apartment construction business plan

Construction Contractor Business Plan PDF Example

• May 10, 2024
• Business Plan

Creating a comprehensive business plan is crucial for launching and running a successful construction contractor business. This plan serves as your roadmap, detailing your vision, operational strategies, and financial plan. It helps establish your construction contractor business’s identity, navigate the competitive market, and secure funding for growth.

This article not only breaks down the critical components of a construction contractor business plan, but also provides an example of a business plan to help you craft your own.

Whether you’re an experienced entrepreneur or new to the service industry, this guide, complete with a business plan example, lays the groundwork for turning your construction contractor business concept into reality. Let’s dive in!

Our construction contractor business plan is meticulously structured to include all essential aspects necessary for a robust strategy. It outlines the company’s operations, marketing strategy , market environment, competitors, management team, and financial projections.

• Executive Summary : Presents an overview of your construction contractor business concept, including market analysis , management structure, and financial strategies.
• Company Information: Describes the company’s foundation, areas of expertise in the construction industry, and the operational standards that define the business.
• Services : Details the comprehensive range of construction services offered, from residential building to commercial projects, including any specialized services such as eco-friendly constructions or renovations.
• Target Market : Outlines the specific demographic and geographic segments the company aims to serve, emphasizing any particular needs of these markets like affordability, durability, or luxury finishes.
• Key Stats: Provides statistics on the construction industry’s size and growth trends relevant to your market area.
• Key Trends: Identifies significant trends affecting the construction sector.
• Key Competitors : Evaluates primary competitors in the area and outlines your competitive advantages.
• SWOT : Conducts a Strengths, Weaknesses, Opportunities, and Threats analysis.
• Marketing Plan : Outlines effective strategies for attracting and retaining clients.
• Timeline : Lists key milestones and objectives from the start-up through the initial years of operation.
• Management: Shares information about the management team, detailing who manages the company and their respective roles.
• Financial Plan: Forecasts the company’s 5-year financial performance, including revenue, profits, and significant expenses.

Construction Contractor Business Plan

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Executive Summary

The Executive Summary introduces your construction contractor’s business plan, offering a concise overview of your company and its services. It should detail your market positioning, the range of construction and remodeling services you offer, its location, size, and an outline of day-to-day operations.

This section should also explore how your construction business will integrate into the local market, including the number of direct competitors within the area, identifying who they are, along with your company’s unique selling points that differentiate it from these competitors.

Furthermore, you should include information about the management and co-founding team, detailing their roles and contributions to the company’s success. Additionally, a summary of your financial projections, including revenue and profits over the next five years, should be presented here to provide a clear picture of your construction business’s financial plan.

Make sure to cover here _ Business Overview _ Market Overview _ Management Team _ Financial Plan

Dive deeper into Executive Summary

Business Overview

For a construction contractor, the Business Overview section can be concisely divided into 3 main slides:

Company Information & Location

Our construction company specializes in handling diverse projects, including residential, commercial, and industrial builds. Located strategically near major transport hubs, our headquarters offer easy access to key construction sites, providing logistical benefits and enhanced service delivery to our clientele.

Services & Specialization

We offer a comprehensive range of services from general contracting to specialized projects like energy-efficient constructions. Our expertise in custom designs and turnkey solutions sets us apart in the industry, ensuring high-quality project management and client satisfaction.

Target Market

Our target market includes homeowners, real estate developers, and public sector contracts. We cater to clients seeking reliable, high-quality construction services, with a focus on innovation and efficiency to meet the unique needs of each segment, ensuring we are the go-to contractor for diverse construction demands.

Make sure to cover here _ Company Information & Information _ Services & Specialization _ Target Market

Market Overview

Industry size & growth.

In the Market Overview of your construction contractor business plan, start by examining the size of the construction industry and its growth potential. This analysis is crucial for understanding the market’s scope and identifying expansion opportunities.

Key Market Trends

Proceed to discuss recent market trends , such as the increasing consumer interest in sustainable building practices, energy-efficient homes, and smart technology integration in construction. For example, highlight the demand for green building certifications and the rising popularity of renovations that focus on improving energy efficiency.

Key Competitors

Then, consider the competitive landscape, which includes a range of construction firms from large-scale contractors to local small businesses, as well as the trend toward DIY home improvements. For example, emphasize what makes your company distinctive, whether it’s through advanced project management techniques, specialization in sustainable construction, or exceptional client relations.

Make sure to cover here _ Industry size & growth _ Key competitors _ Key market trends

Dive deeper into Key competitors

First, conduct a SWOT analysis for the construction contractor , highlighting Strengths (such as advanced project management skills and a wide array of building services), Weaknesses (including dependency on the economic cycle and market competition), Opportunities (for example, growing trends in sustainable construction and smart home technologies), and Threats (such as potential economic recessions that may reduce investment in new construction projects).

Marketing Plan

Next, develop a marketing strategy that outlines how to attract and retain clients through targeted advertising, promotional discounts, strong online presence, and community involvement. Focus on showcasing your company’s unique capabilities and successful project completions to build trust and credibility in the market.

Finally, create a detailed timeline that outlines critical milestones for the construction business’s project completions, marketing initiatives, client relationship building, and expansion objectives, ensuring the business progresses with clear direction and purpose.

Make sure to cover here _ SWOT _ Marketing Plan _ Timeline

Dive deeper into SWOT

Dive deeper into Marketing Plan

The Management section focuses on the construction contractor business’s management and their direct roles in daily operations and strategic direction. This part is crucial for understanding who is responsible for making key decisions and driving the construction contractor business toward its financial and operational goals.

For your construction contractor business plan, list the core team members, their specific responsibilities, and how their expertise supports the business.

Financial Plan

The Financial Plan section is a comprehensive analysis of your financial projections for revenue, expenses, and profitability. It lays out your construction contractor business’s approach to securing funding, managing cash flow, and achieving breakeven.

This section typically includes detailed forecasts for the first 5 years of operation, highlighting expected revenue, operating costs and capital expenditures.

For your construction contractor business plan, provide a snapshot of your financial statement (profit and loss, balance sheet, cash flow statement), as well as your key assumptions (e.g. number of customers and prices, expenses, etc.).

Make sure to cover here _ Profit and Loss _ Cash Flow Statement _ Balance Sheet _ Use of Funds

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Property Development Business Plan Template

Written by Dave Lavinsky

Property Development Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their property development companies.

If you’re unfamiliar with creating a business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a property development business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Property Development Business Plan?

A business plan provides a snapshot of your property development business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Property Development Company

If you’re looking to start a property development business or grow your existing property development company, you need a business plan. A proper property development business plan will help you raise funding, if needed, and plan out the growth of your business to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Property Development Companies

With regards to funding, the main sources of funding for a property development company are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for property development companies.

Finish Your Business Plan Today!

How to write a business plan for a property development company.

If you want to start a property development company or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your property development business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of property development business you are running and the status. For example, are you a startup, do you have a business that you would like to grow, or are you operating property development businesses in multiple markets?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the property development and real estate industry.
• Discuss the type of property development business you are operating.
• Detail your direct competitors. Give an overview of your target market.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of business you are operating.

For example, you might specialize in one of the following types of property development businesses:

• Single-family detached housing : these types of property developers build free-standing residential buildings for sale.
• Multifamily housing: these types of property developers build apartment buildings, condos, and mixed-use developments.
• Developing and Subdividing Lots: these types of property developers purchase property, either developed or undeveloped, and clear it and prepare it for sale to builders.
• Commercial buildings: these types of property developers build and manage commercial buildings such as shopping centers or offices.

In addition to explaining the type of property development company you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the property business?
• What milestones have you achieved to date? Milestones could include the number of properties developed, reaching X percentage of vacancy/occupancy, reaching X amount of revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the property development industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the property development industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your property development business plan:

• How big is the property development industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your property development company? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your property development business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, families, and small businesses.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of property development business you operate. Clearly, families would respond to different marketing promotions than businesses, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other property development businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes realtors, foreclosure markets, rental housing, or companies purchasing and remodeling their own building. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of property development company are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide finance packages?
• Will you offer amenities or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a property development company, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of property development company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you specialize in single-family detached housing, mixed use developments, or shopping centers?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the project types and/or services you offer and their prices.

Place : Place refers to the site of your property development company. Document where your company is situated and mention how the site will impact your success. For example, is your property development business located in a business or industrial district, or is it a standalone office surrounded by models? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your property development marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday Short-Term Processes

In this section, include all of the tasks involved in running your property development business, including answering calls, meeting with potential customers, performing construction, showing properties, etc.

Long-Term Goals

Your long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your Xth home, or when you hope to reach $X in revenue. It could also be when you expect to expand your business to a new city.  

Management Team

To demonstrate your property development business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing property development businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your management team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a property development business or successfully running a construction project management firm.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you develop 5 or 25 properties per quarter, and/or offer property management services? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your property development business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a property development business:

• Cost of construction equipment and supplies
• Cost of contract labor
• Cost of office space and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your model properties’ blueprints or a breakdown of development types you offer.  

Writing a business plan for your property development company is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the property development industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful property development business.  

Property Development Company Business Plan Template FAQs

What is the easiest way to complete my property development business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your business plan.

How Do You Start a Property Development Business?

Starting a property development business is easy with these 14 steps:

• Choose the Name for Your Property Development Company
• Create Your Property Development Business Plan
• Choose the Legal Structure for Your Property Development Company
• Secure Startup Funding for Your Property Development Business (If Needed)
• Secure a Location for Your Business
• Register Your Property Development Company with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Property Development Company
• Buy or Lease the Right Property Development Equipment
• Develop Your Property Development Business Marketing Materials
• Purchase and Setup the Software Needed to Run Your Business
• Open for Business

Don’t you wish there was a faster, easier way to finish your Property Development business plan?

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Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to hire someone to write a business plan for you from Growthink’s team.

Other Helpful Business Plan Articles & Templates

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1-877-804-2421 [email protected]

How to Write a Successful Construction Business Plan That Sets You Up for Success

by: Daniel Quindemil

What if I told you there was a “copy and paste” formula that any construction business can follow and be successful?

Seriously…. there is…

Before I started I AM Builders, I helped grow a Commercial Construction Company from a $0 to $7,000,000 per year company.

I initially started I AM Builders to be an estimating firm. But as time went on I realized there was a big problem in the construction industry…. Contractors know how to build, but no one teaches them how to grow a company.

As a side a note: we specialize in estimating projects for busy contractors . If you ever need help estimating projects, we can prepare your entire estimate and bid for you and we can walk you through all strategies to help you close. Learn more about our estimating service for Contractors and Subcontractors .

Every entrepreneur wants to write a business plan. And yes, in most businesses you need a business plan to get financing, venture capital money, etc.

But construction is the only industry where you can start a business with zero financing become a million-dollar business almost overnight.

And guess what….. it doesn’t take a fancy business plan.

When I walked into Caroni, they were a drywall labor company and had just starting getting their first GC jobs. We didn’t know how to grow a construction business .

We started trying out different ways to get leads, estimating strategies, negotiations strategies….

We tried it all….

And after all was said and done, the secret to growing a construction business can be summarized in these three steps.

This is your business plan.

5 Pillars of a Contractor Business Plan

1. develop a system to get a ton of potential projects and client leads, 2. develop an estimating team that can bid jobs fast, 3. develop a follow-up system to negotiate and close sales.

4. Set Up Project Management Systems to Keep Everything Running Smoothly

5. Build Your Field Team and Perform an Outstanding Job on Every Single Project

Before you start… do this.

Here are some questions to ask yourself:

• What do you want your reputation to be?
• How do you want to handle your bidding process?
• How much time do you have for your construction company?

Next, it’s time to get some specific goals.

Too many contractors are only caught up with their jobs and the busyness of their daily schedules that they never sit down and think, “ what am I working toward ?”

This is why it’s important to get into the specifics and have clear goals on what to achieve.

For more info on how to prepare detailed goals and targets read this post: Grow Your Construction Business in 3 Months .

After helping over 1200 contractors grow their company, we’ve concluded that there are 5 steps to creating an effective business plan.

Let’s get into each one.

1. Determine Your Lead Generation Strategy

How are you getting your leads?

Before doing any work on the field, before estimating the job, before even getting the job , you need to capture the lead for the job.

That’s why it’s the first step in this list.

So the question is, how do you capture leads? Well, the first thing you should probably do is educate yourself deeply on this specific topic alone. Lucky for you, we have an article on how to get more jobs for you to dive into.

Next, you need to sign up for lead generation services like iSqft and Bluebook to consistently get the opportunity to bid on jobs. They both serve as the lead generation tool and the bidding tool as well, so it’s a 2-in-1 deal.

If you want more details on these lead gen services and a few other ones, check out this article .

After investing in these lead gen services you’ll have potential jobs coming in guaranteed, but there’s also another strategy you can take to get more leads.

It involves building a Select 12 Cluster (S12C). An S12C is essentially a list of 12 potential clients that you handpick and focus on that will provide you with a steady stream of business.

For example, if you’re a general contractor you would do a quick Google search for developers in your area,

Then you would pick 12 of them and either send out personalized emails, give them all a call, or visit their offices.

