Businesses come in many types of specialties. Some examples are banking, telecommunications, restaurants and vehicles. The best real estate investors realize that real estate is also a specific type of business. This is because one requires knowledge of the management, product, market, business plan, corporate structure and financials to progress.

One of these elements, namely the business plan is what many novice investors overlook when purchasing their properties. Real estate is a numbers game and one must have them in a written down fashion with realistic tangible objectives.

In your business plan, one must include the monthly, quarterly and yearly income and expenses for the property. These would necessarily include a cash flow statement to be reviewed monthly at the very least. One should also factor in any capital and current expenses into your plan to account for unforeseen and planned upgrades to the property.  Do not forget to include a vacancy allowance because even the best properties in the best markets are occasionally vacant.

A key point which should be obvious after completing your first plan is that equity is not a priority but cash flow is because it is the heart of any successful business.

If you have never written a business plan, sit down with your real estate specific accountant and they can help you write one down which you can use as a template for your overall portfolio.