IntroductionParadise estate pty ltd is a private limited Essay

Introduction

Paradise estate pty ltd is a private limited liability company which means it has a separate legal entity from its owners. It leases houses mainly to tertiary school students and workers of different salaries and wages. It differs from other real estate companies because its main customer base is students which make it a good venture to start as no other company offers this service.

Motto

“There’s no place like home”

Mission

Provide better, luxurious and affordable homes to students and all workers

Vision

We aspire to be a well-known company in the next 10 years and be able to compete globally and come out as a formidable real estate company.

Objectives

• To flip approximately 50 houses by 2022

• To rent out more than 100 houses by 2022

• To have a stable customer base

• To have a good reputation

• Make our brand well known globally

INDUSTRY ANALYSIS

There is a huge market for Botswana’s properties because almost every year properties gain value because the economy here is friendly which stimulates growth to foreign investors on properties, demand for housing is accelerating due to increased population in the country.

Lots of people are taking mortgage loans worth millions of Pula’s.

Properties that are rented give high yields of 7.9% in the city whilst those outside yields 5.5%.Price of a new house of 60 square meters starts at BWPP370 000 and average rent in Gaborone is BWP3 100 per month.

The return of both residential and non-residential properties stood at 16.5% in 2015 from yearly returns of 11.5% in 2014. For residential properties returns were 6.4% in 2015. (Guide 2019)

BOTSWANA STATISTICAL DATA

INDICATOR DATA YEAR

Total Population 2 290 000 2017

Urban Population Approximately 1 300 000 2017

Home Mortgage Loans BWP 96 000 000+/- 2017

Looking at the data above, the demand for accommodation is going to rent looking at the increasing population and the high demand for accommodation in the country.

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MARKET SEGMENTATION

1 Demographic –houses rented will differ in value looking at the income and occupation and income of our students. Those rented by students will be of low price and those rented by those with permanent jobs will be given high cost houses.

2 Geographic- our target customers will be students studying in Gaborone and people with permanent good paying jobs.

ANALYSIS OF COMPETITORS

Our main competitors is:

1. Botswana Housing Corporation (BHC)

-main aim is to solve housing shortage in Botswana

-offers large estates in cities and a mix of high, medium and low income houses

-those who are willing to buy BHC offers free interest loans and an individual is expected to pay over a period of 20 years. Guide (2019)

COMPETITIVE STRATEGIES

¬¬-Free internet (Wi-Fi) at student’s accommodation to make it easier to access information during their learning at home

-Provision of fully fitted student’s houses i.e. not it’s difficult for students to adapt here in Gaborone especially those from low income families so if they are provided with everything it’s going to increase our customers

-Rent free months for customers who has been with us for more than three months

-Students will be provided with free transport to their respective schools

DESCRIPTION OF VENTURE

Paradise Real Estates (Pty) Ltd is a newly established private owned company that will be wholly owned by five Batswana shareholders who each will possess 20% of the company. It will be located at Fairgrounds office park. As a lately established company the sole purpose of this company will be to offer rental services to the target market which will be students at a tertiary level as well as high-middle earning individuals in Gaborone. According to (transunion, 2019) a real estate is a lucrative business opportunity one can venture into as real estate is mainly about property thereby it will be able to appreciate, add value to the property yearly therefore making profits almost every year. Each shareholder will contribute individual skills from leadership skills for making decisions concerning activities of the business to come up with marketing skills that will help with coming up with marketing strategies to draw customers to the company.

In agreement with (Mokashi, 2018), Paradise Real Estates (Pty) Ltd will be registered at Registrar of Companies and Intellectual Property (ROCIP), apply for a trade license and register for tax at Botswana Unified Revenue Service. In addition to this, the enterprise shall open up a corporate bank account at Banc ABC. According to (finance, 2014) it shall be imperative to the company that it opens a corporate account because it will boost the odds accessing financial aid from investors because investors can better track how the business will be running in the future. This will also show the level of professionalism that it will display as it will separate business finances from the shareholders finances. The main source of finances will be from Citizen Entrepreneurship Development Agency(CEDA) that lends Batswana citizens up to P30 million which is payable up to 15years at market rate.

The enterprise would hire employees through interviews that will be spearheaded by a professional interviewer. Employees will be paid with the use of payroll software. As stated in (Lucerna, n.d), a payroll software is a type of operating system that aids in repaying laborers for the amount of time they worked, it then calculates paychecks from time they logged in and then draws paychecks into their individual accounts, the payroll software will be imperative to the company because it will prepare tax forms by filing and submitting the required reports thus saving time for the business owners. According to (Lucerna, n.d), the payroll software will keep the company’s records with less effort as files are stored electronically and it will save physical space.

The company will hire a real estate agent so that our services are fairly distributed to our customers. As stated in (agents., 2019) the real estate agents will promote the company’s real estate property through advertisements such as flyers thus asking potential customers to purchase, market and lease properties.Futhermore according to (agents., 2019) he or she will assure that all the terms of contracts drawn between the company and clients are met. Lastly (agents., 2019) states the real estate agent will further take soon to be buyers or renters to see their desired properties.

