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1.0 Executive Summary
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. These rentals will be provided with unmatched levels of customer service and attention. Sales are projected to be $430,000 in year one growing to $600,000 in year three.
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.
MSN will initially focus their efforts on buying and developing existing properties. Once the properties are purchased, each unit will be hard wired with Internet access, state-of-the-art amenities will be installed, and safety measures will be implemented ensuring a cutting edge, safe environment. This course of action will be initially pursued as a way to efficiently utilize capital and establish a reputation within the community. Future projects may include custom build outs.
MSN will be led by Shawn Menashe and Nathan Koach. Shawn has a bachelors degree in Economics and received his MBA from the University of Oregon. Following school, Shawn went to work for one of the largest property management companies in the area. After seven years with [name omitted], Shawn had risen up to Vice President of Operations. It was his time at [name omitted] that provided Shawn with valuable industry insight and experience. Nathan brings different skills sets to the company, coming from a customer service background. At the young age of 21, Nathan had already completed his undergraduate degree and went to work for Voice Stream Wireless. After six years at Voice Stream, Nathan had been promoted to the Director of Customer Service for the Salem, Oregon center. In this position Nathan managed Voice Stream's 200 person customer service department. This experience provided Nathan with incredible customer attention skills that he will leverage for MSN.
Sales of $430,000 in 1999 and $600,000 by the year 2001.
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Gross margin higher than 50%.
Net profit/sales to be positive by the second year.
Have a crime rate of 0.
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.
Initial focus will be to buy and develop existing apartment complexes. We will modify and remodel the acquired real estate so as to meet MSN standards and increase long-term assets and income. Housing units will predominantly be located in the University neighborhood targeting both students and professionals. MSN fosters the ideals of the importance of tenant needs along with healthy and understanding relationships and a professional commitment to satisfaction.
1.3 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
2.0 Company Summary
MSN Real Estate is an enterprise that is involved in numerous aspects of the industry. Primary experience and expertise is in the development of high-quality, lower cost living for students and professionals seeking the most up-to-date technologically advanced living environment. An area of intense training and attention is the importance of strong customer service.
The first property purchased by the company is a 40-unit apartment building on the corner of Hilyard and 14th in Eugene. It is relatively close to the University, so will be easily rented to capacity nine months out of the year. For the remaining three months, the price of rent will be reduced and we will aim to remain at 60% capacity.
2.1 Company Ownership
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.
2.2 Start-up Summary
The total start-up expenses (including legal, stationery, architect, brochures, consultants, insurance, rent, construction, expensed equipment, and other) come to $91,560. Start-up assets required include $12,000 in short-term assets (truck, cell phone, etc.), and $36,000 in 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 assets of $120,000 and long-term liabilities of $1,080,000 are anticipated.
The details are included in the following table and chart.
Architect Fees $3,000
Stationery etc. $270
Expensed equipment $600
Total Start-up Expenses $91,560
Start-up Assets Needed
Cash Balance on Starting Date $1,111,330
Other Current Assets $12,000
Total Current Assets $1,123,330
Long-term Assets $120,000
Total Assets $1,243,330
Total Requirements $1,334,890
Silent Partners $200,000
Total Investment $246,000
Accounts Payable $3,890
Current Borrowing $5,000
Other Current Liabilities $0
Current Liabilities $8,890
Long-term Liabilities $1,080,000
Total Liabilities $1,088,890
Loss at Start-up ($91,560)
Total Capital $154,440
Total Capital and Liabilities $1,243,330
2.3 Company Locations and 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.
The company is currently in the final stages of purchasing its first building, a 40-unit apartment building on the corner of Hilyard and 14th in Eugene. The price of this building is $1.2 million. The company will make a down payment $120,000 and spend an additional $75,000 on renovation. This building houses mostly 2-bedroom units with average per unit price of $775 per month.
In Year 2 the company will 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.