Kristy MacDonald - RPDRS

Kristy: Brady's got you right up to the point now where we have the systems here at BK. As Brady said, I am on the other side of BK. Everybody asks us what does the BK stand for? Oh, there's Brady and there's Kristy. Some people don't know. As Brady mentioned, we have a daughter. She's five and that's Kylie. Last year we spent a lot of the year cruising around The Bahamas and Florida keys. We just brought her boat back to Georgia Bay, which is what we love. We call our boat live in the dream.

I'm also the host of Tricky Tuesday. If you follow me on social media every week, I've been showing all the different things that I can do with one arm. I've done opening jars, tying my shoes, doing my hair, all sorts of things that people like, how do you do that? Follow me on social and you can tune on Tuesdays for tricky Tuesdays.

Before Brady and I got together, I'm an appraiser. I'm an AACI, I'm a commercially designated appraiser. That's the background that I came to. When I started to do some real estate investing, we knew what our numbers were. We knew what we needed to buy stuff for to be able to renovate it, to look at the end goal.

This is my social handle. Take a picture, add me so you can follow on Tricky Tuesday and we can go over. What are business systems, documented policies and procedures that allow our business to run without you? If you want to step away and travel, if you want to grow your business and you want to do this and that you have these systems set up in place, right from the get-go, whether you have one property, five properties, a hundred properties or 10 properties.

Without systems, our businesses become self-made. Why do we need to systemize? You need systems so that you can run a business so that you don't have to be in that jail. We can build credibility from the start and build responsibility to our joint venture partners. They're going to be looking for information. You want to build more than one property in your portfolio. You need to have these systems ready to go and ready to rock right from the beginning.

I'm going to talk about five different areas that we need to systemize in purchasing an accounts, tracking expenses, during renovations, as you saw what our strategy is like, we buy it, we renovate it. We need to know what all these numbers are. We need to tenant our property and we do ongoing property management, as well as ongoing reporting and some maintenance and inspections as well. Purchasing in accounts. When we partnered with a joint venture partner, we're going to have a different bank account.

We're going to open up one bank account for that partner. And every single transaction is going to go in that account and out of that account. Okay. Do not have one or in our experience, it works best to not have one account to run your whole business through when you're starting to have all your different properties. If you want to start it and have different accounts for different properties when you're starting small, that's great too.

Everything is traceable and everything is trackable. Income in one account and always income. This is one of our little checklists on the side. As soon as we go and we buy a property, we put the deposit down, we send an email to our office staff, or this is how we used to do it. Even if we have a new property checklist, it initiates our processes. We take all our purchase and sale documents and we can take them, create file folders.

We posted on the wall in the office and now we can file and start getting on the way. We also send a welcome letter to our joint venture partners as well. We set the expectation of the documents that are going to be required from them at certain times throughout the process as well as the things that we're going to expect throughout the entire length of the process. We're going to look at the time frame of when we're going to distribute cash flows and all these things are going to be in our joint venture agreement as well.

We look at the renovation structure for our refinance procedures, et cetera. We send that letter, set the expectations, from the beginning, they know what we're going to expect. Our team knows what to expect and we carry on. In our office, we store our documents electronically and this makes it easy for multiple reasons. If you're going to start to get a new mortgage, you know exactly where your documents are, your mortgage broker will love you. All you do is grab those documents from your electronic section, send them out in an email blast.

In our electronics on the cloud, we have two things. We have the BK office system where we use the Google drive to save all our documents for all our individual properties, all the leases on all that. And then we have an external storage section that our accountants and our bookkeepers can use. They are all separately categorized for all the different properties, with all the different purchase and sale documents from the lawyers, all the leases, all the tax documents, all the cash flow statements, everything is in there. Everything's ready to go at any time.
Our paper systems are all filed in different colors. This is just one of the examples here. We've got green, yellow, orange, blue, and purple.

