Looking for a rental remodeling business plan? You're in the right place.
A contractor who works for landlords and property managers has to answer questions a homeowner-facing remodeler never hears. How many empty units a month will keep a crew busy? What do clients pay for a turn, and how long do they take to pay? How much cash does the firm need before the first summer's invoices come in? A blank template will not tell you what a sensible answer looks like.
In this article we'll walk through a complete sample plan for a Portland, Oregon rental remodeling contractor, section by section, ending with the financials: the start-up budget, the first twelve months, five years of profit and cash, and a downside case.
What you can take from it:
- The one-page summary: see how to state a service business, its funding and its first three years in under a minute of reading
- The market and customer sections: learn how to describe who orders turnover work, what makes them switch crews, and what they will not tolerate
- The winning-accounts and marketing sections: find out what it plausibly costs to land a property manager, so your acquisition figure holds up
- The crew plan and operating routine: check that your hiring follows the hours of work you are selling, not the other way around
- The monthly Year 1 table: spot the winter months that lose money, and size your reserve to cover them
- Profit, cash flow and balance sheet: see how net 40 payment terms and a slow second year shape the cash you need
- The downside case: have an answer ready when a lender asks what happens if a fifth of the work goes elsewhere
- The stress tests and the bank's terms: see which single change breaks the cash first, and what the owner asks the lender to waive
If you plan to renovate rentals for other people's portfolios, read this before writing your own. The company is fictional, so keep what fits your market and change the rest.
In this plan
If you need a rental remodeling business plan template for your own plan, start it in the Toolkit.
The Business in One Page
River Bridge Renovations is a Portland, Oregon contractor that opens on 1 January 2027 to prepare and upgrade rental units for property managers and landlords. It turns vacant apartments and houses between tenants, upgrades vacant units with new kitchens, baths and flooring, and handles repair orders for the same clients. Founder Dana Okafor holds the firm's contractor license and owns five eighths of the equity; a private investor holds the other three eighths.
The firm raises $560,000: $200,000 from Dana, $120,000 of common equity from the investor and a $240,000 seven-year bank loan. Vans, tools and shop fit-out take $118,000, licensing, legal and launch work $21,000, and $421,000 stays as a cash reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $809,800 | $1,409,250 | $1,854,600 |
| Net income after start-up costs | ($144,023) | ($29,604) | $95,932 |
| Closing cash | $258,145 | $144,765 | $193,146 |
Three clients have signed master service agreements before opening. The firm finishes 2027 with 11 active accounts, two carpenters in the field and a coordinator in the office. Years 1 and 2 lose money because winter work does not cover the shop, the payroll and the insurance while the crew is being built. Customers pay in about 40 days, which ties up cash in receivables. Year 3 is the first profitable year.
A downside case is part of the plan. If a fifth of the expected work goes elsewhere and Dana holds back hiring, marketing, her own pay and distributions, year-end cash stays above zero in all five years. Spring cash inside the year does not, so the request to the bank includes a revolving line of credit.
About River Bridge
Legal name: River Bridge Renovations, LLC, an Oregon limited liability company. Owners: Dana Okafor, five eighths; one private investor, three eighths. Shop and office: about 3,000 square feet of flex space on Portland's inner east side. Opening date: 1 January 2027, ahead of the spring leasing season.
Why the firm exists
Portland landlords want a vacant unit back on the market in days, not weeks. River Bridge puts a consistent crew on that work, quotes by unit type and keeps the same people on each client's buildings.
Goals for the first two years
- 11 active accounts by December 2027, up from 3 at opening.
- 94 unit turns and 11 vacant-unit upgrades in 2027.
- A second field crew from month 16, which is April 2028.
- A profit in Year 3, with bank debt service covered 2.7 times.
The three kinds of job
| Job | How it is priced | Year 1 share of revenue |
|---|---|---|
| Unit turnover (make-ready) | $4,700 average per unit | 54.6% |
| Vacant-unit upgrade | $25,500 average per project | 34.6% |
| Repair order | Time and materials, labor at $98 an hour | 10.8% |
Licensing, lead rules and insurance
Oregon contractors work under a license from the state Construction Contractors Board. As ORS 701.005 defines it, a residential structure contains dwelling units and stands four stories or less above grade; taller buildings, and buildings that mix housing with shops or offices, need a commercial endorsement instead. The firm works under a residential general contractor endorsement, which carries a $25,000 license bond under the Board's schedule in force since 1 January 2024, and limits its client list to buildings that qualify. The Board's fees, education and exam rules, and the building test for each client's portfolio, are confirmed with the Board before opening.
Many rental buildings in Portland were built before 1978. The US EPA's lead renovation rule requires anyone paid to disturb painted surfaces in pre-1978 housing, rentals included, to be certified, and EPA has authorized Oregon to run its own program. In Oregon the Board issues the lead-based paint renovation license (OAR 812-007-0300), and its rule sets the license fee at $50 a year. The firm becomes a certified lead-safe firm with a certified renovator on every crew. The $4,500 licensing line in the start-up budget (license, bond premium, firm certification, renovator training and the Portland business license) is a planning figure. Insurance covers general liability, commercial auto and an umbrella policy, with workers' compensation carried through payroll.
Portland's Rental Stock and the Work It Needs
Why turnover work is steady
Every lease that ends produces the same job list: patch and paint, replace worn hardware, fix a door, replace a floor or a fixture. Property managers run these jobs all year, and volume commonly peaks when leases start, in the summer months. River Bridge's Year 1 table follows that pattern, with 3 turns in January and 12 a month in July and August. Part of that climb is the account base growing from 3 to 11, so later years use a milder seasonal swing, set out in the operating figures.
What shapes landlord spending in Oregon
Oregon limits annual rent increases on many tenancies and sets the cap each year. The Department of Administrative Services puts it at 9.5% for 2026 and 10% for 2027 for tenancies under ORS 90.324(b), and the figure for later years may differ. A cap changes how a landlord weighs a $25,500 upgrade, since how far rent can be reset on a vacant unit is a question for the landlord's counsel, and the spending may have to be justified by lower repair and vacancy costs. Landlords generally prefer to do major work in empty units, and the notice and relocation rules for occupied ones are also for counsel to confirm. For that reason upgrades are priced only for vacant units.
