1.0 Executive Summary
The purpose of this business plan is to secure a $125,000 investment for the development of a real estate broker bridge based in Philadelphia, Pennsylvania. MDD Real Estate Solutions (“the Company’) was founded in by Matthew Deutsch. The business will specialize in mid-range to high-priced residential properties. Full scale revenue generating operations will commence in the second quarter of next year.
Operations
The principal driver of the Company’s revenues will come from the ongoing marketing and arrangement of transactions specific for residential real estate. Generally, the Company will target properties that have value of $500,000 to over $3 million. The business will generate a commission of 2.5% to 3% of the face value of the transaction.
To complement these operations, the business will also provide a moderate degree of residential property management services. This will allow the business to generate highly recurring streams of revenue that will support the underlying operations of this real estate brokerage.
The third section of this document will discuss the operations of MDD Real Estate Solutions.
The Financing
A private investment of $125,000 is sought in order to commence operations. The terms of this equity financing are to be determined during negotiation. Primarily, the funds will be used for the following:
• Office development in Philadelphia
• Furniture, fixtures, and equipment
• Working capital
The Company would be a very strong candidate for a revolving credit facility in the future given the substantial profits that are generated from each real estate transaction as well as the recurring income that is produced from residential property management. This document assumes that the Company will use its retained earnings in order to complete the growth objectives outlined in this document.
The Future
The Company will continue to onboard a number of highly qualified real estate agents that will work on behalf of the business in order to secure listings while also showcasing properties to potential buyers. The business will also continually hire qualified property management specialist as a segment of operations is incredibly important to the overall economic liability of MDD Real Estate Solutions.
Market Overview
Revenue Forecasts
2.0 The Financing
2.1 Funds Required
The funding sought in this document will be used as follows:
2.2 Management and Investor Equity
The terms of the equity financing will be determined during negotiation.
2.3 Exit Strategies
Given the level of competition within the field of real estate brokering, there is an immense demand for highly established firms in this industry. In the event that the business is going to be sold, the Company will most likely engage in a buyout strategy with its existing staff agents. If this is not feasible, a qualified business broker will be hired to market the business to a larger firm that will absorb the operations of the Company.
3.0 Operations
As discussed in the executive summary, the Company will focus heavily on providing exceptional brokerage and marketing services specifically for the needs of residential property sellers throughout the greater Philadelphia metropolitan area. Given that this area has a substantial population, the Company will have no issues acquiring listings among buyers that are seeking to quickly divest their properties.
The business will generate significant commissions from these operations with an average commission of $25,000 per sale. Matthew Deutsch will directly provide brokering of real estate alongside staff agents.
Of special importance to the Company’s operations are the continued residential property management services as it will produce highly recurring reams of revenue, it will ultimately support the underlying operating cost of the business wherein commissions will be pure profit for the MDD Real Estate Solutions.
To that end, the Company will conduct extensive direct outreach with real estate investors that operate within the greater Philadelphia metropolitan area. This will lead to rapid onboarding of property owners that are seeking a hands-off solution for their real estate management needs.
4.0 Overview of the Organization
4.1 Registered Name
MDD Real Estate Solutions LLC. The business is registered as a limited liability company in the Commonwealth of Pennsylvania.
4.2 Commencement of Operations
Revenue generating operations will commence in the second quarter of next year.
4.3 Mission Statement
MDD Real Estate Solutions’ mission is for a provide comprehensive real estate sales and property management solutions.
4.4 Vision Statement
To become the preeminent and widely recognized real estate brokerage firm within the greater Philadelphia metropolitan area.
4.5 Organizational Objectives
• Implement numerous marketing strategies that will allow the business to quickly acquire listing among individual seeking property sales.
• Use multiple forms of online marketing in order to showcase available properties to the general public.
• Conduct direct outreach with real estate investors that are seeking an end-to-end solution for their property management needs.
• Adhere to all laws regarding the marketing and sale of residential real estate within Pennsylvania.
• Properly onboard staff agents that have extensive experience in the field of residential property sales.
