How I Went from 200+ Tenant Phone Calls to 1 Per Year

Henry:
This is the BiggerPockets Podcast show number 784. Look, I did it. I nailed the fingers on the first try. Take that David Greene. So for reference, what you’re saying is in the last 12 months, you had 218 calls from tenants around issues or potential issues at a property. And of those 218 calls, you only had to talk to someone one time.

Pasha:
Correct.

Henry:
I would say the system works.

Pasha:
Thanks. Or maybe I’m just super lucky. I don’t know.

Henry:
I am taking over the BiggerPockets Podcast today and I have the pleasure of interviewing my good friend, my partner, my student, Mr. Pasha Maleknia. Pasha’s got an advanced degree in information systems. He’s here to teach you how to build systems that save you time and money. Pasha, we know you love board games. So what would you say is more fun, learning a new board game or building a new system?

Pasha:
You’re making it so hard. I would say building a new system. I just like to challenge and just the challenge of it. Of course you’re a nerd.

Henry:
So why should you stick around for this episode? We’re going to be dispelling some myths around system. We’re going to talk about why you’re probably already spending time on systems without even knowing it. Your systems probably just aren’t that great yet. We’re going to talk about the time and money systems can save you, the time and money it saved me, the time and money it’s saved Pasha. And so if you are a beginner, this is a great place to be because you can set your business up for growth in the long-term. And if you’re an experienced investor, you should stick around and listen because we’re going to talk about things that could potentially put more money in your pocket and also help you take care of your tenants without you having to spend so much time addressing those issues yourself. All right, so Pasha’s here with me. He wants to take on the introduction of the quick tip for me. So today we’re going to move into the-

Pasha:
Quick tip.

Henry:
Today’s quick tip is go to biggerpockets.com/resources. There you can download Pasha’s example spreadsheet of how you can implement a system and jumpstart building systems for your own business. Thank you Pasha for sharing that with us. It’s a super cool tool. You’ll actually get to see a piece of it if you’re watching this version of the podcast or you’ll hear me explain what that system spreadsheet is and how he uses it in his business. So thank you for sharing that with us.

Pasha:
Absolutely a pleasure.

Henry:
All right, let’s get into the interview with Pasha. All right everybody, let’s welcome Pasha Maleknia back to the show.

Pasha:
All right, thank you. Thank you, Henry, for having me.

Henry:
Awesome, man. So for a little bit of background, we recently had Pasha on an episode, episode 773, where he shared his incredible story about how he got into the world of real estate investing and how he’s taken that start and catapulted his business. But we kind of left with a little bit of a cliffhanger. Pasha is an expert on systems and how to save yourself time and money with real estate investing and we wanted to dive into it, but obviously didn’t have time in that episode. So we brought him back, especially in this episode, to dig into systems, what they are and how he implements them and how you should be considering and doing the same thing. Because the super secret is everybody already has systems in place, they probably just suck. So let’s talk to Pasha about systems.
So Pasha, obviously, he is a friend of mine, he’s a student of mine, and he’s an excellent real estate investor. So I wanted to start off, Pasha, if you wouldn’t mind by let’s dispel some myths around systems. Because whenever people hear the word system, I think sometimes they think it’s a lot either bigger than it is or more expensive than it is, or that they’re not ready for systems in their business yet. And I don’t really believe any of those things are true. So let’s talk about some of these myths and then you can tell us why they are missing or if they’re missing. Maybe I’m just completely wrong here.

Pasha:
100%. Let’s do it.

Henry:
So the first myth is that systems need to be complex. Is this a myth or is this facts?

Pasha:
Absolutely a myth. As you know, even in bigger corporations sometimes there’s a tendency to build complex systems and it almost always fire backed. I think the best systems that I have encountered are in their simplest form. And you always want to start with a very simple one level type of system that works for you and then start, you can always make it more relevant to a business or to the issue that you’re tackling. But I see this a lot that people start with a perfect system, a very complex system because they love it, but while they’re building it, they want it to be absolutely perfect, but it ends up with a system that never implements.
The simplest form of systems are always better because you can always get a feedback and you can always go back and build it again and make it a little bit more relevant. There is a saying that says: “Your first five systems, always going to suck.” So it’s better to just start it simple, make sure that it’s like, understand why, what is the problem, go back, fix it. And then as you go forward it’s going to be more relevant to your need. But definitely don’t start with a complex system.

Henry:
Awesome. Man, that’s great insight because I think people do tend to overthink systems. I know I did and honestly probably still do in a lot of areas of my business. So the second myth is that you need some expensive software and then once you get this piece of software, that software system is going to fix all your problems.

