2019 real estate business plan pdf

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Real Estate Business Plan Template

Download our template and create a business plan for your real estate business!

Updated September 22, 2023 Reviewed by Brooke Davis

A real estate business plan is as essential as a business plan for any new or existing business. This step-by-step guide will explain how to make a real estate business plan, provide a real estate business plan template for you to work with, and explain how and why each step is necessary for your business plan to be effective.

We also provide links to downloadable templates to help you create your real estate business plan and sample plans to show you the best ways to tailor your plan for any number of real estate business needs.

Whether you seek investors to grow your business or want to track your goals from year to year as your business develops, a carefully crafted plan will help you.

Why You Need a Business Plan for Your Real Estate Business

How to write a business plan for real estate, real estate business plan sample.

The real estate business plan fills several needs. It gives you an outline of your business goals and the direction you want your business to take. It keeps you in line with industry trends. It lets you monitor your annual performance and change your goals as the market changes.

An effective real estate business plan also acts as a financial summary of your business, showing how it stands about your competition and the industry. The business plan acts as a road map for you and a snapshot of your business for any investors or bankers who want to understand your business.

A real estate business plan will help you spot risks and weaknesses early in your business development and help you set realistic goals for your business.

These are known as SMART goals: Specific, Measurable, Achievable, Relevant, and Time-based goals.

Creating a business plan without goals is like starting a journey without a destination. Having a destination without a map means going down many blind alleys, taking unnecessary detours, and wasting time as you frequently need to return and start again.

Your business plan will help you avoid these pitfalls and adjust your course while you travel towards your final goal — a successful real estate business.

You must cover critical topics and include the correct information to ensure your business plan is as effective as possible. Follow our guide to writing a well-formed real estate business plan below.

1. Executive Summary

The executive summary contains an overall review of the rest of the business plan. It should include an outline of your history, your mission statement, and an overview of the rest of the report.

This section will include things like:

• Target clients with a fictional “ideal buyer” persona;
• Target neighborhoods, price ranges, and listings;
• Market overviews and potential threats and opportunities;
• A marketing plan outline.
• Your mission statement. This should include where and how your agency was founded, discuss the legal and financial structure, and stress your dedication to your customers and any special advantages you provide to your target clients.

2. Management Team

If you have a management team or a group that has contributed to the business’s success, summarize their names and contributions.

This section highlights everyone who has been involved in your business.

• Owners, founders, and original managers;
• New management, assigned duties and areas, and specific clients;
• Planned management expansion and anticipated managerial goals.
• Include all information about your managers, names, positions and duties, education and work history, past business successes, and other relevant details. Think of this section as your management team’s biography.

As the business expands, your management team section will be one section that needs constant improvement and updating.

3. Products and Services 

Your products and services should be phrased to make you unique in the industry and highlight how you stand out from your competitors. As a real estate business, what do you provide for your clients that others do not? How do your agents compare with your competition?

In real estate, your product is your listing and your brand. What is it that makes your company the one that your target buyer wants to use? In this section, you will highlight the following:

• Your niche market and how you acquire specific listings in your area;
• Your lead generation model and the way you obtain leads that differentiate you from your competitors;
• Your branding. A defining brand can be nebulous, and many firms resort to hiring a brand agent to help them customize and market their brand. You may be a family-friendly agent or specialize in the young professionals market. Determining how you present yourself is critical to your service profile.

4. Customers and Marketing

The customers and marketing section lets you identify your niche within the real estate business and how you intend to reach them.

You defined your ideal customer in your executive summary; now is where you expand on your perfect customer “persona.” A “persona” is the industry name for the imaginary person you sell to.

• Their demographics, age, gender, job, family preference, and income.
• Deal-breakers. What do they have to have in a home? What can they do without?
• Amenities, recreation, entertainment. Does your ideal buyer need dog parks nearby or bike paths? Do they want access to the water or the theater district?
• What type of neighborhood is your ideal buyer looking for? Do they need a school district or prefer to be far from children?

After establishing your ideal customer, you can select the viability of your marketing niche. For instance, is your buyer likely to be a first-time buyer? If so, what percentage of first-time sales were made in your chosen area in the last two years?

The more detailed you can make your Customers and Marketing section, the more you know how your business will likely thrive in your chosen area.

5. SWOT Analysis

Strengths, weaknesses, opportunities, and threats are necessary for every business analysis. In what areas are you and your business strongest, and where do you need improvement?

Investors appreciate a business owner who can accurately pinpoint their good and bad points and demonstrate how to improve.

This analysis should be fact-based, not opinion-based. You should be able to provide statistics and metrics for your and your competitors’ business research. Some things to consider are:

• In what areas of your business plan are you strongest? Are they similar or dissimilar to your nearest competitor’s strengths?
• In what areas are you weakest? Are you weak where your competitors are strongest?
• What opportunities can you exploit in the next six to 12 months? Are these opportunities unavailable to your competitors?
• What threats are you facing in the next year? How can you avoid these threats or turn them into advantages?

By analyzing your business objectively and reviewing all the facts and numbers, you can determine how you will be placed in the next year.

6. Financials 

The meat of your business plan is the financials. This includes your expenses, annual income forecast (sales, commissions, or other income), cash flow, and costs. As your business grows, your business plan will include previous years’ financials to track the growth.

Your financials should include, at a minimum:

• Expenses. These include operating expenses, whether you have a physical location or are still in the virtual stage of operations, licensing and permitting, fees and filing costs, and other operating expenses. If you have employees, it will also include payroll.
• The past income portion will track how much you have already made. You should be able to show how many leads you have generated, how many transactions you made, and your income from those efforts.
• Future income is how much you would like to make going forward. You can estimate how many leads are needed per transaction and how many transactions per sale from your past efforts.
• Goals. With this information, you should include your projections for the next year and five-year periods. Presumably, you wish to increase profit over the next five years. You can demonstrate how to achieve these goals using income tracking and market research.

7. Operations

Operations contain the moving parts of your financial projections. This section describes how you intend to reach your business goals in the upcoming year. This section might also include upcoming personnel changes, office expansions, etc.

Real Estate operations can include your projected hours of operation, your action plan for achieving your goals, and your marketing and advertising plan. Initially, this may be somewhat fluid if you do not plan to have set hours of operation or a brick-and-mortar office.

Later, as your business increases, this section will include business hours, open house times, etc.

8. Appendix

If your real estate business plan includes any ancillary documents, such as your Articles of Incorporation or a  Business Purchase Agreement , they would be included in the Appendix.

After your first real estate business plan, your previous years’ plans will go into the Appendix so they can be reviewed by potential investors or by your board. You can also include your quarterly statements and other financial documents.

Your Appendix is the section for any documents you want to have that are not essential for your readers’ overall understanding.

