4 Must Have Business Systems for Real Estate Investors

I’ve cried over piles of paper. Probably more than once but there is one time that stands out in my mind. I had an entire year of data entry / bookkeeping in front of me for a dozen or so properties. I used to do it monthly but that particular year I’d let it slide and so had my husband Dave.

Once we missed a few months, the task seemed so much more daunting the next month so we ignored it again.

Before we knew it, over 12 months had passed. It was tax time and we couldn’t put it off any longer. It was just paper – we knew it wouldn’t kill us – but it was awful and sometimes we felt like we were being buried alive.

After that debacle we agreed that we would revise our business processes so we were never faced with that again. We also agreed there were other areas of our business that needed attention too. Chaos was costing us money, wasting our time and making us miserable.

Part of the process involved switching to a more qualified accountant (we’d been using Dave’s family small business accountant but when we added rent to own it became clear we needed a real estate investing specialist), hiring a bookkeeper and then once I was full time, focusing on every area where we could make more money and reduce expenses.

Some investors get far more sophisticated with their systems and processes. They buy software, create elaborate check lists and hire virtual assistants. You can do that and for some it’s the right thing – but we tend to lean to the simpler and often easier to control options. It does depend on your personality and what you want to spend time and money on … but for us this is working and some of these ideas just might help you too – whether you’re going full time or not.

Our 4 Must Have Business Systems for Real Estate Investors

1. Simple but effective filing system

We used to use a binder per property but found that over the years the binder started to burst. Files are simpler and easier to manage. We have an “inbox” where all mail and documents sit until they’ve been processed (scanned so our bookkeeper can enter them in). Then we have 4 file folders for each property:

  1. Legal Documents (purchase agreement, mortgage docs)
  2. Tenants (their application, lease and any communications)
  3. Important docs like warranties and insurance
  4. Income, expenses & receipts (bank statements, repairs).

At the end of each year the expense file is labeled with the year and property address and put away into our “if we are ever audited” tax box for that year. Every tenant turnover results in the creation of a new file and the filing away of that tenant file. Every document is scanned and stored online as well.

Storing the documents online and creating a “virtual office” has been a huge help to us. No matter where in the world we are, as long as we have our iPad and internet connection, we can handle anything. There are so many options now from clouds to Dropbox to back up services to store your files online– it just depends on the security features and access needs you have.

2. Hiring Help & Bringing Property Management in House

The decision to bring most of our property management in house came as the solution to two major problems.

As we started buying properties more aggressively (going from buying 2-5 per year to 10 – 12 per year) we found ourselves drowning in paper. We had a good filing system by then but it required us to actually spend time filing.

That was part one of the issue. Part two was that the more time we spent evaluating the performance of our properties and the property managers – the more areas we identified for improvement. From ads placed in the wrong places or not at all, to pictures that would scare away good tenants, to missed maintenance work– we found all kinds of opportunities to do a better job managing our properties ourselves.

The problem was we didn’t want to take all the tenant calls.

We decided to take back control of most of our properties and then hire someone into our business to help us.

The math worked. We were paying most of our property managers 10% of monthly rent plus half a month’s or a full month’s rent to fill vacancies. If we no longer used a property manager that money could be used to pay a staff member – someone that could help us with property management, handle the filing problem and take over the basic bookkeeping tasks.

This has been the single most important change to our business and while it’s not always ideal to be self managing so many of our own properties – with help and simple systems – we are able to go away and not worry about what is happening with our tenants in our absence. We also do not have any stress at tax time because everything is organized, entered into Quickbooks and ready to ship to the accountant. And if something is missing it’s not us that has to track down the document!

Maybe hiring a full time person to help you isn’t going to work for your business (and quite likely it’s unnecessary) but most investors can definitely benefit from hiring a bookkeeper – and you’ll probably be surprised at how affordable it is to have someone come in once a month or once a quarter to help you get control of the paper monster! Your time is worth money and so is your sanity.

3. A Fantastic Real Estate Investing Team

To be able to do a large volume of deals requires a strong team. Even having a smaller portfolio of properties requires a strong team. Key members of our team today are:

• Great tradespeople
• Realtor
• Property manager (while we self-manage many of our properties we do need some help with a few of them!)
• Accountant
• Lawyer and a notary
• Our office manager / assistant
• Broker and/or banker
• Home inspector
• Insurance Broker.

