Dan Botwinik, now 34 years old and owner of Cougar Capital, began his career in property in 2005. He had watched others invest in properties and done his fair share of studying but knew he was bound to make mistakes at first. For his first property, he wanted something that would be a safer investment, offer a lower return, require little work, and have several tenants to allow for one or two vacancies without putting him seriously under water. The first property he decided to invest in was an 8 tenant building which met his investment profile.
Dan did his financial and physical due diligence of the building and was happy with the purchase. However, within months he would realize he grossly overpaid for this building and to date it is still his worst performing property.
It wasn’t until 3 years later in 2008 that Dan purchased his second property. However, now with one building under his belt and a few years of hands on experience, Dan was savvier about finding deals, construction work, and property management. During those 3 years he spent a great deal of time further educating himself in the space. He went out and got his Construction Supervisor’s License, his Brokers License, and his Moderate Risk De-Leading License. Now, fully equipped with the expertise required to not only solve problems but also understand all costs associated with possible problems, Dan decided to purchase his second property on June 20th 2008. By September of the same year he had 50 units under his management and was consistently closing a deal a month.
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He initially tried to add as much value on his own to reduce overhead costs. He ran around doing collections, learned how to serve notices, and brought delinquent tenants to court. He would even consistently browse Craigslist for goods and equipment that he could use in his properties. One time he went as far to drive all the way up to Vermont to buy an old hot water boiler for $50 and remembers installing it, hoping it wouldn’t have any problems for at least a year. Unfortunately, even at 50 units Dan still had a lot to learn. By this point in his investment career he had picked up a property which was hemorrhaging money in the tune of $38K per year.
Dan eventually realized his true talent was in the actual management of properties, finding deals, and raising capital. He knew that if he continued running around doing the day to day tasks that he would never achieve economies of scale nor be able to maintain momentum and his recent rapid growth. He knew he needed to hire help. But, without a lot of money on hand and wanting to put every dollar into more properties, Dan looked for the cheapest help he could get. Unfortunately this approach not only cost him a lot more money in the long term but also a great deal more money in the short term.
One of Dan’s first hires was a bookkeeper. Dan was falling behind fast with his bookkeeping and knew if he didn’t have good bookkeeping he wouldn’t be able to provide timely reports to investors, know truly how profitable or unprofitable his investments were turning out, nor be able to get good banking support if he couldn’t show the value and wealth created by his management.
Focusing now on rapid expansion, Dan decided to put the brakes on property acquisition for a brief time so he could pool enough money to hire quality individuals across all departments. His goal was to put in place systems and a team to support them that could stand on their own and require little to no oversight to achieve the desired results. Thereby, allowing Dan to step back and see the bigger picture, and focus time on high growth areas and overall management. To Dan, management is three things: rentals, collections, and maintenance. All of which must be handled at high standards of excellence. By stepping back from the day to day, Dan was able to truly own a company and not a job.
First on Dan’s To Do List was to finally solve his bookkeeping headaches. He tried hiring a series of people who were relatively expensive but none of which worked because of the complexities and many moving parts involved with his business. He had several entities and companies formed each with their own investors, properties, vendors, bills, and tenants to track. Not knowing a ton about bookkeeping he frequently found himself hiring someone who seemed to be doing a good job, but months later would realize how far behind they had fallen and how messy his books had become. It became a cycle: hiring someone who couldn’t keep up with the books, the books becoming a mess, firing and hiring someone new to clean up, the books falling behind during the clean up, more mess created, and having to then hire someone new. He even hired a couple bookkeepers that were truly excellent at what they did, the only down fall was that they required Dan to work on their schedule and allowed their personal life to influence the quality of their work. Eventually, even these seemingly good hires resulted in tax returns not being filed on time, which angered Dan’s investors and thus angered Dan.
As bookkeeping mistakes piled up, so do the expenses associated with cleaning and catching up his bookkeeping. Every time he had to hire a new bookkeeper whether through Craigslist, Account Temps, a CPA firm that offered bookkeeping services or even just referrals. He would have to spend extra money getting the books caught up and cleaned up as well spend a great deal of time training the bookkeeper on his business. In all scenarios the bookkeeper or firm just couldn’t keep up with the volume of transactions, complexity, and growth Dan was trying to achieve.
Dan’s lawyer eventually recommended he reach out to a company called SmartBooks as he had heard they were making some waves in the bookkeeping space and were acting as a Virtual Finance Department for several funded startups, small businesses, and property investors in the area. Dan figured he might as well give them a try as other alternatives offered little hope. Within a short time of hiring SmartBooks to handle his bookkeeping, he immediately saw increases in efficiency that drove operational costs down and improved his ability to acquire funding for properties.
Using SmartBooks meant:
- No more filing, scanning, or searching through paperwork
- A better understanding of his business with improved dashboards and reporting
- Less time spent tracking expense reports and timesheets with a portal and mobile app
- No more mail or depositing checks because all mail and checks were now scanned and filed using an automated system linked to his mailing address
- His home office now had more room with a few less employees
With SmartBooks as his finance department, Dan could now sleep a little better a night knowing his financials were accurate, on-time, and the additional reporting he was getting from SmartBooks eased tensions associated with tracking and managing costs of much larger properties that Dan was beginning to acquire and had set his sights on.
In a few short years Dan has gone from not knowing how to buy and manage properties to building a truly efficient and effective property management firm, Cougar Capital. His recent push towards efficient and effective systems and services has laid a foundation for the multimillion dollar management firm. With the right management team in place and SmartBooks handling the bookkeeping and accounting side of his business, he has grown his portfolio to over 430 units and is expanding at a rate of about 2 properties per month. Proof of Dan’s success at building a top notch property management company is made apparent by his recent receipt of The Outstanding Landlord Award by The Bridge of Central MA.
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