Now that you know what goes into your real estate business plan, all that is left for you to do is click on the business plan creation template and begin. Ensure you have all your documentation and research-ready in advance, and the template will provide you with cues as to what information needs to go into which spaces.

After filling in all the blanks, the template will generate a real estate business plan to your specifications.

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• State & Local Advocacy Resources to foster and harness the grassroots strength of the REALTOR® Party.
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• Get Involved Now more than ever, it is critical for REALTORS® across America to come together and speak with one voice.
• All NAR & Affiliate Courses Continuing education and specialty knowledge can help boost your salary and client base.
• Code of Ethics Training Fulfill your COE training requirement with free courses for new and existing members.
• Continuing Education (CE) Meet the continuing education (CE) requirement in state(s) where you hold a license.
• Designations & Certifications Acknowledging experience and expertise in various real estate specialties, awarded by NAR and its affiliates.
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• Writing a Business Plan

Writing a business plan may seem a daunting task as there are so many moving parts and concepts to address. Take it one step at a time and be sure to schedule regular review (quarterly, semi-annually, or annually) of your plan to be sure you on are track to meet your goals.

Why Write a Business Plan?

Making a business plan creates the foundation for your business. It provides an easy-to-understand framework and allows you to navigate the unexpected.

Quick Takeaways

• A good business plan not only creates a road map for your business, but helps you work through your goals and get them on paper
• Business plans come in many formats and contain many sections, but even the most basic should include a mission and vision statement, marketing plans, and a proposed management structure
• Business plans can help you get investors and new business partners

Source: Write Your Business Plan: United States Small Business Association

Writing a business plan is imperative to getting your business of the ground. While every plan is different – and most likely depends on the type and size of your business – there are some basic elements you don’t want to ignore.

Latest on this topic

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles ( E ) are available only to NAR members and require the member's nar.realtor login.

Defining Your Mis​sion & Vision

Writing a business plan begins by defining your business’s mission and vision statement. Though creating such a statement may seem like fluff, it is an important exercise. The mission and vision statement sets the foundation upon which to launch your business. It is difficult to move forward successfully without first defining your business and the ideals under which your business operates. A company description should be included as a part of the mission and vision statement. Some questions you should ask yourself include: 

• What type of real estate do you sell?
• Where is your business located?
• Who founded your business?
• What sets your business apart from your competitors?

What is a Vision Statement ( Business News Daily , Jan. 16, 2024)

How to Write a Mission Statement ( The Balance , Jan. 2, 2020)

How to Write a Mission Statement ( Janel M. Radtke , 1998)

Using a SWOT Analysis to Structure Your Business Plan

Once you’ve created a mission and vision statement, the next step is to develop a SWOT analysis. SWOT stands for “Strengths, Weaknesses, Opportunities, and Threats.” It is difficult to set goals for your business without first enumerating your business’s strengths and weaknesses, and the strengths and weaknesses of your competitors. Evaluate by using the following questions:

• Do you offer superior customer service as compared with your competitors?
• Do you specialize in a niche market? What experiences do you have that set you apart from your competitors?
• What are your competitors’ strengths?
• Where do you see the market already saturated, and where are there opportunities for expansion and growth?

Strength, Weakness, Opportunity, and Threat (SWOT) ( Investopedia , Oct. 30, 2023)

How to Conduct a SWOT Analysis for Your Small Business ( SCORE , Apr. 28, 2022)

SWOT Analysis Toolbox ( University of Washington )

Setting ​Business Goals

Next, translate your mission and vision into tangible goals. For instance, if your mission statement is to make every client feel like your most important client, think about the following:

• How specifically will you implement this?
• Do you want to grow your business?
• Is this growth measured by gross revenue, profit, personnel, or physical office space?
• How much growth do you aim for annually?
• What specific targets will you strive to hit annually in the next few years?

Setting Business Goals & Objectives: 4 Considerations ( Harvard Business School , Oct. 31, 2023)

What are Business Goals? Definition, How To Set Business Goals and Examples ( Indeed , Jul. 31, 2023)

Establishing a Format

Most businesses either follow a traditional business plan format or a lean startup plan.

Traditional Business Plan

A traditional business plan is detailed and comprehensive. Writing this business plan takes more time. A traditional business plan typically contains the following elements:

• Executive Summary
• Company description
• Market analysis
• Organization and management
• Service or product line
• Marketing and sales
• Funding request
• Financial projections

Lean Startup Plan

A lean startup plan requires high-level focus but is easier to write, with an emphasis on key elements. A lean startup plan typically contains the following elements:

• Key partnerships
• Key activities
• Key resources
• Value proposition
• Customer relationships
• Customer segments
• Cost structure
• Revenue stream

Creating a Marketing Plan

You may wish to create a marketing plan as either a section of your business plan or as an addendum. The Marketing Mix concerns product , price , place and promotion .

• What is your product?
• How does your price distinguish you from your competitors—is it industry average, upper quartile, or lower quartile?
• How does your pricing strategy benefit your clients?
• How and where will you promote your services?
• What types of promotions will you advertise?
• Will you ask clients for referrals or use coupons?
• Which channels will you use to place your marketing message?

Your Guide to Creating a Small Business Marketing Plan ( Business.com , Feb. 2, 2024)

10 Questions You Need to Answer to Create a Powerful Marketing Plan ( The Balance , Jan. 16, 2020)

Developing a Marketing Plan ( Federal Deposit Insurance Corporation )

Forming a Team

Ensuring the cooperation of all colleagues, supervisors, and supervisees involved in your plan is another important element to consider. Some questions to consider are:

• Is your business plan’s success contingent upon the cooperation of your colleagues?
• If so, what specifically do you need them to do?
• How will you evaluate their participation?
• Are they on-board with the role you have assigned them?
• How will you get “buy in” from these individuals?

How to Build a Real Estate Team + 7 Critical Mistakes to Avoid ( The Close , May 17, 2023)

Don’t Start a Real Estate Team Without Asking Yourself These 8 Questions ( Homelight , Jan. 21, 2020)

Implementing a Business Plan and Reviewing Regularly

Implementation and follow-up are frequently overlooked aspects to the business plan, yet vital to the success of the plan. Set dates (annually, semi-annually, quarterly, or monthly) to review your business plans goals. Consider the following while reviewing:

• Are you on track?
• Are the goals reasonable to achieve, impossible, or too easy?
• How do you measure success—is it by revenue, profit, or number of transactions?

And lastly, think about overall goals.

• How do you plan to implement your business plan’s goals?
• When will you review and refine your business plan goals?
• What process will you use to review your goals?
• What types of quantitative and qualitative data will you collect and use to measure your success?

