BiggerPockets Real Estate Podcast - 784: How I Went from 200+ Tenant Phone Calls to 1 Per Year Using This “System” w/Pasha Maleknia

Episode Date: June 27, 2023

You’ve built a sizable rental property portfolio; now, it’s time to relax. You book a trip to the beach, get on your swimsuit, and are about to head out the door, but then, your tenant calls you. “The toilet is leaking,” “I lost my keys,” “The oven just went out.” Instead of enjoying your vacation, you’re spending hours looking up plumbers, locksmiths, and electricians. You’re juggling phone calls while trying to enjoy your time off. Wasn’t real estate investing supposed to be passive? This is the scenario that most landlords are living in. And it only gets worse the more homes you buy and the more money you make. But, there is a way never to pick up another tenant phone call again while giving your renters the best experience imaginable. All you have to do is build a system like Pasha Maleknia did. Pasha went from 218 tenant phone calls a year to only one by creating and tweaking this passive income system. In today’s episode, he’ll provide the exact steps so you can do it too. Pasha’s system isn’t complex, and most of it can be built for free. There’s no expensive software or complicated formulas to create this rental portfolio system. If you have some time to set aside from your day, you can build something like this in a matter of hours. So, are you ready to trade tenant phone calls for more trips to the beach? If so, stick around! Grab Pasha’s system spreadsheet template here. In This Episode We Cover: The five-step system to turn a nightmare rental portfolio into truly passive income Why you DON’T need to spend a lot of money or time building a rental systems Finding your “why” behind real estate investing and financial freedom How Henry Washington saved over twenty hours immediately by implementing one super simple system The two things you need to build any system quickly and cheaply And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch BPCON2023 Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area Grab Pasha’s System Spreadsheet Listen to Henry on The “On The Market” Podcast Wherever You Listen to Podcasts: Spotify Apple Podcasts BiggerPockets Henry's BiggerPockets Profile Henry's Instagram Henry's Website Hear Our Full Interview with Pasha 4 Ways Systems Make Landlording Easier, Simpler & More Profitable Connect with Pasha: Pasha's BiggerPockets Profile Pasha's Instagram Pasha's Website Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-784 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show number 784. Oh, look, I did it. I nailed the fingers on the first try. Take that, David Green. 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. Correct. I would say the system works.

Thanks. Or maybe I'm just super lucky. I don't know. I am taking over the Bigger Pockets podcast today, and I have the pleasure of interviewing my good friend, my partner, my student, Mr. Pasha Malignia. 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? You're making it so hard. I would say building a new system. I'd just like to challenge. And that's just a challenge of, of course, you're nerd.

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 quick tip. Today's quick tip is go to biggerpockets.com slash 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, Fasha, for sharing that with us.

It's absolutely a pleasure. All right, let's get into the interview with Pasha. All right, everybody. Let's welcome Pasha Mlicknia back to the show. All right. Thank you. Thank you, Andrew, for having me. Here's why savvy real estate investors are obsessed with bonus depreciation.

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Academy to guide you step by step. Start your seven-day free trial and get 50, free leads at Propstream.com slash BP. That's P-R-O-P-S-T-R-E-A-M.com slash BP. Don't just dream about real estate. Make it happen with PropStream. 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, you know, 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. 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, 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, you know, why they are miss or if they're missing. And maybe I'm just completely wrong here. So 100%.

So the first myth is that systems need to be complex. Is this a myth or is this facts? Absolutely a myth. As you know, like even in bigger corporations. Sometimes there's a tendency to build a complex systems, and it almost always firebacked. I think the best systems that I have encountered are the simplest form. And you always want to start with a very simple, one-level type of system that works for you. And then 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 like 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, a little bit more relevant. And there is a saying that says, like, your first five systems always going to suck. So it's better to just like start with 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 the complex system. Awesome. And 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 system, software system is going to fix all your problems. Oh, man.

You're preaching to the choir. Absolutely a myth. Absolutely a myth. I've seen this a lot, almost in all the talks that I go to, all the workshops and everything. Like, people reach out and like, okay, what software do you use? Like, 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, you know, shop for the softwares or applications for it. An example I can say is like going to Home Depot and buy the first five tools that you

see, you know, from the shelf and then go back. home and try to build something. That's just 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 like they just need to write a check for a big fancy software and they think that all of the problem is going to go away, look magically. And I always tell them that you're in it for a big surprise because that's not going to have. 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 skill set that I have. And so you also don't need to be handy to be a real estate investor. That's just a pro tip. Maybe we'll throw that at the end of the show, pro tip for you new investors. So 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. System is really just a set of processes, right, that you implement systematically over and over again. And it's supposed to save you time and money. So that can be anything. You know, we talked yesterday when we were discussing this show. And you showed me one of your systems that was literally just a Google sheet. Yeah. Right?

