by | 03, Aug 2022

6 Systems You Need When Investing In Real Estate!

Say you want to be an active operator in real estate investing… wouldn’t it be great if you had all of the knowledge and systems in place beforehand?! So that when you do kick off your career, you can hit the ground running?!

Well, who better to give you those systems than Dan and Anthony!

Should you be auditing your budget for dried mangos?

Find out on this week’s episode of Multifamily Investing Made Simple.

LEAVE A REVIEW if you liked this episode!!

Tweetable Quotes:

“If you’re not actually like sitting down and having a process for actively looking at things and asking the question, you can miss it.” -Anthony Vicino

“When you’re meeting with people, don’t be a dick and do it on your phone.” – Dan Krueger

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The Five Rules of Investing

** Transcripts

6 systems

[00:00:00] Anthony: Hello, and welcome to multifamily investing made simple. This is the podcast where we take the complexity out of real estate investing so that you can take action to date on your host, Anthony of Invictus capital joined by the one, the only Dan. It’s Friday

[00:00:29] Dan: Kruger. We’ll be it is Friday. I I’m sorry.

Bring a weird end of

[00:00:37] Anthony: week energy, right?

[00:00:38] Dan: There’s a weird end of week energy. It’s it’s it’s it’s the baby voice that just pops up sometimes, but you spend

[00:00:44] Anthony: probably more time with a non-verbal she’s verbal now. Oh, is she? Oof. Is she talking? Yeah, she’s saying things or just, yeah, saying.

[00:00:54] Dan: silence. I mean, no, it’s they’re words.

They’re not like full sentences. Okay. But she’s, [00:01:00] you know, communicating quite well. Yes, no outside food more drink. She has actually a decent amount of sign language. It’s crazy. She’ll pick up this little sign language book, and then start doing all the things like drink and more. And for those of you not on YouTube, like I’m actually doing really bad’s doing sign language, sign

[00:01:17] Anthony: language.

Yeah. She, so Coco speaks better sign language. She, when she, when she’s like stringing these together, do you have to go to the baby, like hand the book and be like, what is she saying? I know

[00:01:27] Dan: that like two or three that matter. Oh, okay. But yeah, she’s,

[00:01:31] Anthony: she’s getting good more, I don’t know any, honestly. So she, you only need like three.

Yeah. Um, how, how are you feeling? How are you feeling today?

[00:01:39] Dan: Feeling pretty good last week? It was a busy week. It was a busy

[00:01:42] Anthony: months, month busy quarter. busy year.

[00:01:46] Dan: Yeah. We’re busy. It’s one of those, but we like it. I would rather be busy

[00:01:49] Anthony: than bored. One of the, one of the things. Uh, that makes it when you’re really busy in a business or investing in real estate is what will make it less busy is have really good [00:02:00] systems, really good processes.

And, uh, I’m actually hog wash. Um, I, I, I’m excited to talk about today’s episode. What we’re gonna dive into is six, six systems that you don’t realize you need when you first start investing in real estate. That’s a really tongue, tongue twister, tongue twister title, but really we’re just gonna share some systems, share some insights as to like, what are.

What are the things, uh, if you guys are, if you guys are watching on YouTube, just know, read, he’s not here right now. So we’re unsupervised. Yeah. We’re unsupervised in the podcast studio. And so I highly encourage you to go to YouTube, to multifamily investing made simple. So you can watch us because when, when, when daddy’s away, the children will play.

Uh, I have the remote right now for all the cameras. You have all the cameras I can, I can change us at will. Um, but that also means they’re gonna change us at. And it’s gonna be very hectic, but it’s gonna go off the podcast podcast. This means nothing to you. Um, but anyways, we’re gonna talk about some systems that when you’re first starting out, whether, uh, we’re taking this through the [00:03:00] lens more for, if you wanna be an active operator, uh, what systems that you need to have in place or to be thinking about.

Uh, but some of these are actually really helpful, even if you’re a passive investor for at least on my list, because my list, we, I haven’t looked at yours yet, but, um, before we came into the studio, We were having a bit of a contest to decide who’s gonna have the best I, but these are better than yours because, because these are universal.

Mm mm-hmm okay. What do you got before, before we came in here? You said yours were gonna be profound right in

[00:03:33] Dan: spectacular. Well, no, I started profound. Yeah, no, no. You, and then I, I, I back pedaled a bit and said spectacular. How is spectacular? A back pedal? I mean, profound is profound. I mean, that’s, that’s more than spectacular, but

[00:03:46] Anthony: spectacular is spectacular.

It is. But I

[00:03:48] Dan: feel like it’s not better. I don’t know which one’s better now. I feel

[00:03:51] Anthony: like profounds better. I’m on the I’m on the spectacular train. Okay. So listeners, we need you to break the tie. This is the problem with having a two person podcast is, uh, per me tie these [00:04:00] deadlocks all the time. So go, uh, leave a review for the podcast or go listen on, uh, YouTube and, and leave a comment.

Let us know which is better profound or spectacular. And then. Um, send that review, send that comment and then come back at the end of this episode and then leave another comment and say, yeah, that was profound. Or that was not profound. let us know. So that’s a lot, there’s a lot of steps. Yeah. Uh, you guys got your homework, but I, nobody said listening to podcast was easy.

