The purpose of this business plan is to showcase the acquisition of a 4-unit strip mall based in Merrillville/Gary, Indiana. Ray Zor-Cutz (“the Company”) intends to acquire the operations of this existing real estate facility. The loan amount and purchase price is $400,000. In order to facilitate a rapid acquisition of the property, the Company will use equity capital prior to hypothecating it in order to leverage the business’ equity position. The Company’s CEO is Peter Smith.
1.1 The Operations
As stated above, Ray Zor-Cutz will acquire this property and Business within the next two months. It currently operates at 90% capacity. The annual rent roll is in excess of $8,000.00. The business income is in excess of $20,000.00 monthly. The Company, in order to ensure substantial occupancy, will continue to work with numerous commercial real estate brokerages throughout the target market in order to source tenants when vacancies occur. The business will also maintain a proprietary website that showcases tenant operations and how to contact the business to develop a retail store on the premises.
The business will employ a full-time property manager that will ensure the cleanliness and maintenance of the facilities. The Company will work with a third-party landscaping company to ensure that the grass, trees, and shrubs are properly maintained.
The third section of this document will further discuss the property and the Company’s operations.
1.2 Financing
At this time, the Company is seeking an aggregate of $400,000.00 to complete the acquisition discussed in this document. As discussed above, once the acquisition is complete – the Company will hypothecate the property to free up a substantial portion of the capital that was used during the audition.
Moving forward, Ray Zor-Cutz could easily acquire additional rounds of funding to carry out proprietary developments of strip malls or related commercial property facilities. This document assumes that no additional capital will be raised.
1.3 Mission Statement
Ray Zor-Cutz mission is to provide its business and tenants with a highly visible retail business and spaces that are seen by thousands of passers-by on a daily basis while concurrently keeping rents affordable.
1.4 Management Team
Rayshawn Elliot is a seasoned real estate developer and entrepreneur. He will be able to effectively acquire this strip mall as well as operating a seasoned business on site.
1.5 Sales Forecasts
1.6 Expansion Plan
The Company, once this acquired property reaches 100% occupancy, may seek to add additional locations to its portfolio. Management will target properties that have a capitalization rate of now less than 10%. The Company may also create syndicated limited partnerships in order to further expand the acquisition operations of this business.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Ray Zor-Cutz 4061 Richard Hatcher Blvd. Gary, Indiana
2.2 Required Funds (secured)
A capital investment of $400,000 is needed to acquire the strip mall in northwest Indiana . The entirety of these funds will be used for the purchase of the property, closing costs, and working capital.
Use of Funds Strip Mall Acquisition $400,000.00 (+ improvements )
2.3 Investor Equity
Please reference the attached private placement memorandum.
2.4 Management Equity
This matter is discussed in the enclosed documentation.
2.5 Exit Strategy
As the property generates substantial capital appreciation, Management may work with a qualified business broker to divest the property for a significant profit. Based on the current rates of property appreciation, the Strip Mall and business could be worth as much as $2.5million over the next five years. There are no long term plans to sell the property.
2.6 Investor Divestiture
The PPM contains the necessary information regarding exit strategies for investors.
3.0 Real Estate Services
As discussed in the executive summary, the Company intends to acquire this highly trafficked strip mall that provides high visibility locations to tenants within Seattle. The business will recognize substantial streams of passive income as long as the business holds the property. Most importantly, the Company will continue to engage in high impact marketing campaigns that will attract visitors to the location. During holiday months, the location will use seasonal decorations to further increase traffic.
The location will have annual rent increases of 5%, which will allow rent rolls to remain in line with inflation while concurrently creating real profit growth for the business.
4.0 Strategic and Market Analysis (N/A)
4.1 Economic Outlook
This section of the business plan will focus on the commercial real estate market, the tenant profile, and the competition that the Strip Mall will face as it completes the acquisition discussed in this document.
The US economic climate is strong at this time. Inflation rates are declining as are interest rates. Given that interest rates are now declining, the Company will have more affordable access to capital in order to carry out subsequent acquisitions in the future. As rates further decline, the Company may refinance its hypothecated property in order to reduce interest costs.
