Profit First

Zac Ruiz [0:00] As most people know, we try to like, we like to try to get you guys out of here at 7.30. So we're just gonna let the show start, and we'll adjust as we go. So quickly, we're gonna go over the agenda of what's happening tonight, just kind of give you an idea of where the night's gonna go. So the 1st 10 minutes or so, we're gonna do some welcome, housekeeping, and we've got a pretty big announcement that we're gonna be making. Time depending, we're gonna go over the poll results, and if we don't have that time, it's available on your phones. We'll show you how to do that.

We're going to spend the next 15 minutes on a mixture between a really quick market update, but then kind of a focus on what we're calling acquisition loops. And so that's kind of how to generate more business, especially given what the market's happening. Then we have some forced fun. Everyone's gonna talk amongst yourselves for five minutes after the report, get some networking done. Then we've got our guest speaker, David Richter, who's gonna be talking about profit first for real estate investors, and then we're trying to devote a chunk of that time to Q&A. So that's kind of why we run a tight ship to make sure everything gets going quickly. So, welcome. Show hands, if you don't mind.

Who's here for the first time? All right. Yeah, very cool. Thank you for coming, but I love that a good core review have been a lot. So if it's your first time, we bring the movers and shakers in Asheville Real Estate under one roof, and we're gonna kind of go through that as we go. So, I will quickly introduce my esteemed colleague here. This is Rodrigo Afanador. He is known as a deal junkie. He has done over 300 deals since 2012. He's got two tornadoes of terror, I believe, is how he likes to refer to them. So, family of four. And we started this about a year, a little bit over a year ago now. Yeah, so this is Zach.

Speaker 2 [1:39] My esteemed colleague over here on this side of the table. Zach, he's the keeper of the dad, as you guys know, Jack of all trades. He can talk about anything. at length and in detail with a lot of insight. So it's always good to have good conversations. He's a happy father and husband and so much so that we actually took a two-month break at the very beginning when we started the meetup so that could be, he could be at home fully focused on what matters. So thanks to Zach, but we are off to the races tonight, aren't we?

Zac Ruiz [2:05] We have a lot to cover, right? So look, we are about that net profit, right? And so what is the net profit philosophy really quickly? So that's, we believe that you profit from the sum total of your networking, education and transactions. And our fun little thing is, you know, because focusing on your gross is just gross. Like, it doesn't really matter. So networking, networking, this slide is an interesting slide coming up here. How many realtors are in the room? All right, that is a good chunk of you, all right? So, based on the agents who checked in, we have 67 activistings, 21 million inactive volume, and $139 million closed in the last 12 months, right?

So network with the people who are around you. These are the movers and checkers, as we like to see. The community is strong. Next, we have education, right? So these are some of the topics that we've covered. We've covered everything from owner financing to lead management, short term rentals, skipping ahead, commercial real estate, everything but legal advice, which was great. It was three lawyers. We were trying to pin them down to get answers. It was a good time, actually. And then, tonight is profit first, and then, coming up, we have the power of local. So that's all we do. All we do is focus on education and bringing the right people in the room. Right?

And if you can't come to the room, look, we now have this website. where at the top, If you go to events, and you go to past events, you can see the poll results, which is what you all filled in when you came in. And then you can also listen to the meeting audio. Look at this, we're even on Spotify now. And blogs are coming soon. Blogs are coming soon. Those are a little harder than the audio. A little bit harder. So, um, we are leaning into that. The networking education as much as humanly possible, right? So the 2 of those together, this is real. So we calculate this based by attendance and the time spent at the event and multiplying everybody together.

We've done over 19,000 hours of networking and education since we've started. We've had, well, sure, we'll take a clap for that. Um, so this event ends at 7:30. If you go on after 7:30, the site automatically updates, it'll tally everybody that checked in, had the time you spent here, and that's just kind of a running thing. Um, so that wouldn't be possible without the volunteers. We can get a round of applause for the volunteers really quickly. Um, I just showed up today. That was amazing. It all happened. We're very, very lucky. So if you want to become a volunteer, help with networking, introduce people around, all you got to do is email volunteer at Meetup.AVLMetup.com or see Ms.