Like, everybody has access to Google Sheets. So it's not software you need. It's just processes. 100%. Another thing that I want to add is, like, we are at the age of formation technology that it's like the easiest time to build a software. And if you have like five software right now, we're going to have like 20 by the end of next year. I promise you, right? 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 out of that. So that's where you want to

make sure that's like you 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 wrong with yours. 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 in that. We know that systems are meant for any business of any side. It's just a process, right? But this one I think is really important is that systems are only for out-of-state investors. 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 like 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 own. our homes. We already have done the management piece. Now we're focusing on building our systems around rehabbing them remotely. But you definitely want to, 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. It can be as close as it can get to you, but you just

not want to be the elements that is the center of your business. 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 this like 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? Now you're not held back by geographic location. So I think that's a phenomenal way to look at things.

100%. 100%. I agree with that. Great. So we've established. It's about getting back your time, right? 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 is 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 BSY. So what does that? What does that mean? And take us through why that's important, Pasha. The no BISY came up when, if you guys actually listened to episode 773, it was like I was in.

a very dire situation, if you will. 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 like that I never heard about, you know, being an entrepreneur before. I've never heard about like, you know, financial independence before. I was just like listening to other people talking about how they wanted to quit their job or how they wanted to have the freedom of, you know, financial dependency on their job,

which is great. Don't get me wrong. But I was listening to it. I was like, yeah, cool, that. That's neat. I want that too. But I never took any actions on that. Because quite honestly, it was a BSY for me because I love my job.

I honestly do. Almost every other successful entrepreneur I talk to, they always come. Like, there is a, 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, you know, have a cool car to drive around. Everybody wants to have like 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, you know,

allocators of the way, there are some, you know, challenges in the way, they back out. Because that's not, that doesn't satisfy their want part. And that's the reason that I always recommend to, to, to, my, 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, so strong. It needs to strongly align with you in a way that like whenever you wake up in the morning, you can think about it. It's, 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 mode and one day you are in the mode. It's,

it just doesn't work that way. And that's, that's what I call it. No BSY. And it's, and it's really hard to get there. I mean, it's like almost you need to just dig deeper and deeper and deeper and yourself to get there. Yes, I completely agree. And I like that you call it the no BSY because I've never heard it called that before. But I've talked about it different with several of my other students. And it's, you know, the way I've always pictured is like people always are, they're quick to say, I want financial freedom or I want financial independence or I want to build generational wealth. Right. That's the buzzword, generational wealth. And like, All of those things sound good, but I don't know that people truly understand what they mean.

And like, 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. Right. You said it. You said it best. You said it's you need it. You need it to happen. Right. So if you're talking, if you're thinking right now, like, 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 cash flow 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 you're no BSY lives. Agreed? 100%. Absolutely. It's always like you see that picture, then you're like, oh man, wait. So now I have freedom, but my family's sucks or something like, now I need to like 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 have to. We do this exercise with several of my students. And it's the cool part about hearing people dig into that is like who you get to be because you're free. A lot of people are like, well, now I get to retire my parents. Right. Now I get to, you know, send my parents on a trip or remodel my parents' house or now I get to take care of my, pay the medical bills for my sick family member who couldn't afford the proper medical treatment, right? 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?

Like, it's, it's, it's, 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, so talk to me briefly here, Pasha, about like how people find that why. Like what, what, what, what questions did you have to ask yourself to hit what that why was? 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 like 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 is 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 like, help you to dig deeper. But I would say be brutally honest with yourself. If you're talking about a specific needs that needs to be compensated for or needs to be addressed for what are those needs, write them down.

As you mentioned, like 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% because of it. 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. 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, like, 100% aligns with my core value. Finding your why. Pasha, step one for finding your why is to be

brutally honest with yourself. We also, he also talks about if you, if you want to be rich or why you want to be rich, right, 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's going to, 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, right? Is it something that excites you whenever you wake up in the morning? That's a fact. Like, 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 is really lifted me up because my Y 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 like this is Pasha's system for having a Y. This dude is 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. And, you know, I was one who didn't implement a lot of systems. And it's more 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 Pasha 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, right, that's what, 20 hours that you saved? And just drive time. And so we were able to implement this on that property. We showed it virtually. People, no one ever complained.

