Property Development Business Plan Template
If you want to start a Property Development business or expand your current Property Development business, you need a business plan.
The following Property Development business plan template gives you the key elements to include in a winning property development business plan. It can be used to create a land development business plan and a real estate development company business plan.
Sample Property Development Business Plan Template
Below is a property development business plan example with each of the key sections to help you write a property development business plan for your own company.
I. Executive Summary
Business Overview
[Company Name], located in [insert location here] is a new property development company that focuses on residential property development for single family and multifamily homes. The company is owned and operated by a real estate development industry veteran who is well-versed in the entire property development process. [Company Name] aims to be the trusted source for affordable housing in the area.
Products Served
[Company Name] will handle the entire property development process from sourcing land and securing all necessary approvals and permits to the design, construction, and sale of the finished property.
The company focuses on building single family homes and multifamily apartment complexes in the heart of the city. All projects are designed using green materials that promote maximum energy efficiency, while providing homeowners with aesthetically appealing homes that look luxurious, but are highly affordable.
Customer Focus
[Company Name] will primarily serve home buyers and real estate investors in a 30-mile radius of the location. The demographics of these customers are as follows:
- 195,203 residents
- Average income of $35,000
- 49.3% married
- 40.5% in Management/Professional occupations
- Median age: 30 years
Of the above-mentioned demographic profile, there are thousands of first time home buyers, an ideal target market for the company.
Management Team
[Company Name] is led by [Founder’s Name], a local property developer who has over 30 years of experience developing residential properties. He has a bachelor’s degree in real estate and has been working for a well-known property development company for the last ten years. Prior to this, he worked as a project manager for a large construction company where he gained valuable experience managing the entire property development process.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- [Company Name] will fill a specific market niche in the growing community in the heart of [Location].
- The company will be using modern building materials coupled with innovative design elements for homes that are green, functional, and affordable, while maintaining a luxurious aesthetic.
- The management team has a track record of success in the property development business.
- The local area is currently under served and has few experienced property developers offering affordable housing solutions for first time home buyers.
Financial Highlights
[Company Name] is seeking a total funding of $500,000 of debt capital to open its property development company.
- Office design/build-out: $100,000
- Software and supplies: $200,000
- Brand development and marketing: $100,000
- Working capital: $100,000 to pay for licensing, salaries, and lease costs until [Company Name] reaches break-even
Top line projections over the next five years are as follows:
| Financial Summary | FY 1 | FY 2 | FY 3 | FY 4 | FY 5 |
|---|---|---|---|---|---|
| Revenue | $560,401 | $782,152 | $1,069,331 | $1,379,434 | $1,699,644 |
| Total Expenses | $328,233 | $391,429 | $552,149 | $696,577 | $776,687 |
| EBITDA | $232,168 | $390,722 | $517,182 | $682,858 | $922,956 |
| Depreciation | $7,000 | $7,000 | $7,000 | $7,000 | $7,000 |
| EBIT | $225,168 | $383,722 | $510,182 | $675,858 | $915,956 |
| Interest | $6,016 | $5,264 | $4,512 | $3,760 | $3,008 |
| Pre Tax Income | $219,152 | $378,458 | $505,670 | $672,098 | $912,948 |
| Income Tax Expense | $76,703 | $132,460 | $176,985 | $235,234 | $319,532 |
| Net Income | $142,449 | $245,998 | $328,686 | $436,864 | $593,416 |
| Net Profit Margin | 25% | 31% | 31% | 32% | 35% |
II. Company Overview
Who is [Company Name]?
[Company Name], located in [insert location here] is a newly established property development company that specializes in residential property development for single family and multifamily homes. The company is owned and operated by a real estate development industry veteran who is well-versed in the entire property development process. [Company Name] aims to be the trusted source for affordable homes in the area.
[Company Name] is led by [Founder] who has over 30 years of experience developing residential properties. He has a bachelor’s degree in real estate and has been working for a well-known property development company for the last ten years. Prior to this, he worked as a project manager for a large construction company where he gained valuable experience managing the building process.
[Founder] began researching what it would take to create his own property development company and did a thorough analysis on the costs, market, demographics, and competition. [Founder] has compiled enough information to develop his business plan in order to approach investors.
[Company Name]’s History
Once his market analysis was complete, [Founder’s Name] began surveying the local office spaces available and located an ideal location for the property development headquarters. [Founder’s Name] incorporated [Company Name] as a Limited Liability Corporation on [date of incorporation].
