Apartment Business Plan

Apartment Business Plan-35
The same is true for “when” – and it's an often-ignored factor that actually cuts to the heart of the most basic of investment decisions.

The same is true for “when” – and it's an often-ignored factor that actually cuts to the heart of the most basic of investment decisions.For example, take a choice between two properties: If your goal is to create a certain monthly income within three years, the Property 1 is likely to be a better choice.So, if you've got £100,000, you can generate a (pre-tax) profit of £10,000 per year – or £833 per month.

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Sure, it'd be a pretty stupid thing to do – you should really have had a more ambitious goal – but you get the point.

Obviously, most of us aren't in that position – and that's why we need a strategy. A handy way of looking at it is to take the amount of money you've got to invest in property, and assume that you can get a 10% annual return on that money (ROI) – which is a rough rule-of-thumb for a normal property bought with a 75% mortgage.

If you save up the rental income for 10 years, you'll be able to buy another batch of properties just like the first – so you'll now have income of £1,666 per month.

If you're happy with that, then you've already got your strategy: buy properties that will give you a 10% ROI, then wait!

Well, that's where it's time to start thinking about the details of the third step: the strategy you'll use to pursue your goal. It's an unusual way to look at it, but I find it useful – because it tells you (given your timeframe and your goal) how much heavy-lifting your strategy will need to do to keep you on track.

Think of it like this: if you had £10m in the bank and your goal was to make an income of £5,000 per month within a year, you wouldn't need any strategy at all.It certainly doesn't need to be 100 spiral-bound pages of projections and fancy charts.In fact, the best plan would be so simple that it fits on the back of an index card – meaning that you can commit it to memory and use it to drive every decision you make.You could just use your £10m to buy properties, anywhere – you wouldn't need to maximise the rent, manage them well or even keep them all occupied at all times!You'd be able to buy so much property that you really couldn't fail.To give a cheesy analogy, you can't plan a route unless you know where you're starting from.Working out your starting point is the easiest part, because it involves information that's either known or easily knowable to you.It very much is a “bet” because you're taking something of a gamble on capital growth, but it's got a lot of time to happen – and when it does, your returns will dwarf the higher rental income you'd have made from the other property.That's just one example of why making even simple decisions in your property business are impossible without having that most basic ingredient of your plan: where you ultimately want to end up, and when.That's a great start, but for most people it'll produce an uncomfortable insight: the gap between where you are and where you want to be seems impossibly large!With the resources you've got now, how are you possibly going to reach your goal in a sensible period of time?


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