Even in the event of an economic recession, Ray Zor-Cutz will be able to remain profitable and cash flow positive. Merrillville surrounding is a population dense and wealthy market area of retailers and food service businesses. The economically secure nature of the surrounding businesses will continue to allow the business to generate highly recurring income.
4.2 Industry Analysis
Each year, real estate focused enterprises generate in excess of $600 billion per year in aggregate rental fees and related income. There are more than 2 million companies that are actively engaged in the acquisition, rental, sale, and remodeling of real estate.
This industry typically remains in lockstep with the growth of the economy in general. Most importantly, interest rates and inflation have correlating effects on the value of real estate as well as demand. One of the major trends within the strip mall segment of commercial real estate is to focus on acquiring tenants that work in the healthcare, legal, or food service industries. The products and services of these entities remains in demand at all times.
4.3 Tenant Profile
Among tenants that will use the property for their commercial purposes, the following profile has been developed:
Restaurants, custom designers, healthcare provider, retailer, food service business, or legal services provider.
Annual revenues in excess of $400,000
Will receive $15,000 per month on rental fees
In the tenant profile section, you should discuss the number of businesses in your respective market, the population size, the population density, number of people that travel to strip malls, and other information related to your acquisition or development of a strip mall.
4.4 Competition
As with all real estate enterprises, this business will face ongoing competition from individual real estate entrepreneurs to large real estate investment firms seeking above rate returns on investment through commercial property. Admittedly, given the scope of real estate – it is difficult to quantify the competition in any given market. Most importantly, this section should demonstrate how your strip mall is better trafficked and more accessible than competing properties. You can also discuss specialized landlord improvement allotments that will draw well qualified tenants to the property.
5.0 Marketing Plan
Quite simply, the immensely visible nature of the Strip Mall allows the business to only maintain a modest marketing budget in order to have thousands of people visit the facilities on a daily basis. The Company, as will be discussed below, will continue to foster relationships with commercial real estate brokerages to ensure substantial occupancy.
5.1 Marketing Objectives
Develop relationships with regional business organizations that focus on retail industries.
Maintain an online presence that showcases the property and its tenants.
Use social media to showcase the strip mall during holiday seasons.
5.2 Marketing Strategies
The ongoing marketing required by the strip mall is relatively modest given the high visibility nature of the property. The property will have a 100% occupancy rate. The business will continue to maintain strong relationships in the Merrillville/Gary area with commercial real estate brokerages that will place tenants at the facility. The business, once the acquisition is completed, will send brochures to these entities in order to ensure that they are aware of the location when they have clients seeking high visibility retail space.
The business will maintain a modest online presence via its own website and pages on popular social media platforms. The Company’s website will not only showcase the property and its tenants, but it will also provide information about how to acquire space. The website will be listed among numerous directories that showcase commercial properties in the Seattle area market. This will continue to the website being found more frequently among major search engines.
The Company, during holiday seasons, will decorate the property. This will attract additional shoppers. The business will also host themed events, which will be marketed among social media platforms with a focus on Facebook and Instagram. These expenditures will be relatively modest as compared to the rent roll.
5.3 Pricing
Each tenant incurs a rental fee of $2,500 to $4,000 per month depending on the size of their unit. These fees do not include utilities.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Payroll
7.0 Financial Plan
7.1 Underlying Assumptions
The figures shown in this document are based on the following:
Ray Zor-Cutz will raise its rent by 5% each year.
The Company is seeking to acquire $400,000 from investors.
No further capital will be acquired during the first three years.
7.2 Sensitivity Analysis
The Company’s revenues are only modestly sensitive to negative changes in the economic climate. The facilities have tenants that encompass a number of economically secure industries. Additionally, the property is located in the wealthy market of Merrillville/Gary which is home to numerous businesses, apartments and companies. The Strip Mall has fixed operating costs, which will ensure that underlying financial obligations can be fulfilled on a monthly basis.
7.3 Source of Funds Banks/Cash on hand
7.4 Profit and Loss Statements
7.6 Balance Sheet (proposed)
7.7 Breakeven Analysis
7.8 Business Ratios
Fundraise Details
This section is only visible to registered investors. Log in or register as an accredited investor to view.
Fundraise Details