There are hundreds of quotes and analogies about the value of small things. Whether you are talking about how small daily habits can lead to paths of success or even how small things in your real estate career can impact your company’s success. Small things, especially in business, often provide instrumental benefits. Yet, these same small things seem to be often overlooked as well. Why is that the case? Is it pure laziness or is it distractions from the other day to day activities? Do we, specifically as real estate professionals or investors, get too caught up in the bigger picture? While the end vision remains essential, the small pieces influence how business and relationships are shaped. As a real estate professional, whether you are a well-established multifamily investor or a contractor just starting your own business, the minor actions are usually what differentiates you from the next person. If you interviewed ten different entrepreneurs, each one would most likely have a different answer on what small thing has the largest impact on their day to day performance. Let’s uncover some of our teams key “small things” that provide immeasurable value.
Preventative Maintenance Program:
Have you ever found the best flip opportunity in the neighborhood or a rental unit that is a cash flowing machine? Those opportunities are out there and how exciting do those make you after you close on them?! But…. 6 months later you find yourself far exceeding your repair budget and every week a new maintenance problem pops up. One week it is a gutter that needs fixed and the next week the furnace seems to not want to work. A preventative maintenance program won’t eliminate all your home mishaps, but a consistent program will allow you to scale your business and create efficient systems while saving costs in the long run. It may be a checklist on your CRM program or a simple step by step process you do during walkthroughs of the property, but a preventative maintenance program can save you from more headaches than you might believe. It will not just save you money in your pocket, it could potentially lead to better occupancy rates, improved tenant relations, and avoiding major repairs in the future. Would you rather spend $50 per year on replacing furnace filters every quarter or spend $6,000 on replacing a furnace that had a shortened lifespan because there was no preventative maintenance?
According to Your Money: the Missing Manual, for every dollar you spend on preventative maintenance around the home, you save approximately $100 in future repairs.
Still not listening? MicroMain Research showed that yearly preventative maintenance results in an estimated 545% return on investment….
This may seem like an obvious element for a real estate professional to have, but some seem to lose track of it. Not only does measuring your current portfolio or business allow for better understanding of your success, having a quality process to analyze deals is crucial. Your deal analysis may consist of an Excel Sheet that is a 5 step process to saying “Yes” or “No” on buying your next rental property or you may have created a comparable system that lets you know of deals that fit your certain criteria. There is not a certain amount of steps or certain process that beats the rest, it first starts with you knowing the deals you want and the market that they are in. You may be the entrepreneur that creates the analysis sheet yourself or you can find plenty of five-star valuation sites that focus on the information in the deal that you deem important.
Do you strictly look at the cash flow or return on equity for a potential deal? Are you only saying “Yes” to a possible flip deal that requires less than 3 months of rehab and drives a certain amount of final profit? Every investor has common numbers that they analyze, but you may have different standards than the investor you are competing against in the deal. What has our team found contributes to a high quality deal analysis process? Speed and rapport. Instead of spending a whole day on looking through all of the information on a property or breaking down the location characteristics, you can trust your analysis sheet and market knowledge to beat our other investors in a shorter time. Speed then leads us to the next key of rapport and relationships. If you have a quick way to evaluate a property and then establish rapport with the seller or potential client that may be working on the deal with you, then that marks the point where deal finding becomes not only easier, but simpler.
“If you can’t describe what you are doing as a process, you don’t know what you are doing.”
-W. Edwards Deming
No matter the current state of your investment career or real estate company, processes matter. You may be an independent out of state entrepreneur that relies mainly on your own market knowledge and capital to run your investments. Or your local business has been in existence for over 30 years and has remained one of the biggest market leaders and a place where every real estate professional wants to work. It does NOT matter, the processes and operations of your business are what drive your team to work. We can put this into meaning with a real estate analogy. The processes of your business are the “bones” of a home, so the structural components and the foundation. The processes or “bones” of the home are not the flashy parts or the eye catchers that make a home appealing, but a good house must have good “bones.” Similarly, the processes are not what motivates your team to come to work everyday, but the team members would not be able to achieve their goals without daily processes. What happens if the property manager of your company decides to resign and there are no systems in place? Or we can go back to the small companies that are starting to scale or the entrepreneurs that have a 1 person team. Do you have processes/online systems that still find deals or provide ways to keep your sales pipeline going when you are on vacation? I am sure you have heard it before, but processes can often help you work smarter, not harder.
If you have any questions about this blog post, or you have any questions about real estate, don’t hesitate to reach out out via the chat on our website.