I chuckle at the training programs out there that basically say things like “first, you build your team.” 11 years into it, we’re still building our team. We had a reliable electrician and then he moved to Afghanistan. We had to start over. We went through seven realtors to finally find one that gave us the information we needed, returned our calls quickly, worked hard and was fun. We worked with her for a couple of years and then she became a flight attendant for West Jet. We had to start over again.

Without the right advice or the right person you’ll over pay for work, make mistakes and possibly even get into bigger issues like legal challenges. I’d much rather spend $500 on the right advice than try to do it cheap or for free and take unnecessary risks.

Here are three things to keep in mind when you are looking for a new team member:

  1. Find someone that is recommended – ideally from more than one person
  2. Create a database (we just use an Excel spreadsheet) that notes how you found out about them, what properties you worked with them on, what they charge and what type of payment they will accept (some are ok with credit card but many want cheques – you’ll often want to know this).
  3. Work on getting back ups for trades, insurance and brokers/banks. Sometimes your favourite is busy or the job is bigger and you need quotes. You need to have options so you don’t scramble in the heat of the moment and work with someone that isn’t one of your top choices.

4. Making Real Estate Marketing Magic with Marketing Systems

How many times do you start from scratch when you have to write an ad? Or worse, how many times do you just go onto Kijiji and copy some other poorly created ad to place an ad for a tenant or find a deal?

We used to be badly organized with our photos and ads so we’d always have to recreate them every time. It slows things down and often something that worked well in the past will work well again so it’s better to just use it again and again until it doesn’t work.

Have a marketing file for each property on your computer where you store GOOD pictures (free from tenants junk, clean and with good lighting), ads that worked and any of the property details you’ll need when you advertise it (size, features, heating type, rough utility cost if applicable). Keep a scanned copy of the MLS listing if you bought a listed property. The details on the listing sheet will come in handy for years to come!

I have noted 3 other marketing systems for real estate investors on our blog. Check it out and share YOUR MUST HAVE system for real estate investing.

We could have made things easier on ourselves from the beginning by implementing simple systems but the reality is that it’s so easy to not make it a priority.

I’ve also seen investors go the other way and be system crazy when they don’t need to be.

For most real estate investors, I think a balance between outsourcing as many of the tasks you despise while ensuring you can still control the process and the costs will be the best solution. And really the best way to figure out what you will and won’t put up with it is to start simple and add more systems as you go and grow. It makes sense for us to have an employee in our office now but we have a sizeable portfolio and are adding around 10 new homes a year. That won’t make sense for most investors but many could use a part time bookkeeper, a great filing system and some spreadsheets to track their team members.

Whatever you choose to implement make sure it’s helping you and may you never have to feel like you’re being buried alive by the paper.

10 Reasons Real Estate Investors Underperform

Confessions of a Real Estate EntrepreneurAlright, I confess, this wasn’t my original idea. I actually stole the idea from one of my real estate mentors, Jim Randel. Jim is author of one of the best real estate books out there Confessions of a Real Estate Entrepreneur. He is also writer and creator of the Skinny On series of books. These books can be read in less than 2 hours and are full of fun stick people sketches and easy to understand concepts but they pack a punch full of information.

I read Jim’s weekly newsletters and a recent one was about “10 Reasons (Some) Entrepreneurs Underperform”. It got me thinking about the reasons real estate investors underperform.

Now, this is not a scientific study. I did not go out and survey 5,000 real estate investors and determine who were successful and who were not and then look at the characteristics that shape their success (or lack thereof). This is based on years of investing ourselves and what we have learned from other successful real estate investors.

If you lack these traits (or characteristics), there is a good chance you will underperform as a real estate investor. You don’t have to have ALL of these, but the more you have, the more likely you will be highly successful.

So, without further adieu, here are my 10 + 1 Reasons Why (some) REI’s Underperform.