What the firm competes with
| Alternative | Why a client uses it | Where River Bridge differs |
|---|---|---|
| In-house maintenance teams | Always on site, no markup | They are stretched at peak turnover, and River Bridge can bring in overflow carpenters within days |
| National make-ready and franchise services | One contract for many cities | Local crews that learn a client's unit standards and finishes |
| Small remodelers who mainly serve owner-occupied homes | Skilled finish work | Fixed turn pricing and a schedule built around leasing dates |
| Individual handymen and independent subcontractors | Lowest price | Licensed, insured and certified for pre-1978 housing |
The table describes categories, not named companies. The firm does not publish competitor prices.
SWOT
| Strengths | Weaknesses |
|---|---|
| Founder who spent five years running capital projects and make-ready for a Portland property manager, after six years as a carpenter | With three accounts at launch, one lost client is a large share of revenue |
| Fixed-price turn menu and one point of contact per client | Winter months do not cover overhead |
| Certified lead-safe crews | Nothing to show a landlord who has never used the firm |
| A price a manager can quote to an owner before work starts | One person estimates, sells and holds the license |
| Opportunities | Threats |
|---|---|
| Property managers outsourcing work as turnover peaks | A client moving work back in-house |
| Upgrade work on units that are vacant for other reasons | Slow-paying clients on net 45 or net 60 terms |
| Repair and compliance work found during a turn | Material prices rising faster than quoted rates |
Who Hires River Bridge, and Why
Three kinds of client
| Client | What they own or manage | What they buy |
|---|---|---|
| Property manager | 300 to 1,500 units for several owners | Turns on a standing list, upgrades when an owner approves a budget |
| Mid-size owner | 40 to 250 units, managed in-house | Turns and repair orders, a handful of upgrades a year |
| Small landlord | 10 to 40 units | Turns, and the occasional one-off repair |
Revenue per year-end account is about $74,000 in Years 1 to 3. Property managers carry the volume.
What they ask for
A price they can quote to an owner before work starts, keys back and the unit photographed by the agreed day, notes on anything found behind a wall, and an invoice that matches the quote.
What makes a client switch
A missed re-let date, a bill that differs from the quote, or a contractor who stops answering during peak weeks. Those are the three failures the firm works to prevent.
How they pay
Property managers commonly pay on terms of 30 to 45 days. Receivables are modeled at 40 days on average, with a bad-debt allowance. Upgrades are the larger exposure: a $25,500 job needs about $12,000 of materials and subcontractor payments before it is invoiced, so two or three upgrades in progress tie up roughly $24,000 to $36,000 of cost ahead of any invoice. The engine has no work-in-progress timing and the reserve carries that amount. Deposits or progress billing on large upgrades would shrink it, and none is counted.
Winning Accounts
Dana handles every first meeting in Year 1. A typical sequence is an introduction, a walkthrough of two vacant units, a written quote for the turn menu, a trial turn at a stated price, and a master service agreement after the trial.
The Year 1 pipeline
About 55 first meetings turn into 8 new accounts, at roughly 15%, on top of the 3 signed before opening.
| Source of new accounts | Accounts | Share |
|---|---|---|
| Introductions from Dana's former colleagues and vendors | 3 | 38% |
| Direct outreach to property managers | 2 | 25% |
| Landlord association events | 2 | 25% |
| Online search and vendor-portal listings | 1 | 12% |
Quoting
Turns are quoted from a menu of three levels (light, standard, heavy) priced per unit type, with an average of $4,700 in 2027. Upgrades are quoted per project from a written scope. Repair orders are billed on time and materials. Prices rise about 3% a year.
Keeping accounts
About 12% of accounts are expected to leave each year. Active accounts: 11, 19, 25, 29 and 32 at the end of Years 1 to 5. The firm hires its second crew when booked hours pass what the first crew can carry and fills the peaks with overtime and subcontract carpenters, because a missed re-let date costs more than a declined job.
Getting Known by Property Managers
Year 1 marketing is $39,000: $9,000 of launch spend from start-up capital plus $30,000 of operating spend. That is 4.8% of Year 1 revenue and about $4,875 for each of the 8 accounts won. Spending is $34,000 in Year 2 and rises to $41,000 in Year 5, 1.6% of revenue.
| Item | Year 1 spend | Purpose |
|---|---|---|
| Website, brand and portfolio photos (launch) | $5,500 | Before-and-after pages for turns and upgrades |
| Intro packet and vendor-portal registration (launch) | $1,500 | Approved-vendor status with larger managers |
| Sample unit and walkthrough costs (launch) | $2,000 | A finished unit that clients can visit |
| Property manager lunches and walkthroughs | $8,000 | Direct meetings, about 55 in the year |
| Vendor-portal and registry fees | $3,500 | Listings on managers' vendor lists |
| Landlord association memberships and events | $4,500 | Local landlord meetings and trade nights |
| Local search and paid search | $5,000 | "Unit turnover contractor Portland" and related searches |
| Case studies and photos | $3,500 | Unit-by-unit results for the next pitch |
| Direct mail to owners of 20-plus-unit buildings | $3,000 | Owners who manage their own buildings |
| Client referral thank-yous | $2,500 | A gift for each introduction that leads to an account |
Marketing milestones
- January 2027: three master service agreements signed, first turn completed.
- June 2027: seven active accounts, vendor-portal approval at one larger manager.
- December 2027: 11 active accounts and $50,300 of December revenue.
How Jobs Run
The shop
About 3,000 square feet near the east side industrial area, at roughly $17 a square foot a year including shared charges ($51,000 in Year 1), a planning figure to test against listings. It holds materials, two vans' worth of tool storage, a bench and desks for three. The firm moves to about 3,600 square feet in Year 4.
A turn from key to key
The coordinator gets a vacant-unit notice, books a walkthrough within a day, sends a priced scope, and schedules the crew and subcontractors for the target dates. The crew handles carpentry, doors, trim, hardware and patching. Subcontractors paint, lay flooring and clean. A photo report and a closing checklist go back to the client with the invoice.