• Continued to expand all facets of operation in order to drive higher on your revenue growth.
• Potentially established satellite offices within neighboring New Jersey and Delaware in order to operate throughout the Mid-Atlantic United States.
5.0 Market and Industry Analysis
5.1 External Environmental Analysis
This section of this real estate brokerage business plan will document the industry, the competition, the customer profile, and the ongoing economic issues that may impact operations.
At this time, the economic climate with the United States is moderate. As a result of changing trade policies, there has been a modicum of volatility introduced to the market. The Federal Reserve is taking appropriate measures via physical policy in order to ensure that inflation remains tame and economic growth continues.
Although this is a slightly higher interest rate in environment than what it has been experience in the past, the demand for real estate continues to remain strong. Furthermore, the Company is operating within the population dense market in Philadelphia, which has a significant number of properties that need to be sold at any given time.
5.2 Industry Analysis
There are 900,000 companies that operate in a real estate brokering capacity with the United States. Each year of these businesses generate $241 billion of revenue while providing jobs for one million people.
One of the major trends within this industry is to leverage multiple forms of online marketing and application technology in order to keep in contact with clients at all times while showcasing properties to potential buyers on the internet. MDD Real Estate Solutions will use the latest in technology in order to maintain a competitive advantage while offering exceptional service to the Company’s clients.
5.3 Customer Profile
The following demographic profile will be used during the course of marketing operations:
• Household income of $125,000+
• Is selling or buying a home with a value of $500,000 to $3 million
• Lives within 50 miles of the MDD Real Estate Solutions location
5.4 Competitive Analysis
This real estate brokerage business plan has been written for sample purposes only. If this business plan had been completed specifically as an engagement for a client and a thorough analysis of the greater Philadelphia market would have occurred. This would have included the number of real estate brokers within the market, length of time in business, their market reach, and how the business could effectively differentiate itself from the competition.
6.0 Key Strategic Issues
6.1 Sustainable Operations
MDD Real Estate Solutions will have sustainable operations as a result of the following:
• Ability to provide both real estate broker and property management services will be a major advantage for the business.
• The Company can easily scale into neighboring markets within Delaware of New Jersey.
• The business has a highly defined marketing plan that will allow listed properties to be seen by thousands of buyers.
• Recurring income from proper management services will provide a substantial degree of economic stability.
6.2 Basis of Growth
The Company will expand via the following methods:
• Continued hiring of real estate agents so that the business can take on a greater number of listings.
• Continued direct outreach with real estate investors that have comprehensive property management needs.
• Establishment of satellite locations and other economically viable markets within Pennsylvania, New Jersey, in Delaware.
7.0 Marketing Plan
7.1 Marketing Objectives
• Leverage the founders existing contact within the real estate industry to onboard clients.
• Maintain an expansive online presence through a proprietary website as well as the real estate listing platforms.
• Conduct direct outreach with real estate investors who own portfolios of properties within the greater Philadelphia metropolitan area.
7.2 Revenue Forecasts
7.3 Revenue Assumptions
Year 1
• First year revenue will reach $941,000.
• Gross profits will reach $480,000.
Year 2
• Through greater marketing efforts, revenue will reach $1.08 million.
• Gross profits will reach $552,000.
• Total income will increase by 15%.
Years 3-5
• By the fifth year of operation, total revenue will reach $1.4 million.
• Gross profits will reach $734,000.
7.4 Marketing Strategies
The Company will use numerous forms of marketing in order to create brand name awareness for MDD Real Estate Solutions while also showcasing all properties available for sale. Most importantly, Matthew Deutsch is a highly experienced real estate professional, and he will be able to use his existing contacts in order to foster ongoing relationships as the Company establishes its operations.
The Company will maintain an expense of online presence that showcases the biographies of all staff brokers/ agents, the properties that are currently available for sale, how to onboard with the business for property management services, and general information about the real estate market within the greater Philadelphia area. This website will be heavily search engine optimized.