But you’re not just going to introduce yourself, remember that goal is to let them know you exist. Not any other contractor… but you . Stand out from other contractors, display authority and give value by helping them with their jobs, or by giving potential clients advice. This goes a long way in developing a relationship with everyone in your S12C.

The main idea with the S12C is to put your horse blinders on and laser focus on 12 ideal clients and develop relationships with them so they can start using you as the go-to when they need work with your trade.

So just to recap:

• Invest in lead generation services
• Set up and develop a S12C

After securing leads consistently and reliably, it’s time to have a specific plan to bid and estimate those jobs.

2. Establish Your Bidding and Estimating Process

The second step after getting leads is to have a system that bids and estimates those jobs for you at lightning speed so you can focus most of your time on selling the job.

There’s 3 options for you to consider:

• Hire an in-house estimator to work full-time.
• Hire an estimating service to handle each individual project.
• Do the whole thing yourself.

If you choose to do it yourself, it will prove to be really tough to expand your business when you’re so deep in it all day. Plus, imagine working for 1 and a half days straight to estimate a project, only to find out your potential client just used you for better pricing (they really do this). Successful contractors are ones that know how to build a team , how to lead them , and how to sell jobs to bring in business.

In other words, delegate as much as possible so you can focus on the thing that really brings in revenue, selling jobs.

So if you’re estimating jobs yourself as a one-man show, then delegate that task as soon as possible, otherwise, you won’t ever be able to effectively grow.

Let’s say you finally decide to hire an estimator to work in your office. The average salary of an estimator is $81,219/Yr, according to Indeed . Then after payroll taxes and insurance (26%), you’re looking at over $102,000 a year!

Which translates to about $8,500/Mn and $2125/Wk. If you want to bid 10 average-sized projects a month, that means you’re paying your estimator $850 per project!

To save money, time, and effort to manage an extra employee(s), the best option is to outsource your estimating to a reliable firm that can produce accurate pricing and only work on a per-project basis, so you only pay when there’s a project to bid, instead of having to pay an estimator full-time whether they’re hard at work or not.

3. Create a Sales Team that Closes Jobs

After you have leads coming in and you’re bidding those jobs at lightning speed without doing the tedious work, it’s time to dedicate most of your time to sell the job.

There are many strategies to closing jobs, but as a whole, it involves investing in the client .

Investing in a client means giving , being patient, and then asking when the time is right. You can give to the client through automatic follow-up or manual follow-up.

Automatic follow-up means using a Customer Relations Manager (CRM) to systematically contact specific people at specific times. It’s a software you can also use it to send mass emails with similar pitches to different clients in your area.

Manual follow-up involves a lot of calling and talking to people. This is on your own time, that’s why it’s called “manual” follow-up.

Before bidding a project, be sure to meet your potential client in person to:

• See if they’re someone you want to work with
• Get them to know who you are and what you bring to the table

If someone knows who you are, gets calls from you now and then where you genuinely help them out with any problems or ask how they’re doing…

Who do you think they’re most likely to pick for the job?

This is why it’s critical for contractors to have a S12C where they focus on 12 specific clients and get 80% of their work from them.

It’s ideal for the owner of the construction company to be the main salesperson but if there’s just not enough time in the day (we understand), then hire 1-2 Account Managers who’s entire job consists of talking to potential clients, following up with previous ones, and being the main form of communication between your company and the outside.

4. Set Up Project Management Systems

At this point you’ll have leads pouring in, you’ll be estimating those jobs on autopilot, and you’ll be selling the projects. It’s only a matter of time before you suddenly have a couple projects to work on, and the hard work really begins. This is where you need to understand how to manage subcontractors .

As stated above, the owner of a construction company, or any company for that matter, should focus on leading teams and selling. That’s it. Being on the job site all day stressing and pulling your hair out is not going to bring in new business. Unless you truly love being on the field, you need to delegate everything to seasoned professionals.

But before you go running around and delegating everything, you need to set up a system to manage all your projects so your contracting business can be a coordinated, smooth-oiled machine that pumps out only quality work.

You’re going to need 3-4 software to help you manage your fieldwork:

Bid Management Software

This is what you’re going to use to bid out jobs and keep track of your bids. It’s quick, it’s easy, and it’s a whole lot better than handing people estimates all day and having to remember due dates off the top of your head. If you want to check out some bidding software go take a look at SmartBid and Quick Bid .

Project Management Software

This is software for people on the field to be in constant communication with one another. One of the first steps in professionalizing a construction company is to get a project management software that helps all the workers, supervisors, project managers, and superintendents all be on the same page all the time. Some great P.M.S are CoConstruct , Buildertrend , and Procore .

Accounting Software

It always helps to have all your finances done automatically and as hands-off as possible. Let an accounting software manage all your finances so you can focus most of your effort on bringing in revenue by selling jobs. QuickBooks is the cream of the crop here but Zipbooks and Stripe are also great alternatives.

Estimating Software

This is optional because if you outsource your estimating to qualified estimating firms, then spending money on estimating software won’t be necessary. But if you want to hire estimators in-house or want to do a mix of in-house and out-house estimating, then you’re without a doubt going to need a takeoff and estimating software that can help you be as accurate and as quick as possible. We use Planswift in our office but Bluebeam is also great as well.

You can find software packages that include all-in-one packages like Procore, Corecon, or Buildertrend that include everything you need to professionalize your construction business. The pricing will reflect that, but it’s a necessary investment for your construction company.

5. Found a Field Operations Team

Now that you have project management systems set up, it’s time to create a field operations team. Keep in mind this is only for people in the field , not in the office.

Every construction company is different, some may choose to subcontract work instead of hiring workers and training them, and then others may lease workers from other companies.

So first understand how you want your company to operate, then the next step is to understand the roles of a steamrolling field operations team and how to find the right people for the job.

General Superintendent

This is the main field operations manager. He/she is the one overseeing all the projects a company is currently working on. A general superintendent needs to be comfortable under pressure, an effective leader that gets people to work, and able to raise their voice from time to time.

Project Superintendent

There are the overseers of single projects. They put all their attention on a single job to make sure it runs well. They need to have a deep understanding of construction, their workers, and be on top of their game even when under pressure.

This is the next subdivision in the field. Larger jobs typically get broken up into multiple sections and while they’re all being managed by the project superintendent, the foreman is the one managing specific sections or trades.

Skilled laborers are the true engine behind the construction job. These are the people on the field doing the actual work. Hiring workers is relatively simple but be sure not to fall in the trap of hiring cheaper labor to save money because the reality is all the mistakes they make end up costing more than if you would have hired workers a bit more expensive.

Hire people, train them, and let them train other workers.

We’re not going to have a project manager on the list because they’re not typically on the field but a good project manager will be in the field often to help the superintendent run the job.

That’s how you set up a strategical business plan that set’s you up for success.

Construction can be a tough industry, but a great plan on how you’re going to run your business and even better execution on that plan can make your life a lot easier.

We hope you enjoyed this piece and got some real value from it. Feel free to comment below your $0.02.

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Property Development Business Plan Template

Written by Dave Lavinsky

Property Development Business Plan

You’ve come to the right place to create your Property Development business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their property development companies.

Below is a template to help you create each section of your Property Development business plan.

Executive Summary

Business overview.

Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.

Redstone Development is owned and operated by Jack Grant, a real estate development industry veteran who is well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Product Offering

Redstone Development will handle the entire development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.

The company focuses on building single-family homes and multi-family apartment complexes in the heart of Salt Lake City. All projects are designed to make these homes aesthetically appealing and luxurious. However, they will also be affordable to ensure that anyone in the Salt Lake City area can afford to live in our properties.

Customer Focus

Redstone Development will serve home buyers and real estate investors who live and work in Salt Lake City, Utah, or the surrounding area. Salt Lake City is a growing city in need of additional housing. More people come to this beautiful city every year, which reduces the number of available homes and apartment units. Therefore, we will target buyers who are struggling to find affordable housing.

Furthermore, there are thousands of first-time home buyers in the area. These buyers are an ideal target market for the company.

Management Team

Redstone Development will be owned and operated by Jack Grant. He recruited his former administrative assistant, Sheila Johnson, to be his Office Manager and help manage the office and operations.

Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful real estate development businesses.

Sheila Johnson has been Jack Grant’s loyal administrative assistant for over ten years at a former property development firm. Jack relies strongly on Sheila’s diligence, attention to detail, and focus when organizing his clients, schedule, and files. Sheila has worked in the property development industry for so long that she understands all aspects required to run a successful property development company.

Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business.

Success Factors

Redstone Development will be able to achieve success by offering the following competitive advantages:

• Location: Redstone Development’s office is near the center of town, in the shopping district of the city. It is visible from the street, where many residents shop for both day-to-day and luxury items.
• Client-oriented service: Redstone Development will have a full-time assistant with property development experience to keep in contact with clients and answer their everyday questions. Jack realizes the importance of accessibility and will further keep in touch with his clients through monthly newsletters.
• Management: Jack has been highly successful working in the property development sector. His unique qualifications will serve customers in a much more sophisticated manner than many of Redstone Development’s competitors.
• Relationships: Having worked and lived in the community his whole life, Jack knows many local leaders, real estate agents, and other influencers in the local property development industry.

Financial Highlights

Redstone Development is seeking $1,000,000 in debt financing to launch its property development business. The funding will be dedicated to purchasing our first property, construction costs, securing the office space, and purchasing office equipment and supplies. Funding will also be dedicated toward six months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:

• Office space build-out: $50,000
• Office equipment, supplies, and materials: $20,000
• Land purchase and construction expenses: $530,000
• Six months of overhead expenses (payroll, rent, utilities): $250,000
• Marketing costs: $50,000
• Working capital: $100,000

The following graph below outlines the pro forma financial projections for Redstone Development.

Company Overview

Who is redstone development.

Redstone Development is a new property development company located in Salt Lake City, Utah. We focus on residential property development for single-family and multi-family homes. We handle all steps of the property development process, from sourcing the land to selling the finished property. Redstone Development aims to be the most trusted source of affordable housing in the Salt Lake City metro area.

Redstone Development is owned and operated by Jack Grant, who is a real estate development industry veteran and well-versed in the entire property development process. Jack has over 30 years of experience developing residential properties and holds a Master’s in Real Estate Development. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Redstone Development’s History

After 30 years of working in the property development industry, Jack Grant began researching what it would take to create his own property development company. This included a thorough analysis of the costs, market, demographics, and competition. Jack has compiled enough information to develop his business plan and approach investors.

Once his market analysis was complete, Jack began surveying the local office spaces available and located an ideal location for the property development headquarters. Jack incorporated Redstone Development as a Limited Liability Corporation on October 1st, 2022.

Once the lease is finalized on the office space, renovations can be completed to make the office a welcoming environment to meet with clients.

Since incorporation, Redstone Development has achieved the following milestones:

• Located available office space for rent that is ideal for meeting with clients
• Identified the first property to develop
• Developed the company’s name, logo, and website
• Hired an interior designer for the decor and furniture layout
• Determined equipment and fixture requirements
• Began recruiting key employees

Redstone Development’s Services

Redstone Development will handle the entire property development process, including sourcing land, securing all necessary approvals and permits, construction, and sale of the finished property.

Industry Analysis

The real estate and property development industries have been strong over the past few years. As of 2021, the real estate industry was valued at $3.69 trillion and is expected to grow at a compound annual growth rate of 5.2% from now until 2030.

This growth will be driven by increasing demand for personal housing. Millennials and Gen-Z are beginning to rent their first apartments or buy their first homes. After years of living with family or roommates, they are ready to have a space to call their own. This trend is leading to a substantial demand for housing that many cities are struggling to supply.

The main challenge to the property development industry is the decrease in market size in the land development industry. Over the past five years, the industry saw an average annual decline of 0.7%. However, we believe that the pandemic was a considerable factor in this decline. Currently, the land development market is valued at $12 billion USD, and we expect it to grow substantially due to the growth of similar industries and the increasing demand for housing, as mentioned above.

Customer Analysis

Demographic profile of target market.

Redstone Development will serve home buyers and real estate investors in Salt Lake City, Utah, and its surrounding areas.

The community of Salt Lake City has thousands of first-time home buyers, residential real estate investment firms, and people looking for affordable housing options in the area. The company will also target millennials specifically since the majority of first-time home buyers are in this age group.

The precise demographics for Salt Lake City, Utah are:

Customer Segmentation

Redstone Development will primarily target the following customer profiles:

• Home buyers
• Real estate investors
• Millennials
• Apartment/Condominium management companies

Competitive Analysis

Direct and indirect competitors.

Redstone Development will face competition from other companies with similar business profiles. A description of each competitor company is below.

Upscale Property Developers, Inc.

Upscale Property Developers, Inc. is a property development company in Salt Lake City. In business for over 40 years, Upscale Property Developers, Inc. provides oversight for the entire property development process for new single-family and multi-family residences, commercial offices, and government buildings across the area. Upscale Property Developers, Inc also offers a variety of property renovation, demolition, and revitalization services for existing buildings.

Although Upscale Property Developers, Inc. provides homes with a luxury aesthetic, they are also the most expensive property developments on the market, thus resulting in many first-time home buyers being priced out of the market.