These items are only a few sections of a business plan. Depending on your business, you may want to include additional sections in your plan such as a:

• Cover letter stating the reasoning behind developing a business plan
• Non-disclosure statement
• Table of contents

How To Write a Business Proposal Letter (With Examples) ( Indeed , Jul. 18, 2023)

How To Implement Your Business Plan Objectives ( The Balance , Aug. 19, 2022)

The Bottom Line

Creating a business plan may seem daunting, but by understanding your business and market fully, you can create a plan that generates success (however you choose to define it).

Real Estate Business Plans – Samples, Instructional Guides, and Templates

9 Steps to Writing a Real Estate Business Plan + Templates ( The Close , Apr. 3, 2024)

How to Write a Real Estate Business Plan (+Free Template) ( Fit Small Business , Jun. 30, 2023)

The Ultimate Guide to Creating a Real Estate Business Plan + Free Template ( Placester )

Write Your Business Plan ( U.S. Small Business Administration )

General Business Plans – Samples, Instructional Guides, and Templates

Business Plan Template for a Startup Business ( SCORE , Apr. 23, 2024)

Guide to Creating a Business Plan with Template (Business News Daily, Mar. 28, 2024)

Nine Lessons These Entrepreneurs Wish They Knew Before Writing Their First Business Plans ( Forbes , Jul. 25, 2021)

How to Write a Business Plan 101 ( Entrepreneur , Feb. 22, 2021)

Books, eBooks & Other Resources

Ebooks & other resources.

The following eBooks and digital audiobooks are available to NAR members:

The Straightforward Business Plan (eBook)

Business Plan Checklist (eBook)

The SWOT Analysis (eBook)

The Business Plan Workbook (eBook)

Start-Up! A Beginner's Guide to Planning a 21st Century Business (eBook)

Complete Book of Business Plans (eBook)

How to Write a Business Plan (eBook)

The Easy Step by Step Guide to Writing a Business Plan and Making it Work (eBook)

Business Planning: 25 Keys to a Sound Business Plan (Audiobook)

Your First Business Plan, 5 th Edition (eBook)

Anatomy of a Business Plan (eBook)

Writing a Business Plan and Making it Work (Audiobook)

The Social Network Business Plan (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Writing an Effective Business Plan (Deloitte and Touche, 1999) HD 1375 D37w

Have an idea for a real estate topic? Send us your suggestions .

The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.

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Free Real Estate Business Plan Template Download

Download this free real estate business plan template along with the action steps form to maximize plan implementation.

‘Tis the season to create your real estate business plan — and let this FREE downloadable template be your guide! In today’s video, I’ll walk you through how to create your 1-3-5 one-page business plan for your real estate business. I’ll also go over strategies to make your business plan work. To access your free download of the 1-3-5 one-page business plan as well as the action steps form, scroll down to the end of this blog post. Tune in to my video, below, for added insight and guidance.

VIDEO: Free Real Estate Business Plan Template Download

Business plans that work

Here are a few quick tips to consider as you craft your 1-3-5 single-page real estate business plan using our free templates below.

1. The 1-3-5- format is key — one big annual goal at the top, followed by three key focus areas that are broken into five objectives for each.

2. A single page document keeps your business plan streamlined and simple. Gone are the days of large, multi-page business plans that you know you’ll never read again. Keeping everything on one page forces you to focus on what matters and ensures that you will be able to read it again and again throughout the year to re-center yourself.

3. Be SMART. Make your goal , focus areas, and objectives SMART (Specific, Measurable, Achievable, Relevant, and Time-bound ).

4. Stretch but don’t strain. This goes along with making your goal, focus areas, and objectives SMART. You want to create goals that will stretch you, but you don’t want to stretch so much that you hurt yourself. A lofty goal that is well beyond reach can be very damaging.

5. Create action steps with due dates to help you prioritize. If there’s one supportive document we recommend to your business plan, its an action steps page. These action steps turn goals into actionable to-do items with concrete deadlines.

Download your FREE real estate business plan template

To download your free single-page real estate business plan template, click the image below! Create your big annual goal, your three key focus areas, and your five key objectives for each focus area.

Action steps to support your business plan

For your free download of the Action Steps fillable PDF form from the video above, click on the image below. These Action Steps will help you prioritize your to-dos that will help you achieve your five objectives from your real estate business plan template.

Need more help?

Maybe you are feeling behind, or overwhelmed, or like you need a little guidance to make a business plan that you know you’ll stick with. Take a look at our Business Planning course , which will walk you through the process step by step. And if you need more help in general, or if you need to create an implementation plan, hire an ICC coach today. It all starts with a completely free consultation call — reach out today!

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Brian Icenhower

Brian Icenhower is the CEO and Founder of Icenhower Coaching & Consulting (ICC), which provides customized coaching and training programs to many of the highest producing real estate agents, teams, and brokerage owners in North America. This progressive company also produces online courses, podcasts, training materials, white label training portals, speaking events, video modules, and real estate training books. ICC is one of the largest real estate coaching companies in the world with thousands of clients and a large team of the most accomplished coaches in the industry.

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Last updated: January 9, 2024

[DOWNLOAD] Real Estate Business Plan: Step-by-Step

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Real estate is a business. Agents are entrepreneurs. It’s naive—but understandably commonplace—for agents to lack a developed business plan.

It’s always a challenge to identify, quantify, and conquer our goals.

Here’s how.

Table of Contents

• Vision Statement
• Transaction Results & Goals
• Conversions & Lead Metrics
• Lead Gen Systems
• Growth & “Do” Plan
• Progress Chart
• Daily Actions
• Business Expenses
• Personal Expenses
• Download the Biz Plan
• REMM Series

1) What do you want your business to be? Write it down.

Start small. We don’t need mission statements or values declarations. It doesn’t have to be formal or “official.” It just has to be now.

Identify 3 business goals and 1 personal goal. Close your eyes if it helps. Think about what you want to achieve:

• 30 transactions?
• $1M in sales
• Hire an admin or another agent?
• Take weekends off for once?

Whatever they are, write them down.

Once they’re written down, share them. Tell your spouse, your broker, your friends—other Snappack members. Say them out loud to the right people. Stating and sharing these goals helps you hold yourself accountable.

Working with an accountabilibuddy—and having them hold you accountable—significantly improves the chances that you’ll remember and work towards those goals.

Bonus goal-setting tip

Here’s a quick mindset hack: when talking about your goals, replace the word “but” with “and.”

I want to do 40 transactions this year,  but   and I have a long way to go.

The “and” mindset re-frames the goal statement. It changes obstacles into acknowledgements. Problems into plans.

Big difference.

Jump: Top · Vision · Goals · Conversions · Lead Gen · Do Plan · Progress · Daily Actions · Business Expenses · Personal Expenses · Download · REMM · Discussion

2) Use past transactions to set 2019 goals

This one’s simple: you can’t know how to get where you’re going until you know exactly where you are. Use this sheet to help identify and delineate your current and future numbers.