[00:04:30] Dan: there’s a lot of homework

[00:04:32] Anthony: you signed up for the hard, hard road. Uh, but before we do all this, let me just put my list over here so that you can’t look over ’em. Um, how would you tell us your, your. Your bad investing advice for this week. And I think, is it the one that we talked about earlier?

[00:04:45] Dan: I, or is it a different one?

Don’t know. What did we talk about? Uh, well, I just, I’ll just I’ll wait with bait breath. Mind me afterwards. Cause I don’t remember what we talked about

[00:04:52] Anthony: earlier. I’m about to bait my breath. So you gotta go fast, ready and go.

[00:04:57] Dan: Okay. I have an announcement [00:05:00] for everybody. The recession has been canceled. We’re all good.

According to the white house, it’s it’s not happening. We don’t actually have a recession. I didn’t make it very far. I know. We’ll keep going. So we’re good. According to the white house, recession is not actually recession. It’s not actually happening. Don’t worry about it. So that means it’s time to take all your capital, capital capital and go deploy it in risky assets because it’s all good.

Coast is clear. We’re all good. Yeah, we’re all good. So I don’t know if, uh, anyone’s really been paying much attention, uh, but within the last few days, I wanna say within this week, uh, the white house, um, puts something out that that’s effectively challenging. The concept about whether or not we’re in a recession, the definition, right.

And it’s a very crystal clear definition, two negative GDP quarters, uh, in succession to another. So one followed by the other equals recession. Very simple definition. Um, but this is one of those times, and this happens a lot where, um, The, uh, [00:06:00] there’s a lot of politics that get involved in kind of the investing world.

Right. And so it’s in, uh, the current administration’s best interest to try to paint as RO have a picture of as possible about, about what’s going on right now, because they’ve got midterm elections coming up. Uh, but if you are an investor and you’re looking, uh, with what to do with your capital, uh, Don.

Listen to what they’re saying about that. Okay. It, we are in a recession. It might be a mild one. Hope it is. It might not be a mild one. We don’t know, but don’t get caught up in, in all the, the noise that’s out there with any kind of political headlines that are flying around. Uh, we are in a recession. And if you read these types of articles, don’t go out and change your investing thesis, just because you saw some, uh, some rosy speech that, that Biden put up because, you know, he wants to try to make it looks like things are, are going pretty well.

Uh, as we go into the elections here. So. So it is happening. It’s a very simple definition of what, uh, equates to recession two negative GDP quarters, uh, one after the other. And, uh, that’s [00:07:00] not gonna change anytime soon. Like I said, hopefully it’s gonna be mild. Uh, but this isn’t the all clear to go back to how you were investing back in 2019, right?

We’re still in a much different paradigm. Growth is gonna be much more difficult. So the stuff that was working, um, basically for like the last decade, uh, probably isn’t gonna work quite as well for at least the next quarter or two, if. Three quarters. So don’t really know how long this is all gonna take to play out.

But, uh, ignore those types of headlines. Nothing’s really changed in the past couple weeks, other than some politicians kind of panicking before their, uh, their midterms here. Cause they wanna

[00:07:29] Anthony: keep their jobs. Yeah. It’s all about moving the goal posts and trying to put a spin on things. I think a couple weeks ago we did a podcast episode where I broke the internet.

Like I, I made some. Intentionally, um, is this where you were like

[00:07:41] Dan: badmouthing, Texas? This

[00:07:43] Anthony: probably that, that was also one. That was also one that was a people love that post on Facebook, by the way, if, uh, where I said that the unpopular opinion, uh, Minnesota is better than Texas. And, uh, I stand by that, but no, no, no.

I had a different inflammatory test. Cause I’m like, it gets, if you’re not on social [00:08:00] media to like get people riled up, I’m like, what’s the point? Um, whereas intentionally. riling people up because we weren’t agreeing on the definition of some certain key terms like cash flow or equity appreciation. Oh, right.

Like that one. Right. And, and it reminds me of like, Hermo talks about this a lot. He’s like before you can have a reason discussion on anything, we have to first agree on definitions and terms and like what we are actually talking about. And I think it’s really easy to find yourself in, in complet. Stupid arguments.

And, and that will go nowhere simply because both sides have not taken the time to actually define the terms and agree to those terms. And until you do that, you can’t have a reason conversation. And it’s the same here where it’s like, well, recession, I don’t really care one way or the other doesn’t change my life dramatically, but it is interesting.

To take a, a definition that we’ve all historically agreed on and then try to shift it and say, oh, this thing that used to mean this no longer means that. And this is not just a Democrat Biden thing. Like this is across the board human nature. If you’ve ever [00:09:00] played a game. And then after the fact you ever had a bet with somebody.

And then after the fact when you lost, you were like, well, I didn’t really mean that this, this, and this and this, like you work your way backwards into some like convoluted mental gymnastics to, to land. In a 10 point stance to, uh, like, oh, I didn’t actually lose, this is how I was. Right. And you know, when you’re doing it usually.

Oh yeah.

[00:09:22] Dan: we all do it. We, we we’re all guilty, but don’t be fooled. Don’t be fooled. Yeah.

[00:09:27] Anthony: Yeah. I mean, but also the other thing too is headline reading is just never the way to come by your investment thesis or your don’t ever invest off headlines. Yeah. So be more, a little bit thoughtful, more reasoned. And that’s why you’re listening to this podcast.

Um, Maybe. Okay. I don’t

[00:09:44] Dan: know. or they’re here for the amazing production value and camera work by us.