Ray Ray Hicks, who over here, who is hopefully helping you check in and feel welcomed. So, finally, let's can we get a round of applause for archetype, please? Whoo! So, our type has been our partner in crime since the second, third... Second, second, second meetup. And tonight is, unfortunately, our last night. So it is also Camila's birthday, the bartender, right? So if you could tip like it's your last night, 'cause it is. And they've been super, super generous and nice to us, so they've been an incredible partner. Um, and finally, we've got transactions. So if we could if we could pull the crowd real quick. Does anyone have any ideas?

Like, does anyone have an idea of what we could do to help facilitate or make more transactions?

Unknown [5:12] Just yell it out if you got something?

Speaker 2 [5:15] So rephrase it a different way. What would make it easier to do deals with the people sitting next to you? You were doing networking.

Unknown [5:22] Listing. All right, listings.

Speaker 2 [5:25] And how would you get those?

Zac Ruiz [5:30] So we need money and deals. And networking. enlistings and listings. You're on the right path here, right? So... Introduce people, where? We have a winner, winner chicken dinner here, right? So what if you could be connected to the perfect person? To sell, source, fund, or mentor, your next deal. So that's what we've been looking into and implementing, right? So we're introducing tonight the AVLmeetup member directory. So everyone who signs in, all you have to do, once you sign in, you go to the member area, and on the left, you'll see the member directory, and that's everybody who has an account. Little empty right now.

So what you've got to do is, you just go to your account, and you hit edit there, and you just fill out a little bit of questions, right? A couple of questions about your buy and experience, your business, your expertise, what you're looking for. Everybody gets a personal profile. You've already got one, even though it's empty, if you're a member, but this is where it gets cool. You can search the member directory for names. Oh, what was that person I met, right? You can also search it for companies. So if you're at a Keller of the world or an EXP, you can see who else in your brokerage is here or who else you work with. But then even better, you can filter by focus.

When you fill out the profile, you say, what is my area of expertise? Is it brokerage, buy and hold, flipping mobile homes? As everyone starts populating that, all you do is tap it and it'll filter the member directory for the people who are interested in that topic. Then you can go to their profile, get connected with them. And so we are working on getting transactions going, trying to help it more and more, because people have already done transactions from the group. But we're trying to track that and make it even easier. So more coming soon.

Speaker 2 [7:03] One quick note on that, though. So that direction. we said something at the very beginning, is only as powerful as the community decides to make it powerful, right? So if nobody fills it up, the profile, then the member directory is basically useless because there's no information there. Same thing at the beginnings we said, this group or the community is only as good as the people in the room. So invite people who are good people to be in the room with you. Same thing. So if you're in the community member directory, you want to fill it out. So that way there's actually value that you can receive, but then also you can give to others, right?

If you have an area of expertise, that's your moment to kind of shout it at the top of a hill without being obnoxious in any way. And then somebody who's very interested in that topic is going to be able to reach out to you directly and say, hey, you said you're really good at listings. I need help with the listing, and then that's where those transactions get to come together in a very seamless way. So please fill out your profiles. But Mr. Rodriguez going to take over here. All right, so the netprofit philosophy, this came from one of the many hours of brainstorming we had at a coffee shop, and it's been slowly growing and have had different iterations and thought process since January.

I think we announced it in January the 1st time. So, again, networking education and transactions. And so we're hosting 1st net profit summit. Build your way to real estate wealth with the net profits philosophy. June 24, June 25th. One of the reasons that this happened is because typically, if you wanted to get speakers of this caliber, you would have to go two places, right? I don't know how many people have traveled to some sort of event or a conference that's been real estate related, right? So you got airfare, hotels, et cetera, et cetera, et cetera. So this time, oh, where'd the speakers go? They're the best part, right?

So we've got speakers who are coming from all over the country to talk about different areas of expertise. Some of them you'll recognize, 'cause they've already been on the panels, and guess what? We got like some real experts here in Asheville, which we want to highlight. We need your help to highlight them. So join us in that. And then we also got people coming from all over. So, like, Jeff's coming from Charlotte, I think it is. leading expert in short sales, which may or may not increase in the next few years. And then we got Jerry Green, bottom left-hand corner. One of the best sales trainers for real estate investors in real estate agents that exists. Mary Hart.

