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MSN Real Estate
Executive Summary
Opportunity
Solution
MSN Real Estate (MSN) is an Oregon-based real estate company that will offer benchmarked rental units for the Eugene, Oregon community. MSN’s units will balance safety, cutting edge features, and a positive atmosphere for all tenants.
Market
MSN will target three distinct customer segments. The largest segment that they will service is University of Oregon students. This segment is growing at 7% a year with 18,000 prospective customers. This segment is especially attractive since most of the local rental properties that are geared toward students are run down, poor quality units. The second market segment is local professionals who are increasing at 4% and have 12,000 potential members. The last segment is faculty and staff of the University. This section has a 5% growth rate and 6,000 potential customers.
Competition
The market for high quality, reasonably priced apartment units has been growing at a rate of 6.7%. Oregon’s rental rates have remained even, averaging $697, or $.79 per square foot, during the fourth quarter of this year. The Oregon market is experiencing rapid employment growth that is fueling demand for apartments, but not many new units are emerging. Not only is MSN pioneering this particular niche of affordable quality living, but it is capitalizing on the strength of the current economic growth in Oregon
Why Us?
MSN Real Estate provides high-quality, comfortable rental units in Eugene and other areas of Oregon. MSN’s apartment units offer state-of-the-art living conditions reflective of the rapid advancements in technology and a growing need for quality housing. Our company is dedicated to a hassle free living environment in which our tenants can enjoy all of the benefits of safe, attractive, and inviting units. Unlike many other realty companies that are solely concerned with turning profits, our primary objective at MSN is to maintain the highest level of customer satisfaction that is achievable. Tenant safety, happiness, and comfort are our main goals. MSN maintains competitive market prices, while working toward expanding the number of units owned, and increasing total profits earned. Within the company we will strive to work as a cohesive, harmonious unit focused on exemplifying our mission. Just as customer satisfaction is an intricate part of MSN’s success, so is employee satisfaction. That is why the founders of MSN Real Estate believe that employee satisfaction will make the company a success and will be the key to their longevity.
Expectations
Forecast
By Year 2 the company will be profitable enough to purchase its second facility. It is currently in discussions with the owners of a 20-unit apartment building in downtown Portland, OR. It is difficult to predict changes in the building values over the long term, but it is estimated that we will be able to purchase this building for $570,000.
Financial Highlights by Year
Financing Needed
We will be getting $1,250,000 from various sources to start. We will have an angel investment firm of $1,000,000. A loan of $200,000. Lastly we will get $50,000 from the two owners
Opportunity
Problem & Solution
Our solution
MSN Real Estate provides high-quality, comfortable rental units in Eugene and other areas of Oregon. MSN’s apartment units offer state-of-the-art living conditions reflective of the rapid advancements in technology and a growing need for quality housing. Our company is dedicated to a hassle free living environment in which our tenants can enjoy all of the benefits of safe, attractive, and inviting units. Unlike many other realty companies that are solely concerned with turning profits, our primary objective at MSN is to maintain the highest level of customer satisfaction that is achievable. Tenant safety, happiness, and comfort are our main goals. MSN maintains competitive market prices, while working toward expanding the number of units owned, and increasing total profits earned. Within the company we will strive to work as a cohesive, harmonious unit focused on exemplifying our mission. Just as customer satisfaction is an intricate part of MSN’s success, so is employee satisfaction. That is why the founders of MSN Real Estate believe that employee satisfaction will make the company a success and will be the key to their longevity.
Target Market
Market Size & Segments
MSN Real Estate’s main consumer base will be primarily students at the University of Oregon who will benefit from the apartment’s unparalleled level of quality, location, and technological amenities. We will also be marketing to local area professionals and recent graduates, along with faculty and staff at the University. These customers will be looking for safe, high-quality environments that can foster the type of atmosphere needed for scholastic and professional success.
Market Segmentation
- MSN’s largest market segment in the Eugene area will be students of the local universities. These students will be the most likely to desire the technological amenities that our company offers. We expect this to be the largest growing segment with a growth rate of about 7%.
- Local professionals are another large segment. They will be attracted to the units because of the same technological needs, but will also be attracted to the comfortable, well maintained living environment. MSN offers units that provide a quality "hub" between college graduation and home ownership. We expect this segment to grow at a rate of about 4% with a more frequent turn over.
- Local university faculty and staff represent the third and smallest identifiable segment, but contain the second highest growth rate. Proximity and quality will entice this segment which we expect to grow at a rate of 5%.
Competition
Our advantages
We start with a critical competitive edge: there are very few apartment units that offer the same level of quality and technological amenities as MSN properties. We also have a very high regard for customer service; something that is unparalleled in this industry. MSN believes it is essential that the customer feels he/she is being treated with the utmost care and urgency. All staff and personnel go through a training program that teaches many of the skills needed for successful client relations and customer service.