Premium Property Development Solutions

Established in 1990, Premium Property Development Solutions is a property developer of new commercial and residential properties in Salt Lake City. The company specializes in eco-friendly building materials and upscale design options for individual and corporate clients. Clients can customize their building design or choose from a variety of standard design options. The company employs experienced property developers and designers who are well-versed in green building design.

Premium Property Development Solutions is more affordable than Upscale Property Developers Inc. but is still out of most first-time home buyers’ price ranges.

Salt Lake Residential

Salt Lake Residential is also a local property development company that manages the complete property development process from sourcing and permitting to construction and sale. They are mostly known for their unique apartment complex designs but are equipped to take on a variety of different builds. The company has been in business for about ten years and has developed a reputation for building quality homes for affordable prices.

Although Salt Lake Residential has a similar value proposition of luxury homes at affordable prices, this company lacks the green building and eco-efficiency component to their business model, thus losing out on business from eco-conscious home buyers.

Competitive Advantage

Redstone Development enjoys several advantages over its competitors. Those advantages include:

• Location: Redstone Development’s office is near the center of town, in the city’s shopping district. It is visible from the street, where many residents shop for both day-to-day and luxury items.

Marketing Plan

Brand & value proposition.

Redstone Development will offer the following unique value proposition to its clientele:

• Service built on long-term relationships and personal attention
• Big-firm expertise in a small-firm environment
• Client-focused property development, where the company’s interests are aligned with the client
• Effective project management
• Affordable pricing

Promotions Strategy

The promotions strategy for Redstone Development is as follows:

Website/SEO

Redstone Development will invest heavily in developing a professional website that displays all of the features and benefits of the property development company. It will also invest heavily in SEO so the brand’s website will appear at the top of search engine results.

Social Media

Redstone Development will invest heavily in a social media advertising campaign. The marketing manager will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographics.

Print Advertising

The company will invest in professionally designed advertisements to be printed in real estate publications. Redstone Development will also list its properties for sale in key local publications, including newspapers, area magazines, and its own newsletter.

Community Events/Organizations

The company will promote itself by distributing marketing materials and participating in local community events, such as local festivals, business networking, or sporting events.

Redstone Development’s pricing will be moderate so consumers feel they receive great value when purchasing properties from the company.

Operations Plan

The following will be the operations plan for Redstone Development.

Operation Functions:

• Jack Grant will be the Owner and President of the company. He will oversee all staff and manage client relations. He will also oversee all major aspects of the development projects. Jack has spent the past year recruiting the following staff:
• Sheila Johnson – Office Manager who will manage the office administration, client files, and accounts payable.
• Kenneth Bohannon – Staff Accountant will provide all client accounting, tax payments, and monthly financial reporting.
• Beth Martinez – Marketing Manager who will provide all marketing for Redstone Development and each property it manages.
• Jack will also hire a team of architects, engineers, interior designers, and contractors to design and build the properties.

Milestones:

The following are a series of steps that lead to our vision of long-term success. Redstone Development expects to achieve the following milestones in the following six months:

1/1/202X         Finalize lease agreement

2/1/202X         Design and build out Redstone Development

3/1/202X         Hire and train initial staff

4/1/202X         Purchase first property for development

5/1/202X         Kickoff of promotional campaign

6/1/202X         Find second property for development

Jack has over 30 years of experience developing residential properties and worked for several of our competitors. He also holds a Master’s in Real Estate Development from the University of Utah. His education, experience, and industry connections will ensure that Redstone Development becomes one of the area’s most successful property development businesses.

Jack will also employ several other full-time and part-time staff to assist with all aspects of running a real estate development business as outlined in the Operations Plan.

Financial Plan

Key revenue & costs.

Redstone Development’s revenues will come primarily from the sale of completed properties. The company will sell new single-family homes, multi-family townhomes, and apartment complexes/condominium properties to individual buyers and investors.

The cost drivers will be the overhead costs required to staff a property development office. The expenses will be the payroll cost, rent, utilities, office supplies, and marketing materials.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required to achieve the revenue and cost numbers in the financials and to pay off the startup business loan.

• Average monthly payroll expenses: $50,000
• Office lease per year: $100,000

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Property Development Business Plan FAQs

What is a property development business plan.

A property development business plan is a plan to start and/or grow your property development business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Property Development business plan using our Property Development Business Plan Template here .

What are the Main Types of Property Development Businesses?

There are a number of different kinds of property development businesses , some examples include: Single-family detached housing, Multifamily housing, Developing and Subdividing Lots, and Commercial buildings.

How Do You Get Funding for Your Real Estate Development Business Plan?

Property Development businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding. This is true for a real estate developer business plan and a real estate investment business plan template.

What are the Steps To Start a Property Development Business?

Starting a property development business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Write A Property Development Business Plan - The first step in starting a business is to create a detailed real estate development company business plan that outlines all aspects of the venture. This should include market research on the real estate market and potential target market size, information the services you will offer, marketing strategies, pricing details and a solid financial plan.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your property development business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your property development business is in compliance with local laws.

3. Register Your Property Development Business - Once you have chosen a legal structure, the next step is to register your property development business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your property development business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Property Development Equipment & Supplies - In order to start your property development business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your property development business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

How To Write a Business Plan for Apartment Property Development Business in 9 Steps: Checklist

By henry sheykin, resources on real estate apartments development.

• Financial Model
• Business Plan
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Marketing Plan
• Bundle Business Plan & Fin Model

Welcome to our blog post on how to write a business plan for an apartment property development business in 9 easy steps. The apartment property development industry is thriving and experiencing substantial growth. According to recent statistics, the global apartment construction market is projected to grow at a CAGR of 4.5% from 2020 to 2027. This presents a great opportunity for entrepreneurs like you to enter the market and build a successful apartment complex. In this article, we will guide you through the essential steps of creating a comprehensive business plan for your apartment property development business.

The first step in creating a business plan for your apartment property development business is to conduct thorough market research. This will help you understand the demand for apartments in your target market and identify any gaps or opportunities that exist. By analyzing the current market trends, you can tailor your development plans to meet the needs and preferences of potential tenants. This research will also provide insights into the pricing, amenities, and features that will make your apartment complex competitive in the marketplace.

After conducting market research, it's crucial to identify your target market and determine the best location for your apartment complex. Consider factors such as demographics, income levels, and lifestyle preferences of your target market. Additionally, assess the desirability of different locations based on proximity to schools, transportation, recreational facilities, and other amenities. This will help you choose a location that appeals to your target market and maximizes the potential for high occupancy rates and rental income.

Analyzing the competition is another critical step in developing your apartment property business plan. Identify existing apartment complexes in your chosen location and assess their strengths and weaknesses. This analysis will help you differentiate your complex by offering unique amenities, services, or pricing structures. By understanding your competition, you can position your apartment complex as the preferred choice for tenants, ensuring high demand and occupancy rates.

The budget and funding sources are essential considerations in any business plan. Determine the total budget required for land acquisition, construction, permits, marketing, and initial operating costs. Explore various funding options, such as bank loans, investors, or partnerships, and decide which sources are most suitable for your business. A well-defined budget and funding strategy will provide clarity and financial security as you embark on your apartment property development journey.

When writing a business plan, it's crucial to define the legal structure of your company. This could be a sole proprietorship, partnership, or limited liability company (LLC). Consider consulting with a legal professional to choose the most appropriate structure for your apartment property development business. This decision will have ramifications for tax purposes, liability protection, and future growth opportunities.

Developing a marketing strategy is essential to attract tenants to your apartment complex. Consider both traditional and digital marketing channels to create awareness and generate leads. Utilize professional photography and virtual tours to showcase the unique features and amenities of your apartments. Additionally, establish partnerships with local businesses to enhance your amenities and services, creating added value for your tenants.

To ensure the successful execution of your apartment property development plans, it's essential to create a timeline and set milestones. This will help you track the progress of your project and ensure that tasks are completed in a timely manner. Break down the development process into manageable phases, such as land acquisition, construction, marketing, and tenant onboarding. By setting milestones, you can stay organized and motivated throughout the development journey.

Before commencing any construction activities, gather the necessary permits and licenses required by your local authorities. This includes building permits, zoning permits, environmental permits, and any other regulatory requirements. Ensure you comply with all applicable laws and regulations to avoid costly delays and legal complications. Consult with professionals familiar with local regulations to ensure a smooth permitting process.

Assembling a team of professionals is crucial to the success of your apartment property development business. This may include architects, contractors, interior designers, and property management experts. Look for individuals with experience in the development industry and a track record of delivering high-quality projects. Building a capable and reliable team will ensure the smooth execution of your development plans and the successful operation of your apartment complex.

Conduct Market Research

Before delving into any business venture, it is crucial to conduct thorough market research to gain a comprehensive understanding of the apartment property development industry. This will allow you to identify potential opportunities, challenges, and trends, as well as determine the viability of your business idea. Here are some important steps to follow:

• Identify your target market: Determine the specific demographic or segment of the population that your apartment complexes will cater to. Consider factors such as income level, lifestyle preferences, and housing needs.
• Study the local real estate market: Analyze the current state of the local real estate market in the desired location for your apartment property development business. Research property prices, rental rates, vacancy rates, and demand-supply dynamics.
• Assess demand and competition: Investigate the demand for apartments in the target market and evaluate the competition you may face from existing apartment complexes. Look for gaps in the market that your business can fill.
• Understand legal and regulatory requirements: Research the local laws and regulations that govern the apartment property development industry in your target location. Familiarize yourself with zoning restrictions, building codes, and permits required for construction and operation.
• Identify emerging trends: Stay updated on the latest trends in apartment property development, such as sustainable construction practices, smart home technologies, and eco-friendly amenities. This knowledge will give you a competitive edge and help you attract tenants.

Tips for Conducting Effective Market Research:

• Utilize online resources, market reports, and industry publications to gather reliable data.
• Visit local real estate exhibitions, conferences, and networking events to connect with industry professionals and gain insights.
• Consider hiring a market research firm to help you gather and analyze data.
• Engage with potential tenants and conduct surveys or focus groups to understand their preferences and needs.
• Stay updated on economic indicators and demographics that can impact the demand for apartments.

Identify Target Market and Location

Choosing the right target market and location is crucial for the success of an apartment property development business. It requires a comprehensive understanding of both the market demand and the potential locations that align with your business goals.

1. Research and analyze market demand: Begin by identifying the demographics, lifestyle preferences, and housing needs of your target market. Conduct surveys, gather data from market research firms, and study existing apartment complexes to gain insights into the preferences and expectations of potential tenants.

2. Define your target market: Once you have gathered the necessary information, define your target market based on factors such as age group, income level, and lifestyle preferences. This will help you tailor your apartment designs, amenities, and services to meet their specific needs and preferences.

3. Identify suitable locations: Consider factors such as proximity to amenities, public transportation, schools, and employment hubs when selecting potential locations for your apartment property development business. Additionally, research market trends and growth projections to identify areas with increasing demand for housing.

Tips for identifying the target market and location:

• Utilize online tools and databases to gather data on demographics and market trends.
• Visit potential locations and assess the infrastructure, surrounding neighborhood, and accessibility.
• Consult with real estate agents, local developers, and industry experts to gain insights about the target market and location.
• Consider conducting focus groups or surveys to gather direct feedback from potential tenants in your target market.
• Stay updated with local zoning regulations and land-use policies to ensure compliance and smooth development processes.

By identifying the target market and selecting suitable locations, you can optimize your business operations, attract potential tenants, and position your apartment property development business for long-term success.

Analyze Competition

When starting an apartment property development business, it is crucial to thoroughly analyze the competition in the market. This step helps you understand the current market conditions, the offerings of existing apartment complexes, and how you can differentiate your business to attract tenants.

• Research Existing Apartment Complexes: Begin by researching and identifying existing apartment complexes in your target market. Study their locations, amenities, services, rental rates, lease terms, and overall reputation.
• Identify Strengths and Weaknesses: Analyze the strengths and weaknesses of each competitor, such as unique amenities, convenient location, quality of apartments, level of customer service, and pricing strategies.
• Differentiate Your Business: Use the gathered information to identify areas where you can differentiate your apartment property development business. Determine what unique selling points and value proposition you can offer to attract tenants and stand out from the competition.

Tips for Analyzing Competition

• Visit competitor's websites and social media pages to gather information about their offerings and marketing strategies.
• Take note of any negative reviews or complaints about competitor apartment complexes to avoid similar issues in your own business.
• Consider conducting surveys or focus groups with potential tenants to understand their preferences, needs, and pain points when choosing an apartment complex.
• Regularly monitor the market for any new developments or changes in the competition that may impact your business.

Remember, analyzing the competition is an ongoing process. Continuously monitor the market and adapt your strategies to stay competitive and provide the best possible living experience for your tenants.

Determine The Budget And Funding Sources

Developing an apartment property requires careful planning and financial considerations. Determining the budget and identifying the funding sources are crucial steps in ensuring the success of your apartment property development business.

1. Calculate the costs: Start by estimating the costs involved in various aspects of apartment development, such as land acquisition, construction, licensing fees, marketing, and operating expenses. Consider consulting with industry experts, contractors, and financial advisors to get accurate cost estimates.