Hours and capacity
In-house labor is planned at 14 hours per turn, 75 per upgrade and the labor behind repair orders, which is taken as 74% of repair revenue at $98 an hour. One field person supplies about 1,600 productive hours a year, roughly 133 a month, after travel, estimating and callbacks. Dana's hours go to estimating and sales and are not counted as crew capacity. Plumbing, electrical and tile on upgrades go to licensed subcontractors, as do painting, flooring and cleaning on turns; those costs sit in the materials and subcontractor line.
Annual hours and annual capacity roughly match, but the work does not arrive evenly. In 2027 one carpenter covers January to March, with 65, 90 and 129 hours of work against 133 available, and two cover April to December. May to October need more than two carpenters supply, by 9, 30, 44, 123, 16 and 60 hours, 282 in all, and August is the tightest month at 390 hours against 267. From 2028 turn and repair hours are spread by the seasonal index in the operating figures and upgrade hours evenly, because upgrades go into units that are already vacant and can be scheduled around the crew. Hours above each month's capacity are bought at $65 an hour as overtime or subcontract carpentry and booked in their own cost line. A full-time field hire costs $82,200 to $106,900 a year with the 37% on-cost (the second carpenter at $60,000 and the foreman at $78,000), or $51 to $67 for each productive hour, which brackets the $65 paid for overflow, but a hire is paid all year while the peaks last a few months, so the crew is sized to the annual hours and the peaks are bought.
| Year | Field staff at year end | Hours needed | Crew capacity | Hours over capacity in peak months | Cost at $65 an hour |
|---|---|---|---|---|---|
| 2027 | 2 | 2,802 | 2,800 | 282 | $18,300 |
| 2028 | 4 | 4,889 | 4,800 | 523 | $34,000 |
| 2029 | 4 | 6,358 | 6,400 | 240 | $15,600 |
| 2030 | 5 | 7,423 | 7,600 | 135 | $8,800 |
| 2031 | 5 | 8,268 | 8,000 | 494 | $32,100 |
The table shows the peaks and the hours behind them. January to March 2028 account for 281 of the 523 hours in 2028, because the foreman starts in April. In 2031 the five field staff are 268 hours short over the whole year, yet the overflow line already buys 494 hours in the peak months and the crew has 226 hours of slack in the other months. Field staff are hourly and paid overtime above 40 hours a week, and the lowest wage in the plan is about $26 an hour, against an Oregon Bureau of Labor and Industries minimum of $16.80 in the Portland area from 1 July 2026 to 30 June 2027.
Software
Job-costing and scheduling software, estimating software, photo reports and accounting software cost $11,000 in Year 1 and $21,000 in Year 5.
Safety, lead and insurance
Every crew carries certified renovators for pre-1978 units, containment kits, and a written procedure for lead-safe work. Insurance is $32,000 in Year 1 and $61,000 by Year 5, and rises with payroll and revenue.
Suppliers and subcontractors
Two suppliers for lumber, hardware and fixtures, and a flooring supplier. Two painting subcontractors and two flooring installers, each paid on completion. Any of them can be replaced in a week.
Who Runs the Company
Dana Okafor, founder and licensed contractor
Dana spent nine years in Portland, the last five running capital projects and make-ready for a 1,400-unit property manager, where she scheduled crews, wrote scopes and approved invoices. Before that she was a carpenter for six years. She holds the firm's contractor license. Her $200,000 investment is savings.
Gaps in the team
Dana has not run payroll for a field crew, and she has not carried a bank loan personally. A part-time bookkeeper from month 3, an outside accountant and a monthly review of job costs against quotes cover these gaps. She also estimates, sells and signs every contract; with 26 upgrades in Year 3, the first hire that would relieve her is an estimator or project manager, which is not in the budget.
If Dana is out
The lead carpenter is a certified renovator and can run a job. The foreman hired in month 16 gives the firm a second person who can sign for a crew. Key-person life and disability cover on Dana is part of the insurance budget.
Ownership and the bank
Dana owns five eighths and the investor three eighths, in line with the money each put in. Dana gives the bank a personal guarantee. The loan carries quarterly financial reporting.
Money, Margins and Cash
A single five-year model sits behind every table. 2027 is shown month by month and each later year gets one column. Funding comes first, then the operating figures, then sales, crew and the three statements.
Funding the vans, tools and float
| Use of funds | Amount |
|---|---|
| Two used work vans and a utility trailer | $52,000 |
| Third used van for the second crew, bought in month 15 | $26,000 |
| Power tools, saws, scaffolding, floor-prep and spray equipment | $28,000 |
| Shop racking, workbench and dust control | $12,000 |
| CCB license and bond, lead-safe firm certification, Portland business license | $4,500 |
| Legal: entity, master service agreement, lease review | $7,500 |
| Launch: website, vendor-portal sign-ups, property-manager introductions | $9,000 |
| Cash reserve for materials, payroll, slow-paying invoices and the winter and spring troughs | $421,000 |
| Total uses | $560,000 |
| Source of funds | Amount |
|---|---|
| Dana Okafor's savings | $200,000 |
| One private investor, a retired property manager (common equity) | $120,000 |
| Bank term loan | $240,000 |
| Total sources | $560,000 |
Dana puts in $200,000 of savings and a retired property manager adds $120,000 of common equity, which gives Dana five eighths of the shares and the investor three eighths, in line with the money each contributes. A bank lends $240,000 over seven years at 10.5%, interest-only for the first six months; the rate is a figure for this example, not a quoted lending rate. Equity supplies $320,000 of the $560,000 and the loan $240,000. The bank takes Dana's personal guarantee and a lien on the vans and tools. Vans, tools and shop fit-out come to $118,000, including a third van bought in month 15 for the second crew, and $21,000 of licensing, legal and launch work is expensed in month 1. The remaining $421,000 stays in the bank as a reserve, and it is large for three reasons. Operations use $196,619 of cash in Year 1 and $58,736 in Year 2 before turning positive in Year 3. Receivables reach $203,244 by the end of Year 3 at 40-day terms. And the thinnest month is in the spring of 2029, when cash is about $40,600 on the cautious basis set out under the stress tests. Year 2 debt-service cover is 0.3x, so the reserve is what services the loan until Year 3. If opening slips two months, with revenue starting on 1 March and every cost, hire and loan payment on its original date, Year 1 loses $59,600 more and closes with $208,226 of cash, and Year 2 closes with $85,166. Year-end cash stays positive, but the cautious May 2029 low then falls from $40,600 to about $19,000 below zero, which is where the revolving line comes in.