It may take a little reflection or research to come up with these numbers, but it’s worth it. It will make your 2019 numbers clear as day, and help you define a plan to achieve them.

List out last year’s transaction numbers by the following sources:

• COI/Past Clients/Repeat
• COI/Past Clients/Referral
• Referrals from Agents
• Business/Professional Network
• Geographical Farming
• Just list/Just sold/Yikes
• Mega Open House
• Zillow/Trulia/Realtor/etc
• Your website
• Non-Owner Occupied
• NODs/Short Sales
• Promotion/Seminars
• Your Appointment Setter

Then repeat those sources with next year’s goals for each source. Be realistic—but assertive—with how much you increase each source for your goal.

In the next step, we’ll do some math with these numbers.

3) Conversion math

Now that you have your transaction goals defined for the next year, let’s talk about how to hit those numbers.

Real estate has an industry standard conversion rate of 2%. Only 1 in 50 leads becomes a sale.

Knowing that, we can reverse-engineer the number of leads necessary to generate the number of sales you want.

• Transaction goal — input the number of transactions you want
• Leads per year needed — Multiply line 1 by 40 (this represents a 2.5% conversion-to-sale ratio)
• Leads per month needed — Divide line 2 by 12 (months)
• Leads per day needed — Divide line 3 by 20 (monthly working days)

So, for example, if you want to close 4 deals a month next year, that’s a total of 48 transactions—an excellent goal for any agent.

• Goal = close 48 sales per year
• 48 sales ÷ 2.5% conversion rate = 1,920 leads per year required to close 48 sales
• 1920 leads per year ÷ 12 months per year = 160 leads per month required to close 48 sales
• 160 leads per month ÷ 20 working days per month = 8 leads per day required to close 48 sales

8 leads every day. Better get those funnels up and running!

4) Top Lead Gen Systems

This one is fairly self-explanatory. It’s meant to paint a clear picture of which lead sources deliver the best results for you. Obviously, it makes business sense to invest most heavily in the lead sources that provide the best return.

This document helps you get there.

One of the common refrains we hear is that lead gen systems, transaction coordinators, virtual assistants, marketing projects—

These things can’t be looked at as  costs . They’re  investments .

I personally can’t stand superfluous spin. And I think many marketing campaigns avoid the word “cost” at all….investment….because it triggers a certain negative feeling in the audience.

And that may very well be true.

But there are times when things that  cost  money aren’t expenses. They will pay for themselves over time, by providing a return on investment.

Why am I saying this?

Because the Lead Gen sheet above lists Estimated Cost of System in each row. I think it’s important to acknowledge that most of these lead gen systems aren’t free. But they’re also not expenses, per sé.

They’re investments.

5) “Do” Plan

Let’s call this the Do plan. It’s her method for staying in touch past clients and sphere—something every agent is familiar with.

Here’s how she does it.

Call and partner with other businesses to offer discounts.

Local coffee shop? Get a coupon. Local bakery? Buy a few extra snacks to offer around.

Once you have a discount or special offer to give out, start dialing. Your mission is to tell your past clients that the offer is available.

It’s genius—

The discount gives you a reason to call past clients without being too salesy. It means that a random phone call isn’t so random. It looks and feels much more authentic to your clients, and it lets you save some face.

So get on the phone, offer them the unique, not-available-to-just-anybody partnership or discount, and make their day.

And while you have them on the phone, don’t forget to ask them for new business.

How to set up a discount/giveaway program

Run an MVP Program for past clients and give away easy stuff like free coffee, ice cream, muffins, etc.

Every client is included in the program, whether you have a great rapport with them or not. And in fact, some bad-rapport clients may surprise you.

To use this tried-and-true methods, follow these steps:

1) Start a private Facebook group for all your past clients.

Since many of today’s business leads are generated on Facebook, it’s a safe bet that most clients will have a profile and can become your friend and join your private group. It will take some work to go back and find older clients, but it’s worth it.

2) Next, get a Starbucks card and load up $100 it.

You can do this via any store, app, or the website. You don’t have to do it  every month, since $100/mo can be pricey.

3) Take a picture of the card’s barcode or QR code, and share the picture in your private FB group.

Starbucks will honor the barcode and charge the coffee to your card, regardless of who shows the code at the counter. It’s a way to buy the coffee without impacting anyone’s schedule.

This method works at Starbucks, Baskin Robins, Dunkin Donuts, basically anything with a Pay By App system.

What if the business doesn’t have an app?

No problem.

Drive down to your local bakery or other business and ask them if you can hand out coupons. Many will offer a discount like a few dollars or % off. But even if not, they can just act like pre-paid cards, good for future purchases.

These coupons may need to be given out by hand, but they work like a charm: “Want a free coffee & bagel on me? Go to Dave’s and give him THIS. He’ll put it on my tab.”

Other offers for the MVP Program

• “Rent for free” sharing program: loan out power tools, carpet cleaner, or other equipment via your private FB group.
• Event promo tickets: give out 100 free tickets to a local Home Show. Look for similar events near you.
• Thanksgiving pie reverse giveaway: offer free pies via your group. Ask clients to sign up for a time: during a 1-hour lunchtime express pickup (give them a high-five, handshake or hug), or during a 3-hour evening gathering with wine, cheese & cocktails (catchup, shmooze, mingle!)

There are LOTS of ideas out there for how agents can stay in touch with their sphere and clients. This methods work very well, and they may work for you too!

6) Progress Chart

This progress chart does just that.

It’s like the MyFitnessPal of real estate business planning: it doesn’t make you diet. It just forces you to acknowledge when you aren’t dieting.

This is the perfect document to start every month with. Maybe on the first Sunday night of each month, sit down with your numbers and fill out a new column on this progress chart.

The beauty of so-called  big-data is that it reveals patterns that aren’t immediately obvious at first.

That whole “bird’s eye view” thing.

If you’re diligent about filling out this form every month, it will give you a bird’s eye view of your business month-over-month, and reveal patterns you may have missed.

We all know the market goes crazy in the spring—but maybe your buyer leads last into the summer much more than you expected. This doc will show you.

7) Daily Action Checklist

Personally, I feel like I absolutely need it and it would be a game-changer, but I also know I’d be miserable.

What if you could get all the organization benefits of time-blocking, with none of the restrictive blocking of time?

We got you.

It’s not time blocking. It’s task-blocking. Sure, it’s essentially the same as every other to-do list, but this one’s got days on it!

How to fill it out

Here’s what I’d would do. I’d essentially roll this out in 2 phases: discovery and deployment (those terms are used a lot in the tech/development industry).

During discovery, you’re using the checklist as a data-entry form: record your daily life to get an accurate picture of the tasks you’re  already spending time on.

During deployment, you’d use the checklist as…as a checklist. Work down the list in order (or close to it) to keep yourself organized and on-track.