2. Identify funding sources: Once you have calculated the budget, explore various funding options. Some potential funding sources may include personal savings, loans from financial institutions, partnerships, investors, or government grants. Evaluate each option carefully to determine the best fit for your business.

3. Create a detailed financial plan: Develop a comprehensive financial plan that outlines projected income, expenses, and cash flow for the apartment property development business. This plan will help you assess the feasibility of the project and demonstrate its potential to attract investors or secure loans.

Tips for determining the budget and funding sources:

• Consider conducting a thorough market study to understand the demand for apartments in your chosen location and the potential rental income.
• Research and analyze the current interest rates, repayment terms, and eligibility criteria of different loan options available.
• Explore government programs or incentives that offer financial support for sustainable or affordable housing projects.
• Consider approaching potential investors and present a compelling business plan that highlights the potential returns and benefits of investing in your apartment property development business.
• Consult with a financial advisor who specializes in real estate investment to ensure your budget and funding decisions align with your long-term goals and objectives.

Remember, determining the budget and securing appropriate funding sources are essential steps that lay the foundation for your apartment property development business. By carefully analyzing the financial aspects of your project, you can effectively manage costs, attract investors, and create a sustainable and profitable apartment property.

Define The Business Structure

In order to establish a solid foundation for your apartment property development business, it is crucial to define the business structure. This will have legal and financial implications, and will determine how responsibilities are divided among owners and partners.

Consider the following options when defining the business structure:

• 1. Sole Proprietorship: This is the simplest and most common form of business ownership, where you are the sole owner and have full control over the business.
• 2. Partnership: If you plan to start the business with one or more partners, a partnership structure allows for shared responsibilities and resources.
• 3. Limited Liability Company (LLC): An LLC provides liability protection for the owners, called members, while offering flexibility in management and taxation.
• 4. Corporation: A corporation is a separate legal entity from its owners. It offers the most protection against personal liability, but involves more formalities and paperwork.

Tips for defining the business structure:

• ● Consult with a lawyer or an accountant experienced in real estate or property development to determine the most suitable structure for your business.
• ● Consider the long-term goals and growth plans of your business when choosing a structure.
• ● Evaluate the potential tax implications and benefits associated with each structure.
• ● Discuss the allocation of responsibilities, decision-making authority, and profit-sharing arrangements with your business partners or co-owners.
• ● Register your chosen business structure with the appropriate government agencies and obtain any required licenses or permits.

By clearly defining the business structure, you can establish a strong legal and financial framework that will support the growth and success of your apartment property development business.

Develop A Marketing Strategy

Once you have conducted thorough market research, identified your target market, and analyzed your competition, it's time to develop a strong marketing strategy that will help you attract potential tenants and create awareness about your apartment property development business. Here are some essential steps to consider:

• Identify your unique selling proposition: Determine what sets your apartment complexes apart from others in the market. Whether it's exceptional amenities, sustainability initiatives, or premium services, highlighting your unique features will help you differentiate yourself and attract your target market.
• Define your target audience: Clearly identify the demographic and psychographic characteristics of your ideal tenants. Understanding their preferences, needs, and interests will allow you to tailor your marketing efforts to effectively reach and connect with them.
• Create a compelling brand identity: Develop a brand identity that reflects the values and image you want to project. This includes designing a logo, choosing a color palette, and crafting a brand message that resonates with your target audience.
• Utilize a multi-channel approach: Implement a diverse range of marketing channels to maximize your reach. This can include online platforms such as social media, websites, and online directories, as well as offline strategies like print ads, billboards, and local events.
• Create high-quality content: Generate informative and visually appealing content that showcases the unique features and benefits of your apartment complexes. This can include virtual tours, professional photography, videos, and written descriptions that highlight the luxurious amenities and modern living experience you offer.
• Leverage digital marketing tools: Utilize digital marketing techniques like search engine optimization (SEO), pay-per-click (PPC) advertising, and email marketing to enhance your online visibility, drive website traffic, and generate leads. Consider partnering with digital marketing professionals to ensure optimal results.
• Build strong partnerships: Collaborate with local businesses, organizations, and influencers to amplify your marketing efforts. This can involve joint promotions, cross-marketing initiatives, or hosting community events that showcase your apartment complexes.
• Regularly monitor and analyze the performance of your marketing efforts using analytics tools to identify what strategies are working and where improvements can be made.
• Stay up-to-date with industry trends and adjust your marketing strategy accordingly to remain competitive and appealing to your target market.
• Utilize social media platforms to engage with potential tenants, respond to their queries, and showcase the lifestyle and community aspects of living in your apartment complexes.
• Consider offering incentives or referral programs to encourage your existing tenants to refer friends or colleagues, expanding your tenant pool through word-of-mouth marketing.

Create A Timeline And Set Milestones

Creating a timeline and setting milestones is a crucial step in the process of developing an apartment property. It helps keep your project on track and ensures that all the necessary tasks are completed within specific timeframes. Here are the key elements to consider when creating a timeline and setting milestones for your apartment property development business:

• Research: Begin by conducting thorough research to gain insights into the steps involved in developing an apartment property. This will help you understand the time required for each stage and enable you to set realistic milestones.
• Planning: Outline the major milestones of your project, such as obtaining permits, securing financing, completing architectural and engineering designs, and hiring contractors. Break down these milestones into smaller, manageable tasks to ensure clarity and focus.
• Sequencing: Determine the logical order of tasks and milestones. Some tasks may need to be completed before others can begin. For example, architectural and engineering designs may need to be finalized before obtaining permits.
• Timeframes: Assign estimated timeframes to each task and milestone based on your research and industry standards. Take into account potential delays and contingencies. By setting specific deadlines, you create a sense of urgency and accountability.
• Dependencies: Identify any dependencies between tasks. Some tasks may rely on the completion of others. Understanding these dependencies is crucial for coordinating efforts effectively.
• Monitoring: Continuously monitor the progress of your project. Regularly update your timeline and adjust milestones as needed. This will help you identify potential bottlenecks and take corrective actions promptly.

Tips for Creating a Timeline and Setting Milestones:

• Involve key team members and professionals in the timeline creation process to gain different perspectives and insights.
• Allow some flexibility in the timeline to accommodate unforeseen changes and challenges that may arise during the development process.
• Communicate the timeline and milestones clearly with all stakeholders, including contractors, investors, and team members. This ensures everyone is aware of the project's progress and can plan their activities accordingly.
• Regularly review and update the timeline to reflect any changes in the project scope, budget, or resources.

Gather Necessary Permits and Licenses

Before starting any construction or development project, it is crucial to gather all the necessary permits and licenses required by your local government. These permits ensure that you are in compliance with building codes, zoning regulations, and other legal requirements.

Here are some important steps to consider when gathering the necessary permits and licenses:

• Research the specific permits and licenses needed for apartment property development in your area. This may include building permits, environmental permits, occupancy permits, and more.
• Contact and consult with your local government office, such as the planning department or building permits department, to understand the specific regulations and requirements for your project.
• Prepare and submit the required application forms, along with any necessary supporting documents and fees. Ensure that all required information is completed accurately and thoroughly.
• Follow up with the local government office to track the progress of your permit applications. This may involve providing additional information or addressing any concerns raised by the authorities.
• Once you have obtained the necessary permits and licenses, keep them easily accessible and ensure that all construction activities strictly adhere to the approved plans and regulations.
• Start the permit application process as early as possible to avoid delays in your project timeline.
• Engage the services of a professional permit expediter or consultant who specializes in navigating the permit process, especially if you are unfamiliar with local regulations.
• Maintain open communication with the local government office throughout the permit application process to address any concerns or questions promptly.

Assemble A Team Of Professionals

When starting an apartment property development business, one of the key steps in ensuring its success is assembling a team of professionals to assist with various aspects of the project. An experienced and knowledgeable team can help navigate the complexities of the development process and ensure that your project is executed efficiently and effectively.

The first professional you may want to consider adding to your team is a real estate attorney. A real estate attorney can provide valuable legal advice throughout the process, from reviewing contracts and lease agreements to negotiating with contractors and handling any potential legal disputes that may arise.

Another important team member to have is a real estate agent or broker. A skilled real estate agent can help you identify potential properties for development, negotiate favorable purchase or lease agreements, and provide valuable market insights to inform your decision-making process.

In addition to legal and real estate expertise, it is also important to have a team of professionals with construction and design knowledge. This may include architects, engineers, and contractors who specialize in residential construction. These professionals can help you create functional and attractive apartment complexes that meet building codes and regulations.

Furthermore, it is crucial to have a property management team in place to handle the day-to-day operations of your apartment complexes. This may include property managers, maintenance staff, and janitorial services. A competent property management team will ensure that your tenants have a positive living experience and that your properties are well-maintained.

Tips for assembling a team of professionals:

• Seek recommendations and referrals from trusted sources, such as industry professionals or colleagues.
• Conduct thorough interviews and background checks to ensure that the professionals you hire have the necessary experience and qualifications.
• Create clear contracts and agreements with your team members to outline their responsibilities, expectations, and compensation.
• Encourage open communication and collaboration among team members to foster a cohesive and productive working environment.
• Regularly evaluate the performance of your team members and provide constructive feedback to ensure ongoing improvement.

By assembling a team of professionals who are experts in their respective fields, you can increase the likelihood of success in your apartment property development business. Each team member brings their unique skills and knowledge, contributing to the overall success of your projects and ensuring that your tenants have an enjoyable living experience.

In conclusion, developing a business plan for an apartment property development business is crucial to ensure success in this competitive industry. By following these 9 steps, you will be able to create a comprehensive plan that covers all aspects of your business, from market research to assembling a team of professionals. Remember to conduct thorough market research, identify your target market and location, analyze the competition, and determine your budget and funding sources. Additionally, define your business structure, develop a marketing strategy, create a timeline and set milestones, gather necessary permits and licenses, and assemble a team of professionals. By doing so, you will be well-prepared to embark on your journey as a successful apartment property developer.

Apartments Development Financial Model

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In all the stages involved in getting to choose out mutual partners to accomplish your real estate small business plan , or getting to hire out contractors, a construction business plan might be the savior. It helps you in making the essential steps in mapping out a strategic achievement of construction goals. This is accomplished by incorporating project management plan tools available for users’ disposal.

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• A brief history of your construction company
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• Steps on how you will make profits.
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• It foresees the future
• It acts as an added strength to a business action plan for steady growth and prosperity
• It helps one be ready to face any unexpected situation that might crop up.

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Residential Construction Business Plan Template

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COMPANY’S NAME BUSINESS PLAN INSERT IMAGE/LOGO OWNER’S NAME INSERT ADDRESS/CONTACT INFO

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Residential Remodeling Business Plan

Start your own residential remodeling business plan

Anywhere Remodeling

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Anywhere Remodeling, Inc. will change its focus to differentiate ourselves from fly-by-night contractors and improve its sales and customer service functions. The goal is to increase sales to more than $2 million in three years, while also improving the gross profit and working capital. We want to become known as the best quality remodeling company around.

This business plan leads the way. It renews our vision and strategic focus: adding value to our target market segments in our local market. It also provides the step-by-step plan for improving our sales, gross margin, and profitability.

This plan includes this summary, and chapters on the company, products and services, market focus, action plans and forecasts, management team, and financial plan, management and working capital.

1.1 Objectives

• Provide 10% of gross sales for Owner and 10% of gross sales for company.

1.2 Mission

Anywhere Remodeling is a full service remodeling company that is devoted to building the dream homes of local high-end clients.

We believe that attention to detail and customer service sets us apart from our competition, and it is what allows us to continue to focus on high-end projects. We work with the property owner to select the highest grade materials possible, and we continue to contact the customer even after the job has been completed.

1.3 Keys to Success

Marketing: Creating a desire for our services above all competitors is a key to our continued success, as well as creating the perception that we are the top of the line.

Craftsmanship: No matter how good the marketing program is, poor-quality work will destroy our base of referral business. It will also take us out of our high end market.

Communication: Our communication systems, both internally and with our customers, are the key to excellent performance – projects completed on schedule, on budget and to our customers’ satisfaction. We also must ensure that the customer feels like we have been responsive to his/her every request so that we can get a good referral.

Building Material prices: In order to turn a profit, we need to have a good feel for the prices of materials in our area, and where to get the best deals.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Anywhere Remodeling, Inc. started as a proprietorship originally named Right Stuff Construction in August 1989, serving Anywhere, World. Its customers pay 10-15% extra to feel “taken care of.” Their need to trust a contractor allows them to feel comfortable with slightly higher than average prices.

2.1 Company Ownership

Anywhere Remodeling, Inc. is an S corporation owned in majority by its founder and president, Bob Hammer. There are two part owners: Steve Field & Bill Sales. Neither owns more than 15%, but both are active participants in management decisions.

2.2 Company History

Anywhere Remodeling, Inc. was founded in 1989 as a sole proprietorship registered in Anywhere, World as Right Stuff Construction, owned and operated by Bob Hammer. It was a originally a handyman business specializing in house painting.

After seeing an influx of competition in response to the recent housing crisis, Bob decided that the best way to adapt to the market was to take advantage of the fact that new building permits are down. The theory is that because new home construction is down, those people who have the extra money to spend will be more likely to hold on to their assets and remodel existing homes rather than go out and buy a new home.