Operating figures
- Unit turnovers are priced at $4,700 each in 2027, from 3 units in January to 12 in July and August, 94 for the year, then 145, 180, 205 and 225 in Years 2 to 5. A turn covers paint prep and patching, hardware, doors, trim and light carpentry, with painting, flooring and cleaning handled by subcontractors. The average price rises about 3% a year, to $4,850, $5,000, $5,150 and $5,300. Part of the climb from 3 units a month to 12 is the account base growing from 3 to 11, not weather alone.
- Unit upgrades are vacant-unit projects (kitchens, baths, flooring, lighting) at an average of $25,500, with the first finished in April. There are 11 in Year 1, then 20, 26, 30 and 33, at $26,300, $27,100, $27,900 and $28,700.
- Repair orders are billed on time and materials with labor at $98 an hour. They grow from $3,000 in January to $9,500 in August and total $87,500 in Year 1. This line is mostly work the firm picks up because a crew is already on site.
- Materials and subcontractors are 41.1% of turn revenue, 47.1% of upgrade revenue and 26% of repair revenue, which is about $1,930 per turn and $12,010 per upgrade. The engine blends the three into 41.5% from the Year 1 mix and applies that rate to every year. Field labor sits in payroll, not here. Field payroll is the lead carpenter, carpenter, foreman, second carpenter and second senior carpenter roles with their on-costs and pay raises. With field payroll and the overflow line added, direct job cost is 64.5% of revenue in Year 1 and 64.0% in Year 3, which leaves a job margin of 35.5% and 36.0%.
- For comparison, the National Association of Home Builders' Remodelers' Cost of Doing Business Study, summarized in April 2026 for fiscal 2024, reports averages of 29.9% gross profit, overhead of 23.6% of revenue and 6.3% net profit for residential remodelers with $2.7 million of revenue. River Bridge's 36.0% job margin in Year 3 is above that average. Its overhead, which here is everything between the job margin and EBITDA and so includes Dana's pay, is 28.5% of revenue in Year 3 and 24.8% in Year 5, also above it. Its net margin is 5.2% in Year 3, when no tax is due, and 6.4% after tax or 9.1% before tax in Year 5; the NAHB summary does not say whether its 6.3% is before or after income tax, so that comparison is only indicative. The study counts labor, materials and contractors in cost of sales and puts owner pay and indirect construction cost in overhead, so the match is approximate. A margin above the average depends on fixed menu prices, repeat volume and standing subcontractor rates, which a lender would ask to see, and the stress tests add 3 points of direct cost.
- Crew hours are planned at 14 per turn, 75 per upgrade and the labor behind repair orders. Hours above each month's crew capacity are bought as overtime or subcontract carpentry at $65 an hour, a planning figure, and booked in the peak-month overflow line: $18,300 in Year 1, then $34,000, $15,600, $8,800 and $32,100. From 2028 turn and repair hours follow a seasonal index of 0.80 in January and February, 0.90 in March, 1.00 in April, 1.10 in May, 1.15 in June, 1.20 in July and August, 1.05 in September, 1.00 in October and 0.90 in November and December, and upgrade hours are spread evenly. The index averages 1.0, is a planning figure with no published series behind it, and drives only the overflow line and the cash lows. The hours table under How Jobs Run shows the result.
- Accounts are property managers and landlords. The firm has 11 active at the end of 2027, then 19, 25, 29 and 32, with about 12% leaving each year. Revenue per year-end account is about $74,000 in Years 1 to 3, $76,000 in Year 4 and $78,000 in Year 5.
- Customers pay in about 40 days on average, and the firm pays suppliers in about 20. Receivables at the end of Year 1 are $88,745. The engine's monthly view has no receivables timing, so month-end cash lows are quoted after subtracting 40 days of that month's revenue and are approximate. Bad debt is about 0.4% of revenue in Year 1 and 0.5% from Year 2.
- On-costs on top of wages are 37% for field employees, 27% for office staff and 15% for the part-time bookkeeper, covering payroll taxes, health cover and workers' compensation at construction rates; all three are planning figures. Pay raises of 3% a year form a separate line from Year 2. Wages for Portland carpenters, foremen and coordinators are planning figures that can be compared with the Bureau of Labor Statistics' occupational wage estimates for the Portland metro area. The lowest hourly wage is the bookkeeper's, about $26 an hour on roughly 1,040 hours a year (20 hours a week), against a Portland-area minimum of $16.80 an hour from 1 July 2026 to 30 June 2027 (Oregon Bureau of Labor and Industries). Field staff are hourly and paid overtime above 40 hours a week.
- Rent covers about 3,000 square feet of shop and office at roughly $17 a square foot, a planning figure to test against listings, then about 3,600 square feet from Year 4 at $68,000, or about $19 a square foot. No lease deposit is modeled; one to two months of rent would come out of the reserve. Insurance is $32,000 in Year 1 for general liability, commercial auto and an umbrella policy, a planning figure that depends on payroll, subcontractor use and claims history. Workers' compensation sits inside the payroll load.
- Tax is charged at the 21% federal corporate rate and a combined state and local rate of 11.2%: Oregon's corporate excise tax at 6.6% of the first $1 million of taxable income (Oregon Department of Revenue), plus Portland's 2.6% business license tax and Multnomah County's 2% business income tax (City of Portland Revenue Division). The city and county taxes reach only income earned in their areas, so 11.2% is a cautious planning figure. The engine combines the federal and state rates to 29.8%, and Year 1 and Year 2 losses carry forward. Its tax base ignores start-up costs and the federal rule that limits carried-forward losses to 80% of taxable income; applied to Year 3, that rule would leave 20% of the $95,932 of income, about $19,000, taxable at 21% and add about $4,000 of federal tax. Oregon's corporate activity tax is $250 plus 0.57% of Oregon commercial activity above $1 million after a subtraction of 35% of cost inputs, taken here as materials and subcontractors. The firm must register once activity reaches $750,000, which happens in Year 1, but owes nothing until Year 2. A pass-through election would move income tax to the owners.
