacation Rental World Summit ) is because I’m the first one to not know everything.
I’m aware that if I want my business to thrive while this industry changes and crashes, I need to stay informed on what’s changing, adjust my strategies accordingly, and be prepared for what’s coming.
So I put together some of the best minds in our industry once a year – this year (2018) on Lake Como, Italy, in October – to enlighten us all on what we should be doing to ensure we have a sustainable and exciting business we keep loving for many years to come. – Antonio Bortolotti
Step 14. Key milestones and business future:
Write down your plans and goals for your business, plus what key milestones will help you achieve these targets.
When you start any project, whether it is going back to university, losing weight or starting a business, it is really important to track your project and also to track your progress. This section will be useful to refer back to and to ensure you’re on the right track.
After all, if you don’t set any goals, it might be easy to remain where you are.
Here are some good milestones to use for your rental business:
How much do I want to make a month?
- $500? $750? $3.000?
- This answer will be linked to your financial plan, so this is a good time to go back and look at what you wrote down in Point 10.
How many guests do I want in the first quarter?
- As many as possible – I know I’m still in the beginning.
What rate of growth do I want in my bookings year-on-year?
- I’ll figure this out in the second year, I’m just getting started at the moment.
How many returning clients do I want each year?
- At least 10?
- More than 20, I’m confident in the service I provide.
- As many as possible!
“The biggest hurdle that Airbnb hosts have to get through in their first few years of business is to get enough reviews on their listing so that guests are comfortable staying at your listing. The more reviews you have, the higher your listing appears in the search results as well, so the biggest focus for hosts should be to get as many good reviews as possible.” – Cynthia Chan
Step 15. Vacation rental business plan: Appendix
The appendix in your vacation rental business plan should include all of the relevant documents you have for your business, containing the vital information you need to keep things running.
What’s the number for a plumber, just in case I have problems with the pipes?
- Good point, I don’t have one!
- Yes, I have one, it is 123 456 7890.
Where are my tax registration details?
- I’m not sure, I’ll need to look for these and then add them to the appendix.
- I have them, ready to put in the folder.
Have I kept receipts of all of the things purchased for my business recently?
- Yes, I’m ready to add them to my tax records.
- No, I will buy a wallet to keep them in for future reference.
Have I backed up my online bookings and calendar somewhere?
- Yes, on Dropbox and an external hard drive.
- Yes, but offline, in my calendar in the kitchen.
What should you prioritize in your business plan for vacation rentals?
We know that with so many things to keep in mind for your business plan, it could be hard to focus on the most important ones. There are 15 steps, yet every piece seems crucial; what to do?
So we decided to turn to the experts: Antonio, Cynthia, and Karen for their suggestions!
“Looking at the way the industry evolves and its sheer competition, building a clear, easy-to-remember and appealing brand together with setting the infrastructure right is absolutely key. The main backbone of the brand is obviously your own fantastic and inspiring website: your personal Airbnb, your eBay, your Amazon, where you dictate the rules, and no one decides whether you live or die. But it must be productive and efficient.
This, of course, relies on among many things: carefully laying down a perfectly functioning operational structure, where you put in place automation, standardizations, and procedures to ensure your business runs smoothly even without you being at the desk 24/7.
Actually, owners do and should operate their businesses with little to no worries. In such a demanding and dynamic industry as ours finding the right combination of software that aligns with your individual business needs is key to accomplishing all this. And it’s not easy.
This is to keep firm in mind how the ultimate goal is to rely less on third parties for supply of bookings and more on their ability to excel as a way of driving guests and business home.” – Antonio Bortolotti
Brand consistency is vital for a business and should be established from the very beginning. A good branding outline in your business plan will keep your vacation rental looking professional.
