Executive summary
Real estate refers to the assets that include things like land and construction on it and the entire natural and man made resources found in the piece of property. Therefore, a real estate business consist of all the activities that take place in the acquisition of these resources and include buying, leasing, selling and constructing structures in these pieces of properties.
The term real estate often refers to the immovable things in the property. There are laws that regulate the operations and transactions undertaken in real estate business including the ownership and development in the real estate business.
The development of any real estate business requires a careful outline of the goals that the business has to achieve. It also demands that investors have the knowledge required for the development of the real estate, which includes understanding the location of the business. The other factors to be put into consideration are the daily activities of the enterprise and the stipulated period for the plan to be complete.
Business opportunity and vision
The business has to venture into real estate business and has to set its objectives and work hard to meet the timelines set for achieving them. The first thing that the real estate business planning to venture into the market in Houston in Texas, is to evaluate its business opportunities in the market, and that will act as a guide in their daily operations.
The other important factor that has to be in the plan is the vision of the company and its goals. These goals can either be short term or long term depending on the time set to come to pass.
The other thing, that is also, of utmost importance when setting the business goals, is the resources that the business has at its disposal and those that it has to look for before starting its operations. The resources that the business require include the human resource, equipments, infrastructure and capital, (Wittenmyer, 2002).
Business opportunities
The first thing that the real estate business will have to do is to evaluate their chances of getting into the real estate business. The Crown Company is not a new business in the real estate business; it plans to shift its location from the suburbs into the city to venture in to the real estate business.
The enterprise has been in existence for the past eight years, but it was dealing with the construction of rental houses for small businesses and home owners. However, in the recent years they have been planning to venture into the real estate business in Houston where they want to deal with large construction where they will construct buildings and either sell or lease them out to both businesses and family owners.
The difference between their current business and the one they plan to move to is the size of the structure they are going to build and its value. This means that they have to thread carefully to ensure that they do not incur losses. This means that the Crown Company is not new to the transactions and the way of running a business in the real estate sector, but they have to evaluate their options first.
The company’s mission is to create a business pool in the real estate sector, where they will make sure that they build quality structures that will make them the best in the market. This will eventually earn them maximum profits due to their commitment and hard work.
To achieve all this the Crown Company plans to make sure that they purchase land at the most affluent parts of the city and buy them, then improve the standards of homes and business constructions that have lost its value in the market. Through this transaction where they buy and renovate structures, the company will gain popularity among the residents making the business accepted in the area.
The target of the company will be on the business buildings, neglected structures and large houses that need renovations. However, the main focus of the company will be on purchasing large pieces of lands and starting constructions that are on high demand in the surrounding area.
Vision
The directors of the Crown Company do not believe in wasting much time trying to set up the business. Instead, they focus more on understanding the market and starting the operations immediately. The first year of its operations in Houston city will focus on increasing the company’s image in the community. The directors can achieve this by creating an excellent image in the real estate sector.
To do this they have to ensure that all their transactions are ethical and always focus on the needs of their customers. This might prove to be difficult as the business is new in the town and they have to look for brokers who serve as middle men.
The use of middle men will be of considerable importance to the company. This is because the brokers understand the market in the area better than the Crown Company employees, (( Nahorney, Lankarge, 2006).
The Crown Company has to utilize the new technologies that come in handy when dealing with advertisements regarding selling and purchasing of properties. The technology will connect them with other social institutions that will aid in the business operation like financial establishments and other contractors.
Technology will also come in handy when the company will be starting its operation, in terms of other companies in the real estate market. This will also help them know current trends in real estate business.
Most of the transaction in the first few years after Crown Company begins its operations, will be focusing on purchasing and renovation of old buildings and then reselling them at a higher prices.
By so doing, the company will get more profits that will help build for long term investment than when they start constructing new structures. The company targets at least five houses in two months. Any of the houses or structures acquired has to be thoroughly renovated within three months of its purchase.
By developing and achieving these short term goals, the Crown Company directors are sure of success when it comes to setting long term goals. The reason for, this assurance of success comes from the belief that short term goals is a reflection of the long term goals, (( Nahorney, Lankarge, 2006).
All the long term goals set by the company should be a reality by 2020, and they have a carefully laid down plan that will help make it a reality. Crown Company plans that beginning the year 2014 all its directors will work in the company full time as it will manage to establish itself well in the market. The other reason for this change in management is the increase in the work load done by each partner.
Each director will have to manage a department in the company. By so doing, the company’s operation will run more smoothly than when only two directors were full committed to the company’s operations. This will make the company efficient in its operations, hence ensuring that it does not disappoint its customers, (Wittenmyer, 2002).
The company will then shift its focus from the buying old houses and renovating them, and move to purchasing land and constructing new structures. The directors stipulate that they can complete a construction in five months meaning that they can build at least four houses in those five months depending on the demand. Three of these houses can be put up for sale and the other one retained by the company for leasing.
