Plan Your Work & Work Your Plan.
I wrote in an earlier post that the The Secret To Real Estate Investing is that you need a Business Plan. But that`s only the start. Here are a few things you need to do to run your Business like a Business.
- Develop a Business Plan – You need a Business plan to help you define where you are and where you want to go. Why are you in Real Estate Investing? What do you want to achieve and by when? Then you put together goals and action steps to achieve those goals.
- You want to make sure that you keep you business finances separate from your personal finances. Setup a separate bank account. Get a separate credit card for all your business expenses. This will make your bookkeeping much easier.
- You will want to review you business activity on a regular basis. Look at your financial indicators monthly. I usually prepare a monthly Income Statement and Balance Sheet. I also look at the ongoing performance of each property to see if something has to be done with a problem property.
- As your business gets bigger you may want to look at incorporating. You should consult an accountant and a lawyer to see if this makes sense form a financial and legal perspective. Personally, I think you should incorporate right from the start so everything is in place for you to grow.
- You should review your plan yearly and see where you might want to change. Perhaps there is a better opportunity for you in another Investment Strategy. Maybe you like Lease Options more than rentals. Maybe you found an investor who want to do some fix and flips and you can incorporate that into your plan.
A Business Plan is a living document that will change over time. You start out with a plan but it has to be flexible enough to change as the situation and the market changes.