My 2018 Goals

This is going to be a post about goals, published around the turn of the year.
Original, right?
You might be surprised...

What were my goals for 2017?
Pretty simple and standard: Add two properties and $300+ per month in cash flow.
As I write this, we're two weeks away from the end of the year. While I've still got some time, I haven't fully met my goal. I've added 1 property, which should bring me that $300+ per month based on my calculations, but I'm still short a property.
That's not for lack of trying though. My latest offer expired uncountered, then the seller raised the price an additional $22.5k on the MLS.
Colorado can be tough. 

What are my goals for 2018?
First, let me start with the old "I'm going to blog more next year.", since it's been almost two years since my first post, and this is post #2.
Why, you might ask, would I want to blog more, since I apparently suck at it?
Well, I thought my first one was pretty good. It's not the writing/blogging I'm bad at (if I'm wrong, feel free to let me know in the comments), it's being consistent with it. I might even settle for 'occasionally posting', but bi-annually isn't going to cut it.

OK, so what's my big 2018 goal for my Real Estate investment business?
Should I try again for 2 properties? Double that? 10x it!? Buy a Multi Family? A mobile home park? Dump it all into Bitcoin?
I need to take action, right?!
No.
I'm not planning to buy any property next year.
Don't get me wrong, I'm dumb, but I'm not stupid. If a good deal falls in my lap, I'll likely buy it. But I'm not going to be actively looking for new properties. Instead, I'll be focusing on what I've got, in three main areas.

Compliance, Profit, and Direction.

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Compliance

I can't figure this stuff out on my own. I mean, I could, but that takes up a lot of research time. I'll need to think about who makes up my team, and what help I'll need from each of those people.

First, I'll be talking with my agent. How are my offers/contracts? We'll want to look back over the previous offers made this year. Is there anything we might want to change?
I can already tell you that I'll want to make them assignable in the future. I'm not planning to start wholesaling, but if something comes my way that makes sense in that regard, I want to be able to do it.

Should I be looking at a standard earnest money amount, just to make things easier going forward? I like standards. Having to remember one-offs that are different from other times that I've done things... that just takes up too much brain power. So, is there anything else we can standardize?
Why are we letting the seller choose the title/closing agent? If there's not a really good reason for that, then lets determine who is the best for my business and write that choice into each offer.

Next, I'll be reaching out to my lawyer. Do I need smoke and/or carbon monoxide alarms in every unit? I'm pretty sure that's going to be a resounding 'YES!' OK then, what else is required along those lines? Where do I search to find this data?
Then let's look over my leases. Since I do both traditional and short term rentals (STR), there will be some differences. But again, I want standards, so can we get it down to two templates?

What about my LLC? Should I add a few more so that I have one per property? Maybe I need to add at least one to separate out my property management business? Or is my umbrella insurance policy good enough?
I'll likely want to run these questions past my lawyer, CPA, and insurance broker, to ensure I'm looking at it from all angles.

Then there are the questions for my banker or mortgage broker.
What does my debt to income (DTI) ratio look like today? What would make it 'better' in the eyes of a lender? How many more deals can I expect to do before this becomes an issue? And what will be my options if and when it does?

Finally, the compliance piece that will mainly fall on my shoulders will be around the STR part of the business. You may not have heard, but this STR stuff has really taken off in the past few years. That means lots of new rules and regulations, and not many people well versed in these yet.
For this, I'll be digging into the local assessor, chamber of commerce, and city/county/state web sites. I'm sure I'll have some questions, and will likely need to email or make some phone calls based on what I find. Who knows... maybe I'll even end up adding some new members to my team.

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Profit

Now that I'm in compliance, there should not be any unexpected fines, unknown fees, or frivolous lawsuits eating into my profits.
Great. So what do those profits look like, and why is that important as long as I'm in the black?
My goal here is financial independence through passive income (I'll bet you've not heard that one before). Knowing where I currently stand with profits can help me to gauge what more I need to do in order to replace my W2 income and leave the old job behind for good. This will help me to refine my long term goals, which in turn will dictate what my annual goals should be, depending upon my timeline.

I don't plan to spend a lot on upgrades this year. Most of my remodels are already done. For any that are not, I'll plan to buy the materials prior to year end, and then do the work during the off season.
This is Fix n' Hold, not Fix n' Flip, so it doesn't all need to be done at once.
Next year, I plan to only spend on what's necessary, so I can determine what my profits look like without spending on any 'startup' costs.
This will help me to determine if my model is truly working. Does it meet or exceed the numbers that I originally put into the calculator before I made the offer? If the numbers fall short, where did I go wrong and what can I do to improve? Or do I need to consider one of my exit strategies?

I'll mainly be working with one team member here, my CPA. I'm going to take a much closer look at my profit and loss (PNL) statements, as well as updating my balance sheet. Do I understand everything that goes into these documents, and how they relate to each other and to my quarterly tax returns?

We'll be evaluating the business reserve account (savings). Since I don't plan to be drawing on that to make down payments on property, we can evaluate it from a stable point of view. What might I need it for, other than new property purchases? Is there enough there currently to cover those contingencies? If so, how much can I utilize for new property purchases when I decide to ramp up again?

Finally, I will not be injecting any of my own money into the business this year. I have been redirecting some paycheck money from my job into this account, to buy additional property and grow the business. Next year, it needs to survive on it's own. If it can do that, then I know I'm on the right track and this will eventually lead to that financial freedom I've been looking for.

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Direction

Hopefully by year end, or sooner, I'll know that my business is on the up and up and making good money. But what do I need to do to keep it moving in that direction and ensure that I won't need to slow growth every other year for a checkup?

I need systems in place. You've heard that before, right? On the podcast, in blogs, on the forums... but what does it mean?

First off, I'm building a handbook. It should contain the standard operating procedure (SOP) for every facet of the business. From template emails for STR tenants, to what needs to be saved in the portfolio that I share with my CPA during our quarterly meetings.
If I'm doing something related to the business, and I'm not following a document, then I need to be writing that document.
This handbook will ensure that my business processes are consistent, scalable, and easier to automate.
Also, should someone in my family need to take over due to my untimely departure from this world, they should be able to get up and running quickly. I'll just need to make sure that I've made them aware of my handbook and shared the password.
But most importantly, once I've made it to the point where I'm no longer clocking in for a paycheck, I might want to hire someone to run the business for me.
Having a handbook of SOPs means that my successor won't have to reinvent any wheels, and that I won't have to stop what I'm doing to micromanage day to day operations.

This year I'm also planning to pick the brains of the people that have done what I'm trying to do. I already attend and co-host local meetups, so I've got a good idea of who's on the right track and making great things happen in their lives. I'll treat them to lunch, coffee, or beer, and find out if there's anything I can do to help them out (now that I've got spare time from putting new systems in place). In turn, I hope to learn what they've done to be successful, and what areas I should focus on to accelerate my long term goals.

Finally, and most importantly, I plan to spend more time with my family. I'm going to start doing that right now, not wait until 'retirement' or financial independence.
By working smarter, not harder, I'll have more free time that I can devote to enjoying life and sharing it with those that I care most about.
Investing in those relationships will provide an exponential return that I just can't find anywhere else.