A real estate business plan is used to plan out what action needs to be taken to achieve your professional goals. For agents, a business plan will take into account incoming commission income and fixed expenses like desk fees, NAR dues, and car payments, to determine how many deals you will need to close to reach your financial targets. It will also spell out in detail what steps you need to take to achieve your goals.

In this article, we’ll cover everything you need to write a stellar business plan and provide you with some free templates:

• Why You Need a Real Estate Business Plan
• Free Real Estate Business Plan Templates
• 5 Step Guide for New Agents Writing a Business Plan
• Using Software to Make Writing Your Business Plan Easier

LivePlan is the software we personally used to write our business plan. While we are not a real estate business, the software has many resources and templates for realtors. It offers an incredible array of features, helps keep your business plan flexible, and is also simple to use.

Why You Need a Real Estate Business Plan (even if you think you don’t)

Think of your commute to work. You’ve driven the same route or taken the same trains so many times that you probably don’t even think about it anymore. Now try to remember the first time you ever drove a car without GPS. You were probably nervous, second guessing your skills, and might have even gotten lost and had to ask for directions several times.

Think of your business plan as GPS for your career. Instead of getting lost and asking for directions, you simply remember your plan and forge ahead.

Bringing Your Goals Down to Earth

For agents, a business plan is not only a road map to your financial (and personal) development, but it helps keep you accountable as well. Trust me, even the best agents in the business had periods of doubt and uncertainty during their first year in the business. Putting your goals, and the way to achieve them, down on paper can help keep you accountable when you start to second guess yourself. Since you’ve already run the numbers, you know exactly what you need to do to succeed.

A Business Plan is a Living Document and Adapts with Your Business

For both agents and brokerages, a business plan is a living document. As your business grows, you may need to shift strategies and tweak your plan accordingly. For example, a new agent might start out buying FSBO lists and cold calling to get leads, then realize they are more adept at writing facebook ads. Since there is no right way to succeed in real estate, you will need to adjust your plan to fit your new lead generation strategy.

LivePlan software can help you maintain your business plan by automatically refreshing your business plan in real time whenever you add new financial data.

Free Real Estate Business Plan Templates

Below are a few example business plans for real estate brokers. More are available with LivePlan. You can easily adapt or leave out sections that aren’t relevant to your business. For example, sections on hiring and managing new agents won’t be relevant to real estate agents.

Example 1   

Example 2

Example 3

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5 Step Guide for Writing a Business Plan for New Agents

Step 1: Figure out Your Personal and Financial Goals for the Year

How much money do you need to make to pay your current living expenses? How much money would you like to make this year? While your answer to the second question would probably be a million dollars, try and be somewhat realistic here. If you made $45,000 last year before becoming a realtor, how much would make you happy this year?

Writing down your personal goals can also be a big help. Do you want to improve your public speaking skills? Learn how to negotiate? Save up enough money to move into a nicer apartment?

Step 2: Write an Executive Summary That Outlines Your Vision for Success

The first section of a business plan is the executive summary. While you’re probably not going to present your plan to anyone but yourself, it’s still a useful exercise to help you get started. The executive summary briefly outlines the opportunities available, as well as how you plan to use your unique skill set to take advantage of them.

Your executive summary should include details about;

• The area you plan to work in (e.g. home price range, neighborhoods, etc.)
• What type of real estate or clients you plan to focus on
• A general overview of your marketing plan
• What skills you bring to the table (marketing, sales, business development, etc.)

Basically what would you tell a friend over dinner if they asked you how you planned to make money as a real estate agent?

For example, let’s say you’re a former advertising executive planning on working in Manhattan. In your executive summary, you could say that you plan to work in SOHO and focus on doorman rental buildings to start, then work your way up to luxury co ops. You might include information on the average rental or sales price, the vacancy rate, or your connection to the neighborhood. You could then go on to describe how you will use your advertising skills to bring in buyer and seller clients in SOHO.

Step 3: Assess the Market You Plan to Work in

The second step in writing a real estate business plan is to assess the market you plan to work in. In the real estate industry, this is known as your “farm area.” It may sound a little bit silly at first, but it’s an excellent analogy for real estate. By advertising and generating leads, you will be sowing seeds. By converting those leads to clients and closing deals, you will be harvesting your crops.