Once the lease is finalized on the office space, renovations can be completed to make the office a welcoming environment to meet with clients.
Since incorporation, the Company has achieved the following milestones:
- Located available office space for rent that is ideal for meeting with clients
- Developed the company’s name, logo and website located at [website]
- Hired an interior designer for the decor and furniture layout
- Determined equipment and fixture requirements
- Began recruiting key employees
[Company Name]’s Products/Services
Below are [Company Name]’s product and service offerings:
[Company Name] specializes in designing and building new residential properties of the following types:
- Single family homes
- Multifamily apartment complexes and condominiums
- Town homes
In addition to new home development, the company also provides property conversion and renovation services for existing homes.
III. Industry Analysis
The property development industry in the United States is valued at an estimated $231B. There are currently around 64,982 housing development businesses and over 180,000 employees working in the industry throughout the country.
Industry operators must focus on the accuracy of their cost estimations and successful bidding tactics to ensure profitability. Large established industry players have advantages over new entrants because they have more access to capital. However, smaller companies and new entrants can compete by targeting a specific market niche or geographic location.
Demand determinants for property development include population growth, disposable income, and employment rates. A significant trend in the residential real estate market is the rising demand for single family homes which has led to increased costs for new homes and more people moving to the area.
Millennials who are ready to buy their first homes are boosting housing market growth rapidly. This increased demand has resulted in single family home availability being the lowest it has been in the past 40 years.
National statistics reflect the local market. Last month there were approximately 830,000 homes on the market in the U.S., down 39% from this time last year. This has opened up an opportunity for new property developers looking to build new residential homes.
IV. Customer Analysis
Demographic Profile of Target Market
[Company Name] will serve home buyers and real estate investors of [company location] and its surrounding areas.
The community of [company location] has thousands of first time home buyers, residential real estate investment firms, and people looking for affordable housing options in the area. The company will also target millennials specifically, since the majority of first time home buyers are in this age group.
Customer Segmentation
The Company will primarily target the following three customer segments:
- Home Buyers: Home buyers, with an average age of 30 in this community, are mostly made up out of individuals who are moving into the community, and first time home buyers. First time home buyers are an ideal target for affordable homes.
- Real Estate Investors: The area is also home to numerous real estate investment firms looking for profitable investment properties.
- Apartment Complex and Condominium Management Companies: The company will also target property management companies looking to add new properties to their portfolio.
V. Competitive Analysis
Direct & Indirect Competitors
The following businesses are located within a 30-mile radius of [Company Name], thus providing either direct or indirect competition for customers:
Upscale Property Developers, Inc.
Upscale Property Developers, Inc is a property development company in [location]. In business for over 40 years, Upscale Property Developers, Inc provides oversight for the entire property development process for new single family and multifamily residences, commercial offices, and government buildings across the area. Upscale Property Developers, Inc also offers a variety of property renovation, demolition, and revitalization services for existing buildings.
Although Upscale Property Developers, Inc provides homes with a luxury aesthetic, they are also the most expensive property developments on the market, thus resulting in many first time home buyers to be priced out of the market.
Premium Property Development Solutions
Established in 1990, Premium Property Development Solutions is a property developer of new commercial and residential properties in [Location]. The company specializes in eco-friendly building materials and upscale design options for individual and corporate clients. Clients can customize their building design or choose from a variety of standard design options. The company employs experienced property developers and designers who are well versed in green building design.
Premium Property Development Solutions is more affordable than Upscale Property Developers Inc, but is still out of most first time home buyers’ price ranges.
Home Plate Residential
Home Plate Residential is also a local property development company that manages the complete property development process from sourcing and permitting to construction and sale. They are mostly known for their unique apartment complex designs, but are equipped to take on a variety of different builds. The company has been in business for about ten years and has developed a reputation for building quality homes for affordable prices.
Although Home Plate Residential has a similar value proposition of luxury homes at affordable prices, this company lacks the green building and eco-efficiency component to their business model, thus losing out on business from eco-conscious home buyers.
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. Those advantages include:
- Location: [Company Name]’s office is near the center of town, in the shopping district of the city. It is visible from the street where many residents shop for both day-to-day and luxury items.
- Client-oriented service: [Company Name] will have a full-time assistant with property development experience to keep in contact with clients and answer their everyday questions. [Founder’s Name] realizes the importance of accessibility and will further keep in touch with his clients through monthly newsletters.
