I have grape vines, apple trees, blueberry bushes and strawberries in my backyard garden, but my favorites are the strawberries. They are so easy to manage! They don’t require weeding, pruning, or spraying. They don’t get wiped out by high winds. They spread naturally without need for additional planting (put in 25 strawberry plants one year and you’ll have 100 the next). In fact, strawberries are so hardy and prolific they are basically weeds themselves. They are “weeds with fruit.”
“Weeds with fruit” strikes me as an excellent business model for almost anyone to follow. The basic idea is to create a business that, as far as possible, takes care of itself – the “fruit” being money.
It’s not as easy as it looks!
A business that really completely took care of itself and paid you is the economic equivalent of a perpetual motion machine – miraculous, and impossible. We’ve all seen BS web sites like “Ed’s Cash Money Blog” and “Joe’s Magical Money Machine.” Their promises are nonsense. You always have to work. However, there are two kinds of work – the work of building a system and the work within the system.
Let me return to the strawberry analogy for a moment. A strawberry plant is a remarkably complex system. It has codes within its DNA that tell it how to get nutrients from soil, absorb moisture, convert sunlight to energy to grow, and so on. It knows how to shoot out runners to create new plants. It knows when and how to produce flowers, how to grow strawberries out of those flowers, and how to ripen the strawberries.
Strawberry plants, like all other forms of life, have a single purpose – make more copies of themselves. But the system that makes that happen took a lot of work (what did the work, God or evolution, I’m not prepared to say).
Similarly, we can reduce our workload without reducing our income by developing automated systems.
Some examples from the rental property world
Our companies are always going to take more day-to-day management than others. For example, last week I was replacing a bathroom ceiling fan in an apartment. We won’t see an automated system to do that (dirty, neck-straining, frustrating) job until Isaac Asimov’s positronic robots are a reality. But there are some jobs that can be automated. Generally they concern organization, tenant communication, and rent collection.
We can either buy or build systems that help us be more organized. Unless we have many enterprises that we want to manage under the same systems, these should be as rental-property-specific as possible. For example, we want a system to manage our bookkeeping. It would be much better if that system took special care of the bookkeeping tasks that relate to landlording.
How about automating systems for collecting each month’s rent payments? A perfect system would make it very simple for us to record those payments, or even record and receive the payments themselves (if paid through credit card or ACH transfer). It would calculate late payment fees and other fees for us. It would notify the tenants by email if they hadn’t paid on time. It would certainly create, or let us create with a minimum of effort, reports showing each tenant’s payment status.
When a tenant’s lease term was due to expire, the system could notify us and give us the option to send a notice to the tenant offering him a chance to renew – or informing him that he would not be allowed to renew. If an apartment became vacant, the system could automatically post ads for it on compatible web sites.
The human factor
Reading this, you might think, “Boy, he’s in for a world of trouble.” Suppose my automated system tells a tenant he is eligible to renew his lease, though I don’t want him to stay? What if legal issues require such notifications to be made by regular mail?
A completely automated system is completely out of the question. You, the owner of the building or the company, must be the final decision maker. (Strawberry growers need to decide where to plant, when to harvest, and which strawberries are good enough to eat or sell. The plants won’t make those decisions for them.)
A really good automated system won’t make decisions for you, but it will make those decisions easier by presenting you with the information you need, when you need it, and giving you simple and clear choices. Perhaps you get an alert – “Tenant Joe Smith is three days behind on rent. Send reminder notice?”
Don’t wait for perfection, but keep striving
As you might guess, I’m working hard myself to automate my systems; in particular, my property management software. This benefits me in two ways. First, as my software becomes better, more people will use it (and pay me!). Second, since I use it myself, it will become easier for me to handle many of the tasks associated with property management.
It would be wonderful if my system was already perfect, but it’s not. It is constantly improving. And I cannot afford to wait for a perfect system. For one reason, I’m building the thing myself, so “waiting” is just not an option. For another, I have to have something to use now. The rents need to be collected, tenants need to be contacted, and so on. Now.
It is always a tricky challenge to divide your time appropriately. Some of your time needs to be spent doing your daily tasks. Some needs to be spent making your systems better. When your systems are better, the daily tasks will be easier. At least, that’s the idea.