REAL ESTATE

Company name

Investor Business Plan Founder:

Julia Smith
 Real Estate Company Name

THIS IS A SAMPLE BUSINESS PLAN

This file was created by redacting an actual business plan The Plan Writers wrote
for a client. All client information and proprietary content has been removed. As
such, the business model, managers and financial pro forma herein are entirely
theoretical – only the structure of the plan itself and portions of the market and
industry research remain “real”.

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Investor Business Plan 2

 Real Estate Company Name

MISSION STATEMENT

“The mission is to modernize and progress the

experience of buying a home by integrating the
spirit of innovation and integrity that inspires a
positive and long-lasting impact. The client’s
satisfaction inspires our team to deliver quality
that exceeds the client’s expectations.”

Investor Business Plan 3

 Real Estate Company Name

TABLE OF CONTENTS

MISSION STATEMENT ........................................................................................................................................................................................3

TABLE OF CONTENTS ........................................................................................................................................................................................ 4
EXECUTIVE SUMMARY ..................................................................................................................................................................................... 5
Objectives .........................................................................................................................................................................................................................................................8
FINANCIAL OBJECTIVES ...................................................................................................................................................................................9
START-UP SUMMARY...................................................................................................................................................................................... 10
Services ................................................................................................................................................................................................................................................................ 11
COMPETITIVE ADVANTAGES ........................................................................................................................................................................ 12
MARKET ANALYSIS: REAL ESTATE MARKET IN LOS ANGELES, NV .................................................................................................... 13
Pre Covid-19 Analysis......................................................................................................................................................................................................................... 13
Post Covid-19 Analysis...................................................................................................................................................................................................................... 14
OPERATIONAL STRATEGY .............................................................................................................................................................................. 16
Company Structure ............................................................................................................................................................................................................................ 16
Location ............................................................................................................................................................................................................................................................. 16
Target Market ............................................................................................................................................................................................................................................. 19
Strategic Alliances.............................................................................................................................................................................................................................. 20
Business Model Canvas ................................................................................................................................................................................................................. 21
Milestones ..................................................................................................................................................................................................................................................... 22
BRANDING AND MARKETING ...................................................................................................................................................................... 23
Goals.................................................................................................................................................................................................................................................................... 23
Keys to Success .................................................................................................................................................................................................................................... 23
Marketing Campaign...................................................................................................................................................................................................................... 24
LOCAL COMPETITIVE ANALYSIS ..................................................................................................................................................................27
SWOT ANALYSIS .............................................................................................................................................................................................. 28
EXIT STRATEGY ................................................................................................................................................................................................. 29
Buyout & Merger .................................................................................................................................................................................................................................... 29
RETURN ON INVESTMENT (ROI) .................................................................................................................................................................. 30
PERSONNEL FORECAST ................................................................................................................................................................................... 31
REVENUE FORECAST ....................................................................................................................................................................................... 32
BREAK-EVEN ANALYSIS ................................................................................................................................................................................ 33
PROJECTED INCOME STATEMENT ............................................................................................................................................................. 34
PROJECTED CASH FLOW .............................................................................................................................................................................. 36
PROJECTED BALANCE SHEET ...................................................................................................................................................................... 37
SENSITIVITY ANALYSIS .................................................................................................................................................................................. 38
FINANCIAL ASSUMPTIONS ........................................................................................................................................................................... 39
REVENUE ASSUMPTIONS ...............................................................................................................................................................................40
APPENDIX: YEAR ONE FINANCIALS ............................................................................................................................................................ 41

Investor Business Plan 4

 Real Estate Company Name

EXECUTIVE SUMMARY

Real Estate Company Name and Land (also referred

to as “the Company” or Real Estate Company Name)
will be a real estate company that will focus on
house flipping in Los Angeles. Real Estate Company
Name uses the money from investors to fund and
scale single-family residential property flip projects
that are purchased below market value and sold at a
profit after renovation
and remodeling,
depending on the scope. The
lucrative properties of ‘Real Real Estate
Estate Company Name’ will provide Company Name is
move-in-ready properties for homebuyers registered in the
and return profits to investors. Real Estate state of California
Company Name plans to expand its activities in and headquartered
home-building from the fourth year of operation. The in Los Angeles.
owner’s experience and familiarity with industry norms will Ownership is held
play a key role in making the Company a long-lasting by Julia Smith.
success. To achieve the Company’s objective, the
management is seeking $500K in investor financing.

Business Model:

The owner will use the home office for the Company’s operations. The Company’s main
activities will include the following:

FLIPPING HOMES: Real Estate Company Name will purchase distressed and
foreclosed homes below the market value and sell them at a higher
margin after renovation and repairs. The flipping process will consist
of three main processes.

Investor Business Plan 5

 Real Estate Company Name

Purchasing Property Renovations/Repairs Sale

The Company will The Company will hire In the third step, Real Estate Company
purchase the single-family general contractors for Name will stage the property for sale
residential property using renovation and repairs. on its website and real estate listing
the 70% rule of real estate The renovation cost of websites. The company will also use
investing; paying no more each property is the services of a realtor for sale
than 70% of after-repair- estimated to be around purposes. The process of purchase, fix
value (ARV) less repair 10-12% of the selling price and flip will take an estimated three-
expenses of the property month period

HOME-BUILDING: In the second phase of operations, Real Estate Company Name will
start home-building activities from year four. The Company will build the house from
scratch and sell to secure higher profit margins.

Real Estate Company Name intends to extend its market across the state of California and
plans to offer other real estate services like property management, brokerage, and property
valuator. Real Estate Company Name uses a rigorously defined set of formulas and
parameters to purchase a home in specified geographic areas in suburban areas with a
mix of houses, shops and businesses. According to RCLO’s survey, 27.7% of homebuyers
prefer suburban areas1.

Market Size:

According to market research by Norada-Real Estate Investments, the Fix-and-Flip Home

Industry in Los Angeles is showing positive trends. 1,703 single-family houses were sold in
May; the median sales price of previously owned single-family homes increased from

1 https://www.rclco.com/publication/2018-housing-and-community-preference-survey/

Investor Business Plan 6

 Real Estate Company Name

$315,000 in May 2020 to $325,000 in June 2020, which is up 3.1% and up 7% from June 2019. 3,231
houses were listed on the market in May, up 28.4 percent from April.

There are currently 1,221 properties in Los Angeles, LA that are in some stage of foreclosure
(default, auction, or bank-owned), while the number of homes listed for sale on RealtyTrac
is 6,105. In May, the number of properties that
received a foreclosure filing in Los Angeles, NV, was
84% lower than the previous month and 97% lower
than the same time last year.

Marketing:

Marketing for Real Estate Company Name will be done through a variety of media, with the
Internet being the primary driver. The Company will develop a website that outlines all the
services offered, which will be Search Engine Optimized (SEO) to give it more traction and
traffic. The Company will also have a presence on social media platforms (Facebook,
Instagram, LinkedIn, Twitter and YouTube) to drive strong word-of-mouth and authentic
marketing message. Real Estate Company Name will also list properties on real estate listing
websites, such as Zillow, Realtor.com, Redfin and MLS.

