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Episode 41
Why you've got to check out this episode:
3Rs - Read, Resources, Reflect
Read:
Profit First for Real Estate Investing by David Richter
Resources:
Marketing Secrets - Podcast
Google Sheets
Google Gmail
Asana
unroll.me
Reflect:
"Anything is how you do everything." - Anonymous
As a real estate investor, do you find yourself not knowing where the money comes and goes?
Do you rely everything on your bookkeepers and accountants to do money management for you? But often that is only once a year!
That's one reason why some investors just wake up one day and find out all their money is gone, and they don't know why.
It's about time to arm yourself with knowledge, so you take control of your business finances and have your business flourish.
In this episode, David Richter shares how while growing and building a real estate business from 5 deals a month to over 25 deals a month, he realized that as much money that was coming in, it was going right out again.
With the unique opportunity of being in every seat as a real estate investor, he found a calling to the company's finance seat to help them see where their money was really going.
And that's when the 'Profit First' mindset and the formula were brought into the open and helped turn around whatever outdated practices and beliefs about business finances they previously had.
Here, he talks about the two most important things you need to bear in mind to make sense of the whole concept of 'Profit First' and put it into practical use.
In doing so, you will not only keep deals going and coming in one after another but make profit a priority. That way, you make a whole system of making profit a habit in your business, ensuring long-term viability.
David Richter is an active real estate investor who has been essential in closing over 850 deals which include wholesale, turnkey, BRRRR, owner finance, rentals, lease options, and any other exit strategy you can think of.
David has helped real estate companies completely turn around from going out of business to building cash reserves through his profit advising company Simple CFO Solutions, LLC. He is the author of Profit First for Real Estate Investing.
His goal in life is to completely transform the Real Estate Investing industry when it comes to how real estate investors view their finances and – bring them true financial clarity and freedom.
Topics Covered:
03:04 - Eye opening experiences that helped him bring to light needed change in the finance aspect of real estate investing
07:20 - Reasons for most real estate investors losing control of their business finances
09:20 - The concept of the 'Profit First' formula and putting it into practical use
11:39 - One biggest mistake most real estate investors commit in their business
12:41 - A practical step to the 'Profit First' approach – the 'Golden Trio of Accounts'
17:35 - Get out of your own rat race and truly own your financial freedom
20:01 - Making sure you are on the same page with your bookkeepers and accountant about the 'Profit First' approach
24:03 - How to set up accounts for multiple portfolios
25:15 - The big benefit 'Profit First' mindset has given him considering he has no financial background
26:48 - How did the idea of 'Profit First' resonate with him
29:05 - 'Profit First' success stories he is most proud of
37:03 - Explaining what fractional CFO is
39:46 - The reason he loves this brand
40:55 - Book and podcast he recommends if you want to figure out marketing principles
41:40 - Cool tools he uses and enjoys
42:49 - A quote he believes to have helped him be a good steward of what he has now
Key Takeaways:
"A lot of investors, I feel like, if they just had knowledge – knowledge conquers fear. So, that's where getting this knowledge, that's why the book, that's why the message. That's why I love 'Profit First', of all, the whole story and message behind it. Because it arms people with that knowledge." - David Richter
"We're always thinking about, I need to pay all this and hopefully one day I get the benefit. That's where the profit first formula says, well, no, it's sales minus profit equals expenses, meaning I make a sale, I take my profit first. And then the expenses are what's left over to pay for that and fund the business growth and everything. But it's making sure you're healthy first, and you are actually profitable." - David Richter
"The biggest mistake most investors make is having one big bank account where everything goes in, everything goes out, and it's just a cash cow that's being tossed all the time. That's where having that one bank account doesn't give you control, doesn't really let you see what your money is versus what to spend on the business." - David Richter
"You need to make sure you have three main heroes always pushing your story forward for good that you have something besides the expense account that is making sure that you are actually profitable and healthy and going to win and have a good ending to your story." - David Richter
"Everyone wants time freedom, financial freedom like they're looking for the big freedom tickets. And you can't have that unless you have a system in place to keep the money and buy that freedom for yourself." - David Richter
"Make sure to find someone you respect in the real estate space, have them hold you accountable, so you don't just go off the rails buying all their properties just because you're emotionally involved with them." - David Richter
Connect with David Richter:
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