Everybody in the office knows if they're looking for something that's not right in the cloud at the time before it's been scanned in, they can know to go in. Right from the get-go figure out what your filing system is, what color your leases are going to go into, what color your general purchases are going to go into. Orange is our expenses. Yellows are renovation, expenses, blues purchase, and documents, and then purple are always our leases .

This is just one of the ways where we display our things in the office and, we've got the BK rentals and our joint venture stuff, and we've got our files there, ready to go right in front all of the time. The next picture is our filing system where everything is filed away, ready to go documents, CRA, if they ever come back to you, they're going to be looking for these expenses. Every single piece of paper. I know we killed trees. We killed so many trees in our office, but if somebody wants to come to us and say, where's the receipt for this, where's the receipt for that. We know exactly where to go for it. And that file's ready.

As we talked about our strategy is that we renovate. You can imagine $60,000 worth of renovations. There's a lot of pieces of paper. We try to minimize our ordering for our supply. We'll have several large home depot orders which we use for our suppliers. And then we'll have all the different ongoing expenses, but it's a stack like this, every single project that we do. During our renovation, we have an Excel sheet. It's very basic, very easy. Everybody knows how to find it. Everybody can categorize it. It's easy for us to find we used to track stuff in QuickBooks, but the problem is when you track stuff in QuickBooks, you're categorizing, your zoning and then your waste and your materials and all your mortgage and your interest expenses.

It was hard to take them right in front of you. Be right there. As Brady said to me, where's the renovation number? I'm like, oh, let me add this one. This one and this one. Then we started using Excel and then we would categorize it. It also tracks for us where it was paid from a BK, paid it personally before the influx in cash came from the joint venture partner, or if it was paid by the corporate card and then reimbursed from our joint venture process, all these numbers are right handy.

We can categorize all the renovations. Whether we're trying to find our labor, our renovations. And receipt, with our guys, they have to submit our receipts to us every week. We want to know where our renovation budget is every single week. The guy sends, submit the receipts, they put their names on it, the date, and then we make sure that Brady and I and our partners can know exactly where a renovation is every week. At the end of the renovation and the refinance, we'll do a renovation summary and we'll give the partners a summary, a little capture of what it looked like in terms of the numbers at the end of the day.

We also set systems for tenanting as well, and they also involve more processes, more checklists, the girls in the office, but you came from hydro one and they had more checklists and more systems and processes. The girls in the office, every time Brady comes in and says, guess what? I think it's time for another checklist, another process. They always rolled their eyes, but they know at the end of the day, setting up these systems and processes are going to be great. One of the things that we do on the property management side is all of our management duties are done by BK staff.

Even before we had our life at a BK property management company, all of these things were handled internally. We have a separate designated phone number for our rental ads and we have a separate designated phone number for tenant emergencies. Don't give them your cell phone. They're going to call you about their leaky toilet. They're going to call you about all these different things. Set up these virtual phone numbers. They can forward directly to your cell phone and you don't need to know they don't need to have your personal number. Set up these systems and processes and all our tenant general quests are all handled through an email. That's the process.

We set the expectation, right from the beginning. When we're advertising our units, we didn't use our website. We found it was the best. The tenants had this little glimpse on the bottom here of what it looked like, and we used Kijiji ads and our business page. We also have a process for pre-screening tenants when they call in and ask us. We have a whole list of questionnaires that we'll ask them different questions, pre-screened before we even set up.

We have processes again for our systems, we'll schedule 10 minute intervals. We'll host open houses. We'll do all these pre-screening and have more questions there when the tenants are coming to determine what type of people we're going to put in some of our units. Another process applications, when the tenants applied to it, we know that we have a system, we need to check their credit. We need to call their references. We need to verify income. We need to verify their employment. Again, this all goes through.

We check, definitely check their social media. If you're not checking their social media, you need to. You find out who the real person is that you're looking at with that. Within 24 hours, we always offer the apartment and get first and last month's rent right from there. As soon as that process is done, we'll let them know that here's the date you're going to be moving in. We'll meet you here. We'll give you the keys and then we'll provide them with a welcome booklet. And the welcome booklet gives them again, all the systems and the processes that we expect from them. And the expectation is separate from the start.