Target Market:

The primary target market includes a household of two to four or more persons. These
include first-time buyers aged between 22 and 39 years. A majority of buyers 39 and
younger were first-time buyers, at 33% in 2020. Among other buyers, the 40 to 54 age group
had the second-highest percentage of first-time buyers. This age group also includes
repeat homebuyers. A seller who wants to sell his/her property that is under a foreclosure
order or is advertised for sale by its mortgagee is the target market for the flipping segment.

Management:

Julia Smith is the owner and Director of Real Estate Company Name. Ms. Smith is a seasoned
business professional who is well connected and attuned to the needs of her targeted
market. Ms. Smith has hands-on experience of over fifteen years in the real estate industry
and served Jones Lang Lasalle (JLL), CBRE (Amazon Account).

Investor Business Plan 7

 Real Estate Company Name

Objectives

The purpose of this plan is to provide investors

with the information necessary to evaluate the
scope and future growth of Real Estate
Company Name in the marketplace. In addition
to serving as a roadmap for management, the
plan will show that:

A significant market The management team The correct capital

opportunity exists when set in place is qualified to structure will allow for
analyzing the current execute on a well- a long-lasting,
market demands and thought-out operational, profitable business.
competitive landscape marketing and sales
strategy.

01 02 03

To achieve the Company’s objectives, Grandeur Homes is seeking $500,000 in total funding. The
funding will be utilized in acquiring properties for flipping, staffing, operations, and marketing
initiatives. Financial model shows consistent growth for the brand over the next five years. By year
five, plans call for the Company to achieve $6.06M in annual gross revenue, with a net profit of
$1.08M, or approximately 17.9%.

Investor Business Plan 8

 Real Estate Company Name

FINANCIAL OBJECTIVES
The following table and graphs illustrate the financial goals of Real Estate
Company Name during the next five years. The financials are explained in detail
throughout the duration of the plan.

Financial Highlights ($1,000's)

M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 Y1 Y2 Y3 Y4 Y5
Revenue 47 79 95 126 142 142 142 142 158 158 173 173 1,575 2,520 3,465 4,807 6,067
Gross Margin 12 20 24 32 35 35 35 35 39 39 43 43 394 630 866 1,132 1,447
Operating
29 13 13 13 13 13 13 13 13 13 13 13 167 228 285 305 362
Expenses
EBITDA -17 7 11 13 23 23 23 23 23 27 31 31 228 402 582 827 1,085
Net Profit -17 7 11 13 23 23 23 23 23 27 31 31 227 402 582 827 1,085

Gross
25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 24% 24%
Margin/Revenue
EBITDA/Revenue -36% 9% 12% 15% 16% 16% 16% 16% 17% 17% 18% 18% 14% 16% 17% 17% 18%
Net Profit/Revenue -36% 9% 12% 15% 16% 16% 16% 16% 17% 17% 18% 18% 14% 16% 17% 17% 18%

Net Cash Flow 525 26 19 38 31 21 21 22 37 26 41 30 836 181 136 410 659

Cash Balance -
525 550 570 608 639 660 681 703 740 766 807 836 836 1,018 1,153 1,564 2,223
Ending

Projected Operating Highlights By Year ($1,000's)

$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Year 1 Year 2 Year 3 Year 4 Year 5

Revenue Gross Margin EBITDA Net Profit

Investor Business Plan 9

 Real Estate Company Name

START-UP SUMMARY

The following tables and graphs detail the funding the business will need to bring the vision to reality.

Use of Start-up Funding

Expenses
Legal Fees $3,000 Total Start-up Funding
Grand Opening Advertising $10,000
Website Development $3,000
Total Amount Being Requested $500,000
Initial Office Supplies $500
Total Funds Already Received $20,000
Total Start-up Expenses $16,500
Total Funding $520,000
Long-term Assets
New Start-up Funding Being Requested
Office Furniture $4,000
Investor Amount Being Requested $500,000
Computer & Accessories $2,000
Total Amount Being Requested $500,000
Total Long-Term Assets $6,000
Start-up Funding Already Received
Short-Term Assets
Owner Contribution $20,000
Working Capital For Flipping $497,500
Total Funding Already Received $20,000
Total Short-Term Assets $497,500
Start-up Capital and Liabilities
Total Expenses & Assets
Loss at Start-up (Start-up Expenses) ($16,500)
Total Start-up Expenses $16,500
Total Funds Received & Requested $520,000
Total Start-up Assets $503,500
Cash Balance on Starting Date $497,500
Total Funding Requirements $520,000

Total Utilization

0%
33% Total Amount Being Requested
33%
Working Capital For Flipping

Total Start-up Expenses

Total Start-up Assets

1% Total Long-Term Assets

33%

Investor Business Plan 10

 Real Estate Company Name

REAL ESTATE COMPANY NAME

Real Estate Company Name will be engaged in the residential real estate investment and
management business. The company’s focus will be on acquiring undervalued or depressed
residential properties, improving them, and reselling at an attractive price. Real Estate Company
Name also plans to expand its services in the home-building sector to satisfy the ever-increasing
demand.

Services
The business segments in which the Company will operate are described below:

Phase I - Flipping

Fix-and-Flip

Fix-and-flip is the strategy of purchasing a property, renovating it, then selling it at a profit. The
consultative service blends the best ideas, identifying what work needs to be done to maximize the
return. The Company will work closely with real estate agents, ensuring they can coordinate staging,
schedule viewings, open homes and conduct marketing efforts effectively. The principals will meet
with real estate brokers and agents, owners, and other participants in the real estate community to
secure opportunities that will meet the return requirements. Meeting with contractors and third party
companies will be performed as necessary to complete each due diligence.

Real Estate Company Name will use a 70% rule of real estate investing in determining the purchase
price of the property, which dictates the maximum value of the property should not be more than
70% of the after-repair value (ARV) less the repair cost of the property. The Company expects the
average repair cost to be 10-12% of the property cost. Real Estate Company Name anticipates that it
will take an average of three months to complete a flip from purchase to the sale of the property.

Phase II - Construction
Home Building

The company plans to enter the exciting venture of home building from year four of its operations.
The home building will follow modern up-to-code building and safety regulations that will allow
homes to be more energy-efficient, with the use of proper foundation, insulation, and modern
heating and cooling techniques. This will result in long-term money savings and high property value.
Real Estate Company Name expects to build a home of 2,000 square feet in six months, with the
average cost of $300,000 (an average of $150 per square foot of construction).

Investor Business Plan 11

 Real Estate Company Name

COMPETITIVE ADVANTAGES

The following is a listing of the primary competitive advantages of the

Company upon entering the market.

