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There are just some processes in your business that you need to do routinely. In order to make sure that you are following through with the consistency they require, especially if you want to be more efficient and scalable, then you need to have your standard operating procedures in place. In this episode, Dan Deppen discusses the standard operating procedures for your notes business and why they are important. He shares some of the lessons he learned that allowed him to set his business up for scalability and then lists down the tools you need to automate your procedures, along with a step-by-step guide on how to implement them.

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Standard Operating Procedures

What Are Standard Operating Procedures

I’m going to be talking about standard operating procedures for your notes business. This is an area I’ve been working on hard over the last couple of months. I’ve been planning on sharing this for a while. I’m happy to show you what I’ve got. I’m not quite totally done yet, but I’m starting to get there. We’ll talk about what standard operating procedures are and why they might be important to your business. If we look at the dictionary definition of what an SOP is, it means established or prescribed methods to be followed routinely for the performance of designated operations or in designated situations. That’s a lot of godly goop. What it means to me is it’s a standard way of doing things that you’re going to be doing on a repeat basis. If you have something in your business, no matter what it is, and you’re doing it again and again then it behooves you to try to standardize that operation so you can do it again. This is important for a whole lot of reasons.

One, it’s going to make your business more efficient. If you’re doing something again and again, why not standardize it and put it on repeat? If you look at where you want to be creative in your business, it’s not on things you’re doing over and over again. You want to be creative in aspects of expanding your business or doing new things, not this back-office stuff that you want to have on autopilot. It allows you to bring on help. If you grow your business beyond a few notes, at some point you’re going to need an assistant to help out. If you have these standard operating procedures, that’s going to make life a whole lot easier. As we get into this, we’ll talk about some of my lessons learned in that area and some of the mistakes that I’ve made before. If you are bringing on employees, you’re going to lose them from time-to-time for whatever reason, either things weren’t working out or they move on to something else.

If you have things written down, then it’s going to make it a whole lot easier to backfill for people when they move on to something else so it’s not going to be such an extreme crisis situation. Even if you aren’t bringing on an assistant and you’re doing everything yourself, standard operating procedures still help quite a bit. I have certain things that I do on a quarterly basis and a lot of times when I go to do them whether this is putting together quarterly reports for investors or checking on taxes. A lot of times, even though it may be something I’ve done a couple of times, if I’m only doing it every few months then when I start to dive into the task, my first thought is, “What the heck? How the heck did I do this last time?” I ended up wasting time relearning what I already did. If you have a script you can follow, it can save you a lot of time, even if you’re the one doing it or if you’re as absent-minded as I can be. What this whole thing is leading up to is making your notes business more scalable.

Parts Of The Note Business That You Need To Systemize

If you want to move beyond, “I’m buying one or two notes just for fun to see how things go.” You want to scale to not just having an assistant but having multiple employees throughout your business, you’re going to need to have things systematized and written down. The other main thing that drove me to this at first was having things fall through the cracks. I’ve said this before but one of the biggest challenges in notes is there are many little odds and ends and things going on with your different notes. You can’t always depend on your vendors to be on top of everything and to catch everything. It’s easy for things to fall through the cracks. If you have a good set of standard operating procedures and you’re executing on those on some regular cadence, that’s going to find a lot of these problems and prevent them from getting bigger. What parts of a notes business would you want to create standard operating procedures for and systematize?

I put these into different buckets. The big one is the portfolio maintenance of back-office tasks. This is things like checking the status of delinquent taxes, checking the insurance status, following up on notes that are in the legal process, following up on forbearance status, and those investor quarterly reports.

To give you some examples, I’ll admit I’ve done this. I had one a while back where a borrower completed a trial payment plan and forbearance agreement, at which point I needed to modify the loan and I didn’t notice that they had completed the forbearance agreement. I forgot to mod the loan until two months later. It wasn’t a big deal. It didn’t cost the borrower or anything. I got it all squared away, but I’ve got some systems in place now that will prevent that type of thing from happening. The other big one is the delinquent tax status where I’ve got a process in place now for that. What I do on a quarterly basis is I ordered some tax reports from ProTitle, then I go through the whole portfolio at once every quarter.