[00:09:50] Anthony: Look at this, look at this giving guys seizure. Okay. So, um, just speak of that. If you’re listening to this on podcast that you can’t see. Yeah. Um,

[00:09:57] Dan: cameras are going crazy. It’s usually much better. If you are [00:10:00] watching, when reads back, it’s gonna be professional again.

It’s got a little bit better

[00:10:02] Anthony: flow than I do. Okay. Let’s get to the meat here. Let’s get to the.

[00:10:06] Dan: What about the potatoes? Can we get those to

[00:10:07] Anthony: like, I am potatoes, no carbs right now. No, no fine. No carbon error get to the meat. Okay. So here, we’re gonna talk about six systems that you don’t realize that you need when you first start investing in real estate.

Damn. That’s a really bad title. Um, it’s a working title,

[00:10:21] Dan: hopefully by the time it’s posted.

[00:10:23] Anthony: Yeah. Hopefully though, the systems that we suggest to you are not as bad as the title. Um, hopefully they’re actually a little

[00:10:28] Dan: bit helpful. So system one have a copywriter on staff to do this.

[00:10:34] Anthony: not, no, not a bad idea.

Um, do you wanna kick it off or do you want me to kick it off? Who, who do, who wants to go first? Um,

[00:10:41] Dan: one not you first. Oh, I get to go first. Okay. Yeah. Set the tone.

[00:10:44] Anthony: Okay. So this one’s, um, this one’s both for the active and the passive investors. Ooh. Every, and it’s one that honestly it, until recently we ourselves didn’t really even have as [00:11:00] dialed in as we.

so that’s why I’m bringing this up is like when you’re first starting out, you probably don’t, you’re not thinking about this. So this one is a PFS and a schedule of real estate owned. Mm. So here’s the thing. If you don’t know what PFS is, that’s a personal financial statement. And when you’re going to banks and you’re doing, you’re like, Hey, gimme money for this thing.

They kind of wanna see, like this sheet that’s called the PFS or personal financial statement that shows all of your assets, all of your liabilities and your schedule of real estate owned and you give it to ’em and then they go, cool, you’re a credit worthy. You’re not, um, you’re what is, this is crazy.

You have nothing, basically a

[00:11:36] Dan: balance

[00:11:36] Anthony: sheet for a person for a human, and you’re gonna find yourself needing that pretty frequently. The, and so you’re gonna need that. That’s, that’s helpful having a system for tracking and updating that regularly, but the schedule of real estate. And maybe it’s us because we we’ve grown so much in the last couple of years and the amount of real estate that we’ve acquired.

And like, the more that you do, like the harder it gets to track it all. [00:12:00] But at a certain point, if you’re doing this thing, right, you’re gonna scale your portfolio and you’re gonna start to for forget things like, Hey, what was the interest rate on that loan? What bank was that with? When does it come to maturity?

When does like all. All the little things that when you’re doing the loan and you’re closing the pro the pro uh, property, you’re like it’s top of mind. It’s really nice just to have like a, a system for logging it and updating it so that you can look at any moment and be like, all right, that’s how much equity is in this building.

This is when the IO runs out. This is, um, such and such. Like there it’s actually really easy to find yourself getting behind that eight ball mm-hmm .

[00:12:37] Dan: Yeah. Yeah. I think it’s, um, uh, something that became. More obvious when you and I started working together, cuz when we just maintained our own PFSs independently, uh, that was one thing.

Um, but then, you know, we’d kind of get up to the point of. Going to the bank to get some debt. And then we’re also kind of scrambling like, oh, we haven’t, we haven’t updated this in months. [00:13:00] Yeah. A lot of things have changed and let’s make sure we we’re matching up on things here and be consistent. And so when you get, you know, two people, uh, that are sharing a portfolio, it gets a little bit more complex.

And then as that portfolio keeps growing, it’s, it’s a lot to, to keep up with. And then. Aside from that on the schedule of real estate owns, which is basically just a list of all the properties, all the mortgages, all the, all the stats on the debt and the properties. Um, you wanna stay on top of those things and they’re not trivial, like the maturity date, for example, you don’t want that to creep up on you.

Like, oh shoot. Oh yeah. I got a $5 million balloon payment next Monday. um, and I’ll make some phone calls

[00:13:36] Anthony: and I gotta keep track. Sounds ridiculous. But. That could happen. Yeah. Like I know people who, you know, if, whether in single families or in just doing like the small multifamilies you have like 10 of those suddenly keeping track of 10 loans is not insignificant.

No,

[00:13:50] Dan: 2030. I mean, it gets infinitely more complex. Yeah. So start the system early. Uh, I’d say we started fairly early compared to. You know, some of the older guys I’ve seen who are still [00:14:00] operating fairly

[00:14:00] Anthony: casually and, and for the passive investors, the corollary here is like, you, you need to be keeping track of your investments in these vehicles and, and in, in a way keeping track of similar information, right?

Like, oh, this deal was acquired here. This is when they were planning on exiting it. This is when they’re planning on refinancing it. Here are some of the debt terms. If you have that, that can be really helpful just for your own calculations on your own personal financial statement. Mm-hmm when, if you need that or just peace of mind to understand.

Well, how are these investments doing, cuz you, you could easily snowball, um, as a passive investor and get like 10, 15, uh, investments running concurrently. And it’s not like there’s just an app, like, um, Robin hood that you can just log into and be like, here’s how my portfolio’s doing. So you gotta kind of track it on your own and sure.