• Service uniqueness

• Passion for service delivery

• Resources and capabilities that will contribute to the

success

• Competitive Pricing

• Familiarity with the geographical area

• Relevant experience

• Strong relations and networking with paragons of the

real estate industry

• Established contacts with realtors and general

contractors

• Strong connections and high reputation in the

community

• Aggressive marketing campaign

Investor Business Plan 12

 Real Estate Company Name

MARKET ANALYSIS: REAL ESTATE

MARKET IN LOS ANGELES, CA

Pre Covid-19 Analysis

In Los Angeles, 2019 ended with the housing

market remaining strong and yet affordable
for homebuyers and investors. The first quarter
of 2020 ended with home sales running ahead
of last year’s pace in the entire Greater Los
Angeles housing market. 2020 has been a
record-breaking year for median home prices
in Los Angeles. The total number of existing
local homes, condos, and townhomes sold
during January was 2,875. Sales were down
from December 2019. But compared to the
same time last year, January 2020 sales were
up 25.2% for homes and up 22.8% for condos
and townhomes. By the end of January, Los
Angeles REALTORS® reported 4,906 single-
family homes listed for sale. In January 2020,
68.8% of all existing local homes and 66.2% of all
existing local condos and townhomes sold
within 60 days. The median sales price of a
single-family home set a record in February
2020, when it hit an all-time peak of $316,000.
This kind of growth was seen before the burst
of the housing bubble that led to a deep
recession in the housing market of Southern
California for over a decade. The year-over-
year increases in the median home price and
sales were 6.7% and 25.7%, respectively2. Some
9.8% of local home sales in the first quarter of
2108 were flipped, the ninth-highest share in
the country. Los Angeles flip market is among
the top ten in the USA. The chart shows the
percentage of flip home sales every quarter3.

2
https://www.noradarealestate.com/blog/las-vegas-real-estate-market/
3 https://www.reviewjournal.com/business/business-columns/real-estate-insider/las-vegas-among-most-popular-places-in-us-to-flip-houses/

Investor Business Plan 13

 Real Estate Company Name

Post Covid-19 Analysis

The COVID-19 pandemic is causing a

short-term decline in the Los Angeles housing
market. The economy of Los Angeles is largely
driven by the tourism industry, which took a massive hit
due to the COVID-19 pandemic. Due to rising economic
uncertainly of the likes of the infamous recession, coupled with
stay-at-home orders, the number of home sales in the Los Angeles
housing market for April 2020 dropped sharply when compared to
March 2020. Many construction projects were also canceled or
postponed indefinitely. Some real estate experts, however, are
predicting a fast turnaround of the economy of Los Angeles once
again when the viral pandemic eventually starts diminishing. Redfin,
a real estate brokerage, reported that 42.3% of Los Angeles-area homes had multiple offers
during the four weeks ending in May 2020. According to Los Angeles Realtors, there was a
three-month supply of available homes in Southern California in April, up 48.7% from March
and up 18.4% from the prior year. This indicates that it was still a seller's real estate market.

The median price for a home in Los Angeles is $325,000, which set a record for June 2020, up
3.1% from the previous month and up 7% from the prior year. The numbers for July 2020 have
not yet been released, but according to the experts, the market does not appear to be
slowing down. Currently, in July 2020, there are just over 5,200 homes for sale. Last year in
July, there were more than 8,000. The home resale market also has continued to improve
recently, with 2,460 homes selling in June, representing a 45% jump from the previous month.

According to Forbes, the national housing market

is expected to bounce back faster than
anticipated from the damage caused by the
COVID-19 pandemic. Forbes also believes that the
Los Angeles housing market is among those cities
that are showing the most signs of a positive
recovery. With the reopening of its economy, the
Los Angeles real estate industry is looking forward
to ways the business can be conducted in the new
normal4.

4 https://www.noradarealestate.com/blog/las-vegas-real-estate-market/

Investor Business Plan 14

 Real Estate Company Name

Foreclosure Trends in Los Angeles

California spiraled to the second-highest

foreclosure rates in the nation. Los Angeles
Realtors reported that short sales and
foreclosures combined accounted for 2.7% of all
existing local property sales in January 2020. That
compares to 2.8% of all sales one year ago, 4.3%
two years ago and 11% three years ago.
Unfortunately, then the coronavirus came along
and set things back once again. Due to the
tourism-dependent economy, California has
been rocked by record job losses as a result of the
ongoing pandemic, raising the prospect of waves of
missed mortgage or rent payments. According to the Los
Angeles foreclosure data by Zillow, in Los Angeles, 1.4 homes are
foreclosed per 10,000. This is the same as the Los Angeles-Henderson-
Paradise Metro value, and greater than the national value of 1.2. The percentage of
delinquent mortgages in Los Angeles is 1.2%, which is higher than the national value of 1.1%.
The percentage of Los Angeles homeowners underwater on their mortgage is 7.2%, while the
figure for the Los Angeles-Henderson-Paradise Metro as a whole is just slightly lower, at 7.1%.

There are currently 1,221 properties in Los Angeles, CA that are in some stage of foreclosure
(default, auction, or bank-owned), while the number of homes listed for sale on RealtyTrac
is 6,105. In May 2020, the number of properties that received a foreclosure filing in Los
Angeles, CA, was 84% lower than the previous month and 97% lower than the same time last
year5.

5 https://www.noradarealestate.com/blog/las-vegas-real-estate-market/

Investor Business Plan 15

 Real Estate Company Name

OPERATIONAL STRATEGY

Company Structure
Real Estate Company Name will be a Limited Liability
Company registered in the state of California. Mr. Julia Smith
will be the owner of the Company.

Location

Real Estate Company Name will initially operate from a home

office located at 8414 Antique Cameo Ave, Los Angeles,
California. Los Angeles is the most populated city in the state
of California and the county seat of Clark County. The city
anchors the Los Angeles Valley metropolitan area and is the
largest city within the greater Mojave Desert. Los Angeles is an Las Vegas
internationally renowned major resort city, known primarily for
its gambling, shopping, fine dining, entertainment, and Los Angeles

nightlife. The Los Angeles Valley as a whole serves as the

leading financial, commercial, and cultural center for
California.

Investor Business Plan 16

 Real Estate Company Name

Targeted Locations

Southern Highlands

Southern Highlands is an affluent, master-planned community

located in the southern foothills of the Los Angeles Valley,
California. The community surrounds the Southern Highlands Golf
Club. It is among the most affluent communities in the state of
California, with an average household income of $100,207 and an
average household net worth of $579,866.

Seven Hills

Seven Hills is an affluent neighborhood of Henderson, California

and home to the founder of eBay, Pierre Omidyar, Bryce Harper,
Mike Tyson, Tyson Fury and others. Seven Hills is approximately 7
miles (11 km) from the Los Angeles Strip. It is home to the Rio Secco
Golf Club. Seven Hills is located half a mile east of the Henderson
Executive Airport.

Rhodes Ranch

Rhodes Ranch is a few minutes away from the downtown, and the
famous Los Angeles Strip, Rhodes Ranch Los Angeles community,
offers a variety of new, beautiful homes. Located in Southwest Los
Angeles, at the base of Spring Mountain, Rhodes Ranch is a unique
area in Los Angeles, best-known as a beautifully landscaped,
guard-gated community.