Pasha:
Oh, man, you’re preaching to the choir. Absolutely a myth, absolutely a myth. I’ve said this a lot almost in all the talks that I go to, all the workshops and everything, people reach out and are like, “Okay, what software do you use? What do you use for this? What do you use for that?” And I always obviously tell them the answer, but it’s like a lot of people want to start from the software. They think software applications or apps are the systems, which is 100% wrong.
Basically you always want to make sure that you start with your core issues of your business first, then you walk that back and then you focus on what system can address that core issue that I have. And then you go out and shop for the softwares or applications for it. An example I could say is going to Home Depot and buy the first five tools that you see from the shelf and then go back home and try to build something with it. That’s not how it works. You always want to make sure that you focus on a relevant tool for your need. And I see this a lot, man. They think they just need to write a check for a big fancy software and they think that all of their problems are going to go away magically. And I always tell them that you’re in for a big surprise because that’s not going to happen.

Henry:
Awesome. Yeah, that’s a great way to look at it. Here’s a fun fact about me. Even if I knew exactly what tool I needed to do a job and I walked into Home Depot and bought that tool, I would suck at that job. I’m just not handy. That’s just not a skillset that I have. And so you also don’t need to be handy to be a real estate investor. Maybe we’ll throw that at the end of the show, pro tip for you new investors.
That’s a fantastic point because a lot of people think that systems mean I need to go buy a piece of software and then I tell the piece of software, here’s all the things that I do in my business. And then that piece of software says, awesome, this is how you should do those things and it doesn’t work like that. A system is really just a set of processes that you implement systematically over and over again and it’s supposed to save you time and money. That can be anything. We talked yesterday when we were discussing this show and you showed me one of your systems that was literally just a Google Sheet. Everybody has access to Google Sheets. So it’s not software you need, it’s processes.

Pasha:
100%. Another thing that I want to add is we are at the age of information technology that it’s the easiest time to build a software and if you have five softwares right now, we’re going to have 20 by the end of next year, I promise you. And if you want to just chase the shiny software application, the newest trend, man, you’re going to spend a lot of money and you’re probably not going to see great return on that. That’s where you want to make sure that you always start from the business, you always start your systems around it, and then you go back and start shopping for something that is relevant to yours.

Henry:
The next myth that I want to talk about is, so I’m kind of going to skip one here because I think we currently already hit at it. Systems are only for large businesses. Obviously we’ve touched on that. We know that systems are meant for any business of any side, it’s just a process. But this one I think is really important is that systems are only for out-of-state investors.

Pasha:
When we talk about systems are only for out of the state, I think that’s not relevant because I think I’m the living example of this. We have about 20 units that almost all of them are within 10 miles radius of where I live, but we kind of urge ourselves to make sure that we never step into any of them because we want to have the freedom of geographical location. We want to be able to be anywhere we want and be able to renovate our homes and be able to manage all of our homes. We already have done the management piece, now we are focused on building our systems around rehabbing them remotely. If you want to be more passive in your business, I would recommend to start just thinking about building the businesses that you have on a platform that is scalable and that is only doable if you have a good system in place. And you don’t have to be out of the state. You can be as close as it can get to you, but you just don’t want to be the elements that is the center of your business.

Henry:
If I’m hearing you correctly, what you’re saying is that systems are meant to save you time and money. And who doesn’t want to save time or money no matter where you’re located? But implementing systems when you are local as well I would think gives you an added advantage, right? Because you’re there in the event something doesn’t go as planned. So it’s easier to hone your systems when you’re local because you can be there to hone it. And then once you’ve got it dialed in, you really open up almost this world of expansion. Because if you’re not tied to the geographic location of where your properties are, even though you’re local, what’s stopping you from picking a different market and expanding your business because you see an opportunity in a new market and now you’re not held back by geographic location? So I think that’s a phenomenal way to look at things.

Pasha:
100%, 100% agree with that.

Henry:
Great. So we’ve established it’s about getting back your time and that’s why I think systems are truly for everybody because most people get into real estate because they feel like it’s a passive business and then we all learn fairly quickly that it’s absolutely not a passive business. But systems allow you to buy back that passivity in your business. And so you can still have a semi-passive business of real estate investing and make it more passive through the use of systems. And then you truly do get time freedom. And that’s really what this is about. It’s about having the time freedom because that allows you to be the person that you’re called to be and not the person that you have to be for money. I know Pasha talks about having his crystal clear why and he calls it his “no BS why”. What does that mean and take us through why that’s important, Pasha.

