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Business plan for real estate development project template

Do you need a business plan for a development project? Check out our article. You will learn how such a document is structured and how to get a professional development business plan quickly.
Filip Samczuk
Author of the article
Published
May 15 2023
Reading time
7 minutes
working on a business plan - an example
Table of contents

Business plan for a real estate developer - introduction

Development investments are one of the most promising ways to increase one's wealth. However, in order to achieve success in the real estate development industry, a business plan for a real estate development investment plays a key role.

A business plan for a real estate development project is a detailed documentation that outlines the planned real estate investment, as well as indicates what financial benefits may result. Not only does it help investors set goals and strategies, but it also helps minimize the risks associated with the investment.

business plan of a development investment

A business plan for a real estate development project can be used not only for its own purposes, but also for obtaining a loan from a bank or other type of financing. This is a key document when applying for money. Most often, such a business plan is used precisely as an effective tool for obtaining a bank loan.

Read this article to learn more about business plans for real estate development projects. Entrepreneurs who implement this type of projects are the largest group of our clients. We have carried out more than 100 development business plans for both small investments like two semi-detached or terraced houses to large housing estates or hotel developments.

Business plan of a real estate development project - model structure

Here is a sample sample business plan structure for a real estate development project:

Executive Summary

A brief summary of the investment, its purpose and potential returns. Allows you to get an idea of what the project is about in a short period of time, contains basic - the most important information.

Company description and project description

Information about the development company, its history, experience and resources. Often the team is also described, its experience. Also included is a detailed description of the project. Usually with architectural projections, a profile of the clients, a description of the location.

Market analysis and competitive analysis

Real estate market research, including trends, demand, supply and competition. It focuses on the local market, but it is also useful to show nationwide trends and the strengths and weaknesses of competitors.

Marketing plan

Marketing and promotional strategy for a development project. It is worth highlighting the developer's distinctive elements in this field.

Financial analysis

Forecast of investment costs, revenues, profits and profitability ratios. Performed by a professional financial analyst. Important: most "ordinary accountants" will not be able to handle this job. It requires financial modeling for the future, not just historical accounting.

Operational plan

Detailed schedule of activities, project management, construction stages, etc. For development projects, the material and financial schedule is particularly important.

Risk analysis

Identification and evaluation of potential risks associated with the investment and strategies to minimize them. Most often in the form of a SWOT analysis.

Organizational structure

Description of the management structure of the project and the responsibilities of individual team members. Can be part of the project / company description.

Funding

Details of financing sources, such as loans, investors, equity. As part of the financial projections, you should show a detailed loan repayment forecast. This is, of course, on the assumption that the business plan is created for the purpose of obtaining a loan. It is a good idea to establish the loan terms before the business plan is prepared, so that it includes the established repayment terms.

Return on investment forecast

Determine the expected rate of return on investment and the timing of returns. Presented through indicators like IRR or NPV.

Plan for post-investment activities

A strategy for the continued operation, sale or management of a property after construction. Does not apply to special purpose vehicles established solely for the purpose of selling the property and its dissolution.

Applications

Summary of the business plan and recommendations for undertaking a development investment. Conclusions follow from the other chapters of the document and the individual sub-proposals.

Development investment example

Remember that the above formula is a general guide and should be tailored to the specific needs and requirements of your development project.

What to include in a development business plan (development investment)

Most of the elements of a typical construction investment business plan overlap with business plans for other industries. In it you will find sections such as a financial plan, market analysis, sales forecast. In addition, there is usually also a competitive analysis, SWOT analysis or basic business assumptions.

Work on a business plan for a development project

In addition to the above components, other elements should be kept in mind to comprehensively present the entire investment. This is especially important if the development project is to be financed by a development loan. In particular, the document includes information such as: the adopted sales schedule, advantages in relation to local competition, description of the investor (including experience), description of the stages of implementation of the investment, justification of the location, profile of future customers, financial model taking into account possible external financing. When creating financial projections, don't forget about the income statement, balance sheet or cash flow. A detailed statement of capital expenditures may also prove useful.