Rather than emphasizing a particular aspect, Spencer points out the importance of quality throughout the entire business plan:
“Quality – in everything you do. From the product you bring to the market to the excellent customer service you offer your guests.” – Karen Spencer
It’s going to show if your vacation rental business plan falls short halfway through. You need to maintain high-quality standards and dedication throughout, so it can reflect in your vacation rental and result in happy customers and solid bookings.
Common mistakes found in short-term rental business plans
For many hosts, owning a vacation rental is their first business venture. With that in mind, many mistakes can be made along the way. Fortunately, we’ve covered you for what to avoid when creating your business plan. Here are some of the most common mistakes that vacation rental owners make with their business plans:
Of course, you want to welcome as many guest types as possible, but your vacation rental won’t be everyone’s cup of tea – and that’s okay! If you try to go too broad in targeting guest types, you’ll end up attracting none of them.
Some hosts don’t narrow down their target, and, as a result, their business suffers. Having too generic of a vacation rental will take away from the value you could be adding. Refer back to your value proposition: what extra perk do you want to provide customers? Once you have that, you can define exactly who those customers will be.
Ignoring the competition
You might think your vacation rental is the best on the block, but keep in mind that your competition feels the same way. Sometimes even the most luxurious vacation rentals are blown out of the water by their competition.
Rivals can outdo you in price, value, style, and availability! Try to evaluate your competitive edge from every perspective; how can you outdo the other vacation rentals in your area?
Unrealistic finance plan
We all want to make a million dollars in our first year of business, but that’s just not going to happen. One of the most common mistakes you can make is overestimating your revenue while underestimating your budget.
It’s great to think positively about your business and even be encouraged to dream big, but when it comes to money: make sure you’re being realistic.
Assuming standard home insurance covers you
Before you welcome any guests into your home, you’ll want to include vacation rental insurance in your business plan. Standard homeowner insurance will not cover the vast majority of problems that can affect short-term rentals. This is largely due to the increased likelihood of property damage caused by guest parties, misbehavior, and stolen items, making vacation properties high risk.
You’ll want to put in the time to research what policies protect vacation rental owners and which companies provide the best coverage and the best value for your short-term rental business.
Scaling your business with a vacation rental property business plan
So, are vacation rental business plans only reserved for newcomers? Of course not! If you’re wanting to restructure your business or scale it, having a new business plan is a great first step. A growing business usually needs a fresh slate, as the old business plan won’t cut it. With a larger business scale, you will need more staff, budget, time, and more.
Instead of building from your old vacation rental business plan, you might find that creating a new vacation rental business plan will be the best option as you’ll be approaching it with a fresh perspective and more ambitious goals.
Vacation rental business plan: tips & tricks
So, you’ve got a business plan full of really detailed information – great, you’re ready to go! Well, not quite. There are still a couple more things to consider before you put pen to paper and start with your own business plan.
With the industry growing increasingly competitive every day, with more websites opening up and listing your competitors’ rentals, you may be looking for that extra edge.
Here are four of our top tips and tricks to make sure you remain number one!
- Ever heard someone say that if you do what you love, you’ll never work a day in your life? This is completely true with vacation rentals.
- If you enjoy it and don’t let the stress get to you and affect your customer service skills, this will shine through to the guests, and you’ll notice they’ll keep coming back year after year.
You get back what you give out:
- With vacation rentals or with any business or skill, you will get out what you put in.
- If you invest time, money and effort into your business, you will reap financial and personal rewards.
- So many businesses in the tourism industry today simply put in the bare minimum to keep things running.
- For you to be number one, you need to invest more effort and time than your competitors, and you’ll notice very quickly that this investment has really high returns.
Quality over quantity:
- Don’t forget that most people will choose value over price, so don’t compromise one for the other.
Get yourself out there:
- Advertise, advertise, advertise! Really, the more places you advertise your business (your own site, OTAs, social media , etc), the more bookings you’re going to get.
- It is just a numbers game – the more people who look at your listing, the more guests you’ll have. Simple!