Pasha:
The no BS why came up when, if you guys actually listened to episode 773, it was like I was in a very dire situation, if you will. And after that I thought to myself why this never came up. My life setting before this thing was exactly the same why I didn’t see that. And one of the things that stood up to me was I was kind of following a why, meaning why I’m doing all of this or why I wanted to have a business, that it was just not original to me. It wasn’t that I never heard about being an entrepreneur before, I’d never heard about financial independence before. I was just listening to other people talking about how they wanted to quit their job or how they wanted to have the freedom of financial dependency on their job, which is great, don’t get me wrong.
And I was listening to it and I was like, yeah, cool, that’s neat. I want that too. But I never took any actions on that because quite honestly it was a BS why for me because I love my job. I honestly do. It wasn’t a big motivation for me to be above and beyond and dig deeper into different business models and try to be an entrepreneur. It’s just one of those things that you want to make sure that whatever reason you come up with is something that 100% aligns with who you are and what your core values are. And this is one of those things that is kind of hard because there are so many shiny whys out there as well that you might actually just stumble across and you’re like, “Oh, yeah, cool, I want it.” That’s not enough. You need to have that. It’s not like I want to have it. You need to have that why.
I think I talked to you, myself, almost every other successful entrepreneur I talk to, there’s a why in their life that comes from the need part. It doesn’t come from the want part. Because everybody wants to have a cool car to drive around. Everybody wants to have a business that generates a lot of money. That’s the aspect that you see on a lot of social media. But the moment that the rainbows and unicorn go away and there are some alligators on the way and there are some challenges on the way, they back out because that doesn’t satisfy their want part.
And that’s the reason that I always recommend to people that actually reach out to me is that make sure that you have your eyes on the why, why you are doing this, and it needs to be so strong. It needs to strongly align with you in a way that whenever you wake up in the morning, you can think about it. It’s already in front of your eyes. It’s something that you just cannot disconnect yourself from it. It’s not like one day you’re not in the mood and one day you are in the mood. It just doesn’t work that way. And that’s why I called it no BS why and it’s really hard to get there. I mean it’s almost, you need to just dig deeper and deeper and deeper in yourself to get there.

Henry:
Yes, I completely agree and I like that you call it the no BS why because I’d never heard it called that before. But I’ve talked about it different with several of my other students and the way I’ve always pictured is people always are, they’re quick to say, “I want financial freedom, or, “I want financial independence,” or, “I want to build generational wealth.” That’s the buzzword, generational wealth. All of those things sound good, but I don’t know that people truly understand what they mean. For me, financial freedom’s not a goal. It’s not your why. Your why is what you get to do because you’re financially free. Financial freedom allows you the time freedom to be the person that you’re called to be, not the person you have to be for money. And typically when you’re the person that you’re called to be, you get to impact other people.
So your why is typically rooted in who you get to be in service of other people. And so when you’re thinking about your why, you’re right, it’s got to be the thing that drives you beyond the good days and the bad days. You said it best, you said, you need it, you need it to happen. So if you’re thinking right now, I want to be a real estate investor so that I can be financially free, that’s great. Take it a step deeper. If you were free today, if you woke up and magically had all the rental property to produce all the cashflow you needed to live your lifestyle and to pay for all your life’s expenses, what would you be doing with that freedom? Whose life would you be impacting with that freedom? That’s where your no BS why lives. Agree?

Pasha:
100%. Absolutely. It’s always like, you see that picture and then you’re like, “Oh, man, wait. So now I have freedom but my family sucks,” or something like, “Now I need to put all of my undivided attention to my family.” And then you’re like, “Okay, this is what I need, let’s go for it.” And then there is nothing that really can stop you because you know exactly where you want to head to.

Henry:
We do this exercise with several of my students and the cool part about hearing people dig into that is who you get to be because you’re free. A lot of people are like, “Well, now I get to retire my parents. Now I get to send my parents on a trip or remodel my parents’ house,” or, “now I get to pay the medical bills for my sick family member who couldn’t afford the proper medical treatment.” These are the things, these are the whys that are going to drive you through the difficult times. Because if your why is only rooted in you and what you want, folks, we are human and we let ourselves down every day.
You know how many times I said I’m going to go to the gym tomorrow and didn’t go? We let ourselves down all the time, but we don’t like to let down other people. And so think about who you get to help, what you get to do with that freedom, that’s what pushes you through. So talk to me briefly here, Pasha, about how people find that why, what drove you, what questions did you have to ask yourself to hit what that why was?