I’ve received a few letters before about notifications of the tax sale. If you’re new to this, nothing drives more panic than getting a notice from a county that property is being lost at tax sale. In reality, even if it’s already gone to the sale you have time to redeem and you can take care of those things. It’s not that big a deal. I’ve got things now on a regular cadence from checking those things so they’re never going to get to that point. There are a lot of other tasks that happen whether they’re marketing or other things that happen on an ad hoc basis. I was putting together my newsletters that come out every week or two and this show. I’ve got other areas like asset manager outreach, which I have divided into separate buckets. I’ve got my go-to set of asset managers that I bought from before. I reach out to them on one cadence and in one method over the phone. I’ve got other asset managers that I’ve interacted with that are more of the warm asset manager list that I’m reaching out to via email.

I’ve got cold asset manager lists, which are leads or people I know are asset managers but haven’t interacted with them before. I do that in another way. Maybe that’s another good topic for a future episode, the difference between warm or hot email and then cold email outreach, which you want to go about in a very different way. Processes for due diligence that I have in place, which I’ve turned into an online course, but then I have other systems for pricing. The big one too is onboarding a note. I’ll talk about how you can use Pipedrive to create some automations, to create activities when you onboard a note. The other one that’s bitten me before is closing out deals. When you either sell a property as an REO or sell a performing note, I’m always excited. You get wired money, and then I tend to forget about it. I went through and I had one of my insurance providers send me a list of all of my active policies.

I had a couple on there that were REOs I had sold months previous where the insurance policies were still active. I’ve got some processes in place on the back-end to make sure that I get FPI turned off and get all the loose ends tied up. A lot of the systems I use now are based on things I didn’t do so well the first time around. I had an assistant for most of 2019, which worked out very well for the most part, but there were some mistakes that I made in how I went about this. When I brought her on initially, it was at a point where my business had been scaling up and I started to get overwhelmed. At that point, I didn’t have all the systems together that I needed. The big problem at that time was I didn’t know what systems I need. I didn’t know necessarily all the steps that I should be doing regularly. It’s hard to systematize something if you’re not sure what you should be doing.

I was having major problems at that time with several vendors who were letting things fall through the cracks all over the place, particularly one loan servicer that was in the middle of a headquarters move. They’ve since gotten that squared away. At that time, it was rough. When I went out to hire an assistant, my main goal was to find somebody that was very detail-oriented and could find the problems and follow up on people relentlessly. I went out and I found that right person. We were managing most of these activities in Pipedrive. That went well but there were a few problems. The main thing was the way I had separate activities for everything in Pipedrive, it was impossible to keep up with. While she was very good at following up with things, we would get all these activities in Pipedrive that were overdue.

I would always look at the sea of red, which stressed me out. The other thing I didn’t do well was put bumpers and set expectations for the communication cadence. I’m a lot better nowadays about dividing my day up into blocks and doing certain things at certain times. Whereas, the communication came from my assistance was 24/7. I would get emails from her late at night, early in the morning and on the weekends. It was always this cortisol hit when I would get those because I would feel the need to respond. The other issue was I made such a big deal out of following up with vendors and making sure we got answers to different things. She ended up following up too much and a lot of times, there would be five emails sent where one would suffice and the tone wasn’t always the best. I began to become worried about the relationship with some of the vendors.