Your vacation rental deserves a proper vacation rental business plan. When you lead with a plan, you’re setting your new business venture up for success. It’s vital to detail every piece of information you can so there are no surprises when it comes to competition, operations, budget, and everything in between.
Even though your guests won’t see your business plan, implementing one makes sure your business runs smoothly and professionally, which helps contribute to the overall guest experience. We’ve even done the hard part by creating a vacation rental business plan template, so all you have to do is plug in your details, and you’re ready to move forward!
Download our free vacation rental business plan template
Don’t know where to start? Don’t worry! All you have to do is download our free vacation rental business plan template below and fill in your own information. Our handy guide includes all of the questions you need to ask yourself before starting your new venture.
We’ve consulted with the experts to make the best outline possible for your business to help you reach your goals. You can learn more about who Antonio, Cynthia and Karen are, when they started working in the holiday rental market and what they usually do to help rental owners like you to develop their business.
Antonio Bortolotti :
“I’m a property owner with a multi-property in Sardinia and I ventured into holiday rentals as a way of building myself an alternative to my previous life working for Alitalia.
My wife Cristina and I stumbled upon the ruins of an old house in Sardinia and it was love at first sight. We purchased part of it and renovated it; we rented it out to pay the mortgage and hopefully make some money. Fast forward 3 years later and we now own the entire villa with 3 units and I quit my job to focus full time on vacation rentals.
Meanwhile, I was invited to speak on stage at industry events to share how I turned rubbles to such great success – our units were outperforming all other rentals in the area by 4 times in terms of occupancy and duration of the season. I began sharing my know-how with my peers, and that led to hosting what’s become the Vacation Rental World Summit; an event that’s helped over 16,000 property owners and property managers in 50 countries since its first edition.
As a matter of fact, I want to thank you for asking me to respond to your questions by sharing with your readers the recording of Lodgify’s session on the principles of good web design that your very own Dennis Klett shared with us at the Vacation Rental World Summit edition held in Barcelona two years ago. While time goes by, certain things and principles never age.
Cynthia Chan :
“I’m Cynthia, and I’m one of the co-founders of Airhosts Forum . We’re the largest Airbnb host forum online, and we also have the largest Facebook page for Airbnb hosts.
We decided to start a forum so that we could get more information on how to be better hosts and also to help others who were in the same boat as us. Because there is such a need for a community where hosts can come together to share ideas, get tips and advice, and even just vent about their experiences, we quickly grew the community to the #1 Airbnb forum for hosts to come and discuss anything they wanted with other hosts.
We post reviews, useful tips for communicating with guests, information on Airbnb policies, insurance questions and much more, all with the aim of ensuring our members are kept up to date with all they need to know about Airbnb and hosting.”
Karen Spencer :
“I’m Karen Spencer, founder of The Business of Holiday Rental , and I help holiday homeowners to create a quality holiday home, to run it as a business, maximize their income and love what they do.
I’m a holiday cottage owner myself. I’ve worked for a holiday letting agency and have 10 years of experience in the self-catering industry, I’m a home stager and a formal departmental coach.
Combine all that industry knowledge, holiday home business know-how, corporate experience and training, and you get The Business of Holiday Rental. I can help you in group programs, working one to one, or in my off-the-shelf classes.”
Hi, Amazing article to learn from basics to advanced in vacation rental business. Thanks for sharing this wonderful article with us.
Fantastic article Jess as always. Even though we’re on our 2nd property and they both are doing well we are going to go back and go through the steps in the business plan. I bet it will help us refine our ideas for moving forward. Thanks again!
Well… consider yourself added to my blogroll. I have like six other blogs I read on a weekly basis, guess that number just increased to seven! Keep writing!
What kind of insurance is available?
I suggest you check out our article about the different types of vacation rental insurance available. You’ll find it here .
Riley & The Lodgify Team
Thanks for sharing this useful information! Hope that you will continue with the kind of stuff you are doing.
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