Pasha:
I think for me it was a little bit difficult because I was in a situation that I found myself, I didn’t have a lot of time and then immediately it was in front of me like, what are the most important things for me? But what I would recommend is, one, you need to be brutally honest with yourself. And there’s a word in there brutally, it means it’s not going to be comfortable, it’s going to be an uncomfortable discussion. And sometimes you want to bring in somebody that knows you very well and ask them to help you to dig deeper. It’s more like interrogation even. You want to make sure that you get to the core needs that you want to go after and it’s something that just makes you a blazing why that then it turns into an engine that you need to harness that energy to run your business in your day-to-day life.
But I would say be brutally honest with yourself. If you’re talking about a specific need that needs to be compensated for or needs to be addressed for, what are those needs? Write them down. As you mentioned, it might be addressing your specific members of the family or the situation that they might be left after. It needs to be super tailored about you. So make sure that it’s 100% customized based on your life, based on your values in life. It’s good to look at other people’s why and that’s fine, but sometimes it just simply doesn’t align and you don’t want to just copy someone else. You want to make sure that you tailor it for yourself and you need to just dig deeper and deeper and deeper until… When you get there, you know it. It’s one of those things that, when you hit there, you’re like, “Oh, yeah, that’s it. That’s what 100% aligns with my core value.”

Henry:
Finding your why, Pasha’s step one for finding your why is to be brutally honest with yourself. He also talks about if you want to be rich or why you want to be rich, diving into what that means. We talk about this a lot with people. It’s like, what’s the wealth going to do for you? What’s the wealth going to do for the people around you? And then you talk about when you define your why, is there something that you didn’t clearly know before? That’s a great point because when you are digging into your why and trying to figure out what’s truly driving you, it is uncomfortable. It’s going to raise some questions and now you might have some new information that you need to work through in order to figure out what that why is.
And then this one, I believe, is hugely important. Is it something that excites you whenever you wake up in the morning? That’s a fact. This business excites me to no end. And what I like about this business specifically is getting to share with other people and help other people. I really had a bummer call with a tenant right before this. But knowing that I got to get on here and share real estate investing with all of you guys and chat with my friend Pasha and have him share his knowledge and wisdom with you has really lifted me up because my why is rooted in making sure that I share this knowledge with people. So it gets me excited every day. And so if you answer no to any of these questions, it means that you need to keep digging. And I think that’s great. And all these are coming from Pasha. And so what’s awesome about this is this is Pashas system for having a why. This dude has a system for everything.
So while we’re on that topic, let’s go ahead and let’s dive into systems. Pasha sat down with me and reviewed all of his systems for his business. I was one who didn’t implement a lot of systems, and it’s not because I don’t think they’re valuable, it’s just, I’ve always been a ready, fire, aim kind of operator and then make tweaks as I go. And when I sat down and went over to Pasha’s system, I was thoroughly impressed, so much so that we started to implement several of the systems that he’s using. So I’ve started to implement some of these systems in my business and I’m going to talk to you about those. But later on in the show we’re going to break down five steps of how you can build any passive system with Pasha. So stick with us for that.
But for me, when I sat down with Pasha, I immediately implemented a system for showing my rental properties and a system for keeping an eye on renovations of my properties. And so at a really high level, Pasha had this great system for installing… Essentially you’re installing web-enabled cameras, hooking them up to a mobile hotspot, and then installing a web-enabled keypad door lock and then allowing your tenants who want to see your property. So after our tenants apply, we can now give them a code where they can go take a look at the property and we don’t have to physically go see the property. And what was huge for us is right when we sat down with Pasha about this, we were about to put a property on the market that was about a 45-minute drive away from where the rest of our properties are. And so I was like, man, this is going to save literally just two hours of driving time per appointment already off the top. Plus, if you calculate that, and I do that for if I do 10 showings, that’s, what, 20 hours that you saved in just drive time.
And so we were able to implement this on that property. We showed it virtually. No one ever complained, no one had a problem with it at all. The cameras would turn on when people would enter the room. So we would know when people showed up, we would know when they left. The codes, we would give them all cycles, so everybody had their own code. And it was really so much less time-consuming and less painful that we’ve now implemented it for properties that are even close to us because not only is it saving drive time, but it’s saving the time that it takes to actually open up the property. And we all know as landlords, you set appointments for showings and about half of the people show up, some of them don’t even show up. So you’ve wasted your time even going to a property and people just no show on you. So what a huge time saver for me. We are also using it to monitor our rehab property. So I know firsthand that some of these systems have been a lifesaver in my business.
Pasha, let’s talk about, give us two of your favorite systems and then how they’re saving you time or money.