This whole process served its purpose at the time, which was I was extremely overwhelmed, I needed that to stop, and we were able to get through that. Now, the deeper into the business, the business is larger, I was able to step back and systematize this stuff a lot better. Instead of such a wild scramble to stop things from falling through the cracks, you’re almost like the little Dutch boy plugging the holes in the dike. I’m in a much better place now. The other problem with this previous system too was the way I have Pipedrive set up as we have got all the notes set up as a deal in Pipedrive and then different activities for everything that needs to happen. For each note, I would have activities for checking delinquent tax status regularly, checking the insurance status, checking to see if a payment came in and a lot of others. The problem was, especially when you start getting 50 to 60 notes, you ended up with hundreds of activities in Pipedrive.

Tools To Set Up Your SOPs

That’s hard to keep up with and they’re being checked on an ad hoc basis. You’re checking taxes on one and then you’re checking to see if a payment came through and then you’re checking other things. It’s inefficient because there’s all of this switching that goes on. Where I’ve moved to now is a system that has more batching. A lot of these routine tasks, I’ve got them divided up based on their cadence. I have certain things that happen on a quarterly basis. I’m checking taxes, checking insurance, things that happen on a monthly basis like checking to see if payments come in. There are other things that happen weekly like sweeping through the portfolio to check legal status on different things, then there are all these other half processes that get spawned. What I’ve got now is in Google Docs, for example, for checking taxes, a spreadsheet that has a list of all the notes and then the tax status. It’s the same for checking payments, so what we are doing is moving to more batching.

Tropical MBA

By batching and checking all of the taxes and payments at once, for one it’s more efficient because you’re doing less switching from task-to-task. By having one activity in Pipedrive that says, “Check all the payments.” Instead of having 60, it’s a lot more efficient. It cuts out a lot of clutter and a lot of the administration stuff. Even though I’ve been working this on my own, it’s been easier to manage. Batching is really key. I’m going to talk a little bit about some of the tools I used to put together these processes. One of the big ones I use is called Confluence, which is from a company called Atlassian. If you’ve worked in the software world, Atlassian is mainly known for software called JIRA, which is used for tracking software requirements, but they make other software as well. Confluence is a tool for creating an online Wiki. It’s free and easy to use. What I like about it is I can create these little Wiki articles for different tasks, whether that be how you warm asset manager outreach or uploading a podcast episode.

I can create this Wiki document and then it’s also easy to link to let’s say there’s a spreadsheet that needs to be referenced in Google Docs, like the one that checked payments. The other thing I’ll do a lot is to create little short videos. Sometimes I’ll make a little 1 to 2-minute walk through how-to videos and I can link to those as well. It’s a smooth process. I’ve been creating boatloads of these how-to articles for people to use and other pages. I’ve got pages in Confluence that describe the business. What I like about it is I can have a little paragraph at the front. The way I create these how-to standard operating procedures for doing something, I’ll have a paragraph that says, “Here’s why this is important. Here’s why it’s important that we check payments every month. This is what this feeds. This is why we do it.” I then get into the process. Let me open up one of these, finding a property manager, starting cold email outreach. You can also do things where you create screen captures where people can walk through everything. I’ll get into some of the other tools I used to do the screen captures and the videos.

One of the next ones is Trello. If you haven’t used Trello, it’s cool. This is a Kanban board. The way the Kanban board system works is you have these different tasks, then different buckets for each one, and you create a workflow where you go left to right. For my standard processes, I’ve got Trello templates set up and then in working with a system, I can look at my master cadence of what has to happen quarterly, monthly and weekly. For each week, I can set up the tasks that need to happen and I can load those up in Trello. As they get them in progress, they can move it to the next box. When it’s ready for me to review, it can move to the next box then I can add notes. It gives you a nice view of everything that’s happening and everything that’s in the queue.

The system that I use for this is based on a system that a friend of mine set up and created some nice videos for. He’s got a CrossFit training business. What he does is provide online CrossFit training, which with everything going on in the world, that’s a good business to have versus a physical gym. He’s got 7 or 8 employees that he works with. Trello has a good way of managing the status of everything that’s in progress. It’s easy for him to keep track of everything and it’s easy for his employees to let him know when something is ready for review.