The business will also use all forms of social media in order to promote both the brand name of the real estate brokerage as well as available listings. Several times a day, the Company will post images of properties that are available for sale. Direct links from social media pages back to the Company’s website will be included
It is no secret that networking is a major component of why a real estate brokerage becomes successful. The Company’s staff agents as well as the Founder will frequently attend real estate focused events within Philadelphia and surrounding market areas. Ultimately, this will lead to stronger relationships with brokers at other firms in order to engage in co-brokering opportunities. This type of marketing will occur throughout the life of the business.
The Company will also list all properties on major platforms, including Trulia, Zillow, RedFin, Loopnet, and other platforms where properties are frequently listed.
8.0 Organizational Plan
8.1 Organizational Hierarchy
8.2 Personnel Costs
9.0 Financial Plan
9.1 Underlying Assumptions
• The company will secure $125,000 or private investment to launch operations.
• This real estate brokerage will achieve a compounded annual growth rate of 11%.
• The Company will not seek any further capital outside of the funding sought in this document.
9.2 Financial Highlights
• Demand for comprehensive real estate broker services is increasing within the Philadelphia area.
• Recurring income from the Company’s property management operations.
• MDD Real Estate Solutions can easily scale into new markets with retained earnings to the business.
9.3 Sensitivity Analysis
The Company’s revenues may face downward pressure in the event of a severe economic recession. The prices of housing have increased significantly over the past five years, despite the fact that that interest rate rates have concurrently increased. During challenging, economic climates, the Company will be able to maintain profitability given that the business will produce highly recurring reams of revenue from its property management operations. Furthermore, the significant population density of the greater Philadelphia metropolitan area will ensure that there are always listings available to service.
9.4 Source of Funds
9.5 Financial Proformas
A) Profit and Loss Statement
B) Common Size Income Statement
C) Cash Flow Analysis
D) Balance Sheet
9.6 Breakeven Analysis
9.7 Business Ratios
Appendix A – SWOT Analysis
Strengths
• Limited competition among companies that operate in both a real estate brokering and real estate management capacity.
• A Founder, Matthew Deutsch, that has over ten years of experience operating as a real estate professional.
• The recurring income from property management will not only support the operations of a business but will also significantly boost its value.
• Substantial profits on each transaction that is closed through MDD Real Estate Solutions.
Weaknesses
• Very high cost related to marketing.
• Onboarding highly qualified and experienced real estate agents is a complex process.
Opportunities
• Continued to expansion the company’s property management operations through greater direct outreach efforts.
• Expansion of the types of properties that can be sold through MDD Real Estate Solutions including commercial properties.
• Potential development of satellite locations in other nearby major markets
Threats
• Continued increases in inflation and the underlying prime interest rate can impact the demand for properties.
• This is a highly competitive industry within a greater Philadelphia metropolitan area.
Appendix B – Critical Risks
Development Risk – Low
The development of the protocols and sales techniques of the Company will use from the onset of operations has been developed. The primary matter that needs to be addressed is securing the private investment saw in this document.
Financing Risk – Moderate
The $125,000 of capital that will be used to launch operations will be principally used for initial marketing and working capital purposes. The risks related to this financing are abated by the fact that the business will generate highly recurring income from property management as well as significant proper profits on each residential property sale.
Marketing Risk – Low
Management will use the ongoing marketing strategies discussed earlier in this document to create a significant brand name for the brokerage will also showcasing available listings to as many people as possible. The Company will make ongoing and sustain re-investments into these operations in the coming years.
Management Risk – Low
As noted, Matthew Deutsch in experience real estate entrepreneur that has the ability to bring this brokerage to substantial profitability. He will focus heavily on year-on-year growth among all divisions.
Valuation Risk – Low
The valuation risk is offset by:
• The operations of MDD Real Estate Solutions can be expanded across multiple markets.
• Recurring income from residential property management.
• The business can seamless enter the lucrative commercial property sales market.
Exit Risk – Low
In all likeliness, in the event of a business sale, the Company will work with his staff agents through a buyout plan. If this is not a tenable situation then a qualified business broker will be hired to mark the firm to a larger entity.