So here’s how I’d do it:

Keep this list with you all day, every day, for at least a week.

We’re not implementing any changes in your routine yet. That will come during deployment, but the only change that  must happen now is that you  must record your tasks. So keep the sheet with you.

Write down everything you do, with start and end times.

Just a list of tasks is a good start. But to really get value out of this list, you’ll need to see how much time you spend on every task.

How much time you spend on, say, lead follow-up may vary by day of week or another factor. That’s fine. Just be as accurate as possible in recording.

After a week (month?), look for patterns.

Are you spending too much time on social media? Is there such a thing?

It depends .

Are you spending too little time on lead gen? Wrong time of day on follow-up? Your discovery phase of data collection should tell you.

Identify & implement changes

Then, of course, you have to implement—nay,  deploy —the changes you came up with after finding patterns.

8) Business Expenses

Dues, entertainment, coaching, communication, education, equipment, accounting, etc— all necessary investments for any business.

As with the lead sources above, the act of writing down these expenses is an important exercise in itself.

Real Estate Agent ROI Calculation

It can’t be as simple as [(income – expenses) / expenses = ????], can it?

Well, sort of.

The I in ROI—the money you have to invest—varies widely, based on what you’re paying for. But there are tons of real estate agent ROI calculators out there.

Placester has a good writeup and graphic on lead-to-close ROI:

That $56k number sounds great until you start to factor in CPI— cost per acquisition . That’s kinda the whole point of this calculation!

How much will it cost me to earn that $56k?

Zillow has a calculator tool on their website to help answer that. It’s pretty good, but keep in mind that it’s supposed to be a sales tool to convince you to become a Premier Agent.

In the screenshot above, we can see a few values used to calculate an ROI for this real estate agent—hypothetically, of course.

And how much are those “other expenses,” you ask? Well, that’s what this page of the Real Estate Business Plan document are for!

Track. Your. Numbers.

Bonus: Conversion rate matters

After your split and expenses come out, that $54k profit might turn into more like $36k profit. Now you’re at a 1:1 ratio with ROI. Or, in simple terms:

You’re barely breaking even.

Not good enough to stay in business. Why even spend the money if you’re not going to earn anything back on it? You’re better off staying home.

But this is business and the bills still have to get paid. You can’t stay home and you can’t just break even even. So how can you fix that?

Convert more.

Do more with the leads you already have.

Let’s run those numbers again, this time converting 2 leads a month, instead of only 1.

Convert just  ONE additional close in a month, and your GCI doubles to more than $180,000 per year. After split and expenses, even if that number comes down to $100k, it’s still almost a 3x ROI.

That’s the power of conversion rate!

9) Personal Expenses

These ones are never fun to write down, are they? Some of them can be written off your taxes in April, but they still have get paid for now.

I won’t harp on the expense topic all over again—you get the idea—but these expenses matter just as much as business ones do:

They impact your bottom line.

And if you’re anything like me, simply writing down how much money I spend (or calories I eat!) makes me do less of it!

Real Estate Business Plan Download

Take it with you! Email it to your office. Print it out and complete it by hand—whatever works best for you. Get your FREE real estate business plan here!

Where should we send your files?

Where should we send your pdf.

Free Guide: step-by-step guide to Real Estate Business Planning to take your business to the next level!

Now It’s Your Turn

Now I want to turn it over to you: Which of the steps from today’s guide are you going to implement first?

Are you going to calculate your Lead Gen ROI? Or work on making your bookkeeping more transparent?

Let me know by leaving a quick comment below right now.

6 thoughts on “ [DOWNLOAD] Real Estate Business Plan: Step-by-Step ”

November 3, 2017 at 1:35am

Great write up. Can’t wait to see the rest of the series.

November 3, 2017 at 12:48pm

Hello! Tried to download the business plan but I got a FB groups pdf instead. Great article!!

November 3, 2017 at 1:12pm

Sorry about that, @katielagace:disqus! Thanks for bringing it to my attention. Fixing now!

November 3, 2017 at 1:42pm

Thanks again for the heads up, Katie. Should be all set now. You’ll have to refresh the page a few times and try the download again.

Sorry about that!

January 8, 2024 at 12:33pm

I can’t get the download to work on this. Can you send it to me?

January 21, 2024 at 10:22pm

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McKinsey Global Private Markets Review 2024: Private markets in a slower era

At a glance, macroeconomic challenges continued.

McKinsey Global Private Markets Review 2024: Private markets: A slower era

If 2022 was a tale of two halves, with robust fundraising and deal activity in the first six months followed by a slowdown in the second half, then 2023 might be considered a tale of one whole. Macroeconomic headwinds persisted throughout the year, with rising financing costs, and an uncertain growth outlook taking a toll on private markets. Full-year fundraising continued to decline from 2021’s lofty peak, weighed down by the “denominator effect” that persisted in part due to a less active deal market. Managers largely held onto assets to avoid selling in a lower-multiple environment, fueling an activity-dampening cycle in which distribution-starved limited partners (LPs) reined in new commitments.

About the authors

This article is a summary of a larger report, available as a PDF, that is a collaborative effort by Fredrik Dahlqvist , Alastair Green , Paul Maia, Alexandra Nee , David Quigley , Aditya Sanghvi , Connor Mangan, John Spivey, Rahel Schneider, and Brian Vickery , representing views from McKinsey’s Private Equity & Principal Investors Practice.

Performance in most private asset classes remained below historical averages for a second consecutive year. Decade-long tailwinds from low and falling interest rates and consistently expanding multiples seem to be things of the past. As private market managers look to boost performance in this new era of investing, a deeper focus on revenue growth and margin expansion will be needed now more than ever.

Perspectives on a slower era in private markets

Global fundraising contracted.

Fundraising fell 22 percent across private market asset classes globally to just over $1 trillion, as of year-end reported data—the lowest total since 2017. Fundraising in North America, a rare bright spot in 2022, declined in line with global totals, while in Europe, fundraising proved most resilient, falling just 3 percent. In Asia, fundraising fell precipitously and now sits 72 percent below the region’s 2018 peak.

Despite difficult fundraising conditions, headwinds did not affect all strategies or managers equally. Private equity (PE) buyout strategies posted their best fundraising year ever, and larger managers and vehicles also fared well, continuing the prior year’s trend toward greater fundraising concentration.

The numerator effect persisted

Despite a marked recovery in the denominator—the 1,000 largest US retirement funds grew 7 percent in the year ending September 2023, after falling 14 percent the prior year, for example 1 “U.S. retirement plans recover half of 2022 losses amid no-show recession,” Pensions and Investments , February 12, 2024. —many LPs remain overexposed to private markets relative to their target allocations. LPs started 2023 overweight: according to analysis from CEM Benchmarking, average allocations across PE, infrastructure, and real estate were at or above target allocations as of the beginning of the year. And the numerator grew throughout the year, as a lack of exits and rebounding valuations drove net asset values (NAVs) higher. While not all LPs strictly follow asset allocation targets, our analysis in partnership with global private markets firm StepStone Group suggests that an overallocation of just one percentage point can reduce planned commitments by as much as 10 to 12 percent per year for five years or more.