Pasha:
Oh, yeah, absolutely. As you mentioned, the example that you brought up was a very good one. I think when we were starting this, we realized that when we want to show the property or when we want to have a better monitoring system on the contractors coming in and out, it needs to be something that can be done virtually. So exactly what you mentioned, that’s what we implemented. All the cameras, all the web connections, and all the keypads all together. And they actually are now all in different boxes. We’ve got seven of these boxes that they’re all paired. So all they need to do is to just send it to somebody, just plug them to the electrical plug and then it’s all going to be online. I think that’s really one of my favorite ones. So you definitely took one of the favorite ones for sure.
It saved us a lot of time. It still is saving us a lot of time because it’s just one of those things that you just buy them once and then you keep using them. As you mentioned, you don’t have to be the person that drives all the way there. And tenants love it too, because they didn’t feel pressure. They could go into the unit and they could look at it. My contractors also, it allowed us to understand who is a good contractor who is not. If somebody says, “Oh, I’ve been working here for five days,” they’re like, “No, here’s a log that actually shows you’ve been working here for two days. So let’s wrap it up. And then there are some other people that they actually feel better when you have security in the area for all of the materials.
I mean all of this comes together into, what you mentioned, the pain for business, which is basically how it’s all connected together to solve a problem for you, which for us it was not wasting time and not wasting energy. And it’s also actually kind of funny too. Sometimes we go because these are like two-way communications. So sometimes we go in there with the contractor and we’re like, “Hey, don’t forget to finish that wall. We need to get that done too.” First they’re all afraid like, who’s talking to them, and then they notice. It’s actually pretty funny. That’s one of them.
The other one that I really like is the system that I put together, which is basically the category of the issues that can go wrong in our rental properties. For example, it says if you have a, let’s say, surge or if you have overloading like electrical and then we categorize it into plumbing area, landscaping area, basically handyman stuff, HVAC, things like that. And the problems are basically in here and the solution to them or the remedy is also in front of them. And then at the end it says, if none of these remedies work, then you need to contact this person for that issue. And that person is going to be the plumber, electrician, handyman. And then of course we have another page that has, these are our contacts for electrician, these are our contacts for a plumber, these are our contacts for so-and-so.
Now with something like this, I can just step back and now my virtual assistant that is working remotely can address all of the concerns, not all of them, but I would say 99% of the problems that our tenants have. They receive those, they basically come here, they match them with the problems here, they walk tenants through some of the problem solving and sometimes our tenants are actually able to solve the problem themselves, like the small ones. Obviously if it’s serious or if it’s something that can create a liability, we send a licensed person to fix it. But sometimes there’s some easier stuff that they can do and, man, our tenants love it. They absolutely love this because they get to solve the problem really fast. And it’s great for us because we don’t spend hundreds of dollars for every call. It’s something that can be addressed. I think we address 15% of our maintenance calls with doing something like this.
And if it helps, I’m going to make sure that I send a template so that you can put it into the side notes. But again, this is just like a template. You need to go in there and see what are the things that are applicable to your business and you can build something there. But this is also definitely one of our front winners.

Henry:
This is really cool, Pasha. And so what I want to do is add a little context here for those who are listening or driving and can’t see, and then I want to make sure that I’m thinking about it in the right way. So what Pasha’s got up here is a spreadsheet, and in that spreadsheet he’s broken down a category and I believe the categories are the trades. And we say categories, what we’re talking about is issues. So if a tenant has an issue, something’s not working, you break it down into categories. So there’s that category, plumbing, electrical, is it handyman?
So you figure out the category. If the category is one of those, then in this spreadsheet you can follow along and say, okay, it’s electrical. So what’s the subcategory? The subcategory, if it’s a electrical, it could be the breakers are tripping or it could be flickering lights. And so you find the subcategory of the issue. And then once you find the subcategory of that issue, right next to that subcategory is the remedy or the solve for that problem. And so then you can see what that solution is, try to implement that solution and if that works, the problem is solved. And if that doesn’t work, then your next section is who to contact to get somebody out there to figure out what the actual problem is and get it fixed.
This is like when you call the cable company because your internet’s out and they’re like, “All right, well, is the light lighting up?” And you’re like, “Yeah, the light’s lighting up.” They’re like, “Okay, great. What’s your upload speed, download speed? And you tell them, they say, “Okay, great.” So a lot of these problems are just solved by sometimes your modem isn’t on, right? And so you’re able to use this and it’s just a spreadsheet, it’s just a Google Sheet that you took the time to fill out on the front side with what issues you normally see, and then how you normally solve those problems, and then who to contact if this solve doesn’t work. And what you’ve done is you’ve given this spreadsheet essentially to a virtual assistant.

Pasha:
That is correct, yes.

Henry:
And your virtual assistant takes the calls from your tenants, so you’re not taking calls for toilets and anything. Your virtual assistant, this literally is their training. They just follow the spreadsheet, tell them what to do. If it doesn’t work, then this spreadsheet tells your virtual assistant exactly which contractors to call. Is that correct?

