How to Automate Your Rental Property Finances

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1:01How do you automate your rental property finances? Folks, at the end of the day, you know that you need cash flow. But how the heck do you automate your finances as a rental property owner? We're going to talk to baseline and go through their baseline method. It is organized, automate, analyze, and finally optimize. We're going to have this conversation with Saad. How you doing, buddy? Hey, good to be here. Doing well. Thank you. Awesome. Well, once you do me a quick favor, it's your first time on the channel. Once you introduce yourself, what you do and your role at baseline, and then we'll dig into into the problem or question at hand. Yeah, my name is Saad Dar. I'm a VP of partnerships and sales at baseline. I guess for the audience, what's relevant. I'm also a rental property investor. Nice. I have a mix of long-term, midterm, and short-term rentals. We'll see in the northeast. And I am a former CPA. That was the first phase of my career. And I used to prepare financial statements for large private equity and hedge funds. And so I also ran a tax practice.

2:02So I'll be talking a little bit about some of the financial topics that that part of my experience is relevant here too. I love it. No, and again, you got to understand the numbers, right? At the end of the day, you know, cash flow is like blood circulating the body. And if it doesn't stop or you're unaware that the cash flow is not there, the whole empire that you're building can really collapse. So why don't you break down the baseline method for us? It's obviously four steps. It starts with organized. What does that mean in baseline speed? Yeah, so this is something that we see very often. I travel across a country, go to a lot of real estate conferences. I've probably spoken to a few thousand landlord or investors in the US in the last couple of years, because the nature of the work that I do. And one thing that we noticed, it doesn't really matter who you are in terms of level of experience with finances. Most folks are very busy. And you know, some of you we may have just accidentally become landlord. Some of us have intentionally become landlords and scaled. But what often happens is because we

3:03didn't set up the right level of organization with what we call financial management. We lack structure. We lack clarity and we lack growth. And I'm a part of that by the way. And I'm a former DPA who loves numbers and spreadsheets. And I'm very comfortable with those things. And the reason that I find that happens is because we're too busy number one. And we maybe don't know how to do those things. So we kind of avoid those things because they feel like home work. And I rather just go build my really cool STR with nice furnish rental instead of like figuring out how to like sort my finance. And what happens is the sort of the the effect of that is we have a lot of financial stress. Basically. And this is something that a lot of people in real estate have. And they feel every day. But we're not talking about it. And we're not talking about something that I call financial management. What is financial management? Financial management, anything related to money, collecting money or paying the bills. And then, you know, looking at the whole asset management aspect of it to grow your portfolio. And so with organized what it really we're trying to

4:07say is do the basics right first, which is open a dedicated business banking account for your rental property business. The key term in that is business. And this is something that I often like to talk about because some of us and many of us are not thinking about rentals as a business. And guess what? If you have one rental or two or even renting a room, you just started a business. You're in business now. And so you want to separate the funds. And this is sort of like very very like beginnings, but step number one, separate business bank account from personal bank account. Yes. And there are many benefits to that, right? And so that's what we offer at baseline is a, I would say like the best business banking account in the US for landlords. And it lets you open accounts easily. So open a business bank account. That's sort of like step one. The other thing is dark separating your finances either by property entity or strategy. So meaning like if you do short term rentals or if you do bid term or long term, right, you can organize your bank account

5:11that way. If you let's say want to do it at the property level, which is a very popular thing that folks do on baseline, you can have a dedicated business bank account by property. And I can talk about some of the benefits of that later. Or you could have it by entity like let's say I have three LLCs because I have three rental properties. Well, I know I have to do taxes for each one separately. Sure. So why don't I organize my bank account, which is the heart of my entire operation that way so that I can have all the debits and the credits, the money in the money out together in an organized way. So I can easily understand what's going on. Yeah, I love this is a start because when I think about not only my journey, but the tens of thousands of people I've spoken to in the last eight years here on YouTube and school community and all that stuff, you know, a lot of new landlords, a are focused on the buying activity, which is, you know, very much one rental at a time buy box, write offers, all that stuff. But then, you know, you know, oh shit, I'm a landlord, all of a sudden. And then then they go to, okay, I've got to, you know, advertise, I've got to,

6:13you know, deal with tenant, you know, issues and repairs and things of that nature. It is quite common that the finances are left to, like they're almost not thought about. Yes, we got to collect rent and yes, we've got to pay repairs. But the whole infrastructure behind that is very often kind of skipped ignored. I'm busy, no time. But you really can, you know, you really can start it off the right way if you just take a couple of moments. Exactly. And this is by the way, common with all small businesses and not just for work. To be fair to all of us, we're busy, we're working, I get it. I'm in the same boat. And that's what, what baseline is doing, our mission is to make rental properties easier for folks that, you know, we make it easy for you to operate the business so that you can focus on the things that matter, right? And so again, opening a bank account on baseline takes like literally less than a minute. You can like fill out the application and it'll get approved within a few minutes. And, you know, that's sort of like step one.