You can go into different operators, investor, portals, but it, I, I find that it’s. Our app fol, I’m not putting you guys on blast app fol, but it’s not the best for tracking your, your portfolio stats. So to [00:15:00] speak. We just lost our sponsor. Well, well, we had to get the sponsor first, so yeah, app folio. We’re still waiting for the check.

Yeah, they’re

[00:15:07] Dan: great. They’re great. On the property management side, on, on the investor, um, management side, which is actually a slightly different platform, it’s nowhere near as robust as property management. So if you’re listening, AppFolio, which I’m sure you. step it up.

[00:15:20] Anthony: You guys can do better. You got room for improvement up, but, but even so, regardless of what platform your operator’s using, imagine if you invest with us, we’re using AppFolio, you invest with somebody else.

They’re using cash flow portal, right. And, and somebody else is using invest next. And these guys using syndication pro you are gonna have to be the one that correlates all that, uh, or correlates all that into one spreadsheet, one place, one system for tracking so that you can see, like, how’s my portfolio actually.

Yeah,

[00:15:46] Dan: no, I agree. Um, what you got, what’s your, what’s your number one? Uh, I mean, I’m not going in really any order here, so this is not

[00:15:53] Anthony: the most profound necessarily. I mean, they’re all, but it could

[00:15:55] Dan: be, they’re all profound. Yeah. Let’s here. Um, and these are all the, the way I approach [00:16:00] this is I, I kind of picked out the things that, um, really were we’re we’re I.

More more true for me that, that just like you mentioned, with the personal financial statement schedule real estate own stuff, that’s somewhat fresh within the last few years that we’ve come to realize is incredibly important. Um, one I’ve got here is, uh, long term planning slash strategic development, uh, with the entire team.

So we’ve been incorporating the traction, the EOS framework at Invictus for. Decent amount of time. Yeah. Over a year now. Yeah. Over a year. And, uh, prior to that, I mean, when I got started in this business early on and I started hiring people, I, I didn’t really take the time to clearly define what, you know, the, I kinda had the next couple months figured out.

And I knew broad speaking, where I was kind of trying to go, which. Far and as quickly as possible, but it didn’t really dial it in and reverse engineer. Uh, like the [00:17:00] traction framework teaches you do, uh, starting with the 10 year going to your five year, your three year, your one year, and then your quarterlies and just kind of reverse engineering, all the things all the way down.

So number one would be, um, actually taking the time to do that on a reoccurring basis. And more importantly, incorporating your whole team, your whole company into that process with you. So that everybody’s bought in, this is something that’s become, um, I’ve realized now how important that is. And I did not, I really underestimated how important it was to get the entire team if you’re running a company, uh, to be involved in that process so that they’re bought in and they, they know where they’re, they’re trying to go because.

people aren’t mind readers. Right? So even if you, as an operator, an investor, you’ve done that kinda long term planning, uh, for yourself. That’s great. And until you really clearly articulate it to the team and continuously do that, they’re not really gonna. Understand exactly where they’re headed, which is gonna make it difficult to, to get [00:18:00] there.

Um, and then kind of related with that is you wanna have some strategic development in there for people so that they’re growing along with the company. Um, that’s really gonna get them bought in, really get them invested in the company and get them as close to kind of like an ownership mentality a as, as possible.

And that that’s something that’s, I I’ve come to appreciate more and more. Uh, the longer I’ve been in the business here, um, cuz traditionally I’m the type of guy who just kinda wants to work in a. Um, and so this kind of building of a, a team is, is, is newer to me. And, um, I kind of assumed, um, maybe not assumed, but unconsciously acted as if everybody kind of wanted to operate like me, which was everyone kind of goes off and does their own thing nine times outta 10, most people wanna be much more involved with the, the process and a teamwork format.

And so that was a bit of a learning curve for me, uh, hugely important system in my mind, um, to have that. Team planning and, uh, that team planning process [00:19:00] in your, in your business.

[00:19:01] Anthony: The, the interesting thing about aligning a team towards a common vision is you’ll end up as like the CEO, the, the, the visionary, let’s say the person who’s concocting the vision.

You’ll spend a lot of time with that vision. And then you kind of assume when you sit down and explain it to the team in a 20 minute meeting, that they’re just gonna get it. And it’s always been interesting to me how that does not occur. how, in fact it takes a lot of repetition and a lot of intentionality to communicate a vision where people start to actually believe it and buy into it.

And so. You have to, in everything you do, you have to live and exude that vision. And I, I find that really interesting and maybe that doesn’t resonate necessarily for the passive investors out there, but, um, I think there’s always a lot of benefit to figuring out what it is that you’re trying to build towards.

And then working back from there and then building in these phase gates where. [00:20:00] Encouraged to stop and review every now and then am I on path

[00:20:04] Dan: for that? Yeah, I think this is this, this kind of, uh, uh, behavior is applicable. Outside of what we’re talking about here, investing in real estate. I mean, this could be any business.

This could be your marriage, um, sitting down and having a meeting with your spouse on a regular basis about what your goals are as a couple. Um, that’s an incredibly valuable practice that Liz and I have, honestly, we, we haven’t really kept up with it the last couple years, but there was a, there was kind of this transitory period from when we went from engaged to newly married, to kind of.