She's not a local anymore, but she used to be, and she's going to come and talk about estate planning specifically. So, right? whole benefit, do a lot of transactions, earn a lot of money, but then what do you do with it to make sure it goes to the right places when you pass away. So it's happening. June 24th, 25th, Renaissance, that's going to be an idea of what the classroom setup is going to be. And then, obviously, networking. So we're gonna have a VIP dinner and cocktail party at the Omni Grove Park Inn. So that's where it's going to be right on the 18 year, 18 hole. Really excited about that. It's fancy. It's fancy. Yes. So they say. But most importantly, all the good things.

But why is it worth going? So this is why it's important to go, right? So networking, establishing one good relationship at that event can totally transform your business. And then education is you clip the learning curve. As our friend Alexis says multiple times. I've heard him say five minute conversation can cut down to five-month timeline on getting somewhere that you're trying to go. And then, of course, transactions. Our goal is that anybody who buys a ticket can get a 20 X return on that ticket price within the 1st 6 months after the event. So we're really like, as you guys know, we do everything that's very metric driven as much as possible.

So these are not random numbers that were coming out. So, thank you for showing up. 50% off today for general admission. What's it called? I hope I forgot the call.

Zac Ruiz [10:36] So that's the coupon. So, you know, we believe in, if you can't come, you can't come. We don't live stream this, nothing. So for showing up, if you're interested in it. Tonight only at 1159, 59 it goes away. On the left, you just put in the promo code. I showed up, and it'll go expiring by tonight. So that's a real thing. And we have a little surprise if someone signs up here. It will be fine.

Speaker 2 [10:56] Yes, so sign up for the surprise. We have VIP tickets, but we're not doing them discounted at all at any point for the purpose that you want to kind of trust that everybody who took the time and effort to do a VIP ticket at the VIP party is there for the exact same intention and, you know, effort to make the moves in the business that they want to make. I think we have, oh, yeah. But if you're a member. It's true, though. So, you know, you want to make, if you're going to spend that effort in the money to go do something you want to trust that everybody has comparable effort at the table, right? And so members get $50 off either ticket. Um, forever because thank you. And... There's more.

That's right. The one thing is, again, that we try to do everything collective is we do, if you buy a ticket, then you're going to get an affiliate link. So if you invite your friends, they're out of town, then you would get kickback on every ticket that is sold through the affiliate link that you have.

Zac Ruiz [11:51] And once you've paid off the cost of your ticket, Keeps going, right? So we're we're serious. Come make money with us. You can go for free. and then you can actually continue to make money as you go. possible for a lot of good returns. We're being asked to go back. So we will cover this again, but the coupon code is I showed up because you showed up tonight, right? So of the subset of our mailing list, you're the people that actually, thanks for showing up. Oh, we've got a link for the tickets. So, um, boom.

So if you just go to AVLmeetup.com, you'll see at the top there, it says netprofit summit, you'll also see a little banner that says register now and everything, and then you just, you just register now. So there's 2 types of tickets. Standard ticket, 499. VIP tickets, our premium experience, all the same things, plus the event recording and access to the speakers and hosts at the private dinner, and then everybody gets the cocktail. So networking a huge, huge part of that. And now back to our regularly scheduled show. Show continues. All right. So now we're going to put on our data hats, all right? So we are running a little bit late.

So if you want to see the poll results and that's very useful, it's the sentiments of the room, are people bullish, right? Do they think prices are going to come up or down? What do they think about rates? You can just check it out on your phone. So at the top there, you'll see viewpole results because the event is going on. And if you're so interested you can check that out. But today's focus, today's focus is on new listings and deal flow. I heard someone screaming out, we need deals. So let's talk about that a little bit. So 2 parts. Part one, new listings. So, I'm Zachary. I run the Ruiz Report, and this is our 37th month.

So we've been going since the beginning of the pandemic, tracking it month over month and seeing all the changes. This is the only thing you need to know, and we're only going to go over one slide, turns out. The number on the left was the amount for that month. So for under contracts, this isn't for last month. There was 878 for the report month. The top number on the right is the percent of change versus last month, so it would be versus February in March. The next number is the percent of change versus last year. So versus last March. And then the up and down is that the metric either declined or improved, not necessarily up or down. Days on market.