Canyon Gate

Canyon Gate is a neighborhood in Los Angeles, California, with a

population of 19,984. Canyon Gate is in Clark County. Living
in Canyon Gate offers residents a dense suburban feel, and most
residents rent their homes. In Canyon Gate, there are a lot of bars,
restaurants, coffee shops, and parks.

Investor Business Plan 17

 Real Estate Company Name

Demographics

Demographics Los Angeles, CA

Total Population 626,637
Total Households 234,592
Aged between 22-39 148,599
Population in Real Estate
2.7%
Business
Marital Status 45%
Gender 49.9% Male | 50.1% Female
Housing Units 258,568
House Built Between 1970-1999 59.1%
Single-Family Home 61.2%
Vacant Housing Units 13.03%
Owner Occupied 51.07%
Rent 48.93%
Median HH Income $54,694
Poverty % 15.8%
Median Age 36.7

Southern
Demographics Seven Hills Canyon Gate Rhodes Ranch
Highlands

Total Population 25,150 47,214 19,984 39,712

Population Density 2,353 909 6,090 3,224

50.2% Male 48% Male 49.1% Male 49.2% Male

Gender
49.8% Female 52% Female 50.9% Female 50.8% Female

Housing Units 9,955 21,996 10,083 16,862

Median Income $100,207 $95,940 $90,127 $88,872

Median Age 33 43 40.4 34

Investor Business Plan 18

 Real Estate Company Name

Target Market
PRIMARY TARGET

The primary target market will be individuals between

the ages of 22 and 39. Persons in this age group are
mostly first-time homebuyers. According to the
National Association of Realtors, first-time buyers
made up 33 percent of all homebuyers, with the
median age of 31 years6. According to ScreenAge, the
men and women in this age group are 30 percent
single, 67 percent couples, and 80 percent of them buy
established homes7. First-time homebuyers are young
professionals who don’t have time for renovations and
remodeling the home and prefer to purchase a flip
home. Research published in March 2020 by the
National Association of Realtors shows 52 percent of
buyers aged 30 to 39 years, and 88 percent of buyers
29 years and younger are first-time homebuyers.
According to the American Community Survey – 2018,
there are 148,599 individuals in Los Angeles aged
between 22-39 years.

Fist Time Home Buyers by Age Group

100%
88%

80%

60% 52%

40% 33%
23%
20% 13%
6% 5%
0%
All Buyers 22 to 29 30 to 39 40 to 54 55 to 64 65 to 73 74 to 94

6
https://www.inman.com/2015/01/20/whos-in-your-real-estate-target-audience/
7 https://www.screenage.com.au/5-key-property-and-real-estate-target-market-personas/

Investor Business Plan 19

 Real Estate Company Name

SECONDARY TARGET

While persons in the above segment will be the primary target, the secondary target will be persons
between the ages of 40-to-54. Persons between 40 to 54 form 23 percent of homebuyers, with a
median age of 47. Buyers between the ages of 40 to 54 had the highest household incomes of any
generation, at $110,900 in 20188.

Gen Zers : 21 years and younger

Younger Gen Y/Millennials: 22 to 29 years

Older Gen Y/Millennials: 30 to 39 years

Gen Xers: 40 to 54 years

Younger Boomers: 55 to 64 years

Older Boomers: 65 to 73 years

Silent Generation: 74 to 94 years

0% 5% 10% 15% 20% 25% 30%

Strategic Alliances
Real Estate Company Name will seek strategic alliances with realtors, general contractors, and public
housing agencies. The Company has already established a referral base of contractors. These
strategic alliances will help promote the services offered by the company. The realtors and general
contractors not only refer to new business but will suggest the acquisition of suitable properties for
flipping. The company will offer discounts to the referred clients. Real Estate Company Name will only
use licensed companies as per California standard.

WARRIOR CONTRACTING

Real Estate Company Name has contracted Warrior Contracting LLC. Warrior
Contracting is a Service-Disabled, Veteran-Owned Small Business General
Contractor with offices in California & Hawaii. Warrior Contracting is currently the SABER contractor
at Creech AFB in California, the CTOA contractor at the California National Security Site and working
on a sewer rehabilitation project at Schofield Barracks in Hawaii.

8 https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf

Investor Business Plan 20

 Real Estate Company Name

Business Model Canvas

OPERATIVE PARTNERING & FOCUS FINANCIAL COMMUNICATION

Key Activities Key Partners Revenue Stream Marketing Channels

• Conducting • Public Housing • Flipping Home – Employed
surveys for suitable Agency Capital Gain • Social Media
housing properties • Realtors of Los • Real estate listing
within the range of Angeles websites
investment value • General • E-mail Marketing
• Contracting with Contractors of Los • Word of Mouth
General Contractor Angeles • Networking
for renovation and • Company's
finishing the website
property
• Property marketing Value Proposition Main Cost Drivers Communication with
• Contracting with • Housing • Marketing Clients through
the realtor to sell description • Legal services
the property • Location of house • Administrative • Phone
• Marketing and • Custom-Designed expenses • Website
customer renovation • Purchase of • In-person meeting
acquisition • Fast response distress home
• Handling inquiries • Professional • General
of potential clients experience contractor’s
on phone, website Business Timings
expenses
and in-person • Round the clock
• Realtor expenses
• Invoicing and including weekends
• Promotional
payments tracking expenses
from the clients

Customer Relationship
• Valuing the dignity
and respect of
clients
• Fulfilling
commitments
• Word of mouth

Investor Business Plan 21

 Real Estate Company Name

Milestones
The tentative milestones are shown below. Management reserves the right to make changes to this
schedule as needed.

Day 30 Day 45 Day 60 Day 90 Day 455

OBTAIN FUNDING CONTRACT WITH CONTRACTING GRAND ACHIEVE $1.5M IN

GENERAL CONTRACTOR THE REALTOR OPENING GROSS SALES

Investor Business Plan 22

 Real Estate Company Name

BRANDING AND MARKETING

Real Estate Company Name will strive to meet the following objectives as it accomplishes specific
keys to success:

Goals

Become a recognized market leader

in the Fix-and-Flip Home industry
To differentiate services to win
new customers
Develop a robust customer service
model
Remain attuned to the
marketplace and integrate
services into the business mix
that meet the needs of the Remain flexible in-service offerings
targeted audience

Keys to Success
Having good relationships with
Effectively managing existing and prospective clients
resources and understanding their needs
can help the Company to gain
new business and retain existing
customers

Use of advertising A significant amount of capital

campaigns to promote and debt is used to finance
businesses and property property acquisitions.
listings. The success of Therefore, the Company will
the advertisement properly manage cash flows,
campaign is important reserves and debt levels to
for selling property and grow and effectively manage
attracting new clients property portfolios

The ability to efficiently Location is everything in this

manage developments, industry because customers pay
renovations and repairs a premium for a location near
can reduce operational business centers, transportation
costs and increase profit hubs and entertainment venues
for industry participants

Investor Business Plan 23

 Real Estate Company Name

Marketing Campaign
Marketing will be done through the following media:

NETWORKING and Trade Shows

• Networking at industry events, such as 5 Pillars of Real Estate Investment and Wealth
Building
• Registration with associations such as the Real Estate Investors Association – Los Angeles
• Joining real estate groups like Connected Investors of Los Angeles
• Attending events organized by National Association of Mortgage Brokers
• Attending conferences organized by Originator Connect
• Attendance at trade shows and expos, such as Realty411 Expo, will allow the Company to
showcase its latest services and learn about recent market trends and opportunities.
• Promotional connections with similar businesses, such as real estate agents, property
managers and general contractors for reciprocal marketing and referral opportunities.