It was in those first few years where we did some, um, at least annual kind of sit downs, talk about, okay, what are our long term goals? Like, what are your goals, Liz, and what are my goals? And let’s make sure that we’re, we’re tackling both of them, um, hugely beneficial. So this doesn’t need to be for real estate investors.

It could be married couples, any business, real estate.

[00:20:52] Anthony: So, uh, concur. All right. So moving on to my number dose in this one. Oh, if you thought that first one was [00:21:00] okay. And then this one’s this one’s awesome. Also gonna be okay.

[00:21:03] Dan: Exceptionally

[00:21:04] Anthony: great. Uh, this one actually ties kind of ties in very similarly to the PFS and schedule of real estate owned is, and this is, this is great advice.

Whether you are a business owner who has a brick and mortar product, um, you’re a real estate investor. You’re a passive investor. You are, um, just worried about your personal finances is you have to have a regular financial. And this is something that, you know, we, we started doing fairly regularly a couple of months ago and.

It’s interesting because when you don’t do it, expenses just creep in just naturally. And you can, you can often assume like, oh, this thing’s going really well, that thing’s not going well. But until you actually like, look at the numbers, you look at the data, like sometimes things jump out at you, those mangoes, like every now and then you’re like, Hey, what’s that number?

Why is that number so big? Yeah. And if you’re not actually like sitting down and having a process for actively looking at things and asking that [00:22:00] question, you can miss it. And that, like what comes to mind is in our last, this was. A month ago, maybe I think it was last month, there was just like a utility bill that we’re like, oh, what’s that?

Why is that so high? Right. And this just happened actually just this week with, um, my, my partner, Jamie, um, she was checking them out. She looked in there and it looked like our house insurance just quadrupled. our house insurance quadrupled. And we’re like, uh, what? Nope. Hard pass. No, no, no, no. uh, so she spent the morning on the phone with them getting that figured out, but here’s the thing is like, if you’re not auditing your expenses, your finances, like that stuff creeps in.

And this was fascinating. This was a fascinating thing at escape that I learned was that. when you’re working with vendors and suppliers and really pay attention to hear people, is they, you think your systems for billing and payables and receivables is bad. I guarantee pretty much every other business out there is equally bad.

And what ends up happening in a lot of cases is they will [00:23:00] double bill. You, you will very often get doubled billed by vendors and suppliers. And if you’re not paying attention to it, they don’t, they don’t. And you don’t know, and you look at this bill and you’re like, didn’t I just pay this. And if you don’t have a process for looking back and actually getting to the bottom of it, you’ll just double.

It’s ridiculous.

[00:23:17] Dan: I wanna say, I mean, we have, um, uh, Xfinity here in our local area for our, our, our cable service. So I don’t know where you guys live. It might be Cox cable. There’s a bunch of companies, but I wanna say that this is an official part of most cable companies, business model hundred percent quote unquote.

Erroneous erroneously overcharge, because they’ll never accidentally undercharge. You never happens, but they always overcharge you and the amount of people that just don’t pay attention to this stuff and just have everything on autopay because yeah, it’s easy. It’s great. Make sure you don’t miss any payments, but you, you miss that opportunity to take peak of the bill and make sure it all makes

[00:23:50] Anthony: sense here.

I got a story actually on this, uh, so on my first TriFlex I, I went with Bon fee, this local. Uh, plumbing, HVAC company to [00:24:00] help, um, come and do like their annual inspection of the, the, the boiler and everything. Right. And they did some other things and they had this annual recurring plan for like nine bucks a month.

And you get all these visits. And I was like, nah, that’s a really good deal. Actually, nine bucks a month is nothing. So I did it after the first year though, I was like, uh, I’m selling this building. I don’t need this building anymore. Uh, and so I got rid of the building. I called ’em up to cancel the plan.

They’re like, They canceled the plan for the next year and a half. They kept billing me, but not only billing me, they started double billing me. And every month, literally every month for a year, I would call them and be like, you double billed me. I’m not a customer I’ve already canceled. And every month they would have to, they would refund my money and it got to the point where I was like, okay guys, seriously, it’s been a year of this.

If this happens again, we’re going legal. And finally it stopped, but it was like ridiculous. Yeah.

[00:24:50] Dan: It’s stand those vendors. Yeah, it’s worth it. All right. What’s your number two? Uh, number two. Um, this one’s, I mean, this is for active real estate investors. I’m [00:25:00] not gonna try to don’t sugar cut this one. Yeah.

I’m not, uh, unit turns. Um, you gotta have a system for that. Uh, when I first started, I just started, uh, randomly calling vendors and just trying to get work. Uh, but what you’ll find out is that if you don’t consistently use the same types of vendors, uh, for your unit turns, um, you’re not gonna have a streamlined process, right?

So you can’t have a unit come up. That’s that’s about to be turned and then just start, willy-nilly trying to call people and see who’s available. And. You know, start trying to shop around and see what you can get done. You’ve gotta have consistent people that work with each other all the time. They know what you’re doing, what your goals are, what your, uh, philosophy is with the unit turn they get in, they get out, they know what to do, and there’s, there’s not much back and forth.

Take some time to build that up. Uh, but without that, uh, you’re, you’re not going to be efficiently managing your vacancies. Your unit turns are gonna be over budget and they’re gonna take way too long to do. And so it’s imperative that you have really good vendor relationships and you’ve got some. Uh, preferred [00:26:00] vendors is what I like to call them.

