This chapter will apply the systems you created towards managing your real estate effectively. Two critical ideas will follow: flawed systems = flawed results and cash flow is king.
Cash Flow is King
The first priority when managing real estate is cash flow. The way you manage that cash flow is by hitting your budget. If you can’t budget well, you’ll fail. Guaranteed.
Resident Satisfaction is Key
If the residents aren’t happy, no one’s happy. You know you have a good relationship when residents are referring tenants to you. If that’s not happening, you need to find out why.
Whether it’s a single family rental to a 300 unit mobile home park, nothing will kill your investment faster than vacancy. Resident satisfaction, charging market rates, and hitting your budget will ensure vacancy is low and returns are high.
Who are these principles of management applicable to?
While my advice here about systems is applicable to basically any type of real estate manager, it's especially important for those managing residential real estate, which includes mobile home parks, single family residences, and apartments.
Also, if you’re Why use systems for managing real estate? The bottom line is this: do it to multiply your efforts. I ask startup managers, “Do you want to be limited to only 20 units?” That’s what you’ll be limited to as a one-man band without using systems. All one person can really manage is about 20 units—that’s if you’re knocking it out of the park. If you use systems, though, you could manage unlimited units. Systems leverage your efforts and multiply your work because you're replicating everything you do.
Which systems should I use for real estate management?
Okay, managing real estate with systems is important—got that. But which systems might one use?
Side note: For us at Serene, everything has a system. We document them in Evernote (just like we do for every static document we make). Evernote makes it easy for you to share these systems (and update them when needed!).
Your work as a manager is mostly about managing relationships. In order to scale, then, you need to have systems for managing relationships. I’ve categorized the primary relationships into five buckets.
- Employees relationships
- Resident relationships
- Vendor relationships
- Owner relationships
- Governing body relationships
(Management is not only about relationships, but about money, too. That’s why you need systems administrative tasks that affect cash flow as well—accounting and marketing systems.)
We’ll take each of these relationships one by one, but first assess how you’re doing with managing the various relationships and cash flow tasks for which you’re responsible.
What systems do you have for managing resident relationships, for example? Consider the following for resident relationships.
- Dealing with issues that come up in management
- Regular communication
- Responding to phone calls
- Sending emails
- Sending out notices
What about your accounting? Do you have an easy and replicable system for your property cash flow and budget?
What about systems for managing governing bodies, those who regulate properties you manage? Think in terms of systems for relating to regulatory bodies like the department of health, the state department, and the county authorities for zoning requirements, building laws, and other regulations.
Then, there’s your team—coordinating your own staffing, administering payroll, and regulating best practices to promote your company culture.
Of course, you also need systems for marketing properties that you sell and lease, as well. But we’ll get into that in the latter chapters.
Starting to catch on to the importance of systems? Systems are the vital lifeblood of your growing business. Now let’s get into the weeds of creating specific systems for managing your properties.
Side note: Task Management // I recommend using a tool like Asana to manage the following systems. As mentioned in Part 1 Asana is a task management application that helps you stay on target with your team. It's a way to list, schedule, and track specific tasks associated with your business. There's other tools out there, but this is the simplest one I've found on the market. Use this tool to manage all the tasks on your team.