Like any farmer, you need to know as much as possible about your farm area before you begin. Since you’re new to the industry, you may want to get an experienced agent or your broker to help you with your research. Here are some things that you should know about your farm area:

• The average sales and rental prices in the area
• How long a typical home takes to rent or sell on the market
• Average months of supply – Months of supply is a measure of how long it will take for the number of homes currently on the market to be sold. To calculate months of supply, you just need to divide the current number of homes on the market in a particular area by the average number of homes sold in that area each month.
• Local demographics – Is the area mostly retired people? Tech workers? Blue collar workers? Each requires different approaches to lead generation.
• The competition – How many other agents or brokerages are there in the area? How does your brokerage measure up?

Step 4: Outline Your Lead Generation and Nurturing Strategy

Once you’ve written your executive summary and researched your farm area, the next step in writing a real estate business plan is to outline your lead generation and nurturing strategy.

While there are hundreds of ways to generate and nurture real estate leads, new agents should generally start out by marketing to their sphere of influence. Your sphere of influence are the people that you know who you have some kind of influence over. Your friends, family, former coworkers, and business associates are all in your sphere of influence. Your goal is simply to inform them you are working as an agent, and to offer your services to them. Calling is generally the best way to reach out to your sphere as it’s the most personal, but you can also use LinkedIn, email, or Facebook.

Your next step after reaching out to your sphere of influence is going to depend on the demographics of your farm area and your skills. For example, if your farm area is largely retirees, you may decide to generate leads with cold calling FSBOs and a postcard or a door hanger campaign. Or, if your farm area is largely young tech workers, you might have better luck with Facebook advertising.

Since there are so many lead generation ideas to choose from, have a look at our list of the top 37 lead generation strategies to get an idea of what will work for you.

Once you have a lead generation strategy in place, the next step is to figure out how you’re going to nurture your leads until they’re ready to buy or sell property with you. Email marketing is one of the best ways to nurture and engage leads with minimal expense.

Step 5: Develop a Realistic Financial Plan to Reach Your Goals

Now that you’ve researched your farm area, and outlined your lead generation and nurturing strategy, the next step is to work on a realistic financial plan to reach your goals. Though this may sound intimidating, it’s actually very simple. Here’s what you need to do.

A. Outline Your Expenses

Let’s face it, when you decided to become a real estate agent, you may not have factored in all the various expenses you’re going to have. To get started, think of the fixed costs and other expenses that will arise based your lead generation and nurturing strategy. Depending on what lead generation and nurturing strategy you use, this list will vary. Here are some fairly common expenses to include:

• Desk fees
• Commission splits and transaction fees
• NAR/REBNY dues
• Gas, insurance, and car maintenance (or Uber if you work in the city)
• Email marketing software
• Real estate courses and licensing fees
• FSBO lists
• Printing costs
• Facebook advertising
• Website and landing pages

B. Determine How Many Deals You Need to Close to Reach Your Goal

Since you already know the average rental or selling price in your farm area, this one is pretty easy. Just take the average transaction side (one half of a real estate commission earned representing either the buyer or the seller), generally 3%, and determine how many deals you will need to close to breakeven, and how many deals you need to close to reach your goal.

Let’s say your financial goal (see Step 1) was to make $50,000 your first year and you have $5000 in yearly expenses. If the average transaction side is $10,000 in your farm area, on a 50/50 split you will make $5000 from a typical transaction, before expenses. That means you will need to close 11 deals in your first year in order to bring home $50,000 in net annual profit.

C. Determine How Many Leads You Need to Generate

Admittedly the math can get a bit fuzzy here, but you should plan on closing roughly 1 in every 30 or so leads that you generate. When I say leads here, I mean warm leads (i.e. people who are actively looking to purchase or sell a home). You will probably need to generate more cold leads, people who are a few months away from purchasing or selling a home, in order to generate 30 warm leads.

Using Software to Make Writing Your Business Plan Easier

If you want to make your real estate business plan easier to write and update, you should consider using business plan software. Business plan software will not only produce a professional looking document, but will help the writing process by prompting you to answer simple questions about your business.

LivePlan is the software we personally used to write our (ever changing) business plan. It offers an incredible array of features, helps keep your business plan flexible, and is also dead simple to use.

LivePlan will also give you financial calculators so adding or removing an expense, for instance, will automatically adjust your targets. LivePlan software also makes it easy to see patterns over time and whether you’re hitting or missing your goals and by how much. You can even see how you’re doing relative to other agents and real estate businesses.

The Bottom Line

Writing a solid real estate business plan is the best way for new agents figure out how they plan to succeed in their first year and beyond. In order to write an effective plan, you need to assess your farm area, develop a lead generation and nurturing strategy, and come up with a solid financial plan to reach your goals.