This article will talk about why a business plan is important for entrepreneurs who invest in tax-defaulted property. Sadly, they rarely take the extra step of creating a business plan for themselves, and yet, a well thought out business plan can streamline your ability to be very successful.
According to the Small Business Administration (SBA), 96% of all businesses will fail in the first 10 years. The SBA is a bureau of the United States government that congress created to help small businesses and to make loans to those small businesses.
They keep records and according to their records 80% of all start-up businesses will fail in the first 5 years and of the survivors, 80% of the survivors will fail in the next 5 years.
So let’s not become a statistic – here is why a business plan is important for you.
3 Reasons Why a Business Plan is Important
1. A Business Plan is Your GPS
A business plan is to an entrepreneur what GPS is to a traveller. If you don’t know which road to take it is a real challenge finding what you want. If you get lost or off-course, you need a map to find your way back on-track. Common sense and a few trips with a guide or a roadmap certainly saves you a lot of time and it is the best way to get started.
A business plan is no different. It can be easy to lose sight of goals within the minutia of day-to-day business. Your plan will keep you focussed and on-track, if it is written well.
2. If You Need Investors, You Need a Business Plan
Unless you have enough capital to start your business on your own, you will need to court investors. Investors will reject you and look the other way if you don’t have a written business plan that reveals your product or service and what it will cost and how you will go about selling it. By having a business plan, you will show that you have been doing your research and know where you are headed.
Investors want to know about margins and about how you calculated the spread between the cost of the product, the margin, and the possible profits. Keep In mind, investors don’t care about you. They care about the exit strategy, they care about paydays, they care a lot about the return of capital.
3. If You Have a Business Partner, You Need a Business Plan
A common mistake for entrepreneurs is that they keep their ‘plan’ insite their head. Lots of people have a success plan and know where they are going and exactly what they want to do. However, it is primarily in their head.
The challenge is, no one around them – including their business partner – knows exactly what they are trying to do and this leads to confusion, wasted time and definitely the loss of money when things don’t get finished.
What Your Business Plan Needs to Include
Business plans need to include at least these three vital elements:
1. How Will You Make Your Revenue?
Because we are specifically talking about entrepreneurs who invest in tax-defaulted property, we need to highlight the importance of knowing how you plan to make your revenue.
Will it be through tax liens, or tax deeds? If investing in tax deeds, will you simply flip properties at a discounted rate, or will you rent them out, provide seller financing, or fix them up and sell them at market value?
Understand the benefits/risks of all your decisions so you remain on-track.
2. What is Your Strategy?
Once you know where your revenue will come from, it’s time to get clear on your strategy for investing in tax-defaulted property.
How often will you attend auctions? What repeatable process will you follow when doing your property research? What tools will you use? Having a well thought out strategy will be a huge key to your success.
3. What is Your Marketing/Sales Plan?
This is often overlooked. It does you no good to have a product or service that you haven’t figured out the marketing and sales for. Knowing the tools you have at your disposal will help with this. You can use Zillow, or Trulia, or advertise on Kijiji or the local paper. There are countless tools you can use, just do your research or ask others what has worked for them.
Thankfully, in tax-defaulted property investing, your marketing and sales plan doesn’t need to be complicated nor cost a lot of money (particularly if you are selling at a steeply-discounted rate). Just know the tools at your disposal, and use what works.
A Word About Tax-defaulted Property Investing
30 years ago, I discovered a business that generated revenue and large margins of profit. I could buy for pennies and then I could sell for dollars. That solved the revenue problem quickly. The business could be accomplished by entrepreneurs with small amounts of cash. Although it did take some training and learning, it was not a 5-year process.
This business is a subset of the traditional real estate business, and by ‘traditional’ I mean houses, vacant residential buildable lots, small apartment properties, and small farms. The subset that I became involved in was the tax-defaulted purchase of those properties when the owners failed to pay property taxes and the local county is compelled to confiscate the property and then they auction the property for pennies.
County treasurers don’t want these properties so they discount the properties 60%,70%, 80% below the tax assessed value. Imagine for a moment and auction on a house or a vacant residential lot and the county is only asking 10¢, 20¢, 30¢ on the dollar. The fact is, in over 3,000 counties across the United States these auctions are taking place.
The treasurer is authorized by the state legislator in all 50 states to auction tax defaulted real estate. These are people and properties that are delinquent on their property taxes. The properties are sold at auction at tax-defaulted auctions with no mortgage or deed of trust loan.
The properties that are auctioned are not shiny and new… they are used and slightly abused; some are junk, don’t buy junk! On the other hand, some are move-in ready. All counties in the United States are authorized to sell properties for pennies on the dollar.
If you’d like to get started today, you can begin now at no cost by taking advantage of Ted’s FREE Master Class. It’s only about 1 hour of streaming video and will open your eyes to the incredible opportunities available in tax delinquent real estate investment.
Tax Defaulted Property Investing:
A Few Words of Advice
You now understand why a business plan is important for entrepreneurs investing in tax-defaulted property. Here are two pieces of advice to get you started if you are new to entrepreneurship in this real estate subset.
1. Find a Mentor
There is no reason for you to struggle finding the best way when others before you have learned all the lessons the hard way. Find a mentor who has been and still is successful at doing what you want to do.
Tax-defaulted property investing is a great work-from-home business venture, but there are many things you need to be aware of in order to be successful. If you are unable to find a mentor, then enrol in a course or hire a coach.
2. Find the Best Tools
With hundreds of thousands of properties auctioned off every year across the United States, one of the most invaluable tools you can find and use is a comprehensive and interactive auction list.
As a free gift to you, you can find a full, interactive map of tax deed states across the USA by clicking here. You can find a full, interactive map of tax lien states across the USA by clicking here.
You will also want to understand what other tools successful entrepreneurs and investors are using to streamline their process and have up-to-date information at all times. Weave this into your business plan in order to be successful.
Why a Business Plan is Important: Conclusion
The business plan is a guide. The biggest challenges will turn out to be revenue and marketing and sales. Before you take the big plunge, work out the details and think of the big picture. Are your financial projections creative and expansive or are they conservative and your sensitive to cash flow?
Ask the right questions, find the right mentor, and create a thoughtful business plan. You will be sure to find success in tax-defaulted property investing.
Want to learn how you can make big profits from bargain real estate? Would you like to buy homes for pennies on the dollar? Or earn double-digit interest rates? Learn how to secure your financial future with this FREE mini class today!
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