1.Passion – I feel strongly that if you have passion, real passion about real estate (and investing in it), you will perform better than if you don’t. We know quite a few investors that are not passionate about real estate that have been successful but they feel worn out and want to leave the business. The only reason they don’t leave is because it’s making them money … but they aren’t having fun and they aren’t making as much money as they would (I think) if they were passionate about it. Besides, why spend so much time, energy, focus, and money on something you don’t love? Life is too short!

Real estate investors need mental strength2.Mental strength– There are so many times where you may want to just give up because you’re doing so much heavy lifting mentally. Challenges like insurance issues, and property financing troubles, and tenant challenges are part of the business of real estate investing – be strong and you’ll do well. And by the way – the more physically fit you are – the better you’ll perform mentally. That’s a fact that has been proven by scientific study.


3.Belief– No one, and I mean no one will (or should) believe in you as much as you do. If you don’t really believe that you can be a successful real estate investor, then you may as well stop trying. There will be times when it seems like you are the only one that believes in what you’re trying to do so you have to be there for yourself! You should also surround yourself with folks that believe in and support you … but that’s a different point.

4.Guts– You have to be willing to go the opposite direction from the rest of the people you know. You have to be able to make your own decisions and have the guts to take action on them. This is not an easy thing to do especially when you first start out. And, to continue and advance as an investor you will still need guts to try new real estate strategies and techniques. In fact, we are working on several creative techniques right now and believe me, my guts are rumbling and churning as I push myself to get’r done. The more guts you have, likely the better you’ll perform.

5.Integrity– Sadly, I have met many folks who have become successful without integrity but I believe that their success is likely only financial. I am confident they don’t have the relationships nor the personal satisfaction that comes with doing business with integrity.  Doing business in a way that treats everyone with respect in turn makes you easier to respect and like … and makes it easier to attract the folks that will help you grow your business.

6.Focus– This is probably the most underrated trait or action for becoming successful. If you lack focus, it is still possible to become successful. Heck, over the years I have had trouble staying focused but I have still performed fairly well in the REI game. But, my lack of focus has certainly played an important role in keeping me from reaching my full potential. And, the best part about focus, along with most of these other traits is you can learn it/them! In fact, Julie’s been helping me to re-train myself to become (and stay) more focused! I am getting better all the time (at being focused) and our achievements are moving in sync with our focus.

Communication is a key to success as a real estate investor7.Communication– If you dislike talking to people, emailing, or just all around don’t communicate well with others, good luck performing and being successful with real estate. You have to communicate constantly with realtors, mortgage brokers, banks, accountants, lawyers, vendors, buyers, tenants, appraisers, inspectors, contractors, the list goes on and on. If you aren’t at least somewhat effective at not only getting your point across but also being a good listener and understanding others, forget about being in the REI game.


8.Hustle– Lining up your joint venture partners, obtaining financing, managing all the appraisers, inspectors, realtors, placing and showing tenants the property all require a large amount of hustle. Sure, you don’t need to hustle 365 days a year to perform well, but you sure better be able to hustle every time a deal starts to come together!

9.Commitment– Are you committed? Really committed to being an amazing investor? Are you making it a priority everyday that you do something that will move you towards your goal of being a real estate millionaire? Now, you don’t have to do something everyday, but your level of commitment is directly related to becoming better, stronger, faster, smarter, and wealthier. No commitment = Little to no payoff.

MOMAR Adventure Race - Persistence pays off10.Persistent– In my humble opinion, this is absolutely the most critical reason why some real estate investors underperform. If you want to succeed in this business, you HAVE to be persistent. You will find the best deals by continuously following up on opportunities. You will secure the best financing by continuously trying to find a better option. If your partner backs out at the last minute you have to pick up that phone again and again until you find a new partner. Keep trying, keep pushing, keep being persistent. Do not give up.

Support/Network– this is my +1 (of the 10 + 1) reason or trait that is why some real estate investors underperform. I call it +1 because it’s not necessarily within you….it’s those around you. All of the 10 traits I mentioned are part of who you are or who you need to be, but this is those around you. I have yet to find 1 successful real estate investor that doesn’t have a good support group or network around them. This goes beyond your realtors, brokers, insurance agents, accountants, etc. This is the someone or some people who are there when you need them most. They give you that “push” or helping hand when your persistence, hustle, and guts are on empty. This could be a spouse, friend, investing partner, business partner, parent, child, or even mentor. This is one of the reasons we always suggest investors join real estate investing clubs or start investing with a like-minded individual. You will not only learn a great deal from that support person, but you can also look to them for help or guidance when you struggle.