- Equipment replacement is expensed as it occurs, and the third van is capitalized in month 15. Owner distributions of $30,000 in Year 4 and $50,000 in Year 5 are each below that year's net income. Cumulative net income after start-up costs is $45,789 at the end of Year 4 and $205,500 at the end of Year 5, against cumulative distributions of $30,000 and $80,000, and cash rises in both years after principal repayments.
Revenue by kind of job
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Unit turnovers (make-ready) | $441,800 | $703,250 | $900,000 | $1,055,750 | $1,192,500 |
| Vacant-unit upgrades | $280,500 | $526,000 | $704,600 | $837,000 | $947,100 |
| Repair orders and compliance fixes | $87,500 | $180,000 | $250,000 | $305,000 | $350,000 |
| Total revenue | $809,800 | $1,409,250 | $1,854,600 | $2,197,750 | $2,489,600 |
| Growth on prior year | – | 74% | 32% | 19% | 13% |
Turnovers are the steady line. They are 54.6% of Year 1 revenue and 47.9% of Year 5, they repeat each time a unit empties, and they put a crew in a building where the upgrade and repair work is found. Upgrades are the largest per-job sale and the most variable, since a landlord can delay one for a year; they are 34.6% of Year 1 revenue and 38.0% of Year 5. Repair orders are the smallest line, at 10.8% of Year 1 revenue and 14.1% of Year 5. Growth drops from 74% in Year 2 to 13% in Year 5 because crew hours set the pace, not the number of leads.
Month by month in 2027
| Month | Unit turnovers (make-ready) | Vacant-unit upgrades | Repair orders and compliance fixes | Total revenue | EBITDA |
|---|---|---|---|---|---|
| Jan 2027 | $14,100 | $0 | $3,000 | $17,100 | ($36,150) |
| Feb 2027 | $18,800 | $0 | $4,500 | $23,300 | ($32,526) |
| Mar 2027 | $28,200 | $0 | $6,000 | $34,200 | ($26,155) |
| Apr 2027 | $37,600 | $25,500 | $7,500 | $70,600 | ($4,878) |
| May 2027 | $47,000 | $25,500 | $8,000 | $80,500 | $909 |
| Jun 2027 | $51,700 | $25,500 | $9,000 | $86,200 | $4,241 |
| Jul 2027 | $56,400 | $25,500 | $9,000 | $90,900 | $6,988 |
| Aug 2027 | $56,400 | $51,000 | $9,500 | $116,900 | $22,186 |
| Sep 2027 | $47,000 | $25,500 | $9,000 | $81,500 | $1,494 |
| Oct 2027 | $37,600 | $51,000 | $8,500 | $97,100 | $10,612 |
| Nov 2027 | $28,200 | $25,500 | $7,500 | $61,200 | ($10,372) |
| Dec 2027 | $18,800 | $25,500 | $6,000 | $50,300 | ($16,744) |
Winter is thin. January and February bring in $17,100 and $23,300, below the monthly overhead, and the first upgrade finishes in April. May to October carry the year, with August the peak at $116,900 when two upgrades close and 12 units turn. Monthly EBITDA is negative from January to April and in November and December, and positive from May to October. This view spreads each year's costs evenly, so payroll shows as a flat $29,371 a month although the bookkeeper, the carpenter and the coordinator start in March, April and July; the early months look worse, and the late ones better, than a dated payroll would show. It has no receivables timing either. The lowest month-end cash in 2027 is in August, about $205,000 after subtracting 40 days of that month's revenue as unpaid invoices, an approximation. Crew hours are most stretched from May to October, as the hours table under How Jobs Run shows.
Crew and office staff
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder, licensed contractor and estimator | $95,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Lead carpenter | $76,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Bookkeeper | $27,000 | Month 3 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Carpenter | $62,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Scheduling and account coordinator | $60,000 | Month 7 | 1 | 1 | 1 | 1 | 1 |
| Crew foreman (second crew) | $78,000 | Month 16 | – | 1 | 1 | 1 | 1 |
| Second carpenter | $60,000 | Month 22 | – | 1 | 1 | 1 | 1 |
| Second senior carpenter | $76,000 | Month 40 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $352,450 | $517,655 | $606,020 | $684,110 | $710,140 |
Dana and the lead carpenter start in January. A bookkeeper joins part time in month 3, a carpenter in month 4 as the spring turns arrive, and a scheduling and account coordinator in month 7, when summer volume needs someone to run keys, access and invoices. A foreman for a second crew follows in month 16 (April 2028), a second carpenter in month 22 and a second senior carpenter in month 40. Field staff number 2, 4, 4, 5 and 5 at the end of Years 1 to 5. Each hire is placed after the revenue that pays for it, which leaves January to March 2028 short by about 281 crew hours. Dana does all estimating and first meetings herself, and no estimator or project manager is budgeted, so a lender would ask who prices an upgrade while she is on a job site. The bookkeeper's $27,000 is a part-time wage. Dana's $95,000 is paid from month 1 and sits in the costs, so the profit lines are what remains after she is paid.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $809,800 | $1,409,250 | $1,854,600 | $2,197,750 | $2,489,600 |
| Materials and subcontractors (field labor is in payroll below) | ($336,445) | ($585,497) | ($770,525) | ($913,093) | ($1,034,347) |
| Gross profit | $473,355 | $823,753 | $1,084,075 | $1,284,657 | $1,455,253 |
| Payroll incl. on-costs | ($352,450) | ($517,655) | ($606,020) | ($684,110) | ($710,140) |
| Rent | ($51,000) | ($52,500) | ($54,000) | ($68,000) | ($70,000) |
| Utilities | ($6,000) | ($6,200) | ($6,500) | ($7,500) | ($7,800) |
| Marketing | ($30,000) | ($34,000) | ($37,000) | ($39,000) | ($41,000) |