Pasha:
That is correct. And, again, this is an example, guys. You can build it yourself or if you want, again, I’m going to make sure this is accessible to you as well. But the contact here tells the virtual assistant who they need to contact, because I don’t want them to use their judgment for it. I want them to follow this written down system. So, for example, in this case it says, if, let’s say, there’s a surge that it just makes their fusebox flipping, then this is serious, you don’t want to do anything, you want to contact an electrician. And then there’s another page that has the job title and people that are doing that and it ranks them from the first to the last. So, start calling them.

Henry:
And this is great because a lot of people, one of the myths of landlording is that people say, “I don’t want to be a landlord because I don’t want to deal with tenants and toilets.” And you just literally showed me a spreadsheet that deals with the tenants and toilets for you. So it’s not that big of a deal, folks. Can you give us an example or breakdown in some way, how much time or money is a system like this saving you and your business?

Pasha:
Oh, man, a lot, a lot.

Henry:
How many calls is your VA taking and what’s the volume you’re seeing?

Pasha:
We received about 218 tickets or calls in the last 12 months for our properties because we actually kind of expanded and all of them are addressed with my tenants. Now there are some examples that are one-offs that are really weird and it means, for example, we had a thunderstorm. You and I are both living in Northwest Arkansas, so we know that thunderstorms are not that alien here. And then there was a tree that coming like 45 angle about to hit the house, but it didn’t. So obviously this was one of those things that we didn’t have it in our system and then we added it. So if there’s a tree hanging around, call a tree person or tree removal person and now, from then they do it. But that was, I think, the only call that I had to chip in. I was like, “Okay, if that’s the issue, you need to call this person.” But then I built it into my system so if it happens again, then I don’t need to be pulled back into it.

Henry:
So for reference, what you’re saying is in the last 12 months you had 218 calls from tenants around issues or potential issues at a property. And of those 218 calls, you only had to talk to someone one time.

Pasha:
Correct.

Henry:
I would say the system works.

Pasha:
Thanks. Or maybe I’m just super lucky, I don’t know.

Henry:
And it’s not just that too, it’s not just that. But what I want to highlight here is he only had to get on the phone one time, but he said his tenants love this, they’re happy, they’re not feeling a disconnect from customer service through this.

Pasha:
Exactly.

Henry:
That’s awesome.

Pasha:
And that helps us a lot because when your customers are happy, when your renters are happy, the chances of them staying with you is more. So your vacancy actually starts going lower because they know that whenever they have an issue, it’s going to be addressed immediately. They don’t have to call the tenant, call the landlord, sorry, and then landlord calls the vendor and going back and forth. So this is just one of those things that it helps when you have everything in this format. And again, I think you mentioned one thing that I really want to emphasize. This is built on Google Spreadsheet, which is free, available, accessible to everybody and it’s saving us a lot of time. So another thing is just go with what you think you want to do, build a simple, tangible, easy to use system on whatever, even back-up a napkin, and just to start getting it to work.

Henry:
Thank you so much, Pasha. I think that was a great example for people to see that systems don’t have to be crazy expensive and that they can benefit everybody and save you time and money.
All right, so let’s move on to the meat and potatoes of the show. The information people really want to know is what are the five most important steps for building any passive system? The five steps we have here are inputs, processes, outputs, feedback, and the environment. What the heck does that mean? Pasha, give us an example. So what are the inputs for a system?

Pasha:
So if you think about this, all the systems have these input process, output piece. So input can be anything honestly, whatever you want to get into so that you’d be able to convert it into something else. So the input could be any data point that you can find. For example, in the example that I showed, the input is going to be the problem, the issue that the tenants are facing, right? It’s just the data point on the issue. It could be your P&L if you want to have a system that checks your P&L and tells you if you are doing okay or not. The input needs to be really aligned and I think the most important thing about input is the input is the most important thing that needs to be aligned with your core business issue. You don’t want to have extra information coming in, you want it to be right, crisp, addressing the exact problem that you’re trying to solve and build the system around it.

Henry:
Thank you. So input is what you feed into the system and then process. What’s the process? And I like how you related the inputs to the example we just saw. So let’s continue that. Let’s talk about what the process is and then what’s the process from the example you just showed us.

Pasha:
So process is basically the engine of the system. That’s what it is. It could be the step-by-step procedures so that it follows a certain flow chart to get to a certain output. And this example, for example, it’s going to be the remedy section, which is when you walk your tenant through the issues that they have and now you want to basically get it fixed. So you walk them through how you can get the input information and basically add to it or look at it from a different angle or basically change that data input. So, for example, in this case, let’s say, if garbage disposal is clogged and I think, “Oh, the landlords are really familiar with this issue,” is that you want the tenant to go in there, look at the bottom of it if there’s like a fuse button or something or if there’s a Allen wrench that they need to use. All of these walkthroughs and procedures and step-by-step guides, that’s where the process comes in.
And it’s easier to do this. It’s basically the main part that is going to replace you if you want to build a system to replace you. Does that make sense? This is where you would want to have your knowledge extracted from the person that is an expert, usually it’s going to be you, and you want to put it into a step-by-step guide that with that input can follow those step by step so that it will flow through that to the next step.