Products and Services

Anywhere Remodeling, Inc. is a full-service remodeling contractor. At present we do mostly high-end, single room, kitchen/bath and whole house remodels. It is our philosophy that we can offer a quality product in a timely fashion giving the customer one-on-one service.

This includes:

• Whole House Remodeling
• Historic Home Remodeling
• Wing Remodeling
• Single Room Remodeling
• Kitchen Remodeling
• Bath Remodeling
• Green Remodeling
• Handyman Services

Market Analysis Summary how to do a market analysis for your business plan.">

Anywhere Remodeling is focusing on both the commercial and residential markets of Anytown America, with the residential being about 80% of the overall volume of the company.

As housing prices fall, potential clients will be more apt to remodel their high-end homes, rather than try to sell them.

4.1 Market Segmentation

In an era of decreasing residential property values and relatively stable rates of personal income growth, Anywhere Remodeling, Inc. is focusing on two segments of the residential remodeling market:

1) Neighborhoods where homeowners have achieved success in their careers and have room in their budget for investment in their homes, but are not eager to incur a much higher mortgage payment by selling their house and ‘buying up.’ [Such targeted neighborhoods have housing stock with room to expand and are deemed to be worth the upgrade expenditures.]

2) Run-down neighborhoods that have been targeted by community decision-makers for renewal.

About 20% of Anywhere’s overall volume consists of remodeling projects for businesses within the community areas being revitalized.

4.2 Target Market Segment Strategy

Anywhere Remodeling’s targeted market groups were chosen because of the long-term potential for continued sales. Assuming high quality work and effective word-of-mouth marketing, the targeted, potentially upgradeable, neighborhoods afford a continuing supply of work to do. The business remodels, while providing a smaller portion of the firm’s income, offer an important opportunity to build relationships and generate trust with business owners and managers who have homes in the targeted ‘upgradeable’ homes.

4.3 Service Business Analysis

As a whole, the building industry is a very fragmented industry. Despite large homebuilders, no single company has as much as a 2% market share.

The remodeling industry is even more diluted with only a handful of companies in the nation showing annual sales in excess of $10 million. Under the standard definition, all remodelers fall into the category of a small business.

4.3.1 Competition and Buying Patterns

The remodeling market is made up of potential customers who weigh three competing values: Price, Quality and Service. There is a saying that a remodeling company can deliver any two of those values. A large portion of the potential customers are asking for quality and service, and then go shopping for price. These customers are extremely difficult to work for and make a profit.

There is another segment of the market that is concerned with getting a “fair” price, but is primarily concerned with getting quality work and superior service–they want to be “taken care of.” This customer is generally happy to work with one contractor, developed a trusting relationship, and pay a little bit more for this comfort.

Strategy and Implementation Summary

5.1 Sales Strategy

1. Anywhere Remodeling needs to sell the company, not the price.

2. Anywhere has to sell its quality and service. The actual remodeling is like the razor, and the support, service, design and hand holding are the razor blades. We need to serve our customers with what they really need.

The Yearly Total Sales chart summarizes an ambitious sales forecast. Anywhere expects sales to increase significantly from $750,000 last year.

5.1.1 Sales Forecast

The important elements of the sales forecast are shown in the Total Sales by Month in Year 1 chart. Total sales will increase substantially over the next several years.

5.2 Marketing Strategy

The marketing strategy is the core of the main strategy:

• Emphasize quality and service.
• Build a relationship business–treat the customers like members of the family.
• Take care of the customers for the rest of their life.

5.3 Competitive Edge

Anywhere Remodeling, Inc.’s competitive edge is its reputation in the community. Over the past five years, Anywhere has won a number of awards for quality and design, both nationally and locally. Its satisfied customer base continues to expand and spread the word.

5.4 Milestones

The following table lists important program milestones, with dates and persons in charge, and budgets for each. The milestone schedule indicates our emphasis on planning for implementation. The most important programs are the sales and marketing programs listed in detail in the previous topics.

Web Plan Summary

It will showcase the construction experience within the company, as well as the portfolio of all the past and current projects done by Anywhere Remodeling.The website will include a resources area, offering articles, research and weekly newsletters to interested parties.

The key to the website strategy will be combining a very well designed front end, with a back end capable of recording leads and proposal requests.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Anywhere Remodeling is a company that desires to be of service to others. Its whole existence is keyed to helping people who have need to improve the quality of their life. Anywhere encourages team work and cooperation in helping the customer. The company is very loyal to its employees and provides them with the security and satisfaction to know that they are the business and that without them the company would not exist.

7.1 Personnel Plan

The Personnel Plan reflects the need to bolster our capabilities to match our positioning. Our total head-count should increase to 12 this first year, and to 17 by the third year. This reflects a ~5% growth per year.

Financial Plan investor-ready personnel plan .">

The most important element in the financial plan is the critical need for improving several of the key factors that impact cash flow:

• Anywhere Remodeling must do a better job of collecting deposits and asking for (demanding) prompt payment from the customers.
• We must bring the gross margin up to 35%. This is related to improving the marketing program which will generate higher quality leads and jobs.

8.1 Important Assumptions

The financial plan depends on important assumptions, most of which are shown in the General Assumptions table below. The key underlying assumptions are:

• A slow-growth economy, without major recession.
• There are no unforeseen changes in technology to make our services immediately obsolete (very unlikely).
• We assume access to equity capital and financing sufficient to maintain our financial plan as shown in the tables.

8.2 Break-even Analysis

The break-even analysis can be found below.

8.3 Projected Profit and Loss

The most important assumption in the Projected Profit and Loss statement is the gross margin, which is supposed to increase, up quite a bit from the last year. The increase in gross margin is based on changing our sales mix due to increased target marketing based on 5% assumptions between years.

Month-by-month assumptions for profit and loss are included in the appendices.

8.4 Projected Cash Flow

The cash flow depends on assumptions for payment days and accounts receivable management. The projected 75-day collection days is critical, and it is also reasonable.

8.5 Projected Balance Sheet

The Projected Balance Sheet is quite solid. We do not project any real trouble meeting our debt obligations–as long as we can achieve our specific objectives.

8.6 Business Ratios

8.7 Long-term Plan

The long-term plan is shown in the Appendix.

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Multifamily Apartment Financial Modeling: Developer Guide + Template

March 28, 2023

Adam Hoeksema

The purpose of this post is to help new and experienced multifamily developers learn the process of building a financial model that can be used to raise capital from lenders and investors.  In this post we are going to assume that you are a developer, constructing a multifamily apartment complex from the ground up.  

To put it simply - your goal is to:

• 1. Identify a location
• 2. Determine how many units you plan to build
• 3. Plan your unit mix
• 4. Calculate your gross potential income (GPI)
• 5. Calculate your operating expenses
• 6. Calculate net operating income (NOI)
• 7. Determine a loan amount based on your NOI and cap rates
• 8. Finalize a construction budget based on your loan and equity amount
• 9. Add assumptions for rent stabilization
• 10. Calculate potential sales price based on cap rate
• 11. Forecast investor returns

Multifamily Apartment Financial Model Template

Before I dive in, I wanted to mention that I will be referencing our multifamily apartment financial projection templates throughout the article to demonstrate and include a number of screenshots and a demo video as well. Our 2 templates include:

• Multifamily Apartment Developer Template
• Multifamily Apartment Acquisition Template

With that, let's dive in! 

1. Identify a Location

The first step in developing a multifamily property is selecting a location. Consider factors such as local demographics, employment opportunities, access to public transportation, and nearby amenities. Your location will determine the type of multifamily complex you will build based on the zoning requirements and architectural norms of the area.  Your location helps determine whether you are going to build a single story complex, or build vertically.  

How Many Apartment Units per Acre?  

The University of Idaho estimates that you can achieve between 6 and 100 apartment units per acre depending on whether you are building vertically or horizontally.  

• Single story duplex apartments can fit 6 to 8 apartment units per acre
• Two and three story apartment complexes can fit 20 apartment units per acre.
• Multiple story apartment complexes can fit 50 to 100 apartment units per acre.

Your location, urban, suburban or rural, will likely determine whether you are building vertically or horizontally and ultimately determine how many acres you might be able to acquire.  

2. Determine how Many Units you Plan to Build

Once you have the proposed land identified you can plan the number of apartment units that you would like to build.  Specifically this is often called your “program” which effectively means how many buildings will you build, what type of buildings, and how many units will each building have.  An example of a Multifamily program could be as follows:

How Many Units Does the Average New Multifamily Apartment Complex Have?

The average number of apartment units per new multifamily development is roughly 111 apartment units according to Fannie Mae data.    

3. Plan your Unit Mix

Next, you need to determine the mix of unit types (e.g., studio, one-bedroom, two-bedroom) to cater to the needs of your target market. You will likely want a diverse unit mix in order to appeal to a wider range of potential tenants, thereby reducing vacancy rates and stabilizing income faster. Our Multifamily Financial Model allows you to enter in your unit mix as seen below:

What is the Typical Unit Mix for a Multifamily Apartment Development?

The typical unit mix for a multifamily apartment development is 2 two or three bedroom units for every 1 single bedroom or studio apartment unit.  This seems to be the standard rule of thumb based on multiple sources ( Jake and Gino , Willowdale Equity ).  

The reason that most multifamily complexes have a 2 to 1 ratio of 2 bedrooms to 1 bedrooms is because typically 2 bedroom units are in higher demand; however, this doesn’t mean that this unit mix is guaranteed to be the most profitable.  In fact, you can typically earn a higher rent per square foot with a studio apartment for example.  If you think there is sufficient demand to fill studio apartments, those are likely to be more profitable per square foot when compared to two bedrooms.  

4. Calculate your Gross Potential Income (GPI)

GPI is the total income your property can generate if all units are rented at market rates without any vacancies, concessions or bad debt. 

How to Calculate Gross Potential Income (GPI)

To calculate GPI, multiply the number of units by the average monthly rent per unit type.

Although gross potential income, also known as potential gross income (PGI), is an important number, effective gross income is maybe even more important.  

How to Calculate Effective Gross Income (EGI)

Effective gross income equals gross potential income minus vacancy and credit loss.  In other words, your effective gross income is the total income you will actually receive after taking into consideration vacancies and the tenants that don’t pay rent for some period of time.  

What is the Average Vacancy Rate for Multifamily Apartment Properties?

The average vacancy rate for a multifamily apartment is roughly 6% according to Matthews Real Estate Investment Services .  

What is the Average Credit Loss for a Multifamily Apartment Property?

The average bad debt or credit loss for a multifamily apartment is 0.7% according to CF Capital . 

5. Calculate your Multifamily Operating Expenses

Operating expenses for a multifamily apartment complex are typically between 35% and 45% of your effective gross income according to Bullpen .  Typical operating expenses for a multifamily property include:

• Apartment Turn Costs
• General and Administrative
• Maintenance
• Management Fees
• Real Estate Taxes

Our model will allow you to enter in your operating expenses on a per property, per unit, or per square foot basis.  You can also enter in expenses as a percentage of revenue if you prefer.

Typical Operating Expenses for Multifamily Apartments

It is difficult to provide specific percentages for each operating expense category without knowing the details of a specific multifamily apartment complex, as these costs can vary significantly based on location, size, age, and management practices. However, here are some approximate ranges for some of these operating expenses as a percentage of the effective gross income (EGI):

• Apartment Turn Costs: 1-3%
• General and Administrative: 2-5%
• HOA fees: This is highly variable depending on the specific complex and location; can range from 0% (if no HOA) to over 10%
• Insurance: 2-4%
• Janitorial: 1-3%
• Maintenance: 5-10%
• Management Fees: 3-6%
• Marketing: 1-3%
• Real Estate Taxes: 10-20% (depends on location and tax rates)
• Salaries: 5-10% (includes on-site staff, such as property managers and maintenance personnel)
• Utilities: 5-10%

Please note that these percentages are approximate ranges and can vary based on the specific circumstances of a property. For a more accurate analysis, it would be best to consult with a property management company or a real estate investment professional who can provide tailored guidance based on your unique situation.

6. Calculate Net Operating Income (NOI)

In order to calculate net operating income for a multifamily apartment complex you can utilize the following formula:

Gross Potential Income - Vacancies - Bad debt (aka credit losses) = Effective Gross Income

Effective Gross Income - Total Operating Expenses = Net Operating Income

7. Determine a Loan Amount Based on Your NOI, Cap Rates and Debt Service Coverage Ratio

Once you have an estimated Net Operating Income (NOI) for your multifamily property, you can calculate the potential loan amount that a lender might provide.  

Lenders may use a loan-to-value ratio to determine a loan amount for your proposed development.  Lenders may also require that you maintain a certain debt service coverage ratio (DSCR).  Based on your NOI and your DSCR, you can back into the maximum loan amount that your project can afford.  Once you have a monthly loan amount, you can estimate the total loan amount that would give you that monthly loan payment.   Here are 8 steps I would follow to estimate a loan amount for a multifamily development. 

