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1.0 Executive Summary
Real Estate Brokerage, LLC (“the Company”) will provide comprehensive real estate sales services from its offices in Miami, Florida. The business was founded by Matthew Kratner who serves as the Company’s CEO. At this time, the Company is seeking $125,000 from an investor and a loan of $375,000 in order to commence operations. The business intends to source numerous high performing agents that will assist the business with divesting luxury real estate on behalf of its clients.
1.1 The Services
The first revenue center for Real Estate Brokerage, LLC is the ongoing sales of properties on an exclusive and co-brokered basis. Generally, the business will receive commissions ranging from 2.5% to 5% of the total value of the property. In order to ensure a rapid turnover of the Company’s listings, Management will use numerous forms of advertising (with an immense focus on online strategies).
The secondary revenue center for the business will come from the ongoing placement of short-term and long-term tenants among luxury properties that are for rent. This is an important secondary source of revenue as there is a large influx of professionals that frequently need housing on a temporary basis. The business will work with a number of property owners that focus their operations on rentals of properties. This will produce highly predictable income for the business during all economic climates.
The third section of the business plan will further document the services offered by the business.
1.2 Financing
An aggregate of $500,000 is needed to order to establish the Company’s operations in Florida. The terms of the equity capital are to be determined during the negotiation phase. The loan portion of the capital structure is expected to carry a 10 year term and an 8% interest rate. The funds will be principally allocated towards the following:
• Real estate office development in Miami (leased)
• Working capital
• Vehicles and furniture, fixtures, and equipment
• Initial marketing
Given the ongoing and highly predictable incomes that will be generated from commissions and rental placement fees, the Company could easily acquire a working capital line of credit to expand its operations. This document assumes that no further funding will be sourced within the next three year of operation outside of the equity and debt financing sought in this document. Real Estate Brokerage, LLC will finance its ongoing growth with the retained earnings of the business.
1.3 Mission Statement
Real Estate Brokerage’s mission is to provide cost effective real estate sales solutions for its clients in the greater South Florida market area.
1.4 Management Team
Matthew Kratner has been a licensed real estate broker for the past 16 years. Through his contacts in this market coupled with his industry experience, he will be able to quickly bring the operations of this real estate brokerage to profitability.
1.5 Sales Forecasts
1.6 Expansion Plan
During the course of the first three years of operation, the Company will continually recruit new agents to work on behalf of the business. The Company may also establish satellite offices in the greater South Florida market area. There is also the possibility that the Company will integrate property management services with a focus on short-term rental management through destination booking platforms.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Real Estate Brokerage, LLC. The business is registered as a limited liability company in the State of Florida.
2.2 Required Funds
The $500,000 of capital to launch the operations of this brokerage will be allocated as follows:
2.3 Investor and Management Equity
These matters will be determined during the negotiation phase of the capital raising process.
2.4 Exit Strategies
Given the expected scale and scope of Real Estate Brokerage, LLC – the Company would hire a qualified brokerage that specializes in the sale of real estate focused businesses. Generally, real estate brokerages can receive a sales premium of three to four times the previous year’s earnings. This event is not expected to occur for at least five to ten years.
3.0 Real Estate Services
As discussed in the executive summary, Real Estate Brokerage will be actively involved with sourcing buyers for properties that are being sold by the business’ clients. The business will also represent wealthy buyers that are seeking to purchase properties in the greater South Florida market. The business, through the extensive contacts of the Founder, will be able to work with other real estate brokerages within the South Florida market area in order to more quickly divest properties. The Company, as will be discussed in the fifth section of this business plan, will implement numerous strategies that will drive interest in the listings.
The Company’s ability to place short-term and intermediate-term tenants will be a major revenue stream and differentiating factor for the business. As there are numerous internationally recognized technology businesses in this market, there is an immense demand among professionals that work in this area for periods of time ranging from one month to one year. Management sees a substantial opportunity to create highly predictable streams of revenue among professionals that need to come to this market area for a limited period of time. Given the high incomes of these professionals, many luxury property owners will be able to have their properties operate at near 100% occupancy through these operations.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
Currently, the economy is stable and growing. Interest rates are declining, which will ultimately lead to increased demand for real estate (especially in the wealthy South Florida market area). Inflation rates are also coming down due to effective policies implemented by the US Federal Reserve and global central banks.