Collecting rents, we have a system for that. We're now using a property management software that is tracking some of these things just because we've got to be so big, grabbing an Excel sheet. I got my rent here. Check paid on time, paid late, all different color coding, easy systems are set up. Set up an Excel sheet. You're tracking it. If you've got three properties. I've got that rent. It's in there. Check off we go.

We have systems to handle how late rents and to issue any notices from the Ontario landlord tenant board. There's ongoing reporting. When we work with joint venture partners, they want to know where the cash flow is. They want to know what it is that we're providing. We have systems again in place when these go through it. We double check those. Yes, we have a bank account for each one of those things, but if I'm handing my books to the accountant and she says, okay, I've got all the numbers. She's not expecting me, or I'm not expecting her.

Did you see that the hydro was there for those three properties? Did you say that the mortgage payment was there? I need to know that it was already in the account and already handled. I need to have a checklist to prove that. And the bridge came out. Hydro came out, water, bill came out, taxes came out. I need to know that because they're not going to check for you. When we first started out, they'd say, okay, I've got this. But did you get the tax bill? Did you get this? And they may not miss. They may miss it. Set up a checklist, right from the very beginning on these things.

Our QuickBooks statements are reconciled monthly so that we are ready to go and be able to provide quarterly cash flow statements to our partners. Another checklist for our quarterly JV reporting. This is in-house for us. We have our cover letter that we send out our cash flow statements, the profit and loss, the balance sheet, and we'll say, okay, here's what happened this month? Or this quarter tenant moved in, tenant moved out a rent. There was a repair for this issue.

Set up a tracking sheet that you know, that you've distributed cash flow. You've got your money from your side of things as well. You'll understand. This is a recurring thing. Checklist, checklist, and checklist. We have our systems for the lastly the maintenance and ongoing inspections.

Everything that happens. If there's a repair that we send everything out the system is there, it initiates the processes that got. We have a dedicated email, like I said, for maintenance requests, the tenant sends an email request at bkrei.ca, boom off it goes right to one person or the person who handles tenant requests. She knows, okay, this is gonna initiate. This process is an emergency.

I need to have this person set out or okay. Let's have a bummer or handyman go out and take care of this issue, within a reasonable time. With one BK contact coordinating all of these different types of inspections that are happening with her. We have a lot more other checklists in our office. We've got the snow and grass maintenance checklist who are we providing lawn to? Who needs snow removal services? Who do we have doing grass cutting? All at once as you keep growing and you can add these to the checklist that you have, and you're ready to continue scaling you already have the system set up.

Have we sent out the rent increase checklist? Have we done this and that, right? And then we also have more checklists for semi annual inspections and every single property is broken down. If you're not using a property management software yet, have all this information ready to go with your tenants information, their contact, the email, and have it stored electronically. You can go and find it. If Brady needs to know, or one of your property managers needs to know, hey, I need to get into this property. They have access to that Google drive system to get in, to find that information.

In summary, without systems, you cannot scale creating systems will free yourself from jail last year. If we did not have our systems in our processes and our people we wouldn't have been able to do and experience the cool things that we did last year and invest in your people, your power team. Huge, not just the people that you may hire on staff, but your power team, your lawyers, your accounts, your realtors, all those people who are working with you and your systems that they know about to continue to grow them. I love this.
Most people fail only because they're operating at the wrong degree of action. You have four choices, do nothing, retreat, take a normal level of action or take massive action. Setting these systems and processes from the start sets you up for a massive level of action, Grant Cardone said that.

Thank you. You guys are all here, you have the systems in place. Please ask us, Brady and I love talking about real estate. We love having people ask us questions. Here's my social handles. If you want to follow us. You're in the right place, you're learning the right things and you're in the right room today. Thank you.