Despite these headwinds, recent surveys indicate that LPs remain broadly committed to private markets. In fact, the majority plan to maintain or increase allocations over the medium to long term.

Investors fled to known names and larger funds

Fundraising concentration reached its highest level in over a decade, as investors continued to shift new commitments in favor of the largest fund managers. The 25 most successful fundraisers collected 41 percent of aggregate commitments to closed-end funds (with the top five managers accounting for nearly half that total). Closed-end fundraising totals may understate the extent of concentration in the industry overall, as the largest managers also tend to be more successful in raising non-institutional capital.

While the largest funds grew even larger—the largest vehicles on record were raised in buyout, real estate, infrastructure, and private debt in 2023—smaller and newer funds struggled. Fewer than 1,700 funds of less than $1 billion were closed during the year, half as many as closed in 2022 and the fewest of any year since 2012. New manager formation also fell to the lowest level since 2012, with just 651 new firms launched in 2023.

Whether recent fundraising concentration and a spate of M&A activity signals the beginning of oft-rumored consolidation in the private markets remains uncertain, as a similar pattern developed in each of the last two fundraising downturns before giving way to renewed entrepreneurialism among general partners (GPs) and commitment diversification among LPs. Compared with how things played out in the last two downturns, perhaps this movie really is different, or perhaps we’re watching a trilogy reusing a familiar plotline.

Dry powder inventory spiked (again)

Private markets assets under management totaled $13.1 trillion as of June 30, 2023, and have grown nearly 20 percent per annum since 2018. Dry powder reserves—the amount of capital committed but not yet deployed—increased to $3.7 trillion, marking the ninth consecutive year of growth. Dry powder inventory—the amount of capital available to GPs expressed as a multiple of annual deployment—increased for the second consecutive year in PE, as new commitments continued to outpace deal activity. Inventory sat at 1.6 years in 2023, up markedly from the 0.9 years recorded at the end of 2021 but still within the historical range. NAV grew as well, largely driven by the reluctance of managers to exit positions and crystallize returns in a depressed multiple environment.

Private equity strategies diverged

Buyout and venture capital, the two largest PE sub-asset classes, charted wildly different courses over the past 18 months. Buyout notched its highest fundraising year ever in 2023, and its performance improved, with funds posting a (still paltry) 5 percent net internal rate of return through September 30. And although buyout deal volumes declined by 19 percent, 2023 was still the third-most-active year on record. In contrast, venture capital (VC) fundraising declined by nearly 60 percent, equaling its lowest total since 2015, and deal volume fell by 36 percent to the lowest level since 2019. VC funds returned –3 percent through September, posting negative returns for seven consecutive quarters. VC was the fastest-growing—as well as the highest-performing—PE strategy by a significant margin from 2010 to 2022, but investors appear to be reevaluating their approach in the current environment.

Private equity entry multiples contracted

PE buyout entry multiples declined by roughly one turn from 11.9 to 11.0 times EBITDA, slightly outpacing the decline in public market multiples (down from 12.1 to 11.3 times EBITDA), through the first nine months of 2023. For nearly a decade leading up to 2022, managers consistently sold assets into a higher-multiple environment than that in which they had bought those assets, providing a substantial performance tailwind for the industry. Nowhere has this been truer than in technology. After experiencing more than eight turns of multiple expansion from 2009 to 2021 (the most of any sector), technology multiples have declined by nearly three turns in the past two years, 50 percent more than in any other sector. Overall, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later and exited in 2021 or before can be attributed to market multiple expansion and leverage. Now, with falling multiples and higher financing costs, revenue growth and margin expansion are taking center stage for GPs.

Real estate receded

Demand uncertainty, slowing rent growth, and elevated financing costs drove cap rates higher and made price discovery challenging, all of which weighed on deal volume, fundraising, and investment performance. Global closed-end fundraising declined 34 percent year over year, and funds returned −4 percent in the first nine months of the year, losing money for the first time since the 2007–08 global financial crisis. Capital shifted away from core and core-plus strategies as investors sought liquidity via redemptions in open-end vehicles, from which net outflows reached their highest level in at least two decades. Opportunistic strategies benefited from this shift, with investors focusing on capital appreciation over income generation in a market where alternative sources of yield have grown more attractive. Rising interest rates widened bid–ask spreads and impaired deal volume across food groups, including in what were formerly hot sectors: multifamily and industrial.

Private debt pays dividends

Debt again proved to be the most resilient private asset class against a turbulent market backdrop. Fundraising declined just 13 percent, largely driven by lower commitments to direct lending strategies, for which a slower PE deal environment has made capital deployment challenging. The asset class also posted the highest returns among all private asset classes through September 30. Many private debt securities are tied to floating rates, which enhance returns in a rising-rate environment. Thus far, managers appear to have successfully navigated the rising incidence of default and distress exhibited across the broader leveraged-lending market. Although direct lending deal volume declined from 2022, private lenders financed an all-time high 59 percent of leveraged buyout transactions last year and are now expanding into additional strategies to drive the next era of growth.

Infrastructure took a detour

After several years of robust growth and strong performance, infrastructure and natural resources fundraising declined by 53 percent to the lowest total since 2013. Supply-side timing is partially to blame: five of the seven largest infrastructure managers closed a flagship vehicle in 2021 or 2022, and none of those five held a final close last year. As in real estate, investors shied away from core and core-plus investments in a higher-yield environment. Yet there are reasons to believe infrastructure’s growth will bounce back. Limited partners (LPs) surveyed by McKinsey remain bullish on their deployment to the asset class, and at least a dozen vehicles targeting more than $10 billion were actively fundraising as of the end of 2023. Multiple recent acquisitions of large infrastructure GPs by global multi-asset-class managers also indicate marketwide conviction in the asset class’s potential.

Private markets still have work to do on diversity

Private markets firms are slowly improving their representation of females (up two percentage points over the prior year) and ethnic and racial minorities (up one percentage point). On some diversity metrics, including entry-level representation of women, private markets now compare favorably with corporate America. Yet broad-based parity remains elusive and too slow in the making. Ethnic, racial, and gender imbalances are particularly stark across more influential investing roles and senior positions. In fact, McKinsey’s research  reveals that at the current pace, it would take several decades for private markets firms to reach gender parity at senior levels. Increasing representation across all levels will require managers to take fresh approaches to hiring, retention, and promotion.