If you're selling a home, the longer it takes, the more days on market, that's bad. But if the average price goes up, that's good. So the color tells you whether it's good or bad, and the arrow is just the direction of what happened. So this is all we're focusing on of the Ruiz Report for tonight. Look at the top column. Month over month, 74% new listings. So when everyone's like, oh, I'm waiting for March. They were serious. They weren't lying. They really were waiting for spring to list their homes. But also 32% of people, or more people, excuse me, versus February, actually came to an agreement and put a home under contract. This is not nothing, right? And then 24% more home sold.

But remember, that is a lagging metric. Those homes went under contract in January or so, depending on their financing. Right? So there are a lot more listings this month. That's kind of the thing, right? So who got all of these listings, right? Like, just show hands just for fun. Is anyone's business booming right now? Did anyone see like a huge difference? for the studio or for the audience at home? Not many hands. Not many hands. Because there's no supply, right? We have been at historic, historic low of supplies. There's no real inventory, right? But the agents who did get those listings were top of mind, of course. So deal flow to part 2 of two. So enter acquisition loops.

So I'm in this school right now called Reforge. It out of Silicon Valley. for tech companies and tech startups, essentially. So these slides are from Reforge. But I'm gonna try and translate all this tech stuff into real stakes. I think it's really, really pertinent for how business models work, right? So as it turns out, you're not the only realtor or investor that's reaching out to these clients. Lo and behold, right? So, if we look at this, it says our target audience has established habits with other products, so call it realtors or investors, right? And you're trying to be a new habit.

You're trying to plug yourself into the places where they go to whoever they're dealing with currently, right? So you're probably familiar with sales funnels. And so this is called the R funnel. You've got your marketing as your acquisition, then your activation is calling them and getting them, keeping them around, getting money and getting referrals. This is a sales funnel that everyone's kind of used to. But it turns out newer companies that moved away from the funnel to the loop, right? The world's largest companies employ the concept of loops.

So funnels are bad in summer respects because you need more tactics, more channels, so that's email, phone calling, text messages, channels, right? More money to fund those things, and it's constantly more constantly changing. You're constantly fighting for more stuff. So here we're gonna talk about acquisition loops, and there are basically four main categories. You've got viral loops, content loops, paid loops and sales loops, and we're going to translate all this into real estate talk shortly. So realtors live into these three loops, and we're going to go over them. Right? So a viral loop. A client closes, right?

They send a referral to one of their friends that says, hey, awesome job, you gotta go talk to Zach. is a great realtor. They say, you know what, I will become one of your clients. They close, they refer, so it keeps going in a loop, right? That's the concept of the loop here. Think of Viral Loops as referral business. That would be the equivalent for the real estate business. And it's a loop, because the output, right, the referrals, create more input clients, and that, in turn, gives you more output referrals, which gives you more clients, until you're looping, like that. Right? Sales loop. So sales loop, is about building a sales force, essentially, right? So a client closes.

Now you've got some money. But you're overwhelmed. You can't handle everything. So you hire a team member. You hire a sales rep. Then that sales rep works, leads on your behalf, which gets you more closings, and once you reach capacity again, you have enough to hire more sales reps, which gets you more closing. And so now you're looping. This is what they call a sales loop. This is kind of like starting or growing a team. This is where you wanna be, in my opinion. Employee people is America, right? Let's create jobs and do all that good stuff. Then we've got paid marketing loop. This is where probably a lot of you live, all right?

We're gonna start with client closes here, because it's a little different for us. So a client closes, right? Which gives you money to buy more ads. A portion of the people who see the ads, click it. They become a client, and then they close, you buy more ads, and you keep going in a circle, right? This is the loop. Think of paid loops as buying ads or leads for our industry, but even reforged knows that paid loops are one of the least sustainable loops over time. Why is this? So to measure paid loops, you have to do what's called look on your row as, your return on ad spend.

And this funky looking chart, all that's telling you is that at the beginning, I spent 1,000 bucks, and it was only 4 months later that my users were starting to pay me back. So if I spend $1000 on leads, how long until one of the people who came from that initial $1000 leads actually closes a class, or a home, excuse me. What is my return on ad spend? What's the time? Right? And then who has more leads than they know what to do with? Who has a database of just cold leads that aren't answering that, like, you know, you think they're gonna buy, but they haven't bought in a very long time, right? So that is kind of where a lot of people fall.