No one had a problem with it at all. You could, 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 cycled. So everybody had their own code. And, and it was, it was really so much, so much less time consuming and less painful that we've implemented it for properties that are even close to us because not only is it saving drive time,

but it's saving, you know, 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 them people show up. Some don't even show. 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're also using it when we're to monitor our rehab property. So I know firsthand that some of these systems have been a lifesaver in my business. So Pasha, let's talk about give us two of your favorite systems and then how they're saving you time or money. Oh, yeah, absolutely. As you mentioned, like 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 visually. 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 like different boxes. We've got like seven of these boxes that they're all paired. So all they need to do, so 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. So you definitely took one of the favorite, that's 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. Like, as you mentioned, you don't have to, like, 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 contractor is also, like, it allowed us to understand who is a good contractor, who is not. Like, if somebody says, oh, I've been working here like five days, and they're like, no, here's a log.

It actually shows you've been working here for like 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 kind of like 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 like funny too. Like sometimes we go, because these are like two. way communication. So sometimes you go in there like with the contractor and say, hey, don't forget to like finish that wall. Like you need to get that done too. And first I'm like

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's uh, uh, I'd really like is the system that I put together, which is basically the category of the issues that can go wrong in the properties like in, uh, in our rental property. So for example, it says if you have a, uh, let's say surge or if you have overloaded, overloading like electrical and that we categorized it in 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 like if none of these remedies work, then you need to contact this person for that issue. And that person is going to be like the plumber, electrician, like handyman. And then of course we have another page that. has like, these are our contacts for electrician, these are our contacts for plumber, these are contacts for so and so. So now with something like this, I can just a step back, right? And now my virtual assistance that is, you know, working remotely can address all of the

concerns that, not all of them, but I would say 99% of the problems that are 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 a small ones. Obviously, if it's serious or if it's something that can, you know, create a liability, we

insured and licensed person to fix it. But sometimes there's some easy stuff that they can do. And, man, our tenants love them. Like, they absolutely love this because they get to solve the problem really fast. And it's great for us because we don't spend like, you know, hundreds of dollars for every call. It's something that can be added. I think we add us like 15% of our maintenance calls with doing something like this. And if it helps, I'm going to make sure that I send the templates 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 do with something there. But this is also one of our, definitely one of our front winners. This is really cool, Pasha. And so what I want to do is add a little context here for those who are listening and 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, right? It could be. And we say categories. What we're talking about is issues, right? So if a tenant has an issue, something's not working, right? You break it down into categories. So is that category plumbing,

electrical, is it, handyman? Right? 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 electrical, it could be, you know, the breakers are tripping or it could be flickering lights, right? 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 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. And so this is kind of like, you know, this is kind of like, you know, when you call, you know, 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 letting up. They're like, okay, great. Is the, you know, what's your upload speed, download speed? And you tell them, they say, okay, great. You know, and then... There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals or LLC held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively. in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPPod. That's N-R-E-I-G.com slash B-P pod. Thinking about wholesaling or flipping your first property, but not sure where to start.

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or an eviction, or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. So a lot of these problems are just solved by, you know, sometimes your motive isn't on, right? And so you're able to use this.

And it's just a spreadsheet, right? 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. That is correct. Yes. 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? That is correct. So like in here for example, and again, this is an example, guys. You can build it yourself or if you want, again, I'm going to make sure that this is accessible to you as well. But the context 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 search that you just makes the the fuse box flipping, 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, like, people that are doing that. And it ranks them from the first to the last of the,

you know, start calling them. You know, and this is great because a lot of people, you know, 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. So can you, can you, can you give us an example or

breakdown in some way? How much time or money is a system like this saving you in your business? Oh, man. A lot. A lot. Like how many calls is your VA taking and, you know, like what's, what's the volume you're saying? We received about 218 tickets or calls in the last 12th. 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 like one-offs that are really weird and it means like, for example, we had a thunderstorm. I mean, you and I are both living in Norseus Arkansas, so we know that thunderstorms are not that alien here.

And then like 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, I, We didn't have it in our system. Then we added it. So if there's a tree hanging around, like call a tree person or tree removal person. And now from then they do it. But like 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 build it into my system. So if it happens again, then I don't need to be pulled back into it. 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. Correct.