7:18Again, if you then work with our team and our baseline method system, you can learn how to either, you know, set up the bank account by property entity or a strategy or purpose. And that really helps. So I'll give you one more example in this one. Okay. I'm sure everybody when you do a perform on your buying a deal, you have a vacancy reserve, you have a maintenance reserve, right? Because you know, if you don't do that, you're going to lose money somewhere, right? The reality is most of us don't actually have those reserves in real cash, right? We do it when we underwrite the property and we have a performance. Okay. Fine. 8% vacancy reserve. Okay. I put that in my model. But when you're actually operating, you don't do that. So if you have a vacancy or many months of vacancies, you're going to get hit with surprises and uncomfortable cash positions. And so at baseline, you can open up a dedicated vacancy reserve sub account inside of a bank account. And that allows you to move money over there. 8% of your rent each month, right? So that you keep that there in case you need the same idea for like a CapEx reserve or a maintenance reserve.

8:20I like it. Yeah. That's what you mean by organized. Yeah. Again, and you can set this all up upfront so that you know, you do it for the first one and then kind of rinse and repeat copy for the second one. Again, you're absolutely right. How many people have, you know, loan or rental loss or CapEx expense, but aren't actually putting the money away. Yes. And you know, like sophisticated investors that are larger, they have the money, the resources and the tools to have their own technology and people. Sure. Right. I'm talking about hundreds or thousands of units. The everyday person owns one to four properties. Yeah. Right. Maximum. There's some of us that have four to 10, then there's 10 plus. And for us, that's what base things build for is for each of sort of the mom and pop investor in the US that doesn't have this kind of technology, this type of platform so that we can help you run your operating system, your banking and your bookkeeping in a way that makes it easy for you to be able to scale. Yeah. And then just to close this out, we'll go on to automate next. It's just got to help with your quarterly reports or yearly reports just having it all there. I just got done doing taxes and let's just say being organized

9:25is very beneficial because I have to report income and expenses by property. Yes. You know, there's nothing better than being able to get a report by property as opposed to all the money coming into this big pile like, oh, shit, where did I go? What's it responsible for? So love that. So organize a step one. Automate is step two. What is meant by that? Automation. It's actually pretty simple, right? We want to automate all the little things that, you know, investors are doing one by one so that it helps you save time. Take back that time and be able to again invest a time elsewhere like buying a new property or with your family. And so there's a lot of things in here. For example, many investors right now are either in notebook keeping or spreadsheets. Those are like the two very common, very common things that we see. So what does that mean? No bookkeeping means you're flying blind. You're actually not making decisions based on data. You're just not not good. Not good. Don't want to do that. Spreadsheets error prone and you're probably not a financial wizard or a trained accountant. So you may not know what you're doing, right? And so we

10:30built our own proprietary bookkeeping system that helps you automate the property, the transaction level tagging. So what does that mean? That means if you get a water bill, you get a repair, you get an insurance bill, supply run for your rental property and STRs, whatever it is, baselines have built an AI engine with ML machine learning in it that analyzes those transactions and automatically proactively tags it for you. It says, oh, I think this is insurance or oh, I think that's a repair or, you know, hey, I think that is, you know, taxes being paid, for example. And why we're doing that? Because, you know, it feels like homework to all of us. And we want to automate it, but we don't know how. And so we built it. And so that allows you to either auto tag those transactions. Let's say you have receipts. I hate managing receipts. I don't know about you. Yeah. I'm not not at it. Not a not a fan favorite. No. Right. So then what do you do with it? Like you just don't collect them when you throw them out. Well, based on you can easily just upload it. And we'll digitize it and automate that part and then tag the transaction in it to the real

11:36dollars that you spent another example. We have custom rules. So let's say, Michael, I'm sending you money, but the AI doesn't know what that's for, right? I'm just sending you $1,000 a month. Who knows what that is? Yep. Maybe it's a Venmo transfer or a cash app or whatever it is. Then you can set up a custom rule that says, Hey, I pay my VA, my property manager, whoever this much on this date and this is the description. Automate that for me. It's a bunch of rules. And it says, Okay, I'm going to tag this as property management, for example, for property number a, right? With our rent collection, I still come across so many people, which is shocking that are collecting rent through Zell, Venmo, cash app or even checks still. And we're teaching not to do that. They're not built for rent collection. They're not secure. There's no automation inside of there's no late fees in there. And so we say to automate your rent collection, right? To that through baseline, you're going to be able to set it and forget it. There's reminders being sent to