Leasing the property is a strategy that will keep the income of the company flowing throughout the year. The houses constructed and put under the lease will generate a minimum of $170,000 annually. This means that if they are able to construct ten houses yearly, then they will earn approximately $210,000 per annum. The other houses that go on sale are an instant source of money used to start new constructions.
The company has set a target of constructing 100 houses and business structures by the end of six years. All this construction will result in a 120% profit if they estimate the cost of constructing each structure at $ 100,000. This means that they will meet the objectives of the mission which is to become a 100% profitable company.
Market Analysis
The other strategy that the Crown Company has to develop before they can start putting their goals into action is to evaluate and analyze the marketplace. The company has to focus on those people who will have a stake in the operation of the business.
These stakeholders include the neighborhoods, suppliers, competitors, home owners, buyers and constructors. All these stakeholders have a key role in ensuring the prosperity or failure of the business. Therefore, the directors have to consider their impacts on the objectives in the Crown Company.
Trends in the neighborhoods
Crown Company plans to set up its offices in CBD of Houston city, but its target areas are the suburbs of this city. This means that the directors have to evaluate the neighboring suburbs in order to establish the demand of houses in the area. Their other target is the location of most of the businesses which is in the CBD. The suburbs of this city are has a high population meaning that they require a lot of houses to contain them.
The other reason why the directors chose this city is because three of then reside in different affluent suburbs in the city and have spent many years in the town. This is an added advantage as they understand the needs of these communities better than people who have not resided in place for long, ( Nahorney, Lankarge, 2006).
These neighborhoods are also famous for having many people who want to get rid of their old homes, purchase new houses or have their current homes renovated.
However, the company has to be extremely weary of their buying prices because a slight miscalculation can result in severe losses. Therefore, the company aims at buying the houses at a price where they can be able to make profits after settling all expenses incurred in the renovation process.
Consumers
The most decisive factor, that determines the, success of any real estate business, is the number of people and businesses in any target market. In this case, Houston is the best place to set up the real estate business because its population consists mainly of a working population that is willing to purchase new homes. These young people are also the ones who sell off their parents houses or have them renovated.
The only tactic that is applicable in this case is their financial situation and giving them the best solution. Crown Company has plans of providing flexible modes of payments to these people hence attracting them. Those who cannot afford to buy the houses have the alternative of renting the houses on lease.
The other target group is the business group, which also consists of the young people. These people want classy places where they can set up their businesses and attract customers. Most of the buildings set up for business purposes will be out on lease and not for sale, ( Carney, 2009).
Competitors
The Crown Company is not the only real estate in the city, and this means that they have to work exceptionally hard to gain the trust of the residents. There are other companies that dealing the same businesses. The directors have to go an extra mile to evaluate their strengths and weaknesses. Their strengths in this case include their ability to adapt to new environments fast.
To make this even easier is the fact that they understand the needs of the people in this place because they have spent most of their lives here.
The other factor to be considered is the competition for suppliers and construction companies. However, this is a substantial problem because the company has its former suppliers and constructors meaning that they will have to increase their demand and everything will sort itself, (McCrea, 2005).
The other competition will be the location of the prospective home sellers and buyers of new ones. The challenge with using the internet as their main advertising agency is that some people will not think of checking the internet for real estate dealers.
The directors will employ the services of brokers and real estate agencies who will sort out this problem. They will also serve as middle men in their business transactions. The directors have a strong and trusting relationship with most of the real estate experts, and this makes the situation even better than when they would have to start contacting them.
Management Team
The directors of the Crown Company are the sole owners of the company and the only employees they have are their secretaries. Its operations are under four directors who have equal shares in the company. Two of these directors are part timers and have other formal employment in other sectors. The other two work in the business full time.
Each director plays a different role in the process of acquiring a piece of land or purchasing an old structure to selling or leasing the property. Brokers and real estate agency are the other stakeholders in this business, but they do not play active roles when it comes to performing the daily duties.
The directors rely on the internet to know of any changes in the sector. They also use the internet to market their properties. They also get to know of any properties that are under mortgage.
The constructors, the legal team, and auditors will be working on contracts, and they can be dismissed when their contract is over, or they can have their contract renewed depending on the quality of their work, ( Nahorney, Lankarge, 2006).
Marketing and Sales Plans
These are the daily activities that the business will undertake as they go about in their operations. The most significant activity is identifying the target clients. The business will have to establish a profile, after identifying the target customers, which will help them evaluate their chances of doing business with them.
This is possible by maintaining a steady communication link during the processes off purchasing the property and even during appraisals.
The Crown Company is not a new name in the real estate business, but it needs to improve its image in the real estate market, in Houston. The company uses cloud computing to advertise their products, but they have plans signing a contract with an officer in public relations who will help develop their profile. The public relation officer will target those people who are not conversant with the internet operations.