I would say the system works. Thanks. Or maybe I'm just super lucky. I don't know. 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. Exactly. That's awesome. And that helps us a lot, right? 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, you know, 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 and call the landlord, sorry, and then Landau calls the vendor and, you know, going back and forth. So this is just one of those things that it helps when you have everything in like this, this format. And again, I think you mentioned one thing that I really want to emphasize. this is built on Google a spreadsheet, which is free, available, accessible to everybody. And it's saving us a lot of time. So another thing is like just go with what you think you want to do, build a simple, tangible, easy-to-use system, and whatever,

even back of a napkin. And just to start getting it to work. 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? So if you think about this, all the systems have these like 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 issue that the tenants are facing. Right. It's just the data point on the issue. It could be your PNL if you want to have a system that checks your PNL and tells you if you're doing okay or not. The input needs to be really aligned. And that's, 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 like extra information committee.

You want it to be right, Chris, addressing the exact problem that you're trying to solve and build the system around it. 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. 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 charts to get to like a certain output. And this example, for example, it's going to be the remedy section, which is when you walk your tenants 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 all the landlords are really familiar with this issue,

is that you want the tenant to go in there looking to, like, at the bottom of it, if there's like a fuse button or something to, or if there's an Allen ranch 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 the system to replace you.

Does that make sense? This is where you would want to have your, your knowledge extracted from the person that is an expert, usually it's going to be you. And you want to put it into like a step-by-step guide that with that input can follow those a step by a step so that it will flow through that to the next step. So if I'm following you correctly, the input is the problem. The process is the how you're solving the problem. It can be.

Okay. Now, talk to us about output. 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 formats of a knowledge repository or it can be knowledge repository is basically where you put all of all of your information that are really tangible and valuable to you.

In the example of like lead generation, it's going to be the list of people now. So let's say you start with 1,000 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 it a mailer to that, for example.

But that output is basically what you're going after and what the result of your system should look like. And it can be in different formats and it can be repeatable. It sounds like your outputs can potentially be in different formats even within the same system. Because with the

example we went through, you know, 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 like in the example, 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.

That's 100% right. So that output can like turn into like feed to different systems. One of them is like the payment system. now, right, 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. Yeah, let's talk about that. So feedback, okay, so the input process output is like quiet, common.

I would say that even in like 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. I'm like, okay, cool, 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. It's because if 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 like, how do they feel they are being treated? How do they think like their maintenance issues are being addressed? And that is a great KPI because it tells us whether it's something that are, 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 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

a system and see what was the issue, like 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 updated and stayed relevant. 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. And 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. I love that. I love that.

You know I do. No, yeah, absolutely. So now you want to make sure that, again, that system, that feedback loop is also working the way that you want. So this is like a loop that you can like, 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's not, 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 like 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. 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 negative result. And then you can make adjustments to your process through feedback in

measuring the results. And then environment. We didn't touch on environment, did we? 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, 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're in a different context for input. You're in a different context for processes. Some litigations apply to it, some litigations of 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're running in to make sure that your system stays relevant.

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. So give us, 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. I think one of them is like we were actually in Hawaii and my apartment got flooded. one of the ones that actually we had like a tenant to them, right? And usually that's, I'm not talking about like a leak or something.

It got like, it was about to get flooded really bad. I didn't even notice. It was just on my like weekly report that it get from the mutual assistant that what's going on. Because I always want to know like what's going on. And it was it was just address 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 and mold remediation and all of that. Thank God it didn't get to any of this because we had to sit in like the first hour. And I think we spent about all in all, we spent about like $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 have been ruined and it wouldn't be a very pleased. an experience for my tenant either. But it was just in the first couple of hours and it was completely working fine, which was a, to me, it was a great win because it showed me that it can work specifically when I needed it to. Yeah, man, that's a great example because you're right. No one wants to 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? There's 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 by 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. And Pasha, thank you so much for being gracious enough to share a template or a blank template example of that, of your, what do you call that? I call it residential maintenance system XLX. Your RMS spreadsheet.

And so if you want to take a look at that spreadsheet template, you can go to biggerpockets.com slash 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. You can find me on Instagram and techie. Real estate, T-E-C-H-I-E-E-R-E-E-E-E-E-E-L-E-E-E-E-L-E-E-E-R-E-E-E-R-E-A, and also the website is Five-D-D-D-E-CORC. These are the two places that you can find me. Great, and you can find me on Instagram as well.

I am at the Henry Washington 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. Thank you, sir. Have a good way. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

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