Some of the tools for video, I use Movavi to record a lot. I like it. It’s very simple. You drag the portion of the screen you want to record and then you hit record and it saves it. It’s also cheap. I looked it up, it’s $39.95. A lot of times, I’ll upload the videos to YouTube. When I’m creating a standard operating procedure video, I can still put that on YouTube, but you want to set it as unlisted or private. That way, if the general public goes to my YouTube page, they don’t see all of the standard operating procedure videos that I have. That’s not what they’re looking for when they go there. I can create it unlisted or private and then linked to that within Confluence. I can give people access to Confluence so I can control the access to those videos.

You can also use Zoom to record. It’s free, cheap and easy. I like Movavi because it’s a little bit easier to use. You don’t have to create a meeting, leave the meeting and save it. It also comes with some fairly simple editing tools. I usually don’t do a whole lot of editing in my videos but if you want to do a little bit snip at the beginning and the end, Movavi makes it very easy to do that. The one that I like more than Movavi that I used to use when I was making poker training videos is Camtasia. It’s very similar to Movavi. It’s a little slicker. It’s a little less bare-bones than what Movavi is but it’s $249 instead of $39.95. They also have this yearly maintenance fee of $50. It’s worth it. You probably should use Camtasia but Movavi does the job and it’s cheaper so why to spend the extra money. If you’re willing to splurge a little bit on video, Camtasia is a cool tool that’s worth checking out.

Here’s another tool that which is also made by TechSmith. Camtasia is made by a company called TechSmith. They make another tool that I use called Snagit, which is for screen captures. This one is $49.95. I’ve used it for many years. I like it because it’s simple to take screen captures. You can set up your hotkeys to do screen captures. It comes with some of these simplified tools if you want to draw boxes around different things. When I’m creating standard operating procedures, I can take a screen capture of something I’m doing and then create some red boxes to highlight things. I can add notes and draw arrows and it makes it easy. It takes almost no time at all to do these things. That’s a tool that I highly recommend. I’m not sure but they might have some bundles where you can get Snagit and Camtasia together and save a little bit of money.

Now we get into Pipedrive. It is the CRM that I use. I like it because it’s fairly adjustable. I’ve modified my Pipedrive set up a lot over the years. When I first set up Pipedrive a couple of years ago, I use the Adam Adams videos that you can find out there on YouTube. I took some screen captures and set it up the way that he had it. Over time, I’ve changed a million things as I figured out how I went around my business and how I want to do it. One of the things I like in Pipedrive that they came out with, they didn’t have this for the longest time but they’ve got what they call Automation. What you can do in Pipedrive is when you have a deal which I set up a note as a deal. You can set up some automation so if you move it from one stage to another, tens of things automatically happen.

What I do is after I close on a note and I move the note from being in due diligence to being onboarded, I can have it create a bunch of activities automatically. Some of those activities would be things like verifying that force-placed insurances set up, sending out a hello letter to the borrower which I will often send out my own hello letters to the borrowers. I don’t always do this, but if it’s a nonperforming note that I’m going to work on getting performing, the first stage of my loss mitigation process is I’ll send out my own hello letter. This is in addition to the hello and goodbye letters that the servicers send out to meet RESPA requirements. My hello letters are nicely worded but say something along the lines of, “Your loan is this far behind, here are all of the details. Please reach out and give me a call so we can talk to you about getting things worked out so you can save your home.”

A lot of these activities that happen post-closing on a note don’t happen right away. Something like sending out the hello letter to the borrower, you don’t want to send that out until the loan transfer has occurred and the loan servicer hello and goodbye letters have come out. I might be sending that out a couple of weeks later. What I like about the automation in Pipedrive is I can not only create these activities automatically, but I can delay them. Some activities might be created immediately. Some might happen a couple of days later or a week later, I can set activities to happen a month later. It doesn’t matter. This makes it a lot easier because now I don’t have to manually go into Pipedrive and set all these things up. I get them created automatically and I get them created at the time increment that I need. That’s a big time saver. It makes life a lot easier.