• Estimate Net Operating Income
• Estimate Current Cap Rates for Your Property Type
• Estimate the Value of your Proposed Property based on NOI and Cap Rates
• Estimate a Loan-to-Value Ratio that the Bank will Use
• Estimate a Loan Amount based on Property Value and LTV
• Estimate a Debt Service Coverage Ratio that the Bank will Require
• Calculate a Maximum Loan Payment you can Afford based on the NOI and DSCR
• Estimate a Loan Amount based on the Maximum Loan Payment you can Afford

There is quite a bit here, so let me try to walk through this step by step:

1. Estimate Net Operating Income

Again, the formula to calculate net operating income is Gross Potential Income - Vacancies - Credit Losses - Operating Expenses = Net Operating Income. For the sake of an example, let’s assume we have a property with a projected net operating income of $1 million.  

2. Estimate Current Cap Rates for Your Property Type

Next, you need to know what the cap rates are for your type of property and location.  Cap rates change as the market changes, so you will need to do a bit of research.  

What is a Cap Rate?

A cap rate, short for capitalization rate, is a measure used in real estate to evaluate the profitability and potential return on investment of a property. It is calculated by dividing the net operating income (NOI) of a property by its current market value or purchase price.

The formula for cap rate is:

Cap Rate = Net Operating Income / Current Market Value or Purchase Price

The cap rate is expressed as a percentage and is used to estimate the potential return on investment of a property. A higher cap rate indicates a higher potential return, while a lower cap rate indicates a lower potential return.

What are Typical Cap Rates for Multifamily Apartments?

Cap rates for multifamily properties in prime locations in urban areas can be as low as 4% to 5%.

Cap rates for class B and C multifamily properties in less desirable locations can be in the 5% to 8% range.  

For the sake of this example, let’s use a 5% cap rate for our proposed property.

3. Estimate the Value of your Proposed Property based on NOI and Cap Rates

Since you don’t know the value of your proposed property, but you do have a projected NOI and you can find the market cap rates, you can then calculate an estimate of the value of the property.  

With our example of a $1,000,000 NOI and a 5% cap rate, we can take $1,000,000 divided by 5% and calculate a property value estimate of $20,000,000.

4. Estimate a Loan-to-Value Ratio that the Bank will Use for Multifamily

The average loan to value ratio for multifamily properties is 73% according to Lev Capital .  The maximum LTV for a multifamily property that you might be able to secure is 80%. 

5. Estimate a Loan Amount based on Property Value and LTV

Based on an LTV of 73% for Multifamily properties, and our example property value of $20,000,000, we can estimate a loan amount of $14,600,000. 

6. Estimate a Debt Service Coverage Ratio that the Bank will Require

The other guardrail that will determine how much you can borrow is how much you can cash flow.  Your Debt Service Coverage Ratio is a way to measure how much debt service you can cover based on your Net Operating Income.  

Average Debt Service Coverage Ratio for Multifamily Properties

The average required debt service coverage ratio for multifamily properties is 1.2 according to Janover . 

7. Calculate a Maximum Loan Payment you can Afford based on the NOI and DSCR

If we assume Net Operating Income of $1 million and a required debt service coverage ratio of 1.2 we can calculate the maximum loan payment that you can afford each month and still maintain a DSCR of 1.2.  

In order to calculate the debt service amount we can afford, we can take our NOI divided by DSCR which is $1 million divided by 1.2 which equals $833,333 in annual debt service.  If we divide by 12 months we come up with a monthly loan payment maximum of $69,444.

8. Estimate a Loan Amount based on the Maximum Loan Payment you can Afford

Next we can try to estimate a loan amount that would give us a monthly payment of $69,444. 

But in order to do this we need to make assumptions about the term of the loan and the interest rate.  

What is the Average Term for a Multifamily Apartment Loan?

The average term for a multifamily apartment loan is 30 years, but can be up to 35 years in some cases according to Janover . 

What is the Average Interest Rate for a Multifamily Property Loan?

A common interest rate for a multifamily property loan is the 10 year treasury rate + 2%.  So if the 10 year treasury rate is 3.5%, your interest rate would be 5.5%.  These rates fluctuate daily, so you will need to check the current rates.  

For our example we are going to assume an interest rate of 5.5% and a 30 year term with a monthly payment of $69,444.  Then I did a quick trick and asked ChatGPT to calculate what my loan amount would be with those parameters and it calculated a loan amount of $10,850,000. 

ChatGPT did a wonderful job explaining the process and calculation below:

“To calculate the loan amount, we need to use the formula for a fixed payment loan:

Loan Amount = Monthly Payment / ((1 - (1 + Monthly Interest Rate)^(-Number of Months)))

where Monthly Interest Rate = Annual Interest Rate / 12 and Number of Months = Loan Term x 12.

Plugging in the given values, we get:

Monthly Interest Rate = 5.5% / 12 = 0.00458 Number of Months = 30 years x 12 = 360

Loan Amount = $69,444 / ((1 - (1 + 0.00458)^(-360))) Loan Amount = $69,444 / ((1 - 0.3681)) Loan Amount = $10,850,000

Therefore, the loan amount assuming an interest rate of 5.5% and a 30-year term with a monthly payment of $69,444 would be $10,850,000.”

So after all of this we have 2 different loan amounts!  The loan to value ratio process estimated a loan amount of $14,600,000 and the DSCR process estimated a loan amount of $10,850,000.  

You should assume that you will need to take the lower of the two numbers.  So we are going to move forward with a $10,850,000 loan in this example.

8. Finalize a Construction Budget Based on your Loan and Equity Amount

Your construction budget should include all costs related to land acquisition, construction, professional fees, and financing costs. Your total project cost should be covered by the combination of your loan and equity investments.  We already know our loan amount is $10,850,000, but we need to know our equity amount.  

Average Equity Injection for a Multifamily Apartment Complex 

The average equity injection for a multifamily apartment development is 25% according to Janover . 

If we assume that $10,850,000 is 75% of the total project cost, then the total project would be $14,466,667.  Our equity portion would be 25% which equals $3,616,667

So our construction budget can be $14,466,667.  

Our model includes a Construction Budget Template tab that allows you to enter in the details and timing of construction as seen below:

9. Add Assumptions for Rent Stabilization

Let’s fast forward and assume your multifamily property is complete.  Your multifamily financial model should include assumptions for rent stabilization, meaning how long does it take to get the property full and stabilized?  

How Long Does it Take to Fill a New Multifamily Apartment?

Let’s assume it takes 9 months from the time the property is complete to have all of the units occupied, less the normal vacancy rate that you might expect. 

10. Calculate Potential Sales Price Based on Cap Rate

The capitalization rate (cap rate) is the ratio of NOI to property value. To calculate the potential sales price, divide your NOI by the cap rate, which is determined by market conditions and comparable properties.   To be specific, the cap rate when you sell a property is called your exit cap rate . You need to be careful to assume a conservative exit cap rate because the exit cap rate will have a dramatic impact on your rate of return on the property.

As we discussed earlier, if we assume a 5% cap rate and a $1 million NOI, the expected value of the property would be $20,000,000. 

11. Forecast Investor Returns

Finally, you will want to calculate key investor return metrics, such as internal rate of return (IRR), cash-on-cash return, and equity multiple. These metrics help investors evaluate the attractiveness of your project and make informed decisions about whether to invest. You can run different scenarios with our template to forecast IRR based on sale details as seen below:

Typical Multifamily Investor Returns

The typical multifamily investor might expect average returns of between 14% and 18% according to ButterflyMX .

IRR vs XIRR

Your investors might ask your for a projected IRR or XIRR.  Let’s look at the difference between IRR and XIRR. 

Both XIRR and IRR are financial metrics used in real estate to analyze the returns of an investment. However, they differ in their calculation methods and the way they account for irregular cash flows.

IRR (Internal Rate of Return) is a measure of the profitability of an investment, expressed as a percentage rate. It calculates the discount rate at which the net present value of all the cash inflows and outflows from an investment is equal to zero. In other words, it is the rate at which the investment breaks even.

XIRR (Extended Internal Rate of Return) is an advanced version of IRR that is used to calculate the returns on investments with irregular cash flows. Unlike IRR, which assumes that cash flows occur at regular intervals, XIRR considers the exact dates of cash flows and the amount of each cash flow.

In real estate, XIRR is generally used for investments that have irregular cash flows, such as rental properties that generate monthly rent payments, irregular capital expenditures, or other cash flows that are not evenly distributed over time. On the other hand, IRR is more commonly used for investments with regular cash flows, such as development projects with predictable timelines and cash flows.

In summary, the main difference between XIRR and IRR is that XIRR is more precise and takes into account the timing and amount of each cash flow, whereas IRR assumes that cash flows are evenly distributed over time. As such, XIRR is more appropriate for analyzing investments with irregular cash flows, while IRR is more suitable for investments with regular cash flows.

I hope this has been helpful to you as you think through the process of building a financial model for a multifamily apartment complex.  If you have any questions please feel free to reach out, we would love to help! 

About the Author

Adam is the Co-founder of ProjectionHub which helps entrepreneurs create financial projections for potential investors, lenders and internal business planning. Since 2012, over 50,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections.

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How To Write a Winning Construction Company Business Plan + Template

Creating a business plan is essential for any business, but it can be especially helpful for construction company businesses who want to improve their strategy or raise funding.

A well-crafted business plan not only outlines the vision for your company, but also documents a step-by-step roadmap of how you will accomplish it. To create an effective business plan, you must first understand the components essential to its success.

This article provides an overview of the key elements that every construction company business owner should include in their business plan.

Download the Ultimate Construction Business Plan Template

What is a construction company business plan.

A construction company business plan is a formal written document describing your company’s business strategy and feasibility. It documents the reasons you will succeed, your areas of competitive advantage, and it includes information about your team members. Your business plan is a key document that will convince investors and lenders (if needed) that you are positioned to become a successful venture.

Why Write a Construction Company Business Plan?

A construction company business plan is required for banks and investors. The document is a clear and concise guide of your business idea and the steps you will take to make it profitable.

Entrepreneurs can also use this as a roadmap when starting their new company or venture, especially if they are inexperienced in starting a business.

Writing an Effective Construction Company Business Plan

The following are the key components of a successful construction company business plan:

Executive Summary

The executive summary of a construction company business plan is a one to two page overview of your entire business plan. It should summarize the main points, which will be presented in full in the rest of your business plan.

• Start with a one-line description of your construction company
• Provide a short summary of the key points in each section of your business plan, which includes information about your company’s management team, industry analysis, competitive analysis, and financial forecast among others.

Company Description

This section should include a brief history of your company. Include a short description of how your company started, and provide a timeline of milestones your company has achieved.

If you are just starting your construction business, you may not have a long company history. Instead, you can include information about your professional experience in this industry and how and why you conceived your new venture. If you have worked for a similar company before or have been involved in an entrepreneurial venture before starting your construction firm, mention this.

You will also include information about your chosen construction company business model and how, if applicable, it is different from other companies in your industry.

Industry Analysis

The industry or market analysis is an important component of a construction company business plan. Conduct thorough market research to determine industry trends and document the size of your market. Questions to answer include:

• What part of the construction industry are you targeting?
• How big is the market?
• What trends are happening in the industry right now (and if applicable, how do these trends support the success of your company)?

You should also include sources for the information you provide, such as published research reports and expert opinions.

Customer Analysis

This section should include a list of your target audience(s) with demographic and psychographic profiles (e.g., age, gender, income level, profession, job titles, interests). You will need to provide a profile of each customer segment separately, including their needs and wants.

For example, a construction company business’ customers may include:

• Businesses (e.g., office complexes, restaurants, retail stores)
• General contractors
• Other construction companies

As you conduct your customer analysis, keep in mind that your target customers may not be aware of your company or product right away. You will need to have a marketing strategy to reach them and get them interested.

You can include information about how your customers make the decision to buy from you as well as what keeps them buying from you.

Develop a strategy for targeting those customers who are most likely to buy from you, as well as those that might be influenced to buy your products or construction company services with the right marketing.

Competitive Analysis

The competitive analysis helps you determine how your product or service will be different from competitors, and what your unique selling proposition (USP) might be that will set you apart in this industry.

For each competitor, list their strengths and weaknesses. Next, determine your areas of competitive differentiation and/or advantage; that is, in what ways are you different from and ideally better than your competitors.

Marketing Plan

This part of the business plan is where you determine and document your marketing plan. . Your plan should be clearly laid out, including the following 4 Ps.

• Product/Service : Detail your product/service offerings here. Document their features and benefits.
• Price : Document your pricing strategy here. In addition to stating the prices for your products/services, mention how your pricing compares to your competition.
• Place : Where will your customers find you? What channels of distribution (e.g., partnerships) will you use to reach them if applicable?
• Promotion : How will you reach your target customers? For example, you may use social media, write blog posts, create an email marketing campaign, use pay-per-click advertising, launch a direct mail campaign. Or you may promote your construction company business via word-of-mouth.

Operations Plan

This part of your construction company business plan should include the following information:

• How will you deliver your product/service to customers? For example, will you do it in person or over the phone only?
• What infrastructure, equipment, and resources are needed to operate successfully? How can you meet those requirements within budget constraints?