SOCIAL MEDIA

Social media will play an important role in marketing for Real Estate Company Name. According to
the research by Screen Age, 71% of first-time homebuyers engage in social media daily.

• Generate brand awareness and maintain a presence on social media website such as
Facebook, Twitter, LinkedIn
• A YouTube channel will be created and optimized through the benefits of SEO, which will
accelerate the process of reaching targeted customers.
• YouTube and video blogging will be used by the Company to drive sales by posting
relevant and informative videos on YouTube or video blogs.
• Facebook has its pay-per-click network that is also cost-effective and can be targeted to
the Company's demographic.

EMAIL MARKETING

Adequately executed with the right strategies, email marketing will be a cost-effective
method to acquire potential homebuyers. Keeping in view the following factors, the
Company will use email marketing to engage potential homebuyers:

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 Real Estate Company Name

• Emails will be mobile responsive.

• Segmenting email lists will help to personalize email messages and ensure that
the offer is tailored to the specific audience.
• Optimizing email subject line.
• Landing page: Emails will direct the reader to a landing page using a call-to-
action (CTA) button.

EMAIL LISTING AT YELP

Yelp has tremendous power in the industry, and having a strong backing of positive Yelp
reviews is like having a flock of golden geese. The most important thing to understand about
Yelp is that people can review a cleaning business even if it is not listed. Real Estate
Company Name will use a proactive approach to make a positive and long-lasting impact
on potential homebuyers by listing the following details;

• A lot of before-and-after renovation pictures of homes

• Services offered
• Location
• Price range
• Additional services offered
• Discounts and promotions

PRESS RELEAS ES

• Media coverage in well-known news channels and newspapers, such as Los

Angeles Review-Journal and Los Angeles Real Estate Magazine.
• This will increase the Company’s credibility and recognition among the public and
key industry decision-makers.

WORD-OF-MOUTH MARKETING

Word-of-mouth advertising is one of the most powerful means of propelling the business
forward. The Company will create new business by the referrals of current clients, as the
Company will exceed expectations in providing its services.

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 Real Estate Company Name

REFERRAL MARKETI NG

According to the New York Times, 65% of all new business comes from referrals. Real Estate
Company Name will gain new customers through existing ones by rewarding new
homebuyers referred by previous clients with a special discount on the purchase of
property, with an exciting gift hamper to the referrer. Real Estate Company Name will reward
general contractors and other referrers with percentages based on the selling price of the
property for each referred homebuyer.

CONTENT MARKETING

Content marketing is a strategic marketing approach focused on creating and distributing

valuable, relevant, and consistent content to attract and retain a clearly defined audience
to attract and retain visitors, and eventually, turn them into customers. The company can
effectively manage content marketing by
• Telling Real Estate Company Name story: what drove the company to enter the
industry
• By humanizing the Company, by showing videos of before and after the
renovation of homes
• Researching to gain insight into questions frequently asked by a potential
homebuyer
• By creating content through blog posts.

WEBSITE

A well-optimized website is being constructed, with proper site structure, page layout, and
clear and easy navigation, along with targeted keywords embedded throughout the site,
which will ensure proper search engine placement and saturation. The Company’s
proposed website, www.grandeurhomesandland.com, is an important marketing asset.
Incorporating SEO, the website is easily navigable, highly informative, and a platform to
generate new business.

SEO is considered by most online marketers to be the cornerstone of any successful search
engine marketing campaign. Websites that appear on the first page of Google are
considered trusted, authoritative sites. SEO is a long-term strategy and has the potential to
be the most lucrative marketing channel for most businesses. This form of marketing uses
unpaid tactics to improve a site’s search engine results ranking. Search engine optimization
is broken up into the following main areas: onsite optimization, offsite optimization, and local
SEO.

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LOCAL COMPETITIVE ANALYSIS

The identified competitors are described below:

GOLIATH COMPANY CROTEAU REAL ESTATE BLACK ROCK FLIPS

SERVICES LLC
In 2008, Yancey founded the Croteau Real Estate Services Black Rock Real Estate LLC is
Las Vegas-based Goliath LLC is a local Las Vegas real a home-flipping company
Company, a real estate estate company offering in the Las Vegas market. The
brokerage and investment short sales, mortgage loan company has a staff of five
firm. Goliath Company modifications, flipping full-time employees and
focuses on investment houses and an affiliated real employs six different
properties, the buy-and-hold estate law firm to handle all construction crews to
approach, flipping properties your real estate needs under repair and rehab the
and finding land to entitle and one roof. Croteau buys properties. Black Rock flips
subsidize by selling to large properties, fixes them and have fixed and flipped over
private companies. Goliath sells at the margin with the 600 properties since 2012,
Company is a full-service Real experience of over twenty and the company is
Estate Brokerage with years in flipping houses. targeting the markets in
considerable experience Nevada, California,
working in luxury residential Tennessee and Florida.
markets. By specializing in land
development, income
properties, and buying and
selling, Goliath Company is a
one-stop-shop for all thing’s
real estate.

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SWOT ANALYSIS

The following is a listing of the key strengths and weaknesses of Real Estate Company Name, as well
as the opportunities and threats that exist within the marketplace.

WEAKNESSES STRENGTHS

S
• Owner’s experience • Owner’s experience
• Familiarity with the geographical
• Familiarity with the geographical
area
area
• Resources and capabilities that
• Resources and capabilities that will will contribute to the success
contribute to the success • Strong relations and networking

W
• Strong relations and networking with general contractors and
with general contractors and remodeling companies.
remodeling companies. • Established contacts with
realtors
• Established contacts with realtors
• Strong connections and high
• Strong connections and high
reputation in the community

O
reputation in the community
• Aggressive marketing campaign
• Aggressive marketing campaign

T
THREATS OPPORTUNITIES
• Owner’s experience • Owner’s experience
• Familiarity with the geographical
• Familiarity with the geographical
area
area
• Resources and capabilities that
• Resources and capabilities that will will contribute to the success
contribute to the success • Strong relations and networking
• Strong relations and networking with general contractors and
with general contractors and remodeling companies.
remodeling companies. • Established contacts with
realtors
• Established contacts with realtors
• Strong connections and high
• Strong connections and high reputation in the community
reputation in the community • Aggressive marketing campaign
• Aggressive marketing campaign

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EXIT STRATEGY

After careful consideration, the Company has developed the following strategies to exit the
venture:

Buyout & Merger

Real Estate Company Name experiences growth and sees an opportunity to expand its
brand into additional markets as a successful income-generating operation. Additional
markets open the door for additional product offerings and revenue streams. Due to its
substantial market growth and industry recognition, major competing brands begin to take
notice of the Company. These businesses approach Real Estate Company Name with
attractive buyout offers; then the Company negotiates and sells to the best deal.