12:38you and your tenants. There's late fees being applied. And there's bookkeeping being done automatically because we have the same system with banking and bookkeeping as you go. So these are just examples of how to automate one more is I have credit cards. I have an MX card. I have a chase card, whatever for my rental business. I want to pull those transactions and I want to tag them in the ledger. So I know what I'm spending my money. Why? Well, I don't want to overspend, right? Because again, if you're flying blind, you're making decisions based on feelings, not data. We don't want to do that. So the benefit of it is you can sync all of it in there into baseline, let the AI run and automate as much of it as it can. And then set up some custom rules that can take you like 85, 90% of the way there. So I guess let me paint the scenario. How would you like it if you have a few rentals? You log in. Everything is tagged instead of like worrying about cash and receipts and all that. You just go to your financial statements and say, Oh, okay. This is my revenue. This is my expenses. And you know, here's how much money I made. Basically, I like it. I like it. Well,

13:41so we go organize, automate and then step three is analyze again, having everything in the right place. You can finally get some real analysis on how each rental unit is performing as I'm guessing where this goes. Yes. And this is the most important thing. We already do this, right? All of us do some level of analysis. We're actually entrepreneurs are quite good at figuring out what's important and where to focus. That's that's kind of one of our muscles. But again, we're not financial analysts. We're not accountants and bookkeepers, right? Most of us. And so the idea here is what's the easy button? How do we make sure that we're making money? Most people that we meet, they have a couple of objectives with real estate. They want five, $10,000 passive income, maybe something more. They want to maybe retire early or maybe they want to leave like a legacy for their families, right? Or all of the above, right? But if we're not able to analyze our portfolios in a professional way and make decisions based on data, most likely you're going to fail, unfortunately, right? Like most

14:45businesses do in the US, right? And what we're teaching here is like, don't make that mistake. We all know that we need to analyze our performance so that we can make decisions based on data and avoid losing money and make more money, basically. And so this is what where we teach you to, once you've done the, you know, the organization and the automation, this is the fun part now. Now you can log in and you actually actually analyze real numbers of baseline. You can look at a PNL, you can look at a balance sheet, a cash flow statement, your schedule E as well. We have all kinds of reports. Why? Because we want you to look at each property's performance month over month, right? How much revenue do I make? How much do I spend in expenses? Where do the money go? Are there any spikes that I give you an example the other day? And this maybe seems small. One of the properties that have a $50 water bill on average last month, it goes to $200. Now, I didn't notice that if I'm just living and not looking at anything, but I log into baseline and

15:48look at a chart, it's very easy. Oh yeah, why is that 200? That's a good. Well, guess what? There was a plumbing leak. And I didn't know about it that rendered on there, right? And I'm like, wait, what's going on here? I'm losing like a lot of money here. And if I just left that alone, I could have been losing hundreds of dollars over the next few months. Oh, anybody got worse. Water leaks don't ever get better. Exactly. That's going to cause damage to the property and so on and so forth. So this is no longer just a financial homework. It's actually to help you run your business and make decisions based on data. Yeah, I can tell you how important it is to get a notification and alert whatever you want to call it when something's out of variance, whether it's a utility bill or a water bill or guard. I mean, whatever it is, anytime you see something that just becomes an outlier, that's like, that's like a red flag. That's not a yellow flag. That's a red flag. And I can't tell you how many times, you know, we've uncovered a water leak that, you know, the tenant didn't even know about. Totally. Yeah, this is one example. And so maybe your insurance

16:48company did auto renewal and they charged to change the premium on you and you didn't know it, right? And you're like, wait a minute. Hold on. Yeah. Right. And so those are little examples. And what we're building more is how do we use AI to proactively give you these sort of CFO level insights into your business? So it's the easy button. You don't have to do much. You log in. Are you going to see it? Or are you going to get alert? So baseline is moving in that direction of becoming like your CFO in your pocket, essentially. Yeah, I love the whole idea of the notion, the kind of division is CFO agent or CFO in your pocket. I think that's, I think that's the right way to go. Because again, everybody knows what a CFO is. At least most people do. It's kind of the person managing the money and the purse string. So I think that's, that's awesome. Well, let's close this out with optimized because I think that's, that's where a lot of people get stuck, right? A lot of people in my community got two, three, four, five units, you know, they're under 10. And, you know, the portfolio is just big enough where there's just lots of works and lots of annoyances. And sometimes it just takes, you know, optimization to kind of tweak it, manage for cash flow and really see massive improvement. Sometimes the best thing you could do is optimize