The operations plan is where you also need to include your company’s business policies. You will want to establish policies related to everything from customer service to pricing, to the overall brand image you are trying to present. Finally, and most importantly, in your Operations Plan, you will lay out the milestones your company hopes to achieve within the next five years. Create a chart that shows the key milestone(s) you hope to achieve each quarter for the next four quarters, and then each year for the following four years. Examples of milestones for a construction company business include reaching $X in sales. Other examples include hiring a certain number of employees, signing up a certain number of customers, or completing a certain number of projects.

Management Team

List your team members here including their names and titles, as well as their expertise and experience relevant to your specific construction industry. Include brief biography sketches for each team member. Particularly if you are seeking funding, the goal of this section is to convince investors and lenders that your team has the expertise and experience to execute on your plan. If you are missing key team members, document the roles and responsibilities you plan to hire for in the future.

Financial Plan

Here you will include a summary of your complete and detailed financial plan (your full financial projections go in the Appendix). This includes the following three financial statements:

Income Statement

Your income statement should include:

• Revenue : how much revenue you generate.
• Cost of Goods Sold : These are your direct costs associated with generating revenue. This includes labor costs, as well as the cost of any equipment and supplies used to deliver the product/service offering.
• Net Income (or loss) : Once expenses and revenue are totaled and deducted from each other, this is the net income or loss.

Sample Income Statement for a Startup Construction Company

Balance Sheet

Include a balance sheet that shows your assets, liabilities, and equity. Your balance sheet should include:

• Assets : All of the things you own (including cash).
• Liabilities : This is what you owe against your company’s assets, such as accounts payable or loans.
• Equity : The worth of your business after all liabilities and assets are totaled and deducted from each other.

Sample Balance Sheet for a Startup Construction Company

Cash Flow Statement Include a cash flow statement showing how much cash comes in, how much cash goes out and a net cash flow for each year. The cash flow statement should include:

• Cash Flow From Operations
• Cash Flow From Investments
• Cash Flow From Financing

Below is a sample of a projected cash flow statement for a startup construction business.

Sample Cash Flow Statement for a Startup Construction Company

Finish with an appendix section which will include:

• Your complete financial projections
• A complete list of your company’s business policies and procedures related to the rest of the business plan (marketing, operations, etc.)
• Any other documentation which supports what you included in the body of your business plan.

Writing a good business plan gives you the advantage of being fully prepared to launch and/or grow your construction company. It not only outlines your business vision but also provides a step-by-step process of how you will accomplish it.

A well-written business plan is an essential tool for any construction company. The tips we’ve provided in this article should help you write a winning business plan for your construction company.  

Finish Your Construction Business Plan in 1 Day!

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Free Construction Project Plan Templates

By Diana Ramos | August 29, 2022

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We’ve collected the best free, downloadable construction project plan templates for general, residential, and commercial construction projects. Each template includes a brief description to help you decide which is right for you.

On this page, you’ll find a construction project plan with timeline template , a home construction project plan template , a construction management project plan template , and a commercial construction project plan template .

Construction Project Plan with Timeline Template

Download a Construction Project Plan Template for  Excel | Microsoft Word

Use this simple construction project plan template to track the progress of your project. The timeline feature provides a clear view of how each task fits within the overall project plan. Stay on top of each phase of your project to avoid costly delays and to ensure that dependent tasks are completed on schedule. With this printable template, you can enter all tasks necessary for successful completion of your construction project. You can also track progress, start and completion dates, and the duration of each phase. Task names are completely customizable to meet your precise needs. 

For more construction project tools, see this collection of construction project management templates .

Home Construction Project Plan Template

Download the Home Construction Project Plan Template for Microsoft Excel

Track and manage your residential building project with this robust template. Designed specifically for home construction, this template allows you to individually manage each task in your project, including start and end dates, completion percentages, and necessary resources. Use the integrated Gantt chart to quickly view the progress of every phase of your home building project, thereby eliminating inefficiencies and scheduling issues. 

Check out this complete collection of free construction schedule templates to find the precise tool for your project or business.

Construction Management Project Plan Template

Download the Construction Management Project Plan Template for Microsoft Excel  

Use this template to manage every phase of your construction project. Customize task names and organize the content to meet your specific needs. This template includes space to track each phase and task needed to complete all construction work on time and within budget. Track by completion status, supervisor, start and end date, and task duration. The template also includes space to record any notes you would like to add along the way. 

Check out this complete collection of project plan templates that will meet any planning need you have.

Commercial Construction Management Project Plan Template

Download the Commercial Construction Management Project Plan Template for Microsoft Excel  

Use this customizable template to plan, organize, and track your commercial construction project from start to finish. Enter details about your project’s business plan, including notes about the return on investment (ROI) and project description. By doing so, you can ensure that you clearly articulate all of your goals. Enter every phase and task associated with your project, assign each task to the appropriate supervisor or subcontractor, and track overall progress and completion status. The timeline also provides a quick overview of the progress for each phase of your build. Add notes to any task to clearly articulate details and emphasize certain elements of the project. This robust template keeps your project on time and within budget.

What Is a Construction Project Plan Template?

A construction project plan template is a form that captures vital information about your construction project. Project managers and supervisors use these templates to track each phase and task of a construction project. 

Construction project plan templates are especially helpful for tracking dependent tasks and scheduling deliverables. They also allow you to confidently communicate with clients and subcontractors, as well as help you organize complex task information. 

Individual templates might vary, but they generally include the following elements:

• Project Title: Enter the project name or title.
• Project Manager: Enter the name of the person responsible for the project.
• Phase: Organize individual project tasks under headings that represent each phase of the project.
• Task Name: Enter individual project tasks.
• Start Date: Enter the beginning date for each task.
• Finish Date: Enter the end date for each task.
• Duration: Enter the total duration of each task or phase.
• Notes: Include any other pertinent details for thorough and accurate recordkeeping.

Keep Your Construction Projects on Track with Real-Time Work Management in Smartsheet

From pre-construction to project closeout, keep all stakeholders in the loop with real-time collaboration and automated updates so you can make better, more informed decisions, all while landing your projects on time and within budget.

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed.

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time. Try Smartsheet for free, today.

Discover a better way to streamline workflows and eliminate silos for good.

Construction Project Plans Explained with Example Plans

Anytime you start a project, it’s important to have a plan in place to accomplish it. 

Whether it’s new construction, renovation, restoration, or rebuilding, a well developed construction project plan, also known as a construction management plan (CMP) is essential for successful completion on schedule and within budget. 

Summit Reconstruction and Restoration contractors and crews have successfully completed  a number of projects and have experience with project planning and management for a variety of construction projects. Continue reading to find out what makes a good construction project plan, and check out our projects to see the results of good construction project planning. 

What is a construction project plan?

Construction planning is the process of figuring out the most efficient and cost-effective method of arriving at a satisfactory construction project. The construction project plan is a roadmap that guides the project from conception to completion. 

The project planner, usually a construction project manager, also called a CM, assesses all of the materials and labor required to complete a construction project and schedules those tasks in a way that improves the efficiency of the project as a whole. The goals of a construction plan usually include:

• A definition of the work tasks of each entity involved in the project.
• To clarify the relationship between different work tasks and the individual entities that are performing those tasks.
• Make decisions about which technologies will be used to bring about the successful completion of the project.
• Provide a comprehensive assessment of all resources required to complete a project.
• Use the plan to arrive at a timeline and budget for the project.

What makes a good construction plan?

Good construction plans are comprehensive and accurately assess the costs and needs of a given project. An accurate and strategic plan can define what work needs to be done and in what order for reference of pending work tasks, and enable the delegation of those operation and maintenance tasks.

Important aspects that should be included in the plan are:

Define All Work Tasks 

Break those tasks into sub-tasks, continuing as needed to have a granular view of all work required to complete the project. This includes the work for all teams on the project, from design and engineering team members, to the general contractor and subcontractors.

Determine the Work Sequence & Duration

The work sequence defines the order in which work occurs. If work is done incorrectly it can result in project delays and wasted hours of labor. The project manager must estimate the duration that each task will take to complete. 

This is important for both determining a budget after the strategic plan is in place, and ensuring that the sequencing of all work tasks makes sense. Some tasks may be allowed to overlap, other tasks must be completed sequentially. An accurate duration assessment will result in more efficiency overall.

Resource Breakdown

Accurately assessing the resources required for a task will result in a more accurate budget and ensure that the right amount of each resource is ordered and that other considerations, such as storage of that resource until it is ready to be used, has been accounted for.

Why You Need a Construction Plan

Construction plans help you justify project feasibility and help you develop schedules and goals accordingly. Commonly, they can help bridge the communication gap between cross-disciplinary teams whose input is critical before starting a project.

As fluid projects, the strategic aspects of a project can change as the circumstances of the project change. Throughout the course of construction, the original plan may be disrupted or need to be altered to accommodate changes in weather conditions, materials, work crew, or technical difficulties as they arise.

Construction plans can help the construction manager and other stakeholders refer back to their original plan to ensure that the project is moving forward smoothly. These plans maintain project commitment levels by holding people accountable, ensuring that work is completed on schedule, and within budget. 

Creating a Construction Project Plan

There are three approaches to a good construction project plan:

• Strategic plan: This is the high level overview of all project objectives. Here, you’ll outline the work, and what the overall project goals are. 
• Operational plan: This is the nitty-gritty that gets into how each part of the project will be solved. 
• Schedule: This puts operational plans on a time scale, with milestones and benchmarks for project completion. 

The Stages of Construction Project Management

Design & Initiation

At the beginning of the project, carry out a high level of risk analysis during the initiation phase. Identifying key risks at the beginning of the project will help your team prepare for anything that may occur. There are four parts to designing a construction project.

The Concept 

What are the needs, goals and objectives of the project? You’ll be making decisions based on the size of the project, the site allocated for the build and the actual design of what your building. This consists of a list for each room or space under consideration, including all critical data.

The Schematic Design

This is a sketch that identifies all the various parts, materials, sizes, colors, textures, etc. It includes the floorplan, elevations, etc., even a site plan.

Design Development

This requires research. You’ll be refining the original drawings from the previous stage now to reflect these decisions. Knowing local building codes and adhering to them will be important at this stage.

• What are the materials to use? 
• What equipment will be needed? 
• How much are the materials? 

Get the contract documents together. These are the final drawing and construction specs. These will be used by outside contractors to bid on the job.

Preconstruction & Planning

From here, it’s time to start assigning roles and plans to make the project successful. Define teams, and make sure that those teams have the skills and certifications required to complete a task. If you have parts of a team that aren’t trained, make sure to get everyone trained up.

Investigate the site and check to see if anything is needed. The site must be ready for the construction, which might mean dealing with environmental issues, such as the suitability of the soil for construction.

At this step, fundamental guidelines should be established, including scope, cost and schedule, and then fine-tuned. Risk is defined and possible solutions mapped out according to a number of scenarios. There should be a clear understanding of who is responsible for what. 

Procurement

You have people and you’ve planned for the construction and materials necessary to complete it, now you must obtain those materials and equipment. This might be the responsibility of the general contractor or subcontractors, depending on the organization of the business doing the construction. 

This is the stage you’ll be working with purchase orders, which are used as an agreement between the buyer and the seller, as well as requests for proposals (bidding/tendering) from architects and engineers to contractors. Every viable proposal is examined in the light of the owner’s priorities and the contractors’ ability to follow through. This can include general contractors, specialty contractors, specialized equipment, furnishings and landscapers, and more. 

Execution & Construction

Finally, you’re ready for the build! But first you have a preconstruction meeting to deal with work hours, the storage of materials, quality control and site access. 

Performance Control

During this time, things will inevitably change or go wrong. Ensure that your team is communicating and staying flexible. Good project managers know how to adapt to and solve problems. Go into the project knowing that some things will not go according to plan. 

Delivery & Close

This is the ending portion of the project. Consolidate a list of anything left incomplete and assign a team member to complete these items. 

Ultimately, the satisfaction of the owner determines the overall success of the project. The last part of the project is after the construction is complete and the occupants move into or take ownership of the site. You must make sure all their requirements have been met, and usually provide a warranty period to make that arrangement official and binding.

Components of a Project Plan

A good project plan starts with baselines. You create a project baseline, followed by a baseline management plan, and a business plan. Along the way, you need reams and reams of documentation. We’ll explain. 

Baselines (Performance Measures)

This is the construction project’s approved starting points (cost, scope, and schedule) that determine if the project is on track. A PMB allows you to efficiently monitor and manage how a change in one component affects the others. Using baselines make it easier to accurately estimate costs, assess performance, and calculate earned value. 

Baseline Management Plan

Projects deviate from course, and baseline management plans include the documentation on how the baselines vary and how to handle them. With additional planning, management will determine the acts that the team will do when variances to the baseline arise. 

Business Plan

The two sectors of construction are commercial and residential. If the construction project is a commercial one, the project plan should include a business plan. 