| Insurance | ($32,000) | ($41,000) | ($50,000) | ($56,000) | ($61,000) |
| Professional fees | ($9,000) | ($10,000) | ($11,500) | ($12,500) | ($13,500) |
| Software subscriptions | ($11,000) | ($14,000) | ($17,000) | ($19,000) | ($21,000) |
| Fuel, vehicle repairs and parking | ($18,000) | ($28,000) | ($36,000) | ($42,000) | ($46,000) |
| Small tools, safety gear and dump fees | ($14,000) | ($24,000) | ($32,000) | ($38,000) | ($43,000) |
| Callbacks and punch-list rework | ($5,000) | ($11,000) | ($16,000) | ($19,000) | ($22,000) |
| Peak-month overflow: overtime and carpentry subcontractors | ($18,300) | ($34,000) | ($15,600) | ($8,800) | ($32,100) |
| Oregon corporate activity tax (planning estimate) | $0 | ($1,400) | ($3,600) | ($5,300) | ($6,700) |
| License renewals, lead-safe training and dues | ($3,500) | ($4,200) | ($4,800) | ($5,400) | ($5,900) |
| Bad debt allowance | ($3,500) | ($7,500) | ($10,000) | ($12,000) | ($13,500) |
| Equipment replacement | $0 | ($7,000) | ($9,000) | ($14,000) | ($10,000) |
| Annual pay raises (3% a year) | $0 | ($15,530) | ($36,907) | ($63,435) | ($89,129) |
| EBITDA | ($80,395) | $15,768 | $138,148 | $190,612 | $262,484 |
| Depreciation | ($17,714) | ($22,914) | ($22,914) | ($22,914) | ($22,914) |
| Interest | ($24,913) | ($22,458) | ($19,301) | ($15,797) | ($11,906) |
| Income tax | $0 | $0 | $0 | ($28,417) | ($67,953) |
| Net income before start-up costs | ($123,023) | ($29,604) | $95,932 | $123,484 | $159,711 |
| Legal, licensing and launch costs expensed at opening | ($21,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($144,023) | ($29,604) | $95,932 | $123,484 | $159,711 |
Year 1 loses $123,023 before start-up costs and $144,023 after them. Year 2 loses $29,604, and Year 3 is the first profitable year at $95,932, a 5.2% net margin. Year 4 earns $123,484 and Year 5 $159,711. Gross profit in this table is before field labor, which sits in payroll; after field wages and the overflow line the job margin is about 35.5% in Year 1 and 36.0% in Year 3. Payroll falls from 44% of revenue in Year 1 to 32% in Year 5 while pay raises accumulate. Income tax is zero through Year 3 because the Year 1 and Year 2 losses carry forward, then $28,417 in Year 4 and $67,953 in Year 5.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($196,619) | ($58,736) | $80,180 | $116,605 | $157,285 |
| Vans, tools and shop fit-out | ($92,000) | ($26,000) | $0 | $0 | $0 |
| Funding received | $560,000 | $0 | $0 | $0 | $0 |
| Bank loan principal repaid | ($13,237) | ($28,643) | ($31,799) | ($35,304) | ($39,194) |
| Owner distributions | $0 | $0 | $0 | ($30,000) | ($50,000) |
| Net change in cash | $258,145 | ($113,379) | $48,380 | $51,301 | $68,091 |
| Closing cash | $258,145 | $144,765 | $193,146 | $244,446 | $312,537 |
Year-end cash is lowest at the end of Year 2, $144,765, after operations use $58,736 and the third van costs $26,000. Years 2 to 5 are annual columns, so the winter and spring troughs inside them are not visible. Re-shaping 2028 and 2029 with the seasonal index (the method follows the stress tests) puts the low at about $87,600 in June 2028 and about $40,600 in May 2029, so the spring of 2029 is the tightest point in the plan. If later years followed 2027's monthly revenue shape instead, the same method puts cash about $92,000 below zero in May 2029. Principal payments rise from $13,237 in Year 1 to $39,194 in Year 5 and come out of operating cash. Distributions of $30,000 and $50,000 begin in Year 4.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $258,145 | $144,765 | $193,146 | $244,446 | $312,537 |
| Accounts receivable | $88,745 | $154,438 | $203,244 | $240,849 | $272,833 |
| Vans, tools and shop fit-out (net) | $74,286 | $77,371 | $54,457 | $31,543 | $8,629 |
| Total assets | $421,176 | $376,575 | $450,847 | $516,839 | $593,999 |
| Accounts payable (suppliers and subcontractors) | $18,435 | $32,082 | $42,221 | $50,032 | $56,677 |
| Bank term loan | $226,763 | $198,120 | $166,321 | $131,017 | $91,823 |
| Paid-in capital | $320,000 | $320,000 | $320,000 | $320,000 | $320,000 |
| Retained earnings | ($144,023) | ($173,627) | ($77,695) | $15,789 | $125,500 |
| Total liabilities and equity | $421,176 | $376,575 | $450,847 | $516,839 | $593,999 |
Margins, break-even and payment terms
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -9.9% | 1.1% | 7.4% | 8.7% | 10.5% |
| Net margin (before start-up costs) | -15.2% | -2.1% | 5.2% | 5.6% | 6.4% |
| Payroll incl. pay raises as share of revenue | 44% | 38% | 35% | 34% | 32% |
| Revenue per full-time equivalent at year end | $179,956 | $216,808 | $285,323 | $293,033 | $331,947 |
| Average monthly revenue | $67,483 | $117,438 | $154,550 | $183,146 | $207,467 |
| Monthly revenue needed to cover operating costs | $78,945 | $115,190 | $134,855 | $155,971 | $170,046 |
| Debt service cover (EBITDA / interest + principal) | -2.1x | 0.3x | 2.7x | 3.7x | 5.1x |
The last two rows of the ratios table show whether a year covers its own costs. In Year 1 average monthly revenue is $67,483 against $78,945 needed. Year 2 clears the bar by 2%, $117,438 against $115,190, but interest, depreciation and principal still leave a loss and a cash outflow, and debt-service cover is 0.3x, so the reserve pays part of the loan. From Year 3 revenue is 15% above the break-even level and debt cover is 2.7x or better. Revenue per full-time equivalent rises from $179,956 to $331,947 because the same coordinator and part-time bookkeeper serve a larger field crew.