Any issues with the economy should not overly impact Real Estate Brokerage, LLC’s ability to remain profitable. As has been discussed earlier, the business will generate substantial revenues from commission sales and highly predictable income from tenant placements. Many of the major corporations that operate in this market area are relatively immune from negative economic climates, which in turn reduces the risks associated with this business.
4.2 Industry Analysis
There are currently 850,000 real estate brokerages operating within the United States. Each year, these entities produce $200 billion of revenue while employing 925,000 people (including independently contracted real estate agents). This industry tends to grow and expand at a rate that is similar to that of the economy as a whole.
One of the major trends within this industry, which has occurred over the past fifteen years, is to aggressively use online marketing to drive interest in listings (sales and rentals). Real Estate Brokerage, LLC will use multiple marketing channels in order to create substantial interest in the properties that are available and represented by the firm.
4.3 Customer Profile
Any individual or property management business that is seeking to divest or rent real estate is a potential customer of the business. Typically, the Company will deal in properties that have a value of no less than $1,000,000 (which is near the median price for the South Florida market). For rental placements, the business will work with property owners that expect $5,000 to $10,000 per month.
The Founder has specifically picked the Miami and Florida area to establish brokerage operations given the large number of technology enterprises in this market, high median household incomes, population density, and substantial economic staying power.
4.4 Competition
Real Estate Brokerage, LLC will face a tremendous amount of competition as it establishes its operations in this market. Most importantly, the Company will maintain a differentiating factor by specializing in both sales and rentals of luxury real estate. The business will have highly controllable operating costs, which will allow the Company to remain pricing competitive as it relates to commissions and tenant placement fees. The business will also use multiple forms of online drive marketing, which will lead to faster lead times for property owners.
5.0 Marketing Plan
Given the level of competition in the Miami market, the Company intends to aggressively use social media as well as specialized real estate portals in order to facilitate sales and rentals. The business will also leverage Matthew Kratner’s existing contacts within this market in order to acquire listings once operations commence.
5.1 Marketing Objectives
• Engage in high impact public relations strategies that will create a well regarded brand name for Real Estate Brokerage, LLC.
• Use SEO and social media to promote specific properties as well as for the business as a whole.
• Continue to engage in numerous networking activities so that co-brokering relationships can be fostered among real estate firms in the greater South Florida market.
5.2 Marketing Strategies
Foremost, the Founder will call on his extensive list of previous clients when marketing the brokerage to property owners within Miami and South Florida. This will allow the Company to receive its early engagements which will quickly drive revenues and profits. Over the life of the business, the Founder and all retained agents will continue to engage in networking operations so that the business’ brand is well recognized among other firms in this market.
As it relates to online marketing, the Company will have an expansive online presence via both its proprietary websites and social media platforms. The business’ website will showcase all listings (sales and rentals) as well as pertinent information regarding the brokerage. The platform will undergo substantial search engine optimization in tandem with a regional firm. This will allow for expanded visibility when searches for properties in the South Florida market area are conducted.
The Company will use all major real estate platforms such as Trulia, Zillow, the MLS, and other websites/applications to showcase available properties. These operations will help immensely as it relates to the Company’s rental operations. To that end, the Company will also develop ongoing relationships with corporate relocation specialists that have staff moving to the Miami market area. Moving forward, these relationships will be an invaluable source of revenue for the Company.
Management and Real Estate Brokerage, LLC’s staff will attend all regional events specific for real estate agents and brokerages within the South Florida market.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
• Real Estate Brokerage, LLC will acquire a $375,000 loan and a $125,000 equity investment in order to commence operations in Miami.
• The business will have a compounded annual growth rate of 16.1% per annum.
7.2 Sensitivity Analysis
As has been one of the central discussions throughout this document, Real Estate Brokerage’s revenues are only moderately sensitive to negative economic climates given that the business is operating within the Miami and South Florida market areas. The substantial economic staying power of these markets coupled with the ongoing demand for residential real estate will ensure that the business is able to remain profitable while servicing all of its financial obligations.
7.3 Source of Funds
7.4 Profit and Loss Statement
7.5 Cash Flow Analysis
7.6 Balance Sheet
7.7 Breakeven Analysis
7.8 Business Ratios
