A Guide to Commercial Real Estate Business Plan

Having thorough commercial real estate business plans is a fundamental piece of investing in commercial real estate (CRE). Before a bank, lending institution, or private lender will give you money to invest in commercial space, they'll want to see your long-term financial plan for the investment.
This guide will show you how to write a great real estate business plan that will help you meet your goals, inform your target audience, or get funding for your next CRE investment. Whether you use a free business plan template or design your own, you'll include the same information. To make sure you cover everything, use these four steps to create a commercial real estate business plan: 

1. Optimize your business property plan for a target audience

The length of a commercial real estate business plan depends on the target audience and what the plan is for. You can have a business plan to educate potential investors, agents, sellers, or lenders on what you do, how you do it, and your vision for the future growth of the company, such as where the company will be over a one-to-five-year period of time. 

Or you can focus your business plan on a specific investment opportunity and outline:

• who you are;
• what the investment is;
• what's needed to make it a success;
• how the investment will be executed, improved, and managed; and
• plans for disposition of the property.  

2. Seven key points to include in an executive summary for a successful CRE business plan 

Most business plans start with an executive summary, which is a brief introduction. It gives the reader an overview of your investment focus, area of expertise, education and/or experience, strengths and weaknesses, and your mission -- often written in the form of a mission statement.
When writing an executive summary in your business plan, include the following points:

• company name, including your entity structuring;
• when you were founded;
• where the company is based;
• who the principals or owners are;
• your investment area of focus or specialization;
• why you can invest in this property type, including your experience or education;
• your mission statement. 

3. Next, explain what you do, how you do it, and your plan for growing your real estate business. In this section, include the following:

Your business model, which explains the property types you target, how you invest in and manage the properties, and your plan for disposition, including your target buyer and how you plan to sell or pay off any debt.
A market summary, which provides statistics and demographics about your niche market. Highlight the supply, demand, and current opportunities for your investment model. Include the income potential, competitors, and potential obstacles in this market. Research how the supply and demand may change in your target market based on new development that is underway or planned.
Your plan of action, which explains what your business goals are over the next one to five years and how you plan to accomplish these goals. Be sure to include your marketing plan for finding new acquisition opportunities. 

4. Outline your financial plan or needs

This section explains the financial backing your business needs to reach its goals. 
If you're trying to raise capital or get approved for financing for specific property acquisition, this section will detail the current company's financial structure, including company ownership, if the bank or private financing is used, the debt-to-income ratio, or the returns structure for future partners. This section could also explain the related costs in reaching the financial plan, such as marketing costs, day-to-day business operation costs, renovation or management fees for a specific property, or the financial support needed to acquire future real estate.