All Systems are GO! How to Build Repeatable Processes for Your Rental Business

Now that we’ve wrestled the responsibility of managing our houses away from our property manager, we had to find a way to convert our manual processes into something faster and more efficient. You need repeatable, simple systems if you want your business to scale and work seamlessly. We desired to scale the operation to 50 doors, so we had to come up with some systems to make that dream a reality. The systems you create don’t have to be elaborate or complicated. They just need to accomplish your goal in the most efficient and cost-effective way possible.

Some of the Processes We Needed to Automate in our Rental Real Estate Machine

• Rent Collection
• Repairs
• Rehabs
• Make Ready
• Tenant Acquisition
• Lease Renewal
• Evictions (Heaven forbid!)
• Managing the Books

Rent Collection System

This one was top of the list as we needed a way to efficiently and quickly collect rent from our tenants each month as it was the lifeblood of our business. Without rent, we wouldn’t be able to pay our mortgages or our bills, and our tenants would learn that we were soft and take advantage of us! We wanted to find a free method for tenants to be able to pay rent without us having to sort through the mail for checks. Plus, then the tenants couldn’t use the “Its in the mail” trick. Previously our property manager would collect rent, and the money would magically appear in our bank account a few days later (minus their fee of course).

Chase Bank is the Bomb

With Chase as our business bank of choice, we have several ways for tenants to pay rent, for free. The tenants can deposit money directly into our business account at a Chase branch, or they can use Zelle to pay electronically from almost any bank. This process is instant. All of our tenants use one of these two methods now. The only catch is that if they deposit at a branch, they have to remember to put their name/address on their deposit slip so that we know who paid rent! We love Chase, and they are the oil that keeps our money-making engine running smoothly. We know that there are other solutions out there like Cozy or Paylease, but we like simple and, in this case, simple works well.

Maintenance/Repair System

With any repairs we do, our system is quite elegant. Here’s how it happens.

1. Tenant calls or texts my partner or me as we are their “property manager” Learn more about what that means.
2. We engage the appropriate resource to fix the issue. (Usually by text)
3. Contractor contacts the tenant and makes an appointment.
4. Contractor identifies the problem and communicates to get authorization if it’s a significant problem (more than $500)
5. Contractor solves the problem and takes photos of the repair.
6. Contractor provides the invoice to us documenting the materials and labor necessary.
7. We then send payment to the contractor via Zelle/Quickpay.

The best part of all of this is we can do it all from our smartphones. This advantage is critical. If I need to approve a purchase by my handyman at Home Depot, I get a text and reply “1”, and it’s approved. If I need to respond to my AC guy to replace a coil, I send him a quick text after he sends me a pic of a 1980’s looking evaporator that has finally bit the dust. The only time I ever have to talk on the phone or go to a job site is if its a significant problem, and it needed to be analyzed and solved together (usually pest or plumbing issues). This situation has only happened 3-4 times in 6 years. I’ve even trained my tenants to text me unless its an emergency. Some would say this is all a pain, and they would instead outsource it; That’s fine, but I enjoy the management, and I most enjoy not paying somebody 8% off the top of my gross rents either!

Here are the kinds of guys I have at my disposal. They are one text away. They give me reasonable rates because I’m easy, and I give repeat business. Plus, I always pay immediately. I always tell them to provide me with a good deal, but not so good that they hate working for me. We’ve trained them well to know precisely the level of work we expect and what kinds of fixes we want in our properties.

1. HVAC guy
2. Roofer
3. Electrician
4. Plumber
5. Garage Door
6. Yard guy
7. Full rehab/general contractor
8. Countertop installer
9. Painter
10. General Handyman
11. Cleaners

Property Make Ready System

When we have a tenant move out, the goal of our system is simple, get the asset back online and rented as quickly as possible. Here are the steps we take to make sure that happens:

1. Confirm the tenant has moved out. We generally have them leave the keys somewhere inconspicuous on the property.
2. Visit the property, add a lockbox, and insert keys.
3. Document the property for damage and determine what needs to happen to get the property ready to rent again (paint, carpet, appliances, damage, cleaning, yard
4. Contact resources from the above list to come to the property and do the necessary repairs.
5. List property on MLS for rent taking care to price it right for the market.
6. Fill out Tenant Deposit form and mail any deposit to the forwarding address of the prior tenant.

Protip: Here’s our lockbox of choice. We use all the same code on all of them to keep things simple.

Tenant Acquisition System

Once we have a property listed on the MLS for rent now, we have to quickly get a quality tenant lined up to fill that baby up and pay and pay some rent!

1. We field the calls/emails for agents wanting to schedule the property. 85% of these come via text. Easy.
2. For the large portion of potential tenants, we see without an agent; we had to find a way to show the property to them without me or D physically going to the house to show it to every single person that called us. We have day jobs, and so many of the people calling us without agents were not qualified or not interested. Finally, we came up with a plan to share the lockbox code with the potential tenants if we deemed they were serious. That way, they can see the property at their convenience by themselves. We admit it is a bit of a risk, but we own the houses, and they are empty, so the risk was worth it. Some of these houses go through 15 showings, so this little hack saves us significant time.
3. Once we have an interested applicant, we send them an electronic TREC rental application.
4. They fill it out and send us copies of Driver’s Licenses, SS cards, and recent paystubs.
5. We then check to make sure they have at least 3x rent for monthly income and that their job history and rental history is sound. If it looks good, we send them a mysmartmove.com link, which has the applicant submit a background check. This process checks each applicant for criminal and credit issues, including any evictions. Hopefully, the applicant has been honest, and there are no surprises on the report. This report costs the applicant about $40 per person. This payment is our only application fee.
6. Once we accept an applicant, we create a lease from ZipForms and send it to the tenant to e-sign.
7. Once the lease is signed, we will give them keys AFTER they have deposited first month’s rent + a security deposit/pet fee into our business account. Then we have a little factory producing money month after month.

Wrap Up

We don’t propose to have all the answers, but building these simple systems has helped us be able to scale our real estate business and keep our costs down while maximizing revenue and profit.  They aren’t the most complex, but they are straightforward and repeatable and get the job done, and that’s all we care about in the end! In the next post, we will attack the back half of the processes we need to keep things running smoothly.

• Lease Renewal
• Evictions (Heaven forbid!)
• Managing the Books
• Paying Taxes

Check out Part 2 of this series for the rest of the systems.