The other thing I do within Pipedrive, there are a lot of times there are these different ad hoc tasks. They may not necessarily be a task that was created automatically when I closed the note or it may not be a task that I do in a batch. Maybe I got a letter from the city and I need to respond to it. As I create ad hoc activities and tracking the other ones, what I like about this is I’m able to create notes within Pipedrive. I’ve created an example one. Let’s say I needed the servicer to turn on force-placed insurance on April 14th, I asked the servicer to turn it on. What I can do is set the due date for the activity in Pipedrive some number of days later. That flags me to check to make sure that they didn’t. If they didn’t, I can send them an email that pings them and say, “What’s going on with this?” I can add in the notes like, “On 4/14, I asked them to turn on force-placed insurance, then on 4/20, I noticed that it wasn’t shown as activated yet in the portal. I sent them a note to go and get that turned on.” It creates an orderly way to keep track of these things. This is one of the big things I do to keep stuff from falling through the cracks.

Doing Mail Merges

The next thing I’m going to talk about is doing mail merges. A lot of times I’m creating documents regularly, whether these are hello letters that go out to the borrower. Sometimes they are JV agreements with partners or from hypothecating loans. It can be a loan and note paperwork. A lot of times, these are always following the same template but the data changes. You may or may not be familiar with doing mail merges within the Microsoft Word, but there are some other tools that you can use within Google Docs and other things as well. I found one called MergeFactory, which is an add-on for Google Docs. I forget what it cost. I think it was $20 or $30. It’s cheap. What you can do for example is let’s say in a borrower hello letter. This is the template of the letter. It will have the name of the borrower, the name of the servicer, the date that the letter is going out. The different loan parameters, the property address, P&I, the current balance and how far it is behind. I can put that data that changes for every letter in a spreadsheet, in this case, the Google Sheets. I can use this add-on and click a button and then I have a template of a Word doc that maps to all of those columns in the spreadsheet. I click the button and it’ll spit out the letter.

What I used to do before was I would do a Save As from a previous letter and then go through and update all these areas. I would inevitably make a copy-paste error where I would forget to update a box, then you ended up feeling silly afterward. Using a mail merge tool like MergeFactory for Google Docs is nice because if your template is correct, then you eliminate those copy-paste errors. You also save yourself a ton of time. It takes me a few seconds to go in. I just need to make sure my information is correct in the spreadsheet and then I click a button. The Word document or Google Docs get spit out. It makes life so much easier and it saves you a lot of time. I’ve got standard operating procedures for how to create these. It gets even better from my perspective. If I need to send a borrower letter out, I can ask the assistant to do that. They can follow the standard operating procedure and then use these tools so that it saves a lot of their time.

I can run through an example. One would be checking for mis-payments, which is a big one that I do every month. That’s one of my key ones. In the first week of every month, I’ll review every note to see if a payment came in. I’ll also note on my spreadsheet whether it was a regular payment they missed, they made a regular payment or they made two payments. If follow-up activities are needed, I’ll put those into Pipedrive. I don’t do all the follow-up activities. When I’m doing the activity for checking the mis-payments, I check for the missed payments. Let’s say somebody did miss and I need to send a follow-up letter to a borrower. I have all kinds of templates for sending other letters to borrowers. There’s the initial Hello letter, there are templates that say, “You missed the payment, what’s going on? Your taxes are delinquent, what do you want to do with this?” Let’s say they did miss a payment and I need to send a letter, then I’ll go into Pipedrive and create an activity for that. I’ll complete that later when I’m going through my Pipedrive activities.