You’ve got a good relationship. They prioritize you and you can trust them, uh, to show up when they say they’re gonna show up and do things up to standard, you don’t have to babysit ’em and they’re gonna do it for a price that’s appropriate. So it takes some time to get there, but you do need to systematize that process from the, um, the property management to the vendors, to the leasing team.

So that, that can go from notice from a tenant. Notice that at tenants could be VA is received. The manager goes in, they do, they do the walkthrough, get a scope of the work. They get the vendors queued up weeks before that person leaves. So second, that person leaves vendors are in there knocking things out.

And within a couple of days, that leasing agent is, is leasing that unit and getting it filled. Uh, if you don’t have those things queued up anywhere from 45 to 60 days out, uh, you’re gonna have some really inefficient unit turns. So. Not for the past investors. I’m sorry guys. That’s that doesn’t provide a ton of value for you, but if you’re an active operator, uh, you gotta get that system, uh, fine tuned.

If you’re gonna be operating [00:27:00] efficiently,

[00:27:00] Anthony: I would go so far as to say, and this isn’t entirely true, but it’s, it’s like pretty true. Is that when it comes to property management, pretty much everything can be systematized mm-hmm um, so the, almost to the point where no human has to make. A judgment call or like go off book.

Um, now obviously sometimes you do and you have to have like a system even for like, okay, how do we go through this, this process of going off book and how do, who makes the decision? How do they come to that decision? But generally property management is just like this beautiful box that you can just kind of like here’s our system for leasing.

Here’s our system for unit terms. Here’s our system for maintenance, uh, request like systematizing, everything. And. hard. It’s tedious. There’s a lot, obviously. And in the beginning you’ll be attempted just to kind of wing it, right. Because in the moment you’re like, oh, be a little bit quicker. I just will call it up and I’ll, I’ll handle it.

But [00:28:00] as you start to scale, those wheels will eventually fall off. That it won’t scale. Mm-hmm .

[00:28:06] Dan: Sorry, passive investors.

[00:28:07] Anthony: Yeah. Hope you hope that didn’t cost too much brand damage to that one. Here’s one that I think is useful for everybody. Again, not just in real estate, not just in business, but in your personal life as well.

Uh, we call it the wine and D list. And honestly, we don’t really use it in the traditional way that we, we used to use it like a year ago. We were much more formalized about having a list of brokers, lenders, investors, partners, local people that we wanted to maintain a relationship with. And so the wine and dime list was saying, okay, every quarter we want to be in front of these people and making touches and like fostering that relationship and the wine and dying list was a way of saying here this week, we need to reach out to this person, this person, this person.

Try to get them on a phone call, get ’em out the coffee, just to maintain that relationship. And that I think was generally a really great tool. We got away from it for a lot of [00:29:00] reasons. And so we use it in theory, but I think regardless of what you use, it is helpful to think about relationship maintenance as a thing that needs to be scheduled and like actually gets time on the calendar.

Cuz relationships are just, they’re so damn important, but they’re so easy just to. Oh, it’ll happen. It’ll take care of itself. I’ll I’ll text him. I’ll get to that. And I’m the worst at this? Like, people text me all the time and then like two days go by. I’m like, oh crap. I forgot to tell, text him back. Like story in my life.

Gotta have a process for it.

[00:29:32] Dan: anyone who knows me? That’s listening is like, yep. I haven’t

[00:29:35] Anthony: heard from Dan a

[00:29:36] Dan: month. Where is he? People are probably calling hospitals right now. Like text this guy. That’s okay. Um, I think that is probably,

[00:29:41] Anthony: they tuned into the YouTube channel so I know you’re okay. Oh shit, shoot.

Yeah, they

[00:29:44] Dan: see you. Okay. Uh, at least we’re not live. It would be people knock on door. Like, Hey buddy, I texted you a month ago. I’ve been waiting for a response. um, uh, so I was, I was gonna say that one is probably more applicable to the introverts. I wanna say for the non introverts, um, you probably [00:30:00] don’t need a system for remembering to talk to people, but for guys like us, yeah.

We need a schedule because it. Never occurs to us to reach out to humans and interact with them. for the best part. I wonder, I wonder what the

[00:30:10] Anthony: extroverts, if you, if you would still benefit from a system, just,

[00:30:14] Dan: I think in sales, you have so many

[00:30:16] Anthony: people that you, you have to reach out to and stand in front of if it’s

[00:30:19] Dan: your job, if you’re in sales, I mean, any, even someone like my wife, who’s like just a social butterfly.

Um, you know, you’re gonna need some sort of system to manage. You know, a hundred plus relationships,

[00:30:31] Anthony: um, take notes. That’s another thing. Seriously. There’s no shame in taking notes. Yeah. Even if you’re talking to your best friend, like there’s take notes and be like, Hey, we talked about this thing on this day.

If nothing else, like when you’re 82 years old and you look back on your life and you have these cool journals of like phone calls, I don’t know. I don’t, I don’t exactly do that, but I think it would be a cool thing to do. where is this notebook? Uh, no, I say it’s not something I do. Okay. I’m just saying it would be a cool, I wanna see your notes on me, but I do.

I mean, for professional relationships, I do a really good job of taking notes and, and every morning I [00:31:00] journal and if I had a conversation that was particularly impactful the day before, or had a good. Hangout session with a, with a bro or something, I’ll journal about it and be like, oh, I hung out with, so andSo say

[00:31:09] Dan: it was awesome.

