Multi-Company Construction/Real Estate Portfolio

1st Ave buildingChallenge:

DE, Inc. was approached by the owners of a multi-company portfolio after several years of receding profits which had reached 1.4% overall.  While the companies were created for a purpose, there was not an overall strategy which drove the purpose of every decision.  Thus every opportunity that came their way was painstakingly evaluated and reevaluated because no primary goal was established for the portfolio.

Add to this the state of the construction and real estate markets during the period of 2007 – 2012.  Many would not believe anything other than receding profits was possible.

Goal:

Develop the portfolio of businesses in such a way that $500,000 in passive income is generated annually at the time of retirement.

Solution

Constrution Business

  • Began by stabilizing the current businesses, implementing a series of management systems primarily around market, sales, and production to accelerate, predict and monitor cash flow.
  • Develop sufficient commercial real estate property to generate $500,000 in profit annually.
  • All portfolio assets are directed toward this goal with the exception of the home design company which was the “cash cow” of the portfolio.
  • Use the architectural firm to design properties to be added to portfolio.
  • Use the commercial construction company to build their portfolio properties.
  • Add property companies as needed to separate and protect real estate assets.
  • Develop a succession plan to allow all businesses within the portfolio to operate without day-to-day owner involvement.
  • Stabilized home design company within first 4 months.

Results:

  • Increased overall profitability from 1.4% to more than 15.4% and assets by 226% during the 2 year period.
  • Property development sparks interest from other larger property developers creating new opportunities for both the architectural firm and commercial construction company.
  • Hired a full-time architect to act as the principal architect for the architectural firm.