- Management: [Founder’s Name] has been extremely successful working in the property development sector. His unique qualifications will serve customers in a much more sophisticated manner than many of [Company Name]’s competitors.
- Relationships: Having lived in the community for 25 years, [Founder’s Name] knows many of the local leaders, newspapers, and other influences.
VI. Marketing Plan
[Company Name] seeks to position itself as the trusted source for affordable residential property developments in the area. Home buyers and real estate investors can expect to obtain residential assets that are high quality, green, functional, and luxurious, all at an affordable price point.
The [Company Name] Brand
The [Company Name] brand will focus on the company’s unique value proposition:
- Service built on long-term relationships and personal attention
- Big-firm expertise in a small-firm environment
- Client-focused property development, where the company’s interests are aligned with the client
- Effective project management
- Affordable pricing
Promotions Strategy
[Company Name] expects its target market to be home buyers and real estate investors living within a 30-mile radius of its location. The company’s promotion strategy to reach these individuals includes:
Social Media
[Company Name] will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.
Print Advertising
The company will invest in professionally designed advertisements to be printed in real estate publications. [Company Name] will also list its properties for sale in key local publications, including newspapers, area magazines, and its own newsletter.
Website/SEO
[Company Name] will invest heavily in developing a professional website that displays all the features and benefits of the property development company. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.
Community Events/Organizations
The company will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.
Sponsorships
[Company Name] will also invest in sponsoring certain nonprofit and community events so that their banners and collateral material are displayed all over the event where numerous clients will potentially be.
Referrals
The company understands that the best promotion comes from satisfied customers. The Company will encourage its clients to refer other home buyers and real estate investors by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.
Pricing Strategy
[Company Name]’s pricing will be moderate, so consumers feel they receive great value when purchasing properties from the company.
VII. Operations Plan
Functional Roles
Service Functions
[Company Name] will carry out its day-to-day operations as a property developer. There will also be numerous administrative functions involved.
In order to execute on [Company Name]’s business model, the company needs to perform several functions. [Company Name] anticipates using the services of X employees, divided into the following roles.
Service and Administrative Roles
- Team of designers
- General contractor
- General and administrative functions including legal/compliance, marketing, bookkeeping, etc.
- Brand management/social media
- IT management
- Sales and marketing
Milestones
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name], a local property developer who has over 30 years of experience developing residential properties. He has a bachelor’s degree in real estate and has been working for a well-known real estate development company for the last ten years. Prior to this, he worked as a project manager for a large construction company where he gained valuable experience managing the property development process.
[Company Name] will also employ an experienced assistant to help with various administrative duties around the office. [Assistant’s name] has experience working with C-level executives and has spent significant time as an administrator for another property development firm.
Hiring Plan
[Founder] will serve as the Owner and Manager of [Company Name]. In order to launch, he needs to hire the following personnel:
- Lead Designer: 1 full-time employee to oversee the design process.
- General Contractor: 1 full-time employee to manage the construction process.
- Permitting & Compliance Manager: 1 full-time employee who is an expert in the permitting and regulatory compliance aspects of property development.
- Administrative Assistant: 1 full-time employee to oversee the office staff.
- Office Staff: 2–3 employees who will manage the phone calls, scheduling, accounting, marketing, clerical, bookkeeping, billing, and any administrative task required.
- Marketing Manager: 1 full-time employee who will be responsible for developing and launching the brand; manage the website, and social media accounts.
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come primarily from the sale of completed properties. The company will sell new single family homes, multifamily town homes, and apartment complex/condominium properties to individual buyers and investors.
The office lease, equipment, materials, supplies, and labor expenses will be the key cost drivers of [Company Name]. The major cost drivers for the company’s operation will consist of:
- Salaries
- Design software
- Building materials and equipment
- Permitting/licensing fees
- Business Insurance
- Lease on office and utilities
- Taxes
Ongoing marketing expenditures are also notable cost drivers for [Company Name].
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $500,000 of debt capital to open its property development company. The capital will be used for funding capital expenditures and office build-out, hiring initial employees, marketing and branding expenses, and working capital.
Specifically, these funds will be used as follows:
- Office design/build-out: $100,000
- Software and supplies: $200,000
- Brand development and marketing: $100,000
- Working capital: $100,000 to pay for licensing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Annual Number of Properties | |
|---|---|
| Year 1 | 20 |
| Year 2 | 30 |
| Year 3 | 40 |
| Year 4 | 50 |
| Year 5 | 60 |
| Average annual growth rate | 5% |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRE-TAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