I should do more. Yeah. In pro tip, if you guys are taking notes, when you’re meeting with people, uh, don’t be a Dick and do it on your phone. Uh, you look like an asshole, uh, do it on paper or at least do it on some sort of electronic device with a pen. You’ll look like you’re texting. I see people doing this in meetings.

You look like a jerk, just

[00:31:24] Anthony: stop. I think you did that earlier this week. Uh, I think, oh, it was on a podcast episode. Actually. I had my phone. I was like, it does. I’m just, this is where my notes are.

[00:31:33] Dan: Yeah. And if you qualify by saying that that helps a little bit, but it’s still, but still everyone’s just like, what is he listening?

Why is he on his phone? So, um, anywho, well, mini rant. Uh, what’s your, what’s your last one? Oh, was the last one last system. Oh, geez. Well, I wrote down four, so I gotta pick yeah. Four. Well, you never know. I’m only gonna use. All right, I’m gonna go with again. I’m I’m sorry. Passive investors. I I’m not breaking it for you this time.

This is for the active guys, [00:32:00] uh, capital raising. , if you’re gonna be capitalizing your deals with, uh, investors capital, you’ve got to systematize that because one, there’s a lot of relationships that you’re gonna need to effectively manage there. Uh, and two it’s, it, it is kind of a. How do I, how do I describe this?

It’s a two P it’s a two part process. Um, at least the way we do our deals. So number one, we are constantly, um, doing stuff like this podcast, broadcasting into the world, getting ourselves out there, making sure people know who we are, so that they can come and talk to us and, and start a relationship. And, and at some point, if they choose to invest in the future, um, number two is when we actually get a deal, all those people that you have.

Interacted with over the past, however many months or years, uh, you’ve gotta have a system for getting in front of them, communicating the information, answering all their questions, and then facilitating the, um, less than simple process of reviewing the legal docs, signing funding, and getting into the actual deal.

Um, so when you’re trying [00:33:00] to do that with ton of people at the same time, it can get a bit messy if you don’t have a good system in place. Early on when I first started doing this, um, I did, I didn’t have a system. And so it was a lot of, uh, one-on-one conversations with people, uh, educating them, uh, getting them up to speed.

And I really enjoyed it because I love educating people, but it was incredibly inefficient. Um, again, I was fine with that. It was really enjoyable for me. Um, but in order to scale, you’ve gotta kind of systematize that. quite a bit mm-hmm and when you start to actually do bigger and bigger deals and you’ve got more and more investors, uh, trying to, uh, guide everybody through the process of actually investing when there is a deal, uh, isn’t, it’s tough to keep clean because you’ve got anywhere from, you know, a couple people, some deals might have 50, 75, a hundred people in them, and they’re moving through a multi-step sequence and they’re gonna be in different parts of.

Times, and you don’t want anything to slip through the cracks or get missed because you’ve gotta [00:34:00] definitely, uh, dot your eyes and cross your Ts. Uh, you don’t want to get, uh, have anything missed in that process. So it, it, it’s a very, um, intricate process. Uh, it’s typically a long process of getting to the point of just meeting somebody to the point where they’re feeling comfortable to invest capital in, in your venture.

And, uh, there’s a lot to keep track of. And so I know you just did a, a speech on this recently, um, at, uh, one of the JP genome events. Yeah. It was how to build a capital raising machine. Um, and so we’ve, uh, gone through the process of, of systematizing it as, you know, as much as we can to this point, still a lot more that we can do to keep refining it.

But I think we’ve done, uh, well relative to some of the other guys out there for really at least documenting the system that we have in place. And, um, oh, I think we should probably do it a deep dive on that at some point too. We

[00:34:44] Anthony: should. Um, because people find it pretty interesting. I think of a lot of people who are listening to this, whether you’re, um, wanna be a capital razor, or you want to be an operator or you’re a passive investor.

I think people are generally interested to see like how systems work and peak behind the hood. The way I talk about this is [00:35:00] it’s, um, It’s the difference between being a hunter and being a farmer. And in the beginning, you’re a hunter where you’re, you’re having to pick up the bow arrow and you have to get out there and you have to have conversations.

And it’s a lot of 1 0 1 and you can’t really systematize hunting so, so much, right? Like you just kind of go out there and then hopefully you find the animal and you kill it. Right. But it’s kind of happenstance. And as quickly as you can, when you, when you’re first starting, you start there and then as quickly as you can, you want to become a farmer where now you’re planting the seeds, you’re watering it.

And. Generally speaking with a high degree of probability, you can replicate the system and you can know, oh, I planted this here. And then in this long, it’s going to bear this much fruit right now. That’s not always gonna be the case, but I find it when it comes to capital raising, the more replicatable, it can be the better.

And that’s better not just for you and the work that you’re doing, but also better for your investor experience, which is the it’s really interesting, cuz you, a lot of people focus so much on the capital raising and then as soon as you get the capital. [00:36:00] People forget, like now the investor relations like capital relat, capital raising just leads to investor relations.

And it’s the same system. The system has to be seamless and continue forward. Otherwise people will be like, man, we have this conversation all the time where it’s like, when we’re doing business with a company, we’re like, man, their salesperson was great. The fulfillment, person’s not so good. And if that’s how you raise capital and then fulfill on it, like you are not gonna have a long term.