Artificial intelligence generating excitement

The transformative potential of generative AI was perhaps 2023’s hottest topic (beyond Taylor Swift). Private markets players are excited about the potential for the technology to optimize their approach to thesis generation, deal sourcing, investment due diligence, and portfolio performance, among other areas. While the technology is still nascent and few GPs can boast scaled implementations, pilot programs are already in flight across the industry, particularly within portfolio companies. Adoption seems nearly certain to accelerate throughout 2024.

Private markets in a slower era

If private markets investors entered 2023 hoping for a return to the heady days of 2021, they likely left the year disappointed. Many of the headwinds that emerged in the latter half of 2022 persisted throughout the year, pressuring fundraising, dealmaking, and performance. Inflation moderated somewhat over the course of the year but remained stubbornly elevated by recent historical standards. Interest rates started high and rose higher, increasing the cost of financing. A reinvigorated public equity market recovered most of 2022’s losses but did little to resolve the valuation uncertainty private market investors have faced for the past 18 months.

Within private markets, the denominator effect remained in play, despite the public market recovery, as the numerator continued to expand. An activity-dampening cycle emerged: higher cost of capital and lower multiples limited the ability or willingness of general partners (GPs) to exit positions; fewer exits, coupled with continuing capital calls, pushed LP allocations higher, thereby limiting their ability or willingness to make new commitments. These conditions weighed on managers’ ability to fundraise. Based on data reported as of year-end 2023, private markets fundraising fell 22 percent from the prior year to just over $1 trillion, the largest such drop since 2009 (Exhibit 1).

The impact of the fundraising environment was not felt equally among GPs. Continuing a trend that emerged in 2022, and consistent with prior downturns in fundraising, LPs favored larger vehicles and the scaled GPs that typically manage them. Smaller and newer managers struggled, and the number of sub–$1 billion vehicles and new firm launches each declined to its lowest level in more than a decade.

Despite the decline in fundraising, private markets assets under management (AUM) continued to grow, increasing 12 percent to $13.1 trillion as of June 30, 2023. 2023 fundraising was still the sixth-highest annual haul on record, pushing dry powder higher, while the slowdown in deal making limited distributions.

Investment performance across private market asset classes fell short of historical averages. Private equity (PE) got back in the black but generated the lowest annual performance in the past 15 years, excluding 2022. Closed-end real estate produced negative returns for the first time since 2009, as capitalization (cap) rates expanded across sectors and rent growth dissipated in formerly hot sectors, including multifamily and industrial. The performance of infrastructure funds was less than half of its long-term average and even further below the double-digit returns generated in 2021 and 2022. Private debt was the standout performer (if there was one), outperforming all other private asset classes and illustrating the asset class’s countercyclical appeal.

Private equity down but not out

Higher financing costs, lower multiples, and an uncertain macroeconomic environment created a challenging backdrop for private equity managers in 2023. Fundraising declined for the second year in a row, falling 15 percent to $649 billion, as LPs grappled with the denominator effect and a slowdown in distributions. Managers were on the fundraising trail longer to raise this capital: funds that closed in 2023 were open for a record-high average of 20.1 months, notably longer than 18.7 months in 2022 and 14.1 months in 2018. VC and growth equity strategies led the decline, dropping to their lowest level of cumulative capital raised since 2015. Fundraising in Asia fell for the fourth year of the last five, with the greatest decline in China.

Despite the difficult fundraising context, a subset of strategies and managers prevailed. Buyout managers collectively had their best fundraising year on record, raising more than $400 billion. Fundraising in Europe surged by more than 50 percent, resulting in the region’s biggest haul ever. The largest managers raised an outsized share of the total for a second consecutive year, making 2023 the most concentrated fundraising year of the last decade (Exhibit 2).

Despite the drop in aggregate fundraising, PE assets under management increased 8 percent to $8.2 trillion. Only a small part of this growth was performance driven: PE funds produced a net IRR of just 2.5 percent through September 30, 2023. Buyouts and growth equity generated positive returns, while VC lost money. PE performance, dating back to the beginning of 2022, remains negative, highlighting the difficulty of generating attractive investment returns in a higher interest rate and lower multiple environment. As PE managers devise value creation strategies to improve performance, their focus includes ensuring operating efficiency and profitability of their portfolio companies.

Deal activity volume and count fell sharply, by 21 percent and 24 percent, respectively, which continued the slower pace set in the second half of 2022. Sponsors largely opted to hold assets longer rather than lock in underwhelming returns. While higher financing costs and valuation mismatches weighed on overall deal activity, certain types of M&A gained share. Add-on deals, for example, accounted for a record 46 percent of total buyout deal volume last year.

Real estate recedes

For real estate, 2023 was a year of transition, characterized by a litany of new and familiar challenges. Pandemic-driven demand issues continued, while elevated financing costs, expanding cap rates, and valuation uncertainty weighed on commercial real estate deal volumes, fundraising, and investment performance.

Managers faced one of the toughest fundraising environments in many years. Global closed-end fundraising declined 34 percent to $125 billion. While fundraising challenges were widespread, they were not ubiquitous across strategies. Dollars continued to shift to large, multi-asset class platforms, with the top five managers accounting for 37 percent of aggregate closed-end real estate fundraising. In April, the largest real estate fund ever raised closed on a record $30 billion.

Capital shifted away from core and core-plus strategies as investors sought liquidity through redemptions in open-end vehicles and reduced gross contributions to the lowest level since 2009. Opportunistic strategies benefited from this shift, as investors turned their attention toward capital appreciation over income generation in a market where alternative sources of yield have grown more attractive.

In the United States, for instance, open-end funds, as represented by the National Council of Real Estate Investment Fiduciaries Fund Index—Open-End Equity (NFI-OE), recorded $13 billion in net outflows in 2023, reversing the trend of positive net inflows throughout the 2010s. The negative flows mainly reflected $9 billion in core outflows, with core-plus funds accounting for the remaining outflows, which reversed a 20-year run of net inflows.

As a result, the NAV in US open-end funds fell roughly 16 percent year over year. Meanwhile, global assets under management in closed-end funds reached a new peak of $1.7 trillion as of June 2023, growing 14 percent between June 2022 and June 2023.

Real estate underperformed historical averages in 2023, as previously high-performing multifamily and industrial sectors joined office in producing negative returns caused by slowing demand growth and cap rate expansion. Closed-end funds generated a pooled net IRR of −3.5 percent in the first nine months of 2023, losing money for the first time since the global financial crisis. The lone bright spot among major sectors was hospitality, which—thanks to a rush of postpandemic travel—returned 10.3 percent in 2023. 2 Based on NCREIFs NPI index. Hotels represent 1 percent of total properties in the index. As a whole, the average pooled lifetime net IRRs for closed-end real estate funds from 2011–20 vintages remained around historical levels (9.8 percent).

