Warren Buffett MBA Talk – Part 8
The 4th Element – Marketing Plan
The last thing a successful investor like Warren Buffett would do is to invest into businesses that always guessed at their future profitability and had a loose, unfounded marketing plan for generating prospects, and unproven ways for converting those prospects into customers.
As a real estate investor, your business needs to decide on the type of marketing that will powerfully increase your visibility, draw in motivated sellers and investor buyers like a ten ton magnet on steroids, and follow proven processes for converting those leads into deals, and those deals into profits for you. Are you using proven online websites? Proven sales scripts and automatic response programs? Do you have a compelling value proposition? Who is your ideal target client profile? How are you positioning your business to disrupt your competition and dominate?
For Buffett, he only buys into businesses he can understand and evaluate accurately. With your real estate investing business plan here, you need to make sure it’s doing the same thing.
The 5th Element – Your “Product”
One of the things that Warren Buffet said, that any entrepreneur investing in real estate should remember is: “We are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate . . . we do not sell our holdings just because they have appreciated or because we have held them for a long time.”
With television programs such as House Flipping so popular, many real estate investing entrepreneurs imagine that the real estate game is all about flipping properties very quickly.
That’s not always true.
In many instances, successful investors have created enormous fortunes by real estate investing over the long term. That is, some of the biggest success stories have bought commercial real estate, marketed it better to increase the vacancy rates, and are generating a large, steady income while building their net worth.
For you, this where you need to clearly outline the types of “product” you’ll be investing in, the length of time involved for each type of real estate, and the proposed exit strategies along each step of the way, with a focus for long-term wealth creation.
The 6th Element – Your Power Team
This is defined by the outsourced members in the real estate investing field who will be the “enablers” for you to start, run, and scale your investment business. People like Realtors, Mortgage Brokers, Real Estate Attorneys, etc go here. Be specific as to why you have chosen these individuals in terms of what value they bring to the table, and how they propose to deliver this value to your business. Always have references (at least two) for each member of your power team
The 7th (Final) Element – Resources & Financial Targets
Now we’re well beyond your Power Team in terms of additional hard and soft resources you’ll require. For example, do you have an investment advisor or real estate mentor to guide you through the growth of your business? Do you need websites and marketing systems to promote your business?
How much money do you expect to generate in the next three months? What do you need to generate a 6 figure bank account and 7 figure real estate gains within 7 months? This final section of your real estate investing business plan shows your existing resource constraints, and profit targets – both short and long term – and how you arrived at these conclusions.