This article will teach you how to set goals, develop systems and create a business plan that will help you achieve financial freedom with rental properties.
I’m Jimmy Moncrief, a multifamily real estate investor, bank credit officer, and founder of Real Estate Finance HQ.
I joined Audible last year blasted through a lot of books during my commute to work. One book in particular, had an amazing impact on me.
The book was How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life, written by Scott Adams, the creator of the Dilbert Comic strip.
One of my favorite quotes from the books was:
“Losers have goals, winners have systems” – Scott Adams
Like me, you probably have some kind of a goal related to real estate. Perhaps it’s something like: “Buy my first property” or “Own at least 10 rental units by the end of the year.” Don’t worry… I don’t think you are a loser as the quote suggests!
I also have big real estate goals, but I realize that simply having a goal is useless.
I think people should stop asking about goals, and start asking about systems. What systems are you putting in place to accomplish your goals? Writing your goals down on paper is easy. However, developing systems to accomplish your goals is hard.
Specifically, what have you done today to accomplish your yearly goals?
What is a System?
What exactly is a system? To me, systems are simply a routine or habit.
Something that you could, in theory, document and eventually have somebody else do it so you can scale your business.
The most important part about systems is consistency.
“For changes to be of any true value, they’ve got to be lasting and consistent.” – Anthony Robbins
Building Your Plan
The trick is to not only build your business plan, but to accomplish everything in it.
Now that we have established that daily actions and systems are absolutely critical to achieving long-term goals, let’s go through some exercises so you can document everything from your long-term vision to your day-to-day tasks.
Ask yourself, in a perfect world, where do you want to be in five years? What does your perfect day look like?
My vision is:
- To pay off house,
- Accumulate five paid-off rental properties and,
- Make over $100K/year as a real estate finance authority speaker and trainer.
Now we are going to over the steps from Goals and Systems to Daily Actions
What is your personal mission? What are you trying to achieve?
For me, it is to:
- Gain financial freedom through real estate investing and,
- Educate the world on the different ways to finance real estate.
Create measurable short and long-term goals that will help you calculate and measure your success along the way. For me, it’s
- Reach $10K in revenue by the end of the first year
- End the year with a 3 lending partners
Identify how you will reach those objectives.
I will achieve my objectives by:
- Networking with wholesalers that focus on multifamily projects.
- Cultivate relationships with REO agents.
- Get referrals from other real estate investors on who they use for lending
5. High-level Plans
High-level plans help to create a roadmap for implementing the strategies and achieving your objectives.
- Secure two paid-speaking gigs in 2015
- Rebrand website
- Buy this more properties this year
- Update my stakeholder book
- Write two top-selling Kindle books
6. Daily Plans
Ideally you will break down your high-level plans into daily plans so every day, you will be working towards your long-term goals. It’s easy to push aside your plans thinking “I’ll do it later”, however, that’s a very bad habit to get into.
If you can work at least 15 minutes a day on a project that will accelerate your plans more than you think.
15 minutes a day
can make all the difference in the world
Commit tomorrow to start working on your real estate business the first thing every morning. Let me know in a week how much of a difference this has made.
This is my favorite part of a business plan – dissecting where the numbers come from.
Again, let’s start with a big goal – note – make it a lot bigger than you think.
Most people overestimate what they think they can accomplish in a day and underestimate what they think they can accomplish in a year.
Another reason to think big is you will probably need more money to be achieve financial freedom (or whatever your goal is) than you think.
Let me give you a real life example:
My wife and I are very blessed to have a paid-off rental property. It was our first house and we put 20% down on a 15-year mortgage. The first 2 years we owned it we paid a significant amount of debt down. We have owned it over 12 years now, but it was paid-off a couple of years ago.
We get $800 in rent and have great long-term tenants who probably keep care of it better than we did.
However, in the past six-months I’ve made less than $2,000 in profit on this house!
Why? Let’s take a look:
- October – I waived rent because they pressure-washed the deck, did a lot of landscaping and fixed some other things around the house
- November & December – I used rent to pay property taxes
- January – I used rent to pay property insurance
- February – Actually made money (spent rent on kids’ birthday parties and 2 date nights with my wife)
- March – Made money this month
Therefore, if you think you are going to be able to retire if you get 10-paid off rental properties (which I hear quite a bit of) I think you better recalculate some things.
I know this is a non-traditional way of looking at business plans. However, from someone who looks at other people’s business plans for a living and decides if they get a loan or not, I believe this is not only a practical approach to developing your business plan, but also the most profitable.
Even if you already have a business, I highly encourage you to go through the steps above. You might discover (like I did) that by adding systems and more people to your processes, your business will become more profitable.
Well, because I added systems and people to deal with maintenance issues and other ongoing tenant issues, it freed up my time to look at more properties. After I implemented this plan, I doubled the number of properties my real estate company owned.
Let me know in the comments how you have used systems to grow your real estate business.