Sure, there are likely several more traits that you need to have to rise to the top of the real estate investing pile, but if you have most (or all) of the above, you should become a successful real estate investor.

“So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.”

~ Lee Iacocca

Published on January 31st, 2010

7 Habits of Highly Effective Real Estate Investors

Recently my friend Mike wrote me and said “I reread the 7 Habits of Highly Effective People over the weekend. It won’t be the last time I read that book this year”. It’s pretty rare he comments on a book so I pulled it out and gave it another viewing. My 1989 copy is so old the pages are yellowing and the text is faded. I guess you could say it was like buried treasure in my book shelf.

As I flipped through it and soaked in some of the long forgotten golden nuggets the book contains, I pondered what the seven habits of a highly effective real estate investor would be. It occurs to me that none of the habits of a real estate investor are particularly extraordinary. In other words – anyone could be a highly effective real estate investor if they wanted to be. Of course, this is only my opinion, and without scientific study. But check out my thoughts and feel free to send me yours.

Habit One: Know Your Goals
If you do not change direction, you may end up where you are heading.” – Lao Tzu

Most of the real estate investors I know set out with a goal. One of my MBA alumni started off simply by selling his home to buy two lots side by side and built an 8 unit townhouse complex. He has turned that project into a company that sells and builds hundreds of homes in Toronto every year. Some goals are simple, but lead to big things. Other goals are big and have to be broken down into simpler shorter term goals.

Your goal does not have to be big (although I like to start with my five year goal and make smaller goals for each year to help me get to my five year goal). But I think that if you do not have any idea of what you want to achieve then your first step is going to be difficult to determine. And, you can’t just say I want to be rich. A goal by my definition has to be as specific as possible, measurable and with a time frame.

Habit Two: Make Your Money when you Buy
Price is what you pay. Value is what you get.” – Warren Buffett

It’s very risky to pay over market value for a property in the hopes that the rent will go up, the area will improve, and/or the property’s value will increase. This is an entire article unto itself, but essentially you want to buy a desirable property below market value, in an area with a lot of potential for future growth. Really, it’s not unlike beginning with the end in mind. Envision yourself trying to sell that property and what, if any, problems you may encounter when you try to sell (e.g., is it such a unique property you’ll have a limited buyer pool or is it in a “challenged” location that may never improve, which will severely impact your ability to sell). If there is something that concerns you when you’re buying it, then unless you can easily fix that problem, it’s something that will likely concern the next purchaser.

Habit Three: Hire Help
Unless you want to buy yourself a job when you buy a property, hire a property manager. Unless you are an accountant, hire one to help you with taxes and bookkeeping for your properties. And, in most cases, we also recommend you hire a real estate agent. Just take some time to find one that will work with you to achieve your goals.

I always tell Dave that we should only be doing the things that are the highest and best use of our time or the things we really enjoy. We should hire someone else to do everything else. Of course, when I say this I am also advocating we hire someone to paint or clean our own house. These are both things that I loathe doing and feel someone else can do better and for less cost than my time is worth. Dave takes a different stance on things – why pay someone else to do what we can do for free. But, as we find ourselves with less and less time he is starting to realize he can’t do everything and there are professionals out there that can do the job better and faster than he can. So, even “do-it-myself” Dave is finally paying the experts to do what they do best so he can focus on what he does best!

Habit Four: Use Just the Right Amount of Leverage
A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope

Every single money-making real estate investor that I have met has made money in real estate, in a big part, due to the ability to use leverage. Even the richest people will eventually run out of cash if they keep buying property. Leverage allows you to use a small portion of your own money to buy a property. The less money you put in the higher your potential return on investment. In really simple terms, if you put in $10,000 on a $100,000 property and earn $5,000 in a year your return on investment is 50%. If you had paid cash for that $100,000 property your return would only be 5%. Too much leverage equates to too much risk though, so find a balance. If you buy a $100,000 property and only put in $2,000 of your own money and the market value of that property drops to $90,000 you now owe more on that property than it’s worth.