OPERATIONS PLAN

Daily operations

Paradise Real Estate (pty) ltd regular office hours will be from 0800hrs to 1600hrs on weekdays and during weekends the open hours will be from 0900hrs to 1200hrs. Direct services will be offered to our customers and also on-call service will be available during open hours. E-mail, telephone call service will be a platform for buyers, renters and also our suppliers. The renting agent will be advertising houses and consult with buyers through e-mail, telephone and direct service with them. E-mail will also be used within organization to communicate with different departments within Paradise Real Estate (pty) ltd.

Absence policy

• Employees are expected to report to work as scheduled on time and remain at work.

• Late arrival and early departure must be avoided.

• If absent for 3 consecutive days due to health issues, the employee must report and bring doctors note if not provided the employee will be terminated from work.

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SERVICE PLAN

Our company will rent and sell houses which are needed by tertiary students who do not have accommodation due to inadequate accommodation in schools. A gap has been identified in Gaborone therefore we will bridge the gap for those who are in desperate need for houses. Catalogues, orders and price lists will be used in future so that our clients see prices and make decisions to place orders. The final decision will be taken by agent after consultation with other departments concerning the order of the client.

MARKETING PLAN

Executive summary

This marketing plan shows our company’s market segments, marketing strategies to get customers and create a solid revenue stream. We will apply for a loan from Citizen Entrepreneurship Development Agency to fund our business.

Target markets

Our ideal customer is between the age of 18years old and 50years old who is looking for comfortable, classy accommodation at a reasonable or affordable price. The customer is likely to be one who values privacy and prefers to have their own personal space instead of staying in a multi-residential yard. Furthermore the customer must be willing to either rent or buy the houses as per the terms and conditions of the lease agreement.

Market definition and segmentation

We target two segments; tertiary school students and workers of different wages and salaries. The common characteristics about both segments are that they all want high standard accommodation at an affordable price.

1. Tertiary school students

University students in Gaborone such as Botswana Accountancy College, University of Botswana, Botswana College of Engineering and Technology and Institution of Development Management. These colleges cannot provide adequate accommodation to all of their students, as a result most of the students are forced to stay off-campus and have to travel long distances to get to school and struggle to find accommodation in a conducive environment. Therefore our purpose is to provide accommodation to these students near the schools at an affordable price. The houses will mostly located in Tlokweng and Broadhurst as they are closer to the schools.

2. Workers

The workers must earn a minimum of P500.00 per month. Accommodation is scarce and most people acquire it through renting and some by buying houses because being allocated land is difficult. We target Gaborone and surrounding areas such as Mogoditshane and Oodi.

Marketing Strategies

1. Offer Virtual tours of property

-Create 360? photos or videos; Interactive images that allow one to move the camera frame to see everything in the environment from a fixed point. A video can be created by linking recordings of the house and upload it to youtube, website or on facebook.

-Record a virtual tour with a drone- Allows one to capture images of the surrounding with smooth movements and obtain a complete vision of space than a simple photograph would provide.

2. Organize a webinar to generate leads

Free online conferences where an expert offers valuable information about specific topic in exchange for a name and email address. Our agents will organize webinars.

3. One day experience

Customer will be allowed to spend a day in the houses before actually get an idea of how it will feel to stay in the house to convince them to sign the agreement

4. Paying for ads

We will pay for ads to show customers about the services we offer.

ORGANISATIONAL PLAN

Form of ownership: Private limited company

Shareholders: Dalton Tsima

Portia Seakgosing

Nthabiseng Mokgalo

Tsaone Sillah

Same Rankgomo

Organizational Chart

Management Responsibilities Qualifications

General Manager

Dalton Tsima • General control of business.

• Delegates to subordinates.

• Takes decisions concerning activities of Paradise Real Estate (pty) ltd. • Degree in Business management

Operations Manager

Portia Seakgosing • Employment and Recruitment.

• Performance appraisal and rewards.

• Industry relations. • Bachelor Degree in operations management

• Degree in Business Administration

Marketing Manager

Nthabiseng Mokgalo • Analyses industry trend.

• Come up with marketing strategy by collaborating with sales manager. • Master’s Degree in Marketing

Sales Manager

Tsaone Sillah • Decide terms of discounts and pricing plans

• Evaluate performance of agents • Bachelor Degree in Communications

• Master’s Degree in Marketing

Finance Manager

Same Rankgomo • Maintain system of account , keep books and record all transactions and asserts

• Provides financial documents of transactions. (children, n.d.)

• Degree in Economics

• Degree in accounting

Real Estate Agent

Tumisang Wetshootsile • Solicit potential clients to buy, sell, and rent properties

• Ensure all terms of purchase contracts are met

• Prepare documents such as loyalty contracts, purchase agreement and deeds. (agents, 2018)

• Masters in Real Estate and Valuation

Accountant

Kefilwe January • Prepares budget

• Documents financial transactions

• Prepares annual statement • Bachelor Degree in Accounting

Assessment of risks

Idiosyncratic risk- these are specific to the asset and asset’s business plan.

