Tracking Your Results

Just as Forecasting is the key to your long-term success, Tracking will be the single most important activity you can do on a consistent, monthly basis.

You will not be able to stay on track with your goals if you are not analyzing your investment results and returns.

In the Starting Gate module we had you prepare a Profit & Loss Statement for yourself personally. Well guess what? Every investment you own will need a P&L done on a monthly basis.

This is the only way that you can ensure you are monitoring money in, money out, and staying on track with your cash flow goals.

You're probably wondering how you will ever have the time to do a P&L for every investment you own. Don't worry, in my Team Section, I will discuss the importance of you doing none of this work, but instead hiring experts to do the work for you.

Also, depending on your Entity structuring, you may be developing performance results on a per property AND per company basis. Your CPA and you then should meet at least quarterly to review the results and plan your tax strategies.

With real estate investments, it's very important to analyze if you have any areas where costs are increasing. For instance, the property tax rate gets increased, or the building is getting older and more deferred maintenance is occurring, etc. Noticing these red flags quickly will help you to determine when your next rent increase should occur so that your cash flow is not negatively affected.

Or, if you're in a soft rental market and getting tenants is difficult and your rent is already at the maximum fair market value, then it may be time to look into refinancing the property to lower your monthly mortgage, or possibly selling if the property is no longer profitable.

Every investor has a different set of financial criteria, but I personally do not believe it is EVER ok to have a negative cash flowing property. Therefore, I monitor expenses and fair market rents very diligently to get ahead of the trends and catch any warning signs that may be developing.

Remember, if your cash flow is diminishing then you will not be able to meet your financial goals. Obviously, every investor will have set backs. But set backs due to a lack of diligence on your part should not be acceptable to you as a successful real estate investor.

Without setting up these systems, you will find it impossible to remain profitable in this business.