How to systemize my real estate business?

Question

So me and my wife started our real estate business about 3 years ago. We have 14 properties (18 units.) My wife does the bookkeeping and pays bills (switching utilities and does the paperwork with moving people into properties.) We have own property management sytem with our own website we use and have implemented for tenant maintenane requests, applications, etc. I handle the construction side of things and aqusitions of properties & some of the marketing side. So, we are about to have our first child in December and I wanna keep growing and maybe hire people to do some of our jobs, and maybe focus on me just finding the good deals. Or whats the best way to structure our business to grow huge and make better systems and what not?

JD Martin · Answer

The best way I've found to systematize:1. Electronic everything if possible. That means lease, payments, requests, everything. 2. Have good reliable: HVAC, plumber, electrician, pest control. Good reliable jack of all trades guy is a bonus, for the odd broken window or busted door lock.3. Batch your showings. My wife will batch them in 10-15 minute increments. We used to do open houses exclusively but found that also tends to attract tire kickers. These days she batches the appointments in two or three days. Not only does this keep you from running everywhere, it creates a sense of urgency when 2 or 3 couples are walking through close to each other. Human nature is to want what you're about to not be able to have.4. Keep everything the same as possible. Use the same paint and paint colors across houses. Use the same types of door locks. Use the same faucets. ETC. 5. Pick one day a week to do business housekeeping and batch your tasks. All my contractors know that I write checks on Monday (those that don't get paid electronically). If you do work for me on Tuesday, you're getting paid Monday. If you do work on Sunday, you're getting paid Monday. If you do work on Monday, you're getting paid next Monday. No exceptions. I don't drop what I'm doing to get payments out. I do the same thing with accounting, filing, etc. Do it in big batches so you minimize your ramp up and ramp down times.It doesn't sound like you have enough properties to warrant having anyone on a staff. Utilize contract personnel.

Krishna Chava · Answer

My business partner and I self manage 75 units. We both have full time jobs. 50 of these units are at one place and 25 are scattered around. All within 1 hour radius of our residences. Here are the the things we did to systematize:1) Use property management software for leases and rent collection. For people not willing to able to pay online, give deposit cards. Phase out cash and checks.2) Get a google voice number and train your tenants to text the issues. Calling is only for emergency. Once tenants see that they get faster response by texting, they will get used to texting. Text back summary of any conversations you have such that you have a log of these and partners can seamlessly take over back and forth.3) Use reliable professionals for HVAC, Plumbing and electric issues. You don't want to use handyman here even though you will spend more money. Eventually you would want to develop relationships with these professionals such that they give you good service at reasonable prices. Treat this professional services as extra expense for self managing.4) Keep a handyman on call by paying him a small amount monthly. Since we have 75 properties, we let him stay rent free (750 per month) in one of the units. We don't need him more 2 days a week, but he is available when needed and that counts.I am also automating my properties with video monitoring, smart thermostats and water leak sensors but that is a different aspect of automation that we have recently started.

Joshua D. · Answer

@JD Martin awesome post! Thank you very much everyone for all the responses. Anything else would be greatly appreciated.

Aaron K. · Answer

@Joshua D. this must be a tiny town in the middle of nowhere if there is only one PM company. I see you are in Pittsburgh, how far are the properties from there?

Aaron K. · Answer

You probably don't have enough to justify bringing someone on full time, or even part time in a significant capacity so you might be better off with a property management company. I'm going to speculate that rents on your units are about $1,000/ month each so $18,000 total which if you paid a PM 10% would be $1,800 a month and with that many properties you should get a discount. Regardless $1,800 probably isn't enough to hire someone full time with the skills to handle at least all the white collar work.

Cassi Justiz · Answer

Bookkeeping is a great first place to start to outsource. You can get a qualified bookkeeper for a reasonable rate and it would probably free up a lot of time for your wife. You could also consider leasing agents to handle the moving in and out processes. I'm not sure about your area, but in my area you can get a leasing agent that will do all advertising, showings, tenant screening and documentation, lease signings and move-in/move-out inspections for the cost of 1 month rent or less (depending on property size, price, etc).

Daniel Hyman · Answer

@Joshua D.Bookkeeping - Depending on how much time and cognitive overhead it's taking, you may want to strongly consider outsourcing this. There are firms that specialize in real estate bookkeeping and the fees are typically very reasonable.

Eddie Werner · Answer

There are a fair number of management companies in and around Pittsburgh. Join the Pittsburgh Real Estate Investor's Facebook page. I know of about 5 in and around Pittsburgh.

Aaron K. · Answer

Out here most PMs have a 45 min drive time radius but for 18 properties they might make an exception, the only way to find out would be to ask. Also if it is in the direction of Youngstown OH you might find a PM who is licensed in both states.

Joshua D. · Answer

@Aaron Klatt About a hour from there. Would that be to far?