One job in five goes elsewhere
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $647,840 | $1,127,400 | $1,483,680 | $1,758,200 | $1,991,680 |
| Net income before start-up costs | ($182,129) | ($62,101) | $6,721 | $62,748 | $81,580 |
| Net income after start-up costs | ($203,129) | ($62,101) | $6,721 | $62,748 | $81,580 |
| Closing cash | $213,101 | $77,634 | $44,537 | $71,060 | $116,088 |
Every revenue line is 20% lower in every month and year. Dana's response starts when the shortfall is visible: her pay is cut 20% from month 7 and stays cut; marketing is cut 20%, and insurance and software 10%, from 2028; equipment replacement waits until 2030; the foreman starts in month 22 instead of 16, the second carpenter in month 34 instead of 22, the second senior carpenter in month 52 instead of 40, and the third van in month 21; the bookkeeper, first carpenter and coordinator start on schedule; rent stays on a 3% path with no larger shop; and no distributions are paid. Fuel, small tools, callbacks and bad debt fall 20% with volume from January 2027, and the corporate activity tax is recomputed on the lower revenue. With fewer carpenters the overflow line is rebuilt from the downside's own hours: 45, 579, 349, 74 and 0 hours, or $2,900, $37,600, $22,700, $4,800 and $0. Other cost lines keep their base-case amounts, apart from the 3% pay-raise line, which follows the lower payroll. The firm loses $203,129 in Year 1 and $62,101 in Year 2 after start-up costs, then earns $6,721, $62,748 and $81,580, below the base case in every year. Year-end cash never falls below $44,537, reached at the end of Year 3, and is below the base case in every year. Equity is $116,871 at the end of Year 1, $54,770 at the end of Year 2 and $61,492 at the end of Year 3. Debt-service cover is -3.66x, -0.33x and 0.96x in Years 1 to 3, then 1.99x and 2.28x, so the bank would be asked to waive its cover test through Year 3. On the cautious basis, month-end cash in this case falls below zero by about $35,600 in May 2029, $54,800 in May 2030 and $31,300 in May 2031, which is why a revolving line is part of that request.
Stress Tests and the Bank's Terms
How the cases are run
Each row re-runs the financial model on the base inputs with one change and no management response, except the last row. Hires, pay, marketing, rent and every other fixed cost stay as budgeted. Rows that change work volume also scale fuel, small tools, callbacks and bad debt with revenue, recompute the overflow hours and the corporate activity tax, and let direct costs follow revenue at the base blended rate of 41.5%. That rate is held in every row except the upgrade row, where a changed job mix lets the engine re-blend it to 40.8% from the Year 1 mix; later years' own mixes would give 40.6%, 40.5%, 40.4% and 40.4%, so that row over-costs Years 2 to 5 slightly and is exact for Year 1. In the slip row, each 2027 month's revenue moves two months later, so November and December of the base ramp are lost and not carried into 2028; fuel, small tools, callbacks and bad debt scale with 2027 revenue; the hires, pay, rent, loan payments, start-up spending and other fixed costs keep their dates; and Year 2 onward is unchanged, which makes Year 2 revenue 102% above the lower Year 1 and trips the engine's warning on growth above 100%. In the payment-terms row, receivables are 60 days of revenue. Net income is after start-up costs.
| Case | Year 1 | Year 2 | Year 3 | Lowest year-end cash | Year 3 debt cover | Spring 2029 low (approx.) |
|---|---|---|---|---|---|---|
| Base case | ($144,023) | ($29,604) | $95,932 | $144,765 (Year 2) | 2.70x | $40,600 |
| Revenue 10% lower, every line and year | ($177,108) | ($84,029) | $12,225 | $13,261 (Year 4) | 1.07x | ($55,500) |
| Direct costs 3 points higher (44.5% blended) | ($168,317) | ($71,882) | $40,294 | $73,985 (Year 3) | 1.61x | ($47,300) |
| Wages 10% higher, every role | ($179,268) | ($82,923) | $31,640 | $40,290 (Year 3) | 1.45x | ($74,800) |
| Rent 10% higher, every year | ($149,123) | ($34,854) | $90,532 | $134,415 (Year 2) | 2.60x | $28,000 |
| Opening slips to 1 March 2027 | ($203,622) | ($29,604) | $95,932 | $85,166 (Year 2) | 2.70x | ($19,000) |
| Customers pay in 60 days, not 40 | ($144,023) | ($29,604) | $95,932 | $67,546 (Year 2) | 2.70x | ($72,800) |
| Upgrade volume one third lower, every year | ($177,509) | ($93,176) | ($3,011) | ($24,561) (Year 4) | 0.77x | ($64,800) |
| Downside case, with the response described above | ($203,129) | ($62,101) | $6,721 | $44,537 (Year 3) | 0.96x | ($35,600) |
At year-end the base case stays positive under every single stress except one, and it is fragile on three. Upgrade volume is the one that breaks it: a third fewer upgrades with the crew unchanged leaves Year 3 at a small loss, year-end cash negative from Year 4 and Year 3 debt cover at 0.77x, because upgrades are 35% of Year 1 revenue and about 30% of crew hours. Year 3 income falls to $12,225 with revenue 10% lower, to $31,640 with wages 10% higher and to $40,294 with direct costs 3 points higher, and the revenue case leaves $13,261 of year-end cash in Year 4. Revenue 10% lower and a third fewer upgrades both take Year 3 debt cover under the 1.25x test, at 1.07x and 0.77x. A two-month slip costs $59,600 in Year 1 and leaves $85,166 at the end of Year 2, the lowest year-end figure in that case. Spring cash goes below zero on the cautious basis in six of the seven single-stress rows; only the rent row keeps it positive.