I. I think that’s

[00:36:25] Dan: just how a lot of people operate. I think they, once they wanna get you in the door and they’re your best friend when they’re trying to make the sale, but after that sale’s been made and your client, or you’re in the deal or, or whatever. Um, and you’re just dealing with the, whatever it is that they’re providing, whether it’s a service they’re providing, or it’s a deal that you’re in, um, They got what they want outta you.

They got the sale closed and it’s like, now you’re, um, child liver that makes you feel

[00:36:49] Anthony: worse. Yeah. Like feeling like you had a deep connection and you’re like this person’s different. This company’s different. They’re awesome. And then you get in the door and you’re like, ah, man.

[00:36:58] Dan: They don’t so common though.

Don’t [00:37:00] care. I’d say 90% of the time, that’s how most, um, uh, interactions go with professional companies that we deal with. And

[00:37:08] Anthony: I would encourage you if you’re an investor of Invictus capital and you’re listening to this right now, and you feel like we have done you dirty, we have not lived up to the high standard that we call us out, call us out, let us know like how we can do

[00:37:19] Dan: better.

For sure. We try very hard not to

[00:37:20] Anthony: have that happen a hundred percent, but I. Things do happen. And sometimes, you know, the way that we perceive how we’re serving is not how the customer is receiving that service. And sometimes it’s a love language thing. So anyway, those are six systems, uh, that you need to know when you’re first starting, that when you’re first starting your real estate journey, maybe we just call it six

[00:37:42] Dan: systems,

[00:37:43] Anthony: six, six systems.

Um, that’s, that’s even hard to say, but you guys you’ve listened to this entire podcast by this point. So you, um, You know how bad the title is you don’t need us rehash in that. Hopefully the

[00:37:57] Dan: episode was better

[00:37:58] Anthony: than the title. Yeah, hopefully [00:38:00] I think we did a good job. I don’t know. You guys let us know in the reviews comments.

Um, I think we did a good job of hitting a bunch of different, pretty variable types of systems. Ranging from PFSs to unit turns to investor relations, capital raising, like that’s a pretty wide gamut. So it’s a little bit, it’s something for everybody. I think. So. Except for you, Steven. There’s nothing here for you.

No, I’m just kidding. Even there’s a man. Steven’s too common of name. I shouldn’t, I shouldn’t have said that one, 8% of our

[00:38:30] Dan: audience. I was just like, what the

[00:38:32] Anthony: hell? I should have gone with like a Baral of me or something like that, Margaret to make it really obvious. Like I’m not really calling anybody out.

Um, okay. So before we get outta here, let’s talk a little, little bit about the book that we did a deep dive on last week. And, um, this book it’s a small. There’s only 10 takeaways in the book. So us doing 10 takeaways, maybe doesn’t make the book all that much shorter, but the book is so good. The sophisticated investor notes that Reid created for are so good.

If you want those notes, [00:39:00] by the way, just shoot me an email, send you a link to it. Um, Dan, what was the book that we went through? Um, maybe unnecessarily in depth last week.

[00:39:08] Dan: uh, show your work. Did you not say that while you were?

[00:39:10] Anthony: I don’t think I in all my ramblings. Okay. I

[00:39:12] Dan: got based on one coherent thought.

Uh uh, yeah. Show your work by, uh, Cleo, uh, Mar Austin, Austin. Cleon Cleon Cleon Austin Cleon uh, yeah, this one. I, I love this just because this is something I never would’ve read. Um, I said this in the deep dive that it’s, it’s really kind of packaged as something that’s for a creative or an artist. And me being, not that never would’ve picked this up, but hugely applicable to, uh, anybody who.

In business that might have at least one customer that they need to connect with. So check it out. If you, if you, uh, don’t wanna do the investor notes and, uh, listen to our episode, I wanna say you could read that book at about an hour. It’s not big a hundred percent. Check it

[00:39:53] Anthony: out. You, you could probably read that book faster than we broke it down in the podcast.

[00:39:57] Dan: we actually, yeah, we provided no value. We actually

[00:39:59] Anthony: [00:40:00] just created points. Yeah. It, it, the reason we do. Uh, book dives, deep dives is to save you time, you know, try to take an eight hour book and compress it down to 40 minutes and some investor notes. This, we actually probably cost you time. So, yeah, I’m embarrassed.

Sorry about that. But it is really good. It’s a fantastic book. Regardless if you’re an artist or creative. I, I think that creativity is the most important skill in the modern work area, like where we are currently, whether you’re an entrepreneur or W2, doesn’t matter. I think creativity, your ability to connect ideas and put them together in new novel ways, I think is the foundational skill and a book like this helps you develop that creativity.

And then. even if you’re an accountant, even you soulless number crunchers. Um, you got some creativity in you. So pick up the book. There’s and I’m just kidding. You’re not soulless you. It’s not like you’re a ginger. Um, oh man. I’ve just offended to Texans. We have

[00:40:51] Dan: redhead audience. Full disclosure

[00:40:53] Anthony: literally only is a redhead.

So I can, I, I have, I have the ginger. So I [00:41:00] can say this I’m you’re spicy today. I am a little, little, little spicy, but I assume most of our listeners have fallen off at this point. Yep. So so as we end this episode, just know that. Uncle Danny and, um, uncle auntie, we love you dearly and we’ll see you in the next episode.

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