Henry:
So if I’m following you correctly, the input is the problem, the process is the how you’re solving the problem.

Pasha:
It can be.

Henry:
Okay, now talk to us about output.

Pasha:
All systems need to have a point which basically wants to give you what you need. Now sometimes the output of a system can be input for the next system and this happens all the time, specifically if you want to have a chain of system and if you have a complex business model that you want to put everything together. In this example, the output is going to be a walkthrough that is already provided and making sure that the problem is addressed. So it can be in different formats, it can be in the format of a knowledge repository. Knowledge repository is basically where you put all of your information that are really tangible and valuable to you.
In the example of lead generation, it’s going to be the list of people that… So, let’s say, you start with 1000 people, you have a process that breaks it down to, let’s say, a list of 20. And now that 20 is going to be the output of your first system. That is going to be people that are more likely to be willing to sell their home. Now you have another system that use that and then process it and then sends a mailer to them, for example. But that output is basically what you are going after and what the result of your system should look like. And it can be in different formats and it can be repeatable.

Henry:
It sounds like your outputs can potentially be in different formats even within the same system because with the example we went through, one output might be that the results checklist resulted in the problem being fixed and one output might be that you had to call a professional out and in one of the sub examples you gave, that professional came out and did the work and the output was now you have a new subcategory to add to the spreadsheet so that you don’t have to solve that problem again.

Pasha:
That’s 100% right. So that output can feed to different systems. One of them is the payment system. It’s a feed to a different one, which is like, now the job is done, it needs to go to the payroll system. So you pay them. Again, you don’t want to be the person who writes the check every time. Another one is going to be, the problem is solved, but it was a new one, so let’s go back and add it to the system that we have, which basically is the next system which is the feedback.

Henry:
Yeah, let’s talk about that.

Pasha:
So feedback… Okay, so the input process output is quite common. I would say that even in big corporates when it’s built, when the input is given and when the output is taken, everybody’s like, “Hallelujah, we got there. That’s the system we want.” And, man, I see this over and over again, which they just leave it like that. They’re like, “Okay, cool, the system is working.” And then they just go on to the next one. The problem is you build a system but it’s not a sustainable system because as the context changes, as the input changes, as the business world changes, your system needs to be alert, it needs to understand what’s happening so it can adjust itself.
So a good example of it is going to be identifying KPIs for how your system is working so that you know if your system is actually in good shape or not. So, for example, in this case, again going back to the maintenance system, the KPI for us is, are our tenants happy about addressing their issues or not? So we send out two surveys every six months, basically, every year. So every six months we send one survey and we ask our tenants how do they feel they are being treated, how do they think their maintenance issues are being addressed? And that is a great KPI because it tells us whether it’s something that eventually our tenants are feeling great about it or not. And if they don’t, we need to come back. So that’s our KPI, right?
The first year it might work perfectly, but the second year it might actually not work really well and it’s going to raise a red flag that allows us to go back in there, dig into our system and see what was the issue, what caused that person to not be happy about it. And then we walk it back and then we adjust our processes, we adjust our input to make sure that next time we can address this. So the feedback is basically a loop that goes from your output to the process and to the input to make sure that we update it and stay relevant.

Henry:
Okay, great. So, if I’m understanding, the feedback or feedback loop is what takes your system from being a static system that never changes to a dynamic system that is changing or evolving as your business evolves. So with the example you gave, you measure your tenants, basically you measure if they’re satisfied with the work that’s being done. If you are great, you state the system keeps doing what it’s doing. If you’re getting a lot of feedback that tenants aren’t happy, then you can dig deeper into that feedback and then adjust your system to address those feedback issues and then continue to evaluate and make changes so your system is dynamic. And I’m going to go out on a limb here and I’m going to guess that you have a system that does the feedback for you.

Pasha:
I love that. I love that. You know I do. No, yeah, absolutely. Now you want to make sure that, again, that system, that feedback loop is also working the way that you want. This is like a loop, it’s like a spiral, you can just go down to it. But 100%. And again, start with something simple, just input process output is perfect, but it shouldn’t be like your final destination. Just put some KPI, make sure this KPI is good. If you want, you can always, as Henry mentioned, build another system for your KPI. But at the end of the day you want to make sure that this is not a one linear line. It actually goes back and it feeds itself so it stays relevant. Because if you do that, you’re going to have to spend less time coming back to the problems that are not being addressed by your systems.