Typically, the way this would flow is hopefully most of the payments came in okay. The ones that didn’t, I’ll set activities in Pipedrive to respond, whether that’s sending a letter or following up with the loan servicer. When I’m following up and creating those letters, then I can use MergeFactory in my existing templates for those. With this, I’ve got an orderly process for checking. I can intervene quickly when a payment gets missed. The key to loss mitigation is reaching out to the borrower when something goes off rather than letting them get way off track. Responding sooner is generally going to be better than responding later. The other thing I noticed too when I implemented this was when I sent out some letters that said, “I noticed you missed the payment. Please reach out to the loan servicer if you need help. Let us know what’s going on.” A lot of those borrowers made double payments the following month to get caught up. This is one of my key processes that I lean on heavily and that I get a lot of value out of.

I was going to talk a little bit about where a lot of the inspiration for this came from and a lot of the ideas. There’s another podcast called the Tropical MBA that’s been out since 2008. I’ve listened to it back then. The people who do that are entrepreneurs not involved in real estate, but they’re more general entrepreneurs. They’ve had several different businesses. The podcast started around building location independent businesses of which note investing is definitely one of those. I don’t live in the same state where any of my notes are. They’ve also got this other community they call the Dynamite Circle that I was able to join. It’s a great community. You have to get screened to get in.

It’s not expensive. It’s very cheap. It’s $200 to get in but you do have to have a real existing business and be doing stuff, which is nice. I like this a lot better than some of the other “masterminds” I’ve seen that charge thousands of dollars. A lot of the people there aren’t active operators. They’ve got a private forum and some other things. The people in this community are interesting. All kinds of different businesses, a lot of digital marketing agencies, Amazon-based, businesses, copywriting businesses, different things. A lot of these people have 20 to 30 employees working for them, scattered around the world and they share a lot of their standard operating procedures. A lot of them use Google Docs versus Confluence like I used.

I was able to leverage a lot of the things that people have already used and set up. The Trello system came from something that my friend who has the CrossFit business shared on there. It’s been a big help. You may or may not be able to join that community, but their podcast is good. They talk about a lot of different things related to entrepreneurship that I know I’ve gotten a lot out of over the years. It’s good to hang out with people who are building interesting businesses that are a lot bigger and more developed than mine. It’s a good influence. I don’t recall if I’ve talked about this before on the show, but some other sub-mastermind groups. There’s a group of a handful of other real estate investors that I talk to on about a monthly basis. With businesses that are different than mine, but similar and a lot of the same challenges. One guy does mineral rights in vacant land out of Texas. There’s another guy, he’s German but he lives in Brazil and he buys apartments at foreclosure auctions in Brazil, Sao Paulo, which is not for the faint of heart.

I try to surround myself with a lot of good influences and get a lot of good ideas for systematizing businesses. The thing that’s interesting about this community is even though they pride themselves in being location independent, a lot of these people will spend half the year in Thailand and half the year in Europe and they’re these freewheeling hippies. You would think that they wouldn’t be big on processed but they are fanatical about systematizing their business and developing good processes because that’s what enables them to have that location independence and be able to scale up. I’ve been trying to incorporate more and more of that into my business and that’s where a lot of the motivation for this comes from.

Hopefully, that helps you give some ideas for how to create some standard operating procedures for your business. If you’ve got any questions, please feel free to reach out. You can always reach me at Dan@FusionNotes.com. If you wanted to see more of the visuals, please check out the YouTube channels, YouTube.com/FusionNotes and we’d appreciate it if you could subscribe. I’m trying to do more on YouTube and I want to be able to add some links inside the YouTube videos, so that I can link to other videos of mine within there. You have to have a certain number of subscribers before they let you do that and I’m not quite there yet. If you could subscribe, that would help a lot. Until then, see you next time. Thanks for reading.

Important Links:

• Pipedrive
• Confluence
• JIRA
• Trello
• Movavi
• Zoom
• Camtasia
• Snagit
• ProTitle
• MergeFactory
• Tropical MBA Podcast
• Dynamite Circle
• Dan@FusionNotes.com
• YouTube.com/FusionNotes

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