The business plan explains the “why’s” of the project:

• Business Benefits : what is the return on investment (ROI) of the project?
• Planning Permission : The plan for approval and adherence to building and municipal codes.
• Project Description : An outline of what the project is and how you’re planning to execute it.
• Project Management and Team : Who is leading the project and who will make up the teams executing the plan.
• Project Design : The plans, blueprints and other drawings detailing the build.
• Bid and Contract : There are a couple of different bidding methods, which should be detailed here, also the details of the contract.
• Construction Process : Identifying activities and resources required to make the design a physical reality.
• Occupation and Defects Liability Period : This helps outline the process the client takes once possessing the development to occupy it.
• Evaluation After Occupation : This is like a post-mortem to note what worked and didn’t over the course of the project. Project managers look at the stated goal of the project and then figure out what it will take to get there.

Documents in a Construction Project Plan

These are the documents and drawings that are important and advantageous to have in the planning stage because they provide a representation of what’s going to be constructed. 

Scope Documentation 

Scope documentation is the overall needs of the project, and is usually a list of goals, deliverables, features, functions, tasks, deadlines, and costs. It will also detail the benefits among the milestones you’ll track to reach them.  

Work Breakdown Structure (WBS)

This document visualizes the key project deliverables and organizes the work a team will do when the project is started into manageable sections. Think of it as a “hierarchical decomposition of the work to be executed by the project team,” as defined by the Project Management Body of Knowledge (PMBOK).

Communication Plan

To effectively implement various aspects of your project plan, you must articulate them clearly and deliver them efficiently. You need to define your goals and objectives, then decide on what tools and methods you’ll use to deliver them. Make sure every interaction is documented to keep your teams regularly informed. Reporting mechanisms must be transparent in recording hours, communication strategies, contributions, conflicts, and reconciliations.

Risk Management Plan

You’re going to have to provide safety management, which will include a thorough assessment of what might go wrong and how you resolve it. These risks aren’t only physical or life-threatening, they also include time and cost estimates and other more mundane aspects of the project.

Feasibility Study

This document analyses the impact of the project on a number of factors including stakeholder approval, environmental and social impact, probability of hazards and the extent of profitability posed to clients, teams and your firm. Look at the goals, cost and timeline to see if you have resources to reach a successful project end within those constraints

Building Site Specific Plan

Depending on the size and nature of a building project, including demolition and excavation, the local municipality may require another construction management plan to be drawn up for approval. Items covered often include:

• Public safety and site security
• Operating hours
• Controls to limit noise and vibration
• Proper management of air, dust, stormwater, and sediment
• Waste and materials reuse
• Traffic management.

This kind of CMP also typically requires submission in advance with a pre-defined period for approval.

Some other examples of construction planning documents that may be included in the project plan, depending on the project, are Blueprint drawings and specifications, submittals and approvals, permits, fees, and licenses.

Personnel, Roles, & Responsibilities

There are a number of tasks and responsibilities throughout the process of construction project planning and execution, and it’s important to define who will be responsible for which tasks. The typical breakdown of roles and responsibilities includes the project manager and their support team.

Support team positions may include:

• Contract administrators to help the project manager with managing contracts and procurement. 
• Superintendents are on site to keep construction activities on schedule in terms of the materials, deliveries and equipment. 
• Field engineers are positions that deal with paperwork and day to day operations. 

The Construction Project Manager

Construction project management is run by a construction project manager. This person is tasked with the planning, coordination, budgeting and supervision of the construction project. Construction project manager responsible for the following tasks:

• Formulate budget, and estimate and negotiate project costs
• Create schedule and work timetables, workload management and resource allocation
• Determine which methods and strategies are appropriate for the project
• Communicate with clients and stakeholders, detailing the cost, scope, duration, quality and communications used in the project
• Lead or interface with workers, teams and other construction professions on technical and contract details
• Clearly communicate the plan, so everyone is on the same page and understands what needs to be done over the life cycle of the project. 
• Work with building, construction and regulatory specialists
• Track project performance and monitor progress with key performance indicators for cost, time and quality. 
• Identify potential issues and risks 
• Outline the tasks within the timeline, noting project milestones, and the resources needed to do those tasks within the budget allotted.
• Look at the goals, cost and timeline to see if you have resources to reach a successful project end within those constraints. 
• Define the reasoning behind the project and make sure it’s sound. 
• Create project charter to help initiate the project 
• Make sure design meets with building codes and other regulations.

Tips for Construction Project Planning

In addition to being strategic about resources, operations, and scheduling, there are some aspects to consider when creating and implementing the project plan. 

Anticipate Costs

Anticipating costs is important to keep in mind when forming a project plan, because construction can come with a certain level of uncertainty, which includes discovering additional, unforseen costs as the project progresses. You should try to budget and estimate costs as accurately as possible to reduce overhang that could have been spent elsewhere, while also leaving a little bit of slack for overtures or surprise expenses. 

Usual areas where expenditures can go beyond the budget are payroll, project budgets, safety equipment costs, material supply, and machinery. The best way to prepare for this is by doing thorough research to reduce the occurrences of unforeseen costs, and be plan strategically to be able to address them with as little disruption to the rest of the project as possible.

Include Quality Control of Materials & Output

The client and stakeholders have to specify the quality of the construction project in terms of material, budget and actual output. Performance of different teams should also be included in the plan.

For example, an overview of the civil engineering project management plan will be a part of the CPMP. Accordingly, efforts can be assigned to different components forming the core of the labor. With monetary and personal investments in play here, quality assurance audits need to be conducted before signing them off.

Hold a Kickoff Meeting

A kickoff meeting is a practical step to bring stakeholders together to go over the project in depth and trust is built among team members because everyone’s input is on the table. Topics to discuss in a kickoff meeting are:

• Ground rules
• Project sponsor
• Defined business exports
• Project manager
• Project team
• Team commitments
• How to make decisions

Project Management Tools

Many project management and construction software tools exist to help automate and accelerate the production of a CMP. Programs that run on workstations in the contractor’s offices or that are accessible online as a cloud computing service offer streamlining of:

• Construction activity project management
• CAD (computer-aided design) for preparing 2D or 3D project drawings
• Construction estimating for costing projects
• Construction accounting

As projects grow in complexity, both clients and contractors may use these kinds of software and exchange data and files between one another. BIM (building information modeling) software can federate all the different information effectively to make an even more extensive CMP. The CM’s preferred construction management software is used to pull it all together and estimate time, risk and cost of permits, contractors, insurance, labor, materials and so on, down to the last coat of paint. 

Consider using a cloud-based construction software to ensure that the project is on track and collaboration is available at every aspect of the project’s life cycle. Project management software is beneficial because it keeps the whole team on the same page.

Examples of CMP tools include:

• Project plan 365
• Jonas Construction software  

Construction project plans commonly use Gantt charts for project scheduling. There are a number of tools and softwares for creating Gantt charts, and similar construction schedule templates and project management plan templates using Microsoft Excel or Google Sheets. Other programs are specifically created for construction project planning.

Example Construction Plan and Template

Every project is a little different so every plan will be a little different, but generally they will outline tasks, subtasks, and the timeline in which they must be completed. Below is an example of common tasks included in construction projects.

Construction Project 

General Conditions

• Receive notice to proceed and sign contract
• Submit bond and insurance documents
• Prepare and submit project schedule
• Prepare and submit schedule of values
• Obtain building permits
• Submit preliminary shop drawings
• Submit monthly requests for payment
• Clear and grub site
• Install underground utilities
• Install temporary power service
• Install exterior fire line and building fire riser
• Erect building batter boards and layout building

Foundations

• Excavate foundations
• Excavate elevator pit
• Form column piers and spread foundations
• Rough-in electric and plumbing in elevator
• Form elevator pit walls
• Pour column piers, foundations and walls
• Strip forms
• Install pneumatic tube in elevator pit
• Prepare and pour concrete floor in elevator pit
• Erect steel columns, beams and joist – 1st and 2nd floors
• Erect steel columns, beams and joist – 3rd floor and roof
• Install miscellaneous iron and bracing – 1st and 2nd floors
• Install miscellaneous iron and bracing – 3rd floor and roof
• Install stairs and miscellaneous iron railing
• Touch-up paint on steel

Form and Pour Concrete – Floors and Roof

• Install rebar and in-floor utilities (including mechanical, electrical, plumbing)
• Pour separate floors
• Cure separate floors
• Form roof slab including all floor openings
• Install electrical underground
• Install plumbing underground
• Install rebar and in-floor utilities

Masonry Work

• Rough-in plumbing at toilets and masonry walls
• Lay masonry at core, mechanical, and toilets
• Install exterior masonry work
• Install roof drains
• Install tile in toilet rooms
• Install flashing at parapet walls
• Pour lightweight concrete roof fill
• Install seamless roofing material
• Spread stone ballast on seamless roof
• Set rooftop equipment

Building Finishes

• Install millwork and wood trim
• Paint walls and woodwork
• Install conduit at ceiling plenum space
• Install duct in ceiling plenum space
• Install ceiling grid
• Install ceiling tile
• Hang wallpaper
• Install building carpet
• Install hardware and accessories
• Complete interior and exterior sod and plantings
• Pave, curb, and stripe parking lot
• Rough-in plumbing in drywall walls
• Tie-in fire line riser and set valves
• Set plumbing fixtures and trim
• Flush, test, and clean piping and fixtures
• Rough-in electrical in masonry walls
• Rough-in electrical in drywall walls
• Pull wire in conduit and set area transformers
• Install and terminate electrical devices
• Heating and Ventilating – AC
• Set equipment in mechanical room
• Rough-in mechanical in masonry walls
• Rough-in mechanical in drywall walls
• Install duct in building chase
• Install light fixtures – test and clean

Complete Final Inspections

• Complete elevator inspection and certification
• Perform architect’s inspection
• Perform local building agency inspection
• Perform Fire Marshal’s inspection
• Install hard tile flooring in common areas
• Clean hard tile floors
• Remove debris from building and do final clean-up
• Substantial completion date
• Complete punch list items from all inspection

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Ogden City exploring limits on new apartment construction in commercial zones

By rob nielsen - | jun 6, 2024.

Rob Nielsen, Standard-Examiner

OGDEN — Ogden City is looking at a new approach to the construction of multifamily residences as the public and city officials look at formulating a new general plan.

This week, Ogden City sent out a press release detailing a desire to pursue an ordinance restricting apartment construction in certain areas.

“Ogden City Mayor Ben Nadolski and his administration are proposing a zoning ordinance change that will place temporary limits on new apartment building projects in Ogden,” the release said. “The proposal is the result of broader collaboration and partnerships with State and local leaders working to make data-driven decisions to address the ongoing home ownership crises.”

In the release, Nadolski said the city aims to have a broad spectrum of housing choices.

“Our goal is to provide diverse and balanced housing options across housing types, locations, and affordability levels,” he said. “And the data shows that our citizens need and want to buy single-family homes, especially first-time home buyers.”

In an email to the Standard-Examiner, city spokesman Mike McBride said it’s the perfect time to look at how the city approaches housing.

“Ogden is in the early stages of updating the general plan,” he wrote. “This is a long-forecast look to 2050 and how our planning and zoning will support the vision and hopes of our community, including housing needs and quality neighborhoods. Between 2020-2023, Ogden increased inventory of housing by more than 2000 units with only 3% classified as single family. 62% were multi family. Now is the time for an evaluation of current and future needs while we work to update the general plan. Even with this proposed change, Ogden staff projects that Ogden has sufficient vacant and redevelopable land zoned for multiple-family housing, such as in downtown, in mixed-use zones, and multiple-family residential zones, to accommodate needs for new apartments for at least the next twenty years.”

McBride added that the proposed ordinance change doesn’t necessarily dissuade the construction of new apartment complexes, but rather encourages their construction in other areas of town officials believe are more conducive to their building.

“Ogden continues to seek development of new multiple-family housing in appropriate areas, such as within downtown as part of the Make Ogden plan, in mixed-use zones, and in multiple-family residential zones,” he said. “At the same time, Ogden is seeking ways to provide more opportunities for single-family and ownership housing.”

The release further details where apartments could be restricted with some exceptions.

“If adopted, the ordinance will update standards related to senior and mixed-use multiple-family dwellings,” it said. “Additionally, it will place limits on new apartments in commercial zones C-2/CP-2 and C-3/CP-3, which are generally located along Wall Ave. and Washington Blvd. in the areas north of 18th Street and south of 27th Street, and along 12th Street and Harrison Blvd.”

As stated in the release, new apartments in the specified areas would be prohibited unless developments can be classified under one of these exceptions:

1. Senior multifamily dwellings.

2. Multifamily dwellings next to Ogden Express, or OGX, station areas along Harrison Boulevard.

3. Mixed-use projects on lots of at least 10 acres.

McBride said projects that are already approved and underway will not be impacted and added that the ordinance could help give the city breathing room to address its housing woes.

‘This will give Ogden time to thoroughly plan through an extensive community vision process for healthy neighborhoods that accommodate our housing needs,” he said. “The proposal would apply only to new projects, not projects under construction or where a valid land use application has been filed. The proposal would not prohibit new senior apartments. Senior housing has different neighborhood needs than other types of housing, and the need for senior housing is forecasted to grow more rapidly than needs for other types of housing. The proposal also would not prohibit large mixed-commercial/residential projects that provide substantial services and amenities on-site.”

The city will gather public input on the proposal in the coming weeks, with the first opportunity being at the Ogden City Planning Commission meeting slated for 5 p.m. July 3.

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