How to write a buy to let business plan

min read

What is a property business plan?

In simple terms, a property business plan is a written document outlining what you hope to achieve as a business owner and how you plan to get there. You can think of your business plan as your business road map, detailing your company’s strategy and goals, and the steps you’ll take to achieve them.

If you’re looking to apply for a business loan, it’s likely that your bank will ask to see your business plan before agreeing to lend you the money. This is because they’ll want to see how you plan to pay off the money you owe.

Some of the key elements that should be covered in your buy to let business plan include:

Where you’re at: Explain your current financial situation and any costs you anticipate
Goals for your business: What does success look like for your business? Make sure you relate this back to financial projections
Your strategy: How are you planning to run and grow your business? Explain your business structure and how you’ll operate day-to-day

Creating a property business plan

There’s no right or wrong way to create a business plan. As long as you cover the key elements and express your passion, you’ll be well on your way to success.

The key to a successful property business plan is thorough research, so you have a list of what to include. Below, we’ll explore the key considerations you should include, step by step.

Section one - assess your current position

The first step in putting together your buy to let business plan is to evaluate your current position, so you know what you need to succeed. Try to assess the following areas:

Your current financial circumstances: Assess your personal finances, including any debts and liabilities, as well as savings and other income sources. Do you have any financial commitments that could impact your ability to invest in property right now? Evaluate any potential risks, such as cash flow changes or unexpected expenses, and how they may affect your personal finances and stability.
Your motivation for starting a business: Clearly define your motivation for starting a buy to let business, whether that be financial independence or simply a passion for property. What are your short- and long-term goals?
Your available finances: Do you have the funds available right now to start your business? It’s important to have complete visibility of your savings, investments and any other finances you can allocate towards starting your enterprise. Calculate your initial costs to get things going and whether your current finances are enough, or if you’ll need additional funding.
Additional funding: If you need additional funding from investors or a business loan, you’ll need to work out where this money will come from. Explore options like bank loans, private investors and crowdfunding, and make sure you understand their repayment schedules.
Your skills: Assess your skills and knowledge around property management - if you’re missing any key skills such as real estate law and tenant management, you could look to take a course or contact someone experienced in the industry for advice.
How you’ll manage your properties: You’ll need to make decisions about how you’ll manage your properties. Will you manage them yourself, or have help from others?

Section two - set goals for a buy to let business

Setting realistic and measurable goals is crucial for your business’ success. These goals are what you’ll work towards, allowing you to stay focused with measurable benchmarks to help you track your progress. First, you’ll need to make sure your goals are realistic and achievable with the resources you have.

For example, you could have a financial goal to own a certain amount of properties. If so, you could mention this in your business plan and the steps you’ll take to achieve this, as well as how much money will be required to fulfil this goal. Initially, you’ll want to aim for a manageable amount of properties that you can not only keep on top of, but afford. Consider how you’ll manage your portfolio as it grows - the more properties you acquire, the more work it will take to maintain them. You may need to hire a property management company to handle day-to-day maintenance and operations. Take a look at our how to start a property business guide for more details.

Other business goals you may look to aim for include:

Pension pot: You may use your property portfolio as a way of building a retirement fund. Set goals that align with your retirement planning, such as owning a portfolio of debt-free properties by retirement age.
Financial independence: If you’re looking to achieve financial freedom, explain what that means to you. Perhaps you’ll want to cover all your outgoings with your buy to let income, or perhaps retire early.

Section three - set your buy to let strategy

Writing out your buy to let strategy in your business plan is a crucial step in your business journey, serving as the blueprint for how you’ll achieve your goals. Of course, the strategy you take will vary depending on the type of property you invest in. What works for a residential property is likely to differ from a commercial property, for example.

Some decisions you may need to make when writing the strategy section include:

What is my price range for buying properties?
What improvements or renovations will I make to increase value?
How will I afford these improvements, and what is the expected ROI?
Will I prioritise expanding my portfolio or upgrading properties?
How will I manage properties?
How will I market properties to appeal to tenants?

Top tips for writing a buy to let business plan

As we’ve mentioned, your business plan is your roadmap for success, detailing exactly how you’ll achieve your business goals.

There are further considerations to include when writing your property business plan, to ensure your company is in the best position for success, including:

Build out the cash flow

Building out a cash flow document, such as a spreadsheet, can help you assess how to get the best rental yield - the return on your investment relative to the price you paid for the property and ongoing expenses. You’ll also gain an overview of your expenses so you can make informed financial decisions. Doing so can help you review your expenses (such as gas certificates, legal costs and letting agency fees), to align with your business goals.

Another key consideration is mortgage costs and interest rate changes. Monitoring your cash flow can help you to manage any changes to these costs. You can input your monthly mortgage payments, including interest, to understand how much of your rental income will contribute towards these payments. Remember, if you have a fixed rate mortgage, the interest rate will remain the same each month up to a set period of time - five years for example. After this period the rate may change which could increase your monthly repayments. Inputting different rate scenarios into your cash flow document can help you prepare for these potential changes.

Consider how you’ll be taxed

Once you’ve built your cash flow, you’ll need to consider how you’ll be taxed as a business and how this will affect you. When deciding on a business structure, you may sway towards forming a limited company rather than operating as a sole trader due to the potential tax benefits. For example, as a limited company you’ll pay corporation tax rather than the income tax you’d pay as a sole trader, which is significantly less. Take a look at our limited company vs sole trader guide for more information.

Speak to experienced property investors

Reaching out to experienced property investors can offer first-hand knowledge and top tips for starting a buy to let business, as well as the latest industry changes. Reach out to like-minded professionals on platforms like LinkedIn, attend industry events and conferences or even contact local competitors to build valuable connections. You could ask questions about how they structured their own business plans, and what they’ve done to ensure their business remains profitable and sustainable long term.

Start your business journey with SUAZ

Writing your business plan for a buy to let property is a vital stage in your entrepreneurial journey. From setting your business goals to solidifying your buy to let strategy, you’ll soon have a business plan that you can turn to as you embark on your exciting next chapter.

Looking to start a property business? SUAZ can take care of the complicated stuff for you. With our help, you can form your limited company completely free of charge, with support there whenever you need it. So, what are you waiting for? Form your buy to let business today with SUAZ.