17:53your existing portfolio with small tweaks, which would actually be more beneficial than buying another unit. So talk about optimize. Yeah. So an optimize, you know, exactly. I think you hit it right on the head there. The in terms of like what we think about investors, right? We don't just buy deals, right? We buy them, we improve them, right? We increase to NOI, right? So we increase the valuation. That's what we're doing here. And so on that journey, again, now you have organized, you've automated, you've started analyzing your data. So now you're understanding signals of what's going on, what's, which property is working and not working? So one of my favorite analysis on base lane is a property side by side analysis. I'll look at all my properties for that month or that quarter or the six month period or whatever. And I'll say, okay, which one is the best one? Which one is making me the most money every every month or every year? Worse is which one is the worst one, right? And question marks, should I now go buy another one of those that's doing really

18:57well? Can I do that? Or should I focus on, you know, the one that's really bad? Do I sell it or do I like try to optimize it? Quote unquote. And it figured it out. So let's take the example of optimizing. Well, there you can say, okay, is my rent the right rent? Right? You can find out public information. You can go on Zillow, you can look at all kinds of information. We have a calculator on base lane's website that helps you look at your sort of like competitive rents in the area, right, for your address. Then you can look at all your expenses. Where did I spend all the money? Is there a way to decrease cost? Is there a way to renegotiate some things that we have, right? Maybe your loan was high interest. You forgot about it. It's been three years. Rates are coming down. Should I go refi? Right? Do I need to optimize that way? So those are the kind of things you can start to do as you, you know, optimize. The other thing you can do is now you have all these beautiful reports and financial statements. You can talk to partners. You can talk to other lenders that might be able to give you more money to go get another loan and buy another

20:01property. All these kinds of things are possible once you start organizing, automating, and analyzing things. And the goal of that is improve your cash flow and financial health, but then obviously also try to scale if that's your goal, right? You've got to know where the money's going. You've got to know where the money's going. And again, it's really important for me to understand and optimize. Because again, as you said earlier, buying a property is fun and good. It creates some endorphins, but it's only an event. You're going to own this for months, quarters, years, decades, hopefully. So you need to be watching where the money's going, optimizing, looking for red alerts and, you know, having baseline that kind of the CFO in your pocket is something not a lot of small investors have because they're just, they just don't set it up in the beginning like we talked about. Yeah, absolutely. For me, like the clarity is like heavily underrated, the financial clarity and the real states, we hear a lot from influencers about buy the best deal and get the most value and, you know, zero percent down. Okay, awesome. Great.

21:05Like you said, that's just the starting point. And when we get into the thick of it, we're not all talking enough about the management and the financial management. But once we do, and we start sharing with each other and collaborating and using tools like baseline, I think this helps investors win long term because they understand how important it is to make money now and increase the value of that property over the long term. So that's the idea is like better financial clarity and control, peace of mind, save some time along the way and operate like a pro. There you go. Well, folks, baseline is the newest partner to one rental at a time. You can see a special URL up there. Baseline.com slash or at I appreciate your time. Any closing thoughts? No, I would say that now that we all came off tax season, that's the only thing I have. Like we all were just thinking about this. Yes. I'll just share a story as a closing thought. My story is that a few years ago when I did my tax return for my, you know, whatever eight properties, 18 units,

22:05it took me like two Saturdays to do that. I hated it. I was like, this is insane. I don't want to do this. This year, because everything is on baseline, it took me about 20 minutes. And I'm not making that up. Literally, I went in, looked at everything, just tying things up, making sure it's accurate. Nothing is missing. Downloaded the report, shipped it to the CPA so they can prepare the financial return. So that's the value of like the saving time is like, yeah, you could do a lot of that with baseline. And I hope that folks follow the method. Folks, go to baseline.com slash or at OR AAT one rental at a time. Check it out. See what's going on. Thank you. I appreciate your time. We'll talk in a couple of weeks. Ryan Reynolds here for Mint Mobile, the message for everyone paying big wireless way too much. Please for the love of everything goodness world stopped. With Mint, you can get premium wireless for just $15 a month. Of course, if you enjoy overpaying no judgments, but that's weird. Okay, one judgment. Anyway, give it a try at MintMobile.com slash switch.

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