The thought process and goals of an investor

[Omar Rivera]

Hello Everyone, I am working with a team of programmers, engineers and financial consultants to create and submit a business plan to our MBA curriculum's final competition. I do plan on actually creating a technology/service company based on the results of our research.

I need your help with a survey we created to try to narrow down the needs and "pain points" of the RE investor community. I would GREATLY appreciate anyone who would take the time to complete this short survey.

If anyone at all has additional thoughts and would like to speak with me 1 on 1, I would love to arrange a meeting to learn more about your needs.

They survey is completely confidential. Below is the link:

https://mccombs.qualtrics.com/SE/?SID=SV_4H3EI59DePrWdut

Thanks in advance, and please feel free to contact me directly if you have any comments or questions.

Thanks,
Omar

[Bill Gulley]

Originally posted by Omar Rivera:

The accounting problem is interesting! Thank you for the information. My accounting is easy since I only manage 6 units, but I can see it becoming very complex with many deals and management of properties. What is your deal throughput, if you don't mind me asking? I know there are many accounting systems out there, but I don't know of any specifically designed for real estate. What accounting system or software do you use?

Omar, Being new you're not aware that I'm retired. My goal units are largely determined by the velocity still measured more by the consumption therory by the shot glass or by the mug! That said, LOL, I'm a costing type in managerial accounting.

I have a broad background in RE with a primary emphasis being in the mortgage business. The accounting system I used was MAS 90 with a real estate module. It is far beyond what RE investors would need and you really need an accounting background to utilize the program.

However, it is rather odd that I used the concepts of throughput accounting from blending costing with economic aspects, consumption and the rate or velocity of goal units/projects. This accounting approach was not adopted in my days and managerial accounting was primarily about cutting costs, but was limited as variable costs were the primary constraints.

I'd say too that if you adopted a throughput system for RE that it would be more meaningful for RE investors if it was user friendly. While there are some here who are accountants and well versed in economics most are not. Bottlenecks are prevalent in any RE activity.

In reality, I don't see such a system being adopted, while it may be more meaningful, by most investors. Any advanced system, speaking of constraints, introduces a level of complexity that most investors would not adopt, IMO.

Take a rehab for example, in one project an electrician may be on a site for 480 minutes, another may be 120 minutes, the costs per minute will not likely be the same, the constraints that are applied toward any goal unit have too many variables, you may not have the same electrician, the distance to the job and the complexity of work is different with each job. These constraints must be identifiable before they can be managed as well, when you break open a wall you have no idea what may be inside.

Those with analytical skills tend to adopt them and IMO will always lead to overkill in a small RE investment business. Seems to me that such a system would not be that applicable until you reached 50+ units held or maybe 10 rehab projects as an ongoing process.

As to accounting I'd say the largest market would be for a simplified bookkeeping system where absolutely no accounting knowledge would be required. If you could simply enter a description of income and expenses with amounts as a written statement and it would properly allocate them in GAAP form, you'd have something.

I think I was rambling again. Charles Perkins may have input on this topic. He is our resident CPA. Steven Hamilton II a tax guy mave have an opinion from his point of view. :)