When to prepare a business plan for a development project

While you are applying for a bank loan, the execution of a business plan is important, because it means presenting a key document to the bank. It is on its basis, as well as on the basis of your financial situation (collateral) and your own contribution that the credit committee will decide whether to grant financing. The business plan allows you to make your venture credible in the eyes of the experts evaluating the project. The business plan for a real estate development project should be developed by people who have relevant experience. It is best to entrust its implementation to a specialized company. A developer usually does not have adequate internal resources in this regard.

working on a business plan - an example

A bank is just one of the potential financiers. Sometimes it is private investors (investment funds, business angels) or private lenders who are eager to finance the construction and development industry. Such an investor often secures a mortgage (such as land ownership). If you are looking for investor contacts or need a professional study for a bank - get back to us.

A business plan prepared with due diligence will also come in handy for your own purposes. When you register a special-purpose company, it is useful to know the exact financial plan, the schedule of activities to make it easier to stick to the set deadlines and milestones.

Of course, the business plan can also be prepared independently. You already know what such a document consists of. You can find more articles with free instructions on our blog. Just remember that it will probably take you several weeks to make such a document if you have no experience in it. In addition, preparing professional financial projections (balance sheet, income statement, cashflow, NPV, IRR) requires financial knowledge.

Development business plan - professionally and quickly

Why should you entrust the preparation of a business plan for a development project to an external company? The following arguments answer this.

  1. Experience and expertise: external experts in the field of business plan preparation have a wealth of experience and knowledge that allows them to effectively identify and address the key factors for investment success. They have a thorough knowledge of current trends and best practices in the development industry.
  2. Objective view: external experts provide an independent view of the project, devoid of subjective biases and emotions that can influence the evaluation of one's own plan. As a result, they can more accurately assess the potential of an investment and identify weaknesses and opportunities for optimization.
  3. Access to resources and data: experts have extensive access to a variety of resources and data that are essential for developing a comprehensive business plan. Using professional analytical tools, they can thoroughly research the market, assess the competition and conduct in-depth financial analysis, leading to more reliable and accurate forecasts.
  4. Save time and effort: drafting a complete business plan can be a tedious and time-consuming task. By delegating this task to experienced experts, you gain time to devote to other important aspects of your development project, such as management, searching for investors or establishing business partnerships.
  5. Credibility for investors and partners: a business plan prepared by professional external experts carries more credibility and prestige in the eyes of potential investors, business partners and financial institutions. A solidly developed business plan can increase the chances of obtaining the necessary financing and cooperation with reputable entities.
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Business plan for a development project - questions and answers

What is a business plan for a development project?

A development business plan is a document that describes and analyzes a planned real estate investment. It contains detailed information on the strategy, financing, schedule of activities and projected profitability of the project.

Why is a business plan important for a development project?

A business plan is important because it provides a comprehensive assessment and analysis of a development project. It helps investors and decision makers understand potential risks, returns, timelines, and effectively communicate their vision and strategy for the investment.

How many pages should a business plan be for a bank?

The bank usually does not impose the rigor of a specific number of pages. What matters is the quality of the content of the document and the presence of all mandatory elements (described in detail above). Practice shows that the minimum volume of such a business plan is twenty pages. It happens, however, that bank business plans are more than 100 pages. To this, there are often separate attachments such as an appraisal report.

How can a business plan for a development project be used?

A business plan for a development project can serve as a tool for obtaining financing from investors or financial institutions, for convincing potential business partners, and as an internal roadmap to guide the project team.

Business plan for developer to bank sample cover sheet

About the author

Filip Samczuk
For 12 years, he has provided substantive support to entrepreneurs in realizing their dreams of starting or growing a business. He advises on obtaining financing, business development and legal issues. Privately a fanatic of sports, travel and history of the 20th century.

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