Henry:
Fantastic. So to recap, we got the five main components of a system is the input. That is the problem that you feed into the system. You’ve got the process, that’s essentially how you’re solving the problem or how you’re addressing that issue. You’ve got your output, which can be the results of that process and that can be a positive or a negative result. And then you can make adjustments to your process through feedback and measuring the results. And then environment, we didn’t touch on environment, did we?

Pasha:
The environment is basically the context that your system is running in and that’s like the last component that you want to be aware of. Basically in this example, again, if this system is working in homes, I’m just saying like in Arkansas and now you want to manage the same properties in, let’s say, California, you’re in a different context, you are in a different context for input, you’re in a different context for processes, some litigations apply to it, some litigations to the output and that’s where you want to be aware of that, go back in there and adjust your systems to the context that they are running in to make sure that your system stays relevant.

Henry:
Thank you for breaking down that five step process, Pasha, that is great information and I think it really helps not only to demystify systems but make it seem like something everybody should be implementing within their business at some level. Before we go, give us some examples of some wins or some successes or some positivity that’s come from you implementing multiple systems in your business that maybe you didn’t expect.

Pasha:
I think one of them is we were actually in Hawaii and my apartment got flooded, one of the ones that actually we had a tenant in. I’m not talking about a leak or something. It was about to get flooded really bad. I didn’t even notice. It was just on my weekly report that I get from the virtual assistant of what’s going on because I always want to know what’s going on. And it was just addressed automatically. The problem raised, they called, there’s an emergency level on that system, it was a high emergency. They dispatched somebody like a plumber that is really good in mold remediation and all of that. Thank God it didn’t get to any of this because we had this in like the first hour.
And I think, all in all, we spent about $800 and it included a new piece to the water heater, which, if I didn’t have the system in there, I’m pretty sure my travel would’ve been ruined and it wouldn’t be a very pleasing experience for my tenant either. But it was addressed in the first couple of hours and it was completely working fine, which, to me, it was a great win because it showed me that it can work specifically when I needed it to.

Henry:
Yeah, man, that’s a great example because you’re right, no one wants the call when they’re on vacation that one of their units flooded. And it always seems like that’s when you get those calls is when you’re out having a good time. So that’s cool that your system just kind of handled it for you and saved you all kinds of money and did exactly what it was supposed to do. That’s amazing. Thank you for sharing that.
All right, thank you, Pasha, for giving us this breakdown of systems. There are some great information that you gave us because, again, systems, I like to think of it and you kind of put this in my head, it’s that we’re all already using systems, right? A system is just a process you have in your business and a lot of the times our processes just aren’t great. And so thinking of systems isn’t thinking of how can I go buy an expensive piece of software or how do I spend a lot of time and effort to solve big-level problems? It’s just a matter of systematizing the things that are important to you or the things that are taking the most of your time that you don’t want to be taking your time and giving it some inputs, some processes and some outputs, and then providing some feedback to keep your systems dynamic and you can really save yourself, not just time but money. Did I summarize that in a good way there for you?

Pasha:
And another thing that I just wanted to add real quick is sometimes it’s like you might not be the person that is the expert in that area and that’s still fine. A very good example is like, you and I have been friends for years and I personally learned a lot from you, especially when it comes to finding good off-market deals. And I was like, man, this guy knows his stuff. As I showed it to you, we started thinking about all of these procedures and processes, how can we turn that into a system so that even that can be automated.
So, for example, I know that we didn’t get time to get there, but even lead generation right now for me is something that I put together. Again, we tried it, it started with the most simplest way, but right now it’s like, hey, I just sent this zip code that I want to go after. And then there’s actually, I called it LA, so local assistant, that picks it up, processes all the mails. The direct mails are out, all the formats, everything is predefined. But all of them comes from, not from me, but from a knowledgeable person in the area, like you, that can help me get understanding how this should be. And all I do is just take the concept from the thinner and convert it into a system and just let the system work.

Henry:
That’s great information. A great way to think about solving problems. Pasha, thank you so much for being gracious enough to share a template or a blank template example of your, what do you call that?

Pasha:
I call it Residential Maintenance System XLX.

Henry:
Your RMS Spreadsheet. And so if you want to take a look at that spreadsheet template, you can go to biggerpockets.com/resources where Pasha has been gracious enough to share that with us. And so let the people know where they can find you, Mr. Pasha.

Pasha:
You can find me on Instagram, @techierealestate, T-E-C-H-I-E, real estate, all one word. And also the website is 5dayscourse.com. These are the two places that you can find me.

Henry:
Great. And you can find me on Instagram as well. I am @thehenrywashington on Instagram. Thank you so much for joining us. Lots of great information there, Pasha. It’s been a pleasure talking to you and we wish you nothing but the best.

Pasha:
Thank you, sir. Have a good one.