Global deal volume declined 47 percent in 2023 to reach a ten-year low of $650 billion, driven by widening bid–ask spreads amid valuation uncertainty and higher costs of financing (Exhibit 3). 3 CBRE, Real Capital Analytics Deal flow in the office sector remained depressed, partly as a result of continued uncertainty in the demand for space in a hybrid working world.

During a turbulent year for private markets, private debt was a relative bright spot, topping private markets asset classes in terms of fundraising growth, AUM growth, and performance.

Fundraising for private debt declined just 13 percent year over year, nearly ten percentage points less than the private markets overall. Despite the decline in fundraising, AUM surged 27 percent to $1.7 trillion. And private debt posted the highest investment returns of any private asset class through the first three quarters of 2023.

Private debt’s risk/return characteristics are well suited to the current environment. With interest rates at their highest in more than a decade, current yields in the asset class have grown more attractive on both an absolute and relative basis, particularly if higher rates sustain and put downward pressure on equity returns (Exhibit 4). The built-in security derived from debt’s privileged position in the capital structure, moreover, appeals to investors that are wary of market volatility and valuation uncertainty.

Direct lending continued to be the largest strategy in 2023, with fundraising for the mostly-senior-debt strategy accounting for almost half of the asset class’s total haul (despite declining from the previous year). Separately, mezzanine debt fundraising hit a new high, thanks to the closings of three of the largest funds ever raised in the strategy.

Over the longer term, growth in private debt has largely been driven by institutional investors rotating out of traditional fixed income in favor of private alternatives. Despite this growth in commitments, LPs remain underweight in this asset class relative to their targets. In fact, the allocation gap has only grown wider in recent years, a sharp contrast to other private asset classes, for which LPs’ current allocations exceed their targets on average. According to data from CEM Benchmarking, the private debt allocation gap now stands at 1.4 percent, which means that, in aggregate, investors must commit hundreds of billions in net new capital to the asset class just to reach current targets.

Private debt was not completely immune to the macroeconomic conditions last year, however. Fundraising declined for the second consecutive year and now sits 23 percent below 2021’s peak. Furthermore, though private lenders took share in 2023 from other capital sources, overall deal volumes also declined for the second year in a row. The drop was largely driven by a less active PE deal environment: private debt is predominantly used to finance PE-backed companies, though managers are increasingly diversifying their origination capabilities to include a broad new range of companies and asset types.

Infrastructure and natural resources take a detour

For infrastructure and natural resources fundraising, 2023 was an exceptionally challenging year. Aggregate capital raised declined 53 percent year over year to $82 billion, the lowest annual total since 2013. The size of the drop is particularly surprising in light of infrastructure’s recent momentum. The asset class had set fundraising records in four of the previous five years, and infrastructure is often considered an attractive investment in uncertain markets.

While there is little doubt that the broader fundraising headwinds discussed elsewhere in this report affected infrastructure and natural resources fundraising last year, dynamics specific to the asset class were at play as well. One issue was supply-side timing: nine of the ten largest infrastructure GPs did not close a flagship fund in 2023. Second was the migration of investor dollars away from core and core-plus investments, which have historically accounted for the bulk of infrastructure fundraising, in a higher rate environment.

The asset class had some notable bright spots last year. Fundraising for higher-returning opportunistic strategies more than doubled the prior year’s total (Exhibit 5). AUM grew 18 percent, reaching a new high of $1.5 trillion. Infrastructure funds returned a net IRR of 3.4 percent in 2023; this was below historical averages but still the second-best return among private asset classes. And as was the case in other asset classes, investors concentrated commitments in larger funds and managers in 2023, including in the largest infrastructure fund ever raised.

The outlook for the asset class, moreover, remains positive. Funds targeting a record amount of capital were in the market at year-end, providing a robust foundation for fundraising in 2024 and 2025. A recent spate of infrastructure GP acquisitions signal multi-asset managers’ long-term conviction in the asset class, despite short-term headwinds. Global megatrends like decarbonization and digitization, as well as revolutions in energy and mobility, have spurred new infrastructure investment opportunities around the world, particularly for value-oriented investors that are willing to take on more risk.

Private markets make measured progress in DEI

Diversity, equity, and inclusion (DEI) has become an important part of the fundraising, talent, and investing landscape for private market participants. Encouragingly, incremental progress has been made in recent years, including more diverse talent being brought to entry-level positions, investing roles, and investment committees. The scope of DEI metrics provided to institutional investors during fundraising has also increased in recent years: more than half of PE firms now provide data across investing teams, portfolio company boards, and portfolio company management (versus investment team data only). 4 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023.

In 2023, McKinsey surveyed 66 global private markets firms that collectively employ more than 60,000 people for the second annual State of diversity in global private markets report. 5 “ The state of diversity in global private markets: 2023 ,” McKinsey, August 22, 2023. The research offers insight into the representation of women and ethnic and racial minorities in private investing as of year-end 2022. In this chapter, we discuss where the numbers stand and how firms can bring a more diverse set of perspectives to the table.

The statistics indicate signs of modest advancement. Overall representation of women in private markets increased two percentage points to 35 percent, and ethnic and racial minorities increased one percentage point to 30 percent (Exhibit 6). Entry-level positions have nearly reached gender parity, with female representation at 48 percent. The share of women holding C-suite roles globally increased 3 percentage points, while the share of people from ethnic and racial minorities in investment committees increased 9 percentage points. There is growing evidence that external hiring is gradually helping close the diversity gap, especially at senior levels. For example, 33 percent of external hires at the managing director level were ethnic or racial minorities, higher than their existing representation level (19 percent).

Yet, the scope of the challenge remains substantial. Women and minorities continue to be underrepresented in senior positions and investing roles. They also experience uneven rates of progress due to lower promotion and higher attrition rates, particularly at smaller firms. Firms are also navigating an increasingly polarized workplace today, with additional scrutiny and a growing number of lawsuits against corporate diversity and inclusion programs, particularly in the US, which threatens to impact the industry’s pace of progress.

Fredrik Dahlqvist is a senior partner in McKinsey’s Stockholm office; Alastair Green  is a senior partner in the Washington, DC, office, where Paul Maia and Alexandra Nee  are partners; David Quigley  is a senior partner in the New York office, where Connor Mangan is an associate partner and Aditya Sanghvi  is a senior partner; Rahel Schneider is an associate partner in the Bay Area office; John Spivey is a partner in the Charlotte office; and Brian Vickery  is a partner in the Boston office.

The authors wish to thank Jonathan Christy, Louis Dufau, Vaibhav Gujral, Graham Healy-Day, Laura Johnson, Ryan Luby, Tripp Norton, Alastair Rami, Henri Torbey, and Alex Wolkomir for their contributions

The authors would also like to thank CEM Benchmarking and the StepStone Group for their partnership in this year's report.

This article was edited by Arshiya Khullar, an editor in the Gurugram office.

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