Real Estate Company Name merges with another company to expand its market reach and
development capabilities. Potential merger partners include companies that can offer a
more diversified market reach or provide expanded resources for research and
development. Real Estate Company Name’s management would maintain the majority
control of the Company and combine its operational and sales efforts with its merger
partner.

Instances are:

Griffin Real Estate

In 2017, Poland-based Griffin Real Estate planned to sell part of its asset
portfolio in an initial public offering (IPO) worth about 150 million euros ($159
million). The offering represented the largest IPO on the Warsaw Stock
Exchange since December 2013. Griffin Real Estate invests in the
commercial real estate market in Central and Eastern Europe. Its portfolio
includes office buildings and shopping galleries in Poland’s biggest towns.

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RETURN ON INVESTMENT (ROI)

Real Estate Company Name is currently seeking an equity investor. The Company has placed a value
on the Company of $1.6 million, and it is looking for a $0.5 million investment for 30% of the company.
Below is a return scenario for this investment.

Company Valuation* Outstanding Shares Per Share Valuation

Issued & Committed $1,666,667 7,000,000 $0.2381

After Investment
$1,666,667 10,000,000 $0.1667
Group

Proposed Shares Per Share Dollar Investment

Investment Group
3,000,000 $0.1667 $500,000
(IG)

10,000,000 Total Shares - ROI for the IG is as follows:

Company Valuation Per Share Price ROI for IG

Year 1 $1,749,773 $0.17 105%

Year 2 $3,088,385 $0.31 185%
Year 3 $4,471,071 $0.45 268%
Year 4 $6,354,396 $0.64 381%
Year 5 $8,336,218 $0.83 500%

Number of Shares Per Share Price Proceeds from Sale

(for IG) (for IG)

Year 1 3,000,000 $0.17 $524,932

Year 2 3,000,000 $0.31 $926,515
Year 3 3,000,000 $0.45 $1,341,321
Year 4 3,000,000 $0.64 $1,906,319
Year 5 3,000,000 $0.83 $2,500,865

ROI Notes: (1) The company valuation has been estimated by management. (2) Future
company valuation based off of EBITDA and the current industry multipliers.

*The assumed company valuation was based on a multiplier of 7.68 multiplied by EBITDA.

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PERSONNEL FORECAST

The personnel forecast below shows the staffing needs for the next five years.

Personnel Forecast

Year 1 Year 2 Year 3 Year 4 Year 5

Staff Count
Director 1 1 1 1 1
Real Estate Analyst 0 1 2 2 3
Office Assistant 0 1 1 1 1
Total Personnel 1 3 4 4 5

Staff Salary
Director $50,000 $51,500 $53,045 $54,636 $56,275
Real Estate Analyst $33,969 $34,988 $36,038 $37,119 $38,232
Office Assistant $22,535 $23,211 $23,907 $24,625 $25,363

Staff Salary - Total

Director $50,000 $51,500 $53,045 $54,636 $56,275
Real Estate Analyst $0 $34,988 $72,075 $74,238 $114,697
Office Assistant $0 $23,211 $23,907 $24,625 $25,363
Total Payroll $50,000 $109,699 $149,028 $153,499 $196,336

Personnel Assumptions: (1) Costs are based on average wages.

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REVENUE FORECAST

The following is a five-year revenue and direct cost forecast.

Revenue Forecast

Year 1 Year 2 Year 3 Year 4 Year 5

Total
Flipping Home - Capital Gain 5 8 11 13 17
Constructed Home - Capital Gain 0 0 0 2 2

Price
Flipping Home - Capital Gain $315,000.00 $315,000.00 $315,000.00 $315,000.00 $315,000.00
Constructed Home - Capital Gain $356,162.00 $356,162.00 $356,162.00 $356,162.00 $356,162.00

Revenue
Flipping Home - Capital Gain $1,575,000 $2,520,000 $3,465,000 $4,095,000 $5,355,000
Constructed Home - Capital Gain $0 $0 $0 $712,324 $712,324
Total Revenue $1,575,000 $2,520,000 $3,465,000 $4,807,324 $6,067,324

Direct Cost
Flipping Home - Capital Gain $236,250.00 $236,250.00 $236,250.00 $236,250.00 $236,250.00
Constructed Home - Capital Gain $302,058.10 $302,058.10 $302,058.10 $302,058.10 $302,058.10

Direct Cost of Revenue

Flipping Home - Capital Gain $1,181,250 $1,890,000 $2,598,750 $3,071,250 $4,016,250
Constructed Home - Capital Gain $0 $0 $0 $604,116 $604,116
Subtotal Cost of Revenue $1,181,250 $1,890,000 $2,598,750 $3,675,366 $4,620,366

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BREAK-EVEN ANALYSIS

The following break-even analysis shows the revenue necessary to break even in the first year of
operation. Break-even is where revenue equals expenses. As shown below, the Company is expected
to incur average monthly fixed costs of $13,876 in Year 1. To cover fixed costs and variable costs, which
rise and fall with revenue, the Company must, on average, achieve revenue of $55,505 per month to
break even.

Year 1 Break-even Analysis

Monthly Revenue Break-even $55,505

Assumptions:
Average Monthly Revenue $131,250
Average Monthly Variable Cost $98,438
Estimated Monthly Fixed Cost $13,876

Year 1 Break-even Analysis

$20,000

$15,000

$10,000

$5,000

$0

($5,000)

($10,000)

($15,000)

($20,000)
$0 $55,505 $111,010

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PROJECTED INCOME STATEMENT

Real Estate Company Name intends to deploy its funding to maximize growth and profitability. Below
is the projected income statement of the Company:

Pro Forma Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $1,575,000 $2,520,000 $3,465,000 $4,807,324 $6,067,324
Subtotal Cost of Revenue $1,181,250 $1,890,000 $2,598,750 $3,675,366 $4,620,366
Total Cost of Revenue $1,181,250 $1,890,000 $2,598,750 $3,675,366 $4,620,366