Keys to Success
Keys To Success
Our Keys to Success:
- Safe, quality housing that provides state-of-the-art amenities at competitive prices.
- Maintaining open communication between MSN and its customers in order to ensure the highest level of customer satisfaction and long lasting reputation within the community.
- To continue to expand the number of units owned and maintained, while also increasing the level of profits for both MSN and its investors.
Execution
Marketing & Sales
Marketing Plan
Marketing in a highly competitive housing industry depends on the recognition of excellence, as well as a point of difference to display our units in an individualized light. MSN will build a reputation upon these components.
We will develop and provide a living environment of unmatched proportion. It starts with the commitment to customer satisfaction and fulfilling their demands. Our commitment to quality and comfort includes safety and 24-hour customer service. The aspect of our living developments that differentiate MSN from all other real estate companies is our focus on maintaining the most advanced technological innovations on the market for our tenants.
Sales Plan
Sales in our business is based upon providing customers with a living concept fitting of their needs. We must be in touch with the needs and desires of our clientele in order to best attract a consistent flow of incoming residents.
Operations
Locations & Facilities
MSN headquarters will be established in A-quality office space in the downtown area of Portland, Oregon. This will be the heart of our company, with satellite locations in Beaverton and Eugene, Oregon. We are also installing an in-house Internet server and 24-hour answering service so that all customer or business communications are dealt with in an expedient and fluid manner. Within any living development with more than 32 units a representative of the company will be located.
Technology
MSN real estate will have the most up-to-date technology provided both to the customers and to the subcontractors and other clients.
- Ethernet ports and/or modem jacks will be installed in each unit developed by MSN.
- Access to a 24-hour copy/fax center located on the premises.
- Each unit will contain an emergency panic alert that will automatically go through to the manager and the local police department.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Complete Incorporation
|
Nov 13, 2017 | |
|
Financially Organize Organization
|
Nov 27, 2017 | |
|
Brokerage
|
Dec 11, 2017 | |
|
Expansion
|
Jan 03, 2018 | |
|
Earnings
|
Jan 16, 2018 | |
|
Acquisition
|
Feb 02, 2018 | |
|
Q1 Review
|
Mar 13, 2018 | |
|
Q2 Review
|
June 05, 2018 | |
|
Q3 Review
|
Sept 10, 2018 | |
|
Q4 Review
|
Dec 10, 2018 |
Company
Overview
Ownership & Structure
MSN Real Estate will be created as a Limited Liability Corporation based out of Portland, Oregon. It will be owned by its principal investors, Shawn Menashe and Nathan Koach. Shawn Menashe is the acting CEO and holds a 40% stake in the company. Nathan Koach is the acting CFO and holds a 40% share of the company as well. The other 20% is held by silent investors
Team
Management team
MSN Real Estate is completely departmentalized. The main departments are finance, marketing, management, and research and development. Nate Koach, co-owner of the company, assumes the responsibilities of the CFO, while his counterpart, Shawn Menashe, will be responsible for the duties of CEO. The company will make all decisions in accordance with the company mission. Employees are delegated tasks based upon their specialty.
Every six months, the two top partners will assess the results of these tasks, and the personality of the employee involved, to determine promotion and/or salary issues.
Management Team Gaps
The present team requires business development and administrative support. Most of the partners have been working in business environments where this kind of support was provided to them as part of a larger organization.
MSN will turn to Dynamic Public Relations to help create business development programs, such as speaking opportunities and magazine article insertions, as well as forums and seminars that are important to our ongoing development.
Regarding administration, we need a strong finance manager to guard cash flow. Our partners are not accustomed to the worries of cash flow, but they have the sense to listen to reason and deal with constraints if the finance manager provides the proper information.
Financial Plan
Forecast
Key assumptions
MSN’s plan depends on the assumptions that are made in the following table. These are annual and monthly assumptions that show the consistent growth of the company. Since we operate on a monthly collection basis, we are assuming that the majority of the collections will be timely and in full.
Some of the underlying assumptions are:
- We assume a healthy growth trend in the local real estate market, along with a continued strong local economy.
- We assume that we stay in line with the continuing advances in technology and housing.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of funds
The total start-up expenses include legal, stationery, architect, brochures, consultants, insurance, rent, construction, expensed equipment, etc. Start-up assets required include short-term assets (truck, cell phone, etc.), and initial cash to handle the architect and contractor fees prior to opening. Additional cash is needed to pay all zoning fees and governmental regulations.
Long-term asset purchases and the assumption of long-term liabilities are anticipated.