Once they develop a substantial profile, the just they have to ensure that they maintain the proper profile which will act as a marketing strategy, (Johnsons & Bowman, 2004). The brokers and financial institutions also play a crucial role in establishing a profile, so they company plans on maintaining a healthy relationship with them.
Marketing strategy and advertisement
Reaching the buyers during the first few months and years can be a difficult, and this forces the business to put more effort in its advertising aspects than relying on their previous customers. They might have to change their marketing strategy from using the internet and start using newspapers, and use one on one advertisement like going to working places to meet the target group.
Media houses can also be of immense help in this case as most young people attached to it. However, most of their advertisements will still be in the cloud computing internet services because its target group; the young people use the internet more than they read the daily newspapers, (Allaway, Galaty, Kyle, 2002).
Purchasing Properties
The process of acquiring new and old properties involves dealing with different groups of people including home owners, land owners, financial institutions and legal officers.
After the screening process and identified potential buyers or sellers, they go to the site to check out the property. The appraisal of these properties gets done by a hired contractor who will perform the appraisal and establish the prices of these constructions.
The appraisals are only available for authorized people at the Crown Company website, ( Carney, 2009). The appraisals will happen twice in every three months, and customers can get a copy of the appraisal in the website after getting the log in address and password. The other people entitled to the appraisal report are the municipal council and the legal team of the Crown Company.
Pricing
The directors have to make sure that all the purchases have a margin that will settle the expenses and still have some money remain in the form of profit. An example is where they purchase a house and ensure that they have a $40,000 margin. They assume that the renovation process will amount to$20,000 to $25,000 leaving them with a reasonable profit.
Home owners
These are the people who own homes and need to sell them for renovation. Identifying these people and getting to convince them that the company is the right one to buy their houses or sell your constructions can be hugely expensive. The crown company has put in a number of strategies to help minimize these expenses.
One of the strategies is doing all the introductory part of the business through the internet and this involves the process of filling the forms. This will help identify the most suitable buyers and sellers without wasting a lot of time meeting them face to face, and then realizing that they are not the right people.
The other strategy involves screening the information that the customer submits, and establishes its authenticity before going into business with them. The application form will contain all the details that will help the company to identify customers who can meet their standards.
The application form also helps the company know the financial status of the customers giving them a chance of designing the best plan for purchasing or leasing the property, (Dream Investments Inc. 2010)
Sales strategy
The partners will handle the business management, and they will focus on the renovation, selling properties, financial management and purchasing properties. The business takes advantage of technology to run most of its operations. This reduces the operation costs and increases the profits.
Real estate agents will handle the sale of the properties while the finances will be under internal management, but external auditors will be evaluating the accounts twice every year. The company will get its finances from its sales or properties under lease.
Finances
The purchasing or sale of any property requires a critical review of the financial implication it will have on the company. The purchase or sale has to meet the requirements of a spread sheet that evaluates the value of the property and the outcome of the transaction.
The spreadsheet analyses the property and provides the company a rough estimate of the purchasing price and the possible selling price. It has all the expenses that they will incur whether it involves renovation or constructing a new construction, (Allaway, Galaty, Kyle, 2002).
The other vital financial procedure comes when the company is making the down payment. The company has to ensure that they spent a minimum amount of money when getting a property.
A slight mistake, when evaluating value of the property, can lead losses because the down payment always takes in a large percentage of the investment cash. This is the part where the company will have to use the services of financial institution especially when the property is of high value.
Timing
The Crown Company started its operation in 5th April 2005. This is the time when they always begin a new financial year, and all the new ideas should be under into effect in this month. The same applies to the shift of operations in Houston city.
The company has been fully into the business activities at the end of the year which will be in April 2015. The first year will mostly be characterized by the establishment of profile and identifying potential customers. After the first year, the company will be focusing on meeting their target of building at least ten houses yearly.
References
Allaway, J. W., & Galaty, F. W.,& Kyle, C. R. (2002).Modern Real Estate Practice. New York: Dearborn Real Estate.
Carney, W., A. (2009). Real Estate Business Self-Taught. Chicago: General Books LLC.
Dream Investments, Inc. (2010). Social Media For Real Estate Agents & Realtors: Real Estate Internet Marketing Using Social Networking to Grow Your Real Estate Business Fast. London: Create space.
Johnsons, L., & Bowman, J., L. (2004). How to Succeed in Commercial Real Estate. New York: Mesa House Pub.
McCrea, B. (2005). The real estate agent’s business planner: practical strategies for maximizing your success. New York: AMACOM Div American Mgmt Assn.
Nahorney, D., J., & Lankarge, V. (2006).How to Get Started in the Real Estate Appraisal Business. Chicago: McGraw-Hill Professional.
Wittenmyer, B. (2002). Real Estate Business and Investment Opportunities: The Complete Guide to Starting a High-Profit Business. Virginia: Info Leverage.