How the spring lows are estimated
The spring low is the one figure that sits outside the engine, so it is approximate in every row. For a given year it starts from the engine's cash at the end of the year before on the engine's monthly basis, which is closing cash plus year-end receivables less payables ($258,145 + $88,745 - $18,435 = $328,454 for 2028). Its even monthly net cash is the engine's own monthly figure for 2028, which carries the $26,000 van in month 15 (March 2028), and for later years the year's change in cash plus receivables less payables divided by 12. The method then replaces each month's revenue with the year's revenue times the seasonal index divided by 12, charges direct costs at the blended rate on the difference, and keeps every other cost, interest, principal, van purchase and distribution as the engine has it. The low is the smallest month-end balance after subtracting 40 days, four thirds of a month, of that month's revenue as unpaid invoices. The 2027 low uses the same subtraction. The method ignores supplier credit, which lowers every figure, and carries no receivables forward from the previous month, which raises the early months of a year. A second pass counts unpaid invoices as that month's revenue plus a third of the previous month's, instead of four thirds of that month's, and credits suppliers with two thirds of the month's direct costs. It gives higher lows: $92,800 for the base case in May 2029, against $40,600. The table quotes the lower figure. Applied to 2028, the base case's low is $87,600 in June. An adverse bound replaces the seasonal index with 2027's own monthly revenue shape, $17,100 in January to $116,900 in August, scaled to each year's revenue; it puts May 2029 about $92,000 below zero.
What the bank is asked for
The base case does not meet a 1.25x debt-service test in Year 1 (-2.11x) or Year 2 (0.31x) and meets it from Year 3 (2.70x); 1.25x is a planning figure for the test, and the lender sets its own. River Bridge asks for the following:
- No cover test before Year 3. If the downside occurs, none before Year 4, because that case covers debt service by -3.66x, -0.33x and 0.96x in Years 1 to 3 and by 1.99x and 2.28x in Years 4 and 5.
- A minimum year-end cash balance of $25,000, against a base-case low of $144,765 in Year 2 and a downside low of $44,537 at the end of Year 3.
- A $100,000 revolving line of credit from closing, undrawn in the base case, where the spring low stays above zero. In the downside, cash falls below zero by about $35,600 in May 2029, $54,800 in May 2030 and $31,300 in May 2031 on the cautious basis, so the line covers the deepest of those months with room to spare.
- No owner distributions before Year 4, and then only when debt cover is at least 1.25x and year-end cash after the payout stays above $100,000. The base case pays $30,000 in Year 4 and $50,000 in Year 5; the downside pays none.
What a lender would still ask
- Signed work at opening: the dollar value booked, the rates and payment terms in the three master service agreements, any retainage, and which account is the largest.
- Concentration: with 11 accounts at the end of Year 1 and about $74,000 a year from each, how much revenue the top three hold and what happens to the loan if one leaves.
- License scope: whether a residential endorsement covers every building on the client list, the workers' compensation class and experience rating, and bonding capacity beyond the $25,000 license bond.
- The evidence for a 36% job margin when the NAHB average is 29.9%: the three agreements' rate sheets and the standing subcontractor prices.
- Receivables and work in progress: the aging of invoices, deposits or progress billing on $25,500 upgrades, and the cost out ahead of the first invoice.
- The lease: term, the personal guarantee, and a deposit of one to two months of rent ($4,250 to $8,500), which the model leaves out.
- Why the reserve is $421,000 against a base-case spring low of $40,600 and a downside that needs a $100,000 line.
- Who prices upgrades when Dana is on site, and how much key-person life and disability cover sits on her.
- The investor's return: $30,000 of the $80,000 distributed in Years 4 and 5 on $120,000 invested, with no exit forecast.
- Debt cover of 0.31x in Year 2, which the reserve and a covenant holiday would have to carry.
Sources
- US Environmental Protection Agency, Renovation, Repair and Painting Program, as of October 2026: certification for paid work that disturbs paint in pre-1978 housing, including rentals, and the list of states, Oregon among them, that run their own programs.
- Oregon Construction Contractors Board, Licensing, as of October 2026: bond amounts effective 1 January 2024, $25,000 for a residential general contractor and $20,000 for a residential specialty contractor. The Board's home page carries license lookup and applications; fees and education requirements are confirmed there.
- Oregon Revised Statutes 701.005, as published by Oregon Public Law, as of October 2026: definitions of residential structure (four stories or less above grade) and commercial structure.
- Oregon Administrative Rules 812-007-0300, License Required for Lead-Based Paint Renovation, and 812-007-0360, the $50 yearly fee, as of October 2026.
- Oregon Department of Administrative Services, Rent Stabilization, as of October 2026: a maximum annual increase of 9.5% for 2026 and 10% for 2027 for tenancies under ORS 90.324(b).
- Oregon Department of Revenue, Corporate Activity Tax, as of October 2026: $250 plus 0.57% of taxable Oregon commercial activity above $1 million, a 35% subtraction for the greater of cost inputs or labor, and registration at $750,000.
- Oregon Department of Revenue, Corporation Excise and Income Tax, as of October 2026: 6.6% of Oregon taxable income up to $1 million and 7.6% above it.
- City of Portland Revenue Division, Business Tax Filing and Payment Information, as of October 2026: Portland business license tax 2.6% and Multnomah County business income tax 2%, both on net income.
- Oregon Bureau of Labor and Industries, Oregon Minimum Wage, as of October 2026: $16.80 an hour in the Portland metro area from 1 July 2026 to 30 June 2027.
- US Bureau of Labor Statistics, Occupational Employment and Wage Statistics, Portland-Vancouver-Hillsboro area: the metro wage tables against which the plan's carpenter, foreman and coordinator wages can be compared. No figure from them is quoted.
- National Association of Home Builders, Remodelers saw profit margin gains in 2024, 8 April 2026: averages of 29.9% gross profit, 23.6% overhead and 6.3% net profit for residential remodelers in fiscal 2024; the post does not state whether net profit is before or after income tax.
- Planning figures, not quotes or published rates: the 10.5% loan rate, wage levels, rent, the insurance premium, the $65 overflow rate, the seasonal index and the on-cost percentages.
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