Gross Margin $393,750 $630,000 $866,250 $1,131,958 $1,446,958

Gross Margin/Revenue 25.00% 25.00% 25.00% 23.55% 23.85%

Expenses
Rent $2,400 $2,460 $2,522 $2,585 $2,649
General Insurance Liability $24,000 $24,600 $25,215 $25,845 $26,492
Business License/Permits $1,200 $1,230 $1,261 $1,292 $1,325
Telephone/Internet $3,840 $3,936 $4,034 $4,135 $4,239
Website Hosting/Updates $3,000 $3,075 $3,152 $3,231 $3,311
Marketing & Advertising $30,000 $40,500 $50,625 $63,281 $69,609
Supplies $3,600 $3,690 $3,875 $4,068 $4,272
Utilities $3,600 $3,690 $3,875 $4,068 $4,272
Professional Services $9,600 $9,840 $10,332 $10,849 $11,391
Travel & Fuel $12,000 $12,300 $12,915 $13,948 $15,064
Startup Cost $16,500 $0 $0 $0 $0
Bank Charges $600 $615 $630 $646 $662
Depreciation $600 $600 $600 $600 $600
Payroll Taxes $5,575 $12,231 $16,617 $17,115 $21,891
Total Personnel $50,000 $109,699 $149,028 $153,499 $196,336
Total Operating Expenses $166,515 $228,467 $284,679 $305,162 $362,113

Profit Before Interest and Taxes $227,235 $401,533 $581,571 $826,795 $1,084,845
EBITDA $227,835 $402,133 $582,171 $827,395 $1,085,445

Net Profit $227,235 $401,533 $581,571 $826,795 $1,084,845

Net Profit/Revenue 14.43% 15.93% 16.78% 17.20% 17.88%
Income Statement Assumptions: (1) Depreciation is based on 10 years; (2) Total payroll taxes are
7.65%

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Gross Margin & Profit Monthly

$50,000
$40,000
$30,000
$20,000
$10,000
$0
-$10,000
-$20,000
-$30,000

Month 5

Month 8
Month 2

Month 3

Month 4

Month 6

Month 9

Month 10
Month 7
Month 1

Month 11

Month 12
Gross Margin Profit

Gross Margin & Profit Yearly

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
Year 1 Year 2 Year 3 Year 4 Year 5

Gross Margin Profit

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PROJECTED CASH FLOW

The following is a depiction of Real Estate Company Name’ projected cash flow:

Pro Forma Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5

Cash Received
Revenue $1,531,250 $2,493,750 $3,438,750 $4,770,037 $6,032,324
Owner Contribution $20,000 $0 $0 $0 $0
Proceeds from Investor $500,000 $0 $0 $0 $0
Subtotal Cash Received $2,051,250 $2,493,750 $3,438,750 $4,770,037 $6,032,324

Expenditures
Expenditures from
Operations
Total Personnel $50,000 $109,699 $149,028 $153,499 $196,336
Bill Payments $1,142,443 $1,966,442 $2,681,563 $3,733,631 $4,704,084
Subtotal Spent on
$1,192,443 $2,076,141 $2,830,591 $3,887,130 $4,900,420
Operations

Additional Cash Spent

Start-up Costs $16,500 $0 $0 $0 $0
Flipping Properties $0 $236,250 $472,500 $472,500 $472,500
Purchase Long-term
$6,000 $0 $0 $0 $0
Assets
Subtotal Cash Spent $1,214,943 $2,312,391 $3,303,091 $4,359,630 $5,372,920

Net Cash Flow $836,307 $181,359 $135,659 $410,407 $659,404

Cash Balance $836,307 $1,017,666 $1,153,325 $1,563,732 $2,223,136
Cash Flow Assumptions: (1) Proceeds from Investor Funds assume were received in the amount
of $500K; (2) Owner Contribution is $20K.

Year 1 Cash
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
Month 2

Month 3

Month 5

Month 8
Month 4

Month 6
Month 1

Month 7

Month 9

Month 10

Month 11

Month 12

Net Cash Flow Cash Balance

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PROJECTED BALANCE SHEET

Following is the projected balance sheet of Real Estate Company Name.

Pro Forma Balance Sheet

Year 1 Year 2 Year 3 Year 4 Year 5

Assets
Current Assets
Cash $836,307 $1,017,666 $1,153,325 $1,563,732 $2,223,136
Account Receivable $43,750 $70,000 $96,250 $133,537 $168,537
Inventory $0 $236,250 $708,750 $1,181,250 $1,653,750
Total Current Assets $880,057 $1,323,916 $1,958,325 $2,878,519 $4,045,423

Long-term Assets
Long-term Assets $6,000 $6,000 $6,000 $6,000 $6,000
Accumulated
$600 $1,200 $1,800 $2,400 $3,000
Depreciation
Total Long-term Assets $5,400 $4,800 $4,200 $3,600 $3,000

Other Assets
Total Assets $885,457 $1,328,716 $1,962,525 $2,882,119 $4,048,423

Liabilities and Capital

Current Liabilities
Accounts Payable $138,222 $179,947 $232,186 $324,984 $406,443
Subtotal Current
$138,222 $179,947 $232,186 $324,984 $406,443
Liabilities

Total Liabilities $138,222 $179,947 $232,186 $324,984 $406,443

Paid-in Capital $520,000 $520,000 $520,000 $520,000 $520,000

Retained Earnings $0 $227,235 $628,768 $1,210,339 $2,037,134
Earnings $227,235 $401,533 $581,571 $826,795 $1,084,845
Total Capital $747,235 $1,148,768 $1,730,339 $2,557,134 $3,641,979
Total Liabilities and
$885,457 $1,328,716 $1,962,525 $2,882,119 $4,048,423
Capital

Net Worth $747,235 $1,148,768 $1,730,339 $2,557,134 $3,641,979

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SENSITIVITY ANALYSIS

The sensitivity analysis below assumes that revenues are 10% higher or 10% lower than the figures
projected earlier in this business plan.

Best Case Scenario (Revenue Increases by 10%)

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $1,732,500 $2,772,000 $3,811,500 $5,288,056 $6,674,056

Cost of Goods $1,299,375 $2,079,000 $2,858,625 $4,042,903 $5,082,403

Gross Margin $433,125 $693,000 $952,875 $1,245,154 $1,591,654

Gross Margin/Revenue 25.00% 25.00% 25.00% 23.55% 23.85%

Operating Expenses $166,515 $228,467 $284,679 $305,162 $362,113

Net Profit $266,610 $464,533 $668,196 $939,991 $1,229,541

Cash Flow $875,682 $244,359 $222,284 $523,603 $804,100

Cash Balance $875,682 $1,120,041 $1,342,325 $1,865,928 $2,670,028

Net Profit/Revenue 15.39% 16.76% 17.53% 17.78% 18.42%

Worst Case Scenario (Revenue Decreases by 10%)

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue $1,417,500 $2,268,000 $3,118,500 $4,326,592 $5,460,592
Cost of Goods $1,063,125 $1,701,000 $2,338,875 $3,307,830 $4,158,330
Gross Margin $354,375 $567,000 $779,625 $1,018,762 $1,302,262
Gross Margin/Revenue 25.00% 25.00% 25.00% 23.55% 23.85%
Operating Expenses $166,515 $228,467 $284,679 $305,162 $362,113
Net Profit $187,860 $338,533 $494,946 $713,600 $940,149
Cash Flow $796,932 $118,359 $49,034 $297,211 $514,708
Cash Balance $796,932 $915,291 $964,325 $1,261,536 $1,776,244
Net Profit/Revenue 13.25% 14.93% 15.87% 16.49% 17.22%

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FINANCIAL ASSUMPTIONS

The assumptions below provide growth rates, cash on hand, and the terms of funding based on an initial
investment amount of $500,000 and the owner’s contribution of $20,000.