Start-up Expenses
Legal $6,400
Architect Fees $3,000
Stationery etc. $270
Brochures $275
Consultants $2,550
Insurance $1,315
Rent $1,400
Construction $75,000
Expensed Equipment $600
Other $750
TOTAL START-UP EXPENSES $91,000
Sources of Funds
We are getting startup funding from a couple of sources:
An angel investment firm will give us $1,000,000. They believe its a good investment due to our company assets
Long term liabilities – 200,0000
Menashe – 25,000
Koach – 25,000
Totaling $1,250,000
Statements
Projected Profit and Loss
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Revenue | $891,900 | $1,246,200 | $1,429,100 |
| Direct Costs | $79,330 | $111,020 | $119,790 |
| Gross Margin | $812,570 | $1,135,180 | $1,309,310 |
| Gross Margin % | 91% | 91% | 92% |
| Operating Expenses | |||
| Salaries & Wages | $249,600 | $254,592 | $259,683 |
| Employee Related Expenses | $49,920 | $50,918 | $51,937 |
| Leased Equipment | $24,000 | $24,000 | $24,000 |
| Utilities | $21,600 | $21,600 | $21,600 |
| Rent | $43,200 | $43,200 | $43,200 |
| Insurance | $18,000 | $18,000 | $18,000 |
| Amortization of Other Current Assets | $0 | $0 | $0 |
| Total Operating Expenses | $406,320 | $412,310 | $418,420 |
| Operating Income | $406,250 | $722,870 | $890,890 |
| Interest Incurred | $13,805 | $11,638 | $9,339 |
| Depreciation and Amortization | $40,000 | $40,000 | $40,000 |
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $0 |
| Total Expenses | $539,455 | $574,969 | $587,548 |
| Net Profit | $352,445 | $671,231 | $841,552 |
| Net Profit/Sales | 40% | 54% | 59% |
Projected Balance Sheet
| Starting Balances | 2018 | 2019 | 2020 | |
|---|---|---|---|---|
| Cash | $44,000 | $401,326 | $1,075,272 | $1,917,238 |
| Accounts Receivable | $0 | $0 | $0 | |
| Inventory | ||||
| Other Current Assets | $12,000 | $12,000 | $12,000 | $12,000 |
| Total Current Assets | $56,000 | $413,326 | $1,087,272 | $1,929,238 |
| Long-Term Assets | $1,200,000 | $1,200,000 | $1,200,000 | $1,200,000 |
| Accumulated Depreciation | ($40,000) | ($80,000) | ($120,000) | |
| Total Long-Term Assets | $1,200,000 | $1,160,000 | $1,120,000 | $1,080,000 |
| Total Assets | $1,256,000 | $1,573,326 | $2,207,272 | $3,009,238 |
| Accounts Payable | $0 | $0 | $0 | |
| Income Taxes Payable | $0 | $0 | $0 | |
| Sales Taxes Payable | $0 | $0 | $0 | |
| Short-Term Debt | $35,119 | $37,285 | $39,585 | $42,027 |
| Prepaid Revenue | ||||
| Total Current Liabilities | $35,119 | $37,285 | $39,585 | $42,027 |
| Long-Term Debt | $210,881 | $173,595 | $134,010 | $91,983 |
| Long-Term Liabilities | $210,881 | $173,595 | $134,010 | $91,983 |
| Total Liabilities | $246,000 | $210,881 | $173,595 | $134,010 |
| Paid-In Capital | $1,100,000 | $1,100,000 | $1,100,000 | $1,100,000 |
| Retained Earnings | ($90,000) | ($90,000) | $262,445 | $933,676 |
| Earnings | $352,445 | $671,231 | $841,552 | |
| Total Owner’s Equity | $1,010,000 | $1,362,445 | $2,033,676 | $2,875,228 |
| Total Liabilities & Equity | $1,256,000 | $1,573,326 | $2,207,272 | $3,009,238 |
Projected Cash Flow Statement
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | $352,445 | $671,231 | $841,552 |
| Depreciation & Amortization | $40,000 | $40,000 | $40,000 |
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | |||
| Change in Accounts Payable | $0 | $0 | $0 |
| Change in Income Tax Payable | $0 | $0 | $0 |
| Change in Sales Tax Payable | $0 | $0 | $0 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $392,445 | $711,231 | $881,552 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | |||
| Dividends & Distributions | |||
| Change in Short-Term Debt | $2,166 | $2,300 | $2,442 |
| Change in Long-Term Debt | ($37,285) | ($39,585) | ($42,027) |
| Net Cash from Financing | ($35,119) | ($37,285) | ($39,585) |
| Cash at Beginning of Period | $44,000 | $401,326 | $1,075,272 |
| Net Change in Cash | $357,326 | $673,946 | $841,966 |
| Cash at End of Period | $401,326 | $1,075,272 | $1,917,238 |
