(Student Case Study) How to Create Standard Operating Procedures and Systems in Your Real Estate Business

Work the System

This past week, I was able to spend some time with one of our Master’s Elite Coaching Members and also an investor with Freeland, Phil Luther. He is a very experienced real estate investor with over 30 years experience a massive rental portfolio and who has been part of our high-end coaching program since December 2014.

Recently, we were talking about growing and scaling his business that he has had since 1977. He resides in Austin, Texas and currently invests in San Antonio. He wanted to know some ways to streamline and make his business more automated. He’s spending far too much time “IN THE BUSINESS” working on rental vacancies and evictions and not enough time “ON THE BUSINESS” acquiring properties and building his team.

This made me think of a quote that really resonates with me from one of my favorite books, “Work the System” by Sam Carpenter.

Phil explained to me what his day-to-day responsibilities were within his business and immediately, I knew that he was spending WAY too much time on actually performing the work. He’s totally IN the business and not able to focus on improving the processes.

Are any of you having this exact same issue? Does it not feel like there is enough time in a day for you to get the things on your to-do list done due to administrative work and fixing other unforeseen issues and putting out fires?

The Art of Removing Yourself from Your Business

I know as well as anyone this can be tough, but it’s completely necessary and REQUIRED as a business owner and entrepreneur. Removing yourself from your business is an art – without question, the process begins by creating documented systems and then offloading the systems to someone else.

Remember, once you deviate from the system, you have broken it. A system is designed to work regardless of whether you are in it or not. Every time you get involved you’ve broken the system. Every time you make a “one off decision” and change the process you’ve broken the system.

System creating can be broken into three parts:

One of the problems that Phil mentioned he was having was collecting rent from his tenants, writing eviction notices, chasing after past-due rents, etc.

Let’s break down the steps on how we can help Phil, and you, alleviate these issues…

Step 1: Get bookkeeper all the addresses, tenant names & rental agreement for all properties so they can be responsible for collecting rent checks.

Step 2: Bookkeeper can input all accounts receivable for each property into Quickbooks.

Step 3: Send tenants a monthly statement for their rent (e-mail or physical mail) – it can show the current amount they owe plus any late fees if applicable

Step 4: With no exceptions, decide to whom and to what address the rent checks should be sent to

Send out a notice to all tenants on brightly colored paper that stands out to announce the new
standard operating procedure of where to send their checks. Give about 45-60 days notice for the change to become effective.

Step 5: One person collects ALL rents EVERY TIIME

Step 6: One person deposits ALL rents and communications with bookkeeper about which rents were received and deposited EVERYTIME

Step 7: Bookkeeper processes through QuickBooks and adjusts accounts receivable as rents are collected and deposited

Step 8: Bookkeeper balances QuickBooks on the 15th of each month and sends a quick email or text to business owner (Phil) to let them know who is past due

Step 9: Administrative assistant makes collection calls to tenants with past-due rents

Step 10: Bookkeeper sends business owner report of past-due rents on 30th of each month

*If a tenant is still delinquent by the 10th of the month, follow the next 7 steps:

Step 11: Issue a 3 day eviction notice

Your bookkeeper should alert your attorney of who is still past due about the 10th of the month, keeping the business owner out of the process. Once the notices are drafted, your administrative assistant should go leave notices on each tenant’s door.

Step 12: If still no payment after 3 day notice, file 30 day eviction notice

Step 13: Eviction notice to court date is about 14 days

Step 14: From court date to actual eviction is about 2 weeks

Step 15: If tenant still has not moved 5 days after final eviction notice, clean out property and put their belongings on the curb

Step 16: Maintenance crew cleans up property – fresh paint, carpet cleaning, etc.

Step 17: Market property and re-rent to a new tenant

If/Then Sequences

Within a system, you need to create “If/Then” sequences. These mean that if this happens, then this happens as a result.

Part of the reason why many people DON’T create systems is because IT’S HARD. You have to sit down and think through a step by step process and sometimes, just winging it every day seems easier. BUT, if you take the time to create the systems, you become free from your business.

Homework

Your homework from this is to sit down tonight and put together a few of the systems that you need to create to help automate and streamline your business. Then start thinking of the processes you will need to put these systems into place.

If you’d like to see exactly how we create these systems and all the execution plans we’ve created watch this training video and see how we’ve DONE IT FOR YOU. 

Trust me, you will thank me in the future when you see how much time and money you can save by implementing simple processes like this into your business.

Be Daring,

Josh

CEO Strategic Real Estate Coach

CEO Freeland Ventures and Freeland Lending

CEO Yellow Jacket Properties

SREC Facebook

SREC Twitter

Josh Cantwell Twitter

LinkedIn

Instagram

Strategic Real Estate Coach

YouTube

iTunes

Stitcher

 

Leave a Reply

Your email address will not be published. Required fields are marked *