Financial Assumptions

Year 1 Year 2 Year 3 Year 4 Year 5

Growth Assumptions

Total Revenue Growth 60% 38% 39% 26%

Total Expense Growth 37% 25% 7% 19%

Personnel Assumptions

Average Salary Growth 3% 3% 3% 3%

Payroll Growth 119% 36% 3% 28%

Cash Assumptions

Months of Cash on Hand 18 53 49 61 74

Bill Payment Term (Days) 32 32 32 32 32

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 Real Estate Company Name

REVENUE ASSUMPTIONS

Real Estate Company Name assumes the revenue generation from its operations as
follows:

Revenue Assumptions

Av. Av. Total

Phase 1 Av. Selling Commission Gross
Deals Purchase Renovation Direct Revenue
Price (5%) Margin
Months Price Cost Cost

Sep-Feb 2 $315,000 $15,750 $185,500 $35,000 $236,250 $78,750 $630,000

Mar-Aug 3 $315,000 $15,750 $185,500 $35,000 $236,250 $78,750 $945,000

Total 5 $1,575,000

Phase 2

Year of Av. Selling Commission Cost to Total Direct Gross

Deals Revenue
Operation Price (5%) Build Cost Margin

4 1 $356,162 $17,808 $284,250 $302,058 $54,104 $356,162

5 2 $356,162 $17,808 $284,250 $302,058 $54,104 $712,324

Total 3 $1,068,486

70% Rule General Assumptions

Home Price $315,000 Average Size Sq. Ft $1,895

70 Percent of Price $220,500 Cost to Build/Sq. Ft $150
Av. Renovations $35,000 Total Cost $284,250
Max Purchase Price $185,500 Selling Price $356,162
Commission (5%) $17,808
Total Direct Cost $302,058

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 Grandeur Homes

APPENDIX: YEAR ONE FINANCIALS

Year 1 Revenue Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Total

Flipping Home - Capital Gain 1 0 0 0 1 0 1 0 1 0 1 0

Price

Flipping Home - Capital Gain $315,000.00 $0.00 $0.00 $0.00 $315,000.00 $0.00 $315,000.00 $0.00 $315,000.00 $0.00 $315,000.00 $0.00

Revenue

Flipping Home - Capital Gain $315,000 $0 $0 $0 $315,000 $0 $315,000 $0 $315,000 $0 $315,000 $0

Total Revenue $315,000 $0 $0 $0 $315,000 $0 $315,000 $0 $315,000 $0 $315,000 $0

Direct Cost

Flipping Home - Capital Gain $236,250.00 $0.00 $0.00 $0.00 $236,250.00 $0.00 $236,250.00 $0.00 $236,250.00 $0.00 $236,250.00 $0.00

Direct Cost of Revenue

Flipping Home - Capital Gain $236,250 $0 $0 $0 $236,250 $0 $236,250 $0 $236,250 $0 $236,250 $0

Subtotal Cost of Revenue $236,250 $0 $0 $0 $236,250 $0 $236,250 $0 $236,250 $0 $236,250 $0

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Year 1 Personnel Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Staff Count

Director 1 1 1 1 1 1 1 1 1 1 1 1

Total Personnel 1 1 1 1 1 1 1 1 1 1 1 1

Staff Salary

Director $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

Staff Salary - Total

Director $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

Total Payroll $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

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 Grandeur Homes

Year 1 Income Statement

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Revenue $47,250 $78,750 $94,500 $126,000 $141,750 $141,750 $141,750 $141,750 $157,500 $157,500 $173,250 $173,250
Subtotal Cost of Revenue $35,438 $59,063 $70,875 $94,500 $106,313 $106,313 $106,313 $106,313 $118,125 $118,125 $129,938 $129,938
Total Cost of Revenue $35,438 $59,063 $70,875 $94,500 $106,313 $106,313 $106,313 $106,313 $118,125 $118,125 $129,938 $129,938

Gross Margin $11,813 $19,688 $23,625 $31,500 $35,438 $35,438 $35,438 $35,438 $39,375 $39,375 $43,313 $43,313
Gross Margin/Revenue 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%

Expenses
Rent $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200
General Insurance Liability $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Business License/Permits $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
Telephone/Internet $320 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320 $320
Website Hosting/Updates $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250
Marketing & Advertising $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Supplies $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Utilities $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300
Professional Services $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800 $800
Travel & Fuel $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000
Startup Cost $16,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Bank Charges $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Depreciation $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Payroll Taxes $465 $465 $465 $465 $465 $465 $465 $465 $465 $465 $465 $465
Total Personnel $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167
Total Operating Expenses $29,001 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501 $12,501

Profit Before Interest and Taxes ($17,189) $7,186 $11,124 $18,999 $22,936 $22,936 $22,936 $22,936 $26,874 $26,874 $30,811 $30,811

Net Profit ($17,189) $7,186 $11,124 $18,999 $22,936 $22,936 $22,936 $22,936 $26,874 $26,874 $30,811 $30,811
Net Profit/Revenue -36.38% 9.13% 11.77% 15.08% 16.18% 16.18% 16.18% 16.18% 17.06% 17.06% 17.78% 17.78%

Investor Business Plan 43

 Grandeur Homes

Year 1 Cash Flow

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Additional Cash Received

Revenue $47,250 $78,750 $94,500 $126,000 $141,750 $141,750 $141,750 $141,750 $157,500 $157,500 $173,250 $173,250

Owner Contribution $20,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from Investor $500,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Subtotal Cash Received $551,500 $73,500 $91,000 $121,625 $138,075 $139,300 $140,000 $140,438 $155,896 $156,217 $171,723 $171,977

Total Personnel $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167 $4,167

Bill Payments $0 $43,722 $67,347 $79,160 $102,785 $114,597 $114,597 $114,597 $114,597 $126,410 $126,410 $138,222

Additional Cash Spent

Start-up Costs $16,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchase Long-term Assets $6,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash Spent $26,667 $47,889 $71,514 $83,326 $106,951 $118,764 $118,764 $118,764 $118,764 $130,576 $130,576 $142,389

Net Cash Flow $524,833 $25,611 $19,486 $38,299 $31,124 $20,536 $21,236 $21,674 $37,132 $25,640 $41,146 $29,589

Cash Balance $524,833 $550,445 $569,931 $608,230 $639,353 $659,890 $681,126 $702,800 $739,932 $765,572 $806,719 $836,307

Investor Business Plan 44