Habit Five: Find Good Partners
Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain

I love the success stories where someone with nothing but big dreams and a lot of initiative ties up one or more properties with contracts. They had little to no money, so while they had the properties under contract, they went out and found people who did. I am not going to name names here, but maybe one day I will introduce our readers to at least one of the three guys I personally know of with a story like this. But the bottom line is that it’s tough to make your millions in real estate if you aren’t willing to partner with others. Your partner might be a family member, a friend, a colleague, a company or someone you haven’t met yet. Dave has partnered with friends, family, and myself to help us build a nice real estate portfolio in only a few short years.

Habit Six: Be persistent
Genius is one percent inspiration and ninety-nine percent perspiration.” -Thomas Edison

The other characteristic of the three guys I’ve mentioned above, and every other investor I have ever met is being persistent. You will hear “no” a lot. Get ready to face the objections and find creative solutions. In our experience we’ve been turned down by:

  • Potential partners not wanting to get involved in a deal we’ve invited them into,
  • The banks – on just about every deal we had trouble getting financing and had to deal with multiple lending issues,
  • Family – sometimes we try the bank of parents and we almost always get rejected but we still try because the interest rates are so favourable,
  • Insurance companies – so few companies want to deal with out of province landlords and it seems like we’ve been turned down by nearly every company in Ontario where some of our properties are located (we’re in B.C.),
  • Property Managers – sometimes the company you want to work for you doesn’t want to manage the property you own.

And even though we have been turned down by all of the above at one time or another, we keep pushing ahead to reach our goals. Don’t let the “naysayers” stop you.

Habit Seven: Research – Always be learning
I am always ready to learn although I do not always like being taught.” -Winston Churchill

The best investors are the ones that ask a lot of questions, keep their eyes open for new opportunities and do a lot of research. Many get right into the details of a city. They go to the municipal offices and pull the official plan. They get zoning details and applications. They talk to the city councilors about plans, they attend city council meetings and know everything that is happening in an area. Besides the above, many of the really successful investors will always be learning about:

  • Local transportation plans,
  • New economic forces that will impact their investment area,
  • Changes to political leaders that will impact the real estate values (if you don’t believe this is a critical one ask just about any investor in Toronto that owned land around the legislated Greenbelt),
  • House values,
  • Land values,
  • Listings to sales ratios for an area (shows sales pace and amount of supply in a market),
  • Latest demographic and economic trends for an area, and more.

Not every good investor I know possesses every one of these habits. And I know there are habits that many good investors have that I haven’t covered. But as I thought about the most effective and successful investors that I have met or read about, I realized that almost all of them did possess each of the above habits. And, that anyone could really do what they did if they set out to establish these habits and practices in their real estate investing.


If you’re like me, now you’re trying to remember Stephen Covey’s 7 Habits. Just in case you can’t remember Covey’s seven habits, here is a very brief summary to refresh your memory:

  1. Be Proactive: There are things we can control and things we cannot. Focus positively on the things you can control and worry less about the things you can’t.
  2. Begin with the End in Mind: Envision your funeral – what do you want people to say about you. Now, think about what you have to do to be that person. From there, develop a personal mission statement that encompasses your values and your vision of yourself.
  3. Put First Things First: Focus on the important tasks. Don’t spend time on not important and not urgent tasks; try to delegate urgent but not important tasks.
  4. Think win/win: It’s not your way or my way, it’s a better way. There is plenty out there for everybody – the abundance mentality versus the scarcity mentality.
  5. Seek first to understand, then to be understood: Seeking to understand takes consideration but seeking to be understood takes courage.
  6. Synergize : Finding that solution that is likely different than any other solution pursued because you’ve understood and been understood and you’ve sought out win/win scenarios. It’s the old saying of one plus one equals three.
  7. Sharpen the Saw: Practice in a balanced way. Covey talks about the four dimensions of renewal which are essentially physical well being, mental well being, emotional health, and spiritual strength. Maintaining balance in these areas keeps your saw sharp and ready to act and work on the other habits.

Published on June 18, 2008

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