The more the risk, the more the return, location is an example of his kind of risk because it affects how customers would come to view the houses to rent. (Scherer, 2017)

Liquidity risk

The depth of the market and how to leave the investment needs to be put in thought before purchasing houses. (Scherer, 2018)

Credit risk

The length and stability of the income stream drives the value of the houses. The most creditworthy tenants can experience bankruptcy, the business must always be cautious when renting out to trusted people. (Scherer, 2017)

Replacement cost risk

Knowing if it is economically feasible for a new building to possibly come and take away our tenants. We must consider our property’s asset class, location and sub market in our chosen location. (Scherer, 2017)

Rental property

Potential risks

Additional mortgage: this is needed in order to deal with the cost of repairs and maintenance of the houses that are being rented out. (Maddox, 2019)

Value – there might be a plunge in terms of value of the property, that may lead to eviction a tenant or if a tenant moves out unexpectedly. Insurance is necessary in case any damage may happen to the house and legal protection if a tenant tries to sue you. These risks can be controlled by screening tenants and creating a detailed lease with the help of a professional lawyer. To increase the equity, we can put more money on the property and add its value so it appreciates. (Maddox, 2019)

Tax systems

When there is a loss in rental property, it is not possible to balance the loss suffered by negating other income resources. (AG, 2019)

Contingency plan

A contingency plan is commonly known as “plan B”; it is set up in case something disrupts the primary plan of a business. They are set up to evade any to evade any bad events that may affect a businesses’ reputation or finances. (Hughes & Hughes, 2019)

Important resources necessary in real estate

• Houses

• Staff

• Data

• Capital

Risks that may affect the resources

• Death

• Natural disasters

• Hackers

• Unruly tenants

• Theft

Contingency plan

In any case where an employee passes on, the company must offer help anywhere possible. They must also find a new person to fill in the position that was previously occupied by the deceased as soon as possible so to ensure that they are no disruptions on the day to day running of the company.

Data loss is common nowadays, so to avoid any hassles the company must have backed up data on a different medium in a different place.

ORGANISATIONAL PLAN

Form of ownership: Private limited company

Shareholders: Dalton Tsima

Portia Seakgosing

Nthabiseng Mokgalo

Tsaone Sillah

Same Rankgomo

Organizational Chart

Management Responsibilities Qualifications

General Manager

Dalton Tsima • General control of business.

• Delegates to subordinates.

• Takes decisions concerning activities of Paradise Real Estate (pty) ltd. • Degree in Business management

Operations Manager

Portia Seakgosing • Employment and Recruitment.

• Performance appraisal and rewards.

• Industry relations. • Bachelor Degree in operations management

• Degree in Business Administration

Marketing Manager

Nthabiseng Mokgalo • Analyses industry trend.

• Come up with marketing strategy by collaborating with sales manager. • Master’s Degree in Marketing

Sales Manager

Tsaone Sillah • Decide terms of discounts and pricing plans

• Evaluate performance of agents • Bachelor Degree in Communications

• Master’s Degree in Marketing

Finance Manager

Same Rankgomo • Maintain system of account , keep books and record all transactions and asserts

• Provides financial documents of transactions. (children, n.d.)

• Degree in Economics

• Degree in accounting

Real Estate Agent

Tumisang Wetshootsile • Solicit potential clients to buy, sell, and rent properties

• Ensure all terms of purchase contracts are met

• Prepare documents such as loyalty contracts, purchase agreement and deeds. (agents, 2018)

• Masters in Real Estate and Valuation

Accountant

Kefilwe January • Prepares budget

• Documents financial transactions

• Prepares annual statement • Bachelor Degree in Accounting

FINANCIAL PLAN

This will show financial information.

INCOME STATEMENT(in Pula’s)

Year 1 Year 2 Year 3

Sales 378 000 756 000 1134 000

Direct cost of sales -72000 (144 000) (216 000)

Gross profit 306000 612000 918000

less expenses

Insurance 6000 6000 6000

Rent 48 000 48000 48 500

Salaries 15000 15000 20000

Stationery 500 500 500

Electricity 4200 4200 4200

Water 600 600 600

Net Profit 231 700 537 700 838 200

Statement of cash flows(in Pula’s)

Year 1 Year 2 Year 3

Cash Sales 378 000 756 000 1134 000

Bill Payments (58 800) (58 800) (58 000)

319 200 697 200 1076000

Balance sheet (in ‘00000 pulas)

Assets

Fixed assets Year 1 Year 2 Year 3

Premises 1 1 2

Office equipment 2 1 1

Vehicle 2 1 4

Current assets

Cash 2 1 1

less liabilities

loan -5 -1 -0.5

2 4 7.5

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