They find their open rates are single digits and all of that stuff. And that's because of this concept here, right? So if you think of the total network as everyone who saw your ad, right? That's everyone clicking and coming into you or every lead that comes from Ops City that may or may not be interested. A subset of those people are actually looking to buy and sell, right? So they're good, but only a subset of those people are working or not working with anyone. They're an actual potential client. Your future clients live there. That's how this works.

But the problem is, over time, like you've seen with your email lists, you go from the most qualified, and you either convert, you don't, and then you're just left with the rest. You're left with the least qualified, right? So that's funky. So for the rest of us, what that says is, look, in order for paid loops to work, you need to convert quick enough where the money out gets replaced by money comes in. And the problem with that is from that cohort from the people who came in with those ads, the quality diminishes over time. So now we're going to talk about content loops, right? So this is, um, for us, this is where the Ruiz Report lives. This is where my business model lives.

This is where ADL meetup lives, right? This is the same concept there. And this is where part of your business could live as well, if you're into this sort of thing. So let's think about it. So the Ruiz Report comes out. It gets distributed to everyone on the mailing list, so all of your clients, they like that, and they have a friend who's looking for the house. They're going, man, I know this realtor he's got, look, you should look at his report. It's great. And a subset of those people, they like the information and they turn into a client. The next month, they get your mailer, and that's the loop here for this content, right? Very few real estate professionals employ this strategy.

So high quality mailing list, podcasts, all those content that you generate. That is that's what's considered here, right? So what does this have to do with being top of mind? I promise I'm going to land the plane here in a second. So look, this is the use case frequency spectrum. Real state is over here, multiple years in between contacts. Once they bought the home, they don't really need you anymore, right? For some time. But the habit zone is where the fastest growing products and most successful businesses are at. And that's between daily and monthly. This is where you want to be.

You want to be touching them for real estate on the edge of the habit zone because really they buy homes every year or more. So you don't want to talk too much, but just enough that you are still top of mind. So which large real estate companies employ this strategy? You ever heard Zillow? Right? So Zillow started on this site where you could just look for homes. But then they realized that once they looked for that home, they didn't come back. So their users were going down. They weren't able to continue looping them. So they added this estimate. And they send you emails to tell you whether your house is value in up or down to get you back in. Then they added content.

They started sending you articles about stuff to get you back into their ecosystem, right? So what's the best way to put this into practice? You generally combine loops? So, you send your content, and then you work the leads, and they send content and work the leads. It's the 2 things. The concrete example would be branded market reports. This company generated articles. You like that one? Uh, we have Elena in the front who has a couple YouTube videos that have gotten some views over time that she works those leads. The point being, all these people, the 74% new listings that came on the market and Bunkum, they knew exactly who to call. Right?

So if you're interested in that type of stuff, reforges the class that gives over these concepts, I can send some links. But we're gonna give you 5 minutes now on the clock to discuss kind of the market, that spring is here, there's much more deals going on, then if you're interested in loops and how you might use that in your business, we'll give you 5 minutes and bring you back right after that. All right, all right, all right.

Speaker 2 [22:47] Oh, yeah. So, um, voice networking, we're gonna get started here with David in 30 seconds, but first off, we had two people buy tickets really quickly. And so, we had this quick little celebration, and thank you for, oh, and one of them is not in the room. All right, well, when Daniel Castillo walks back in, we can all cheer for him, and Mike Smith, as well, bought tickets, so we do a quick little countdown. Do you guys help me? We start at five. Five, four, three, two, one. Whoo! Half a celebration. It's okay. All right. Well, I'm gonna introduce David Tyr to get started. Oh, there it is. David got his own.

Um, so, I've heard David speak twice on this concept, and, uh, it all started from the book by Mike McColowitz. I think that's pronounced correctly. Anybody read profit first, just the normal one? Yeah, so there's a couple people, and I know the first time I read it, I was like, Okay, this makes conceptual sense, but I have no idea how to actually apply it to the real estate side. I was like, I don't know where to find the taps anywhere online for what I do. And then, when this book came out, I got it right away, and I've heard David speak at two other events.

I did also a client to his, so I'm a little biased, full disclosure, but excited to have David talk to us about, you know, prioritizing what's important. So, David, thanks for being here. And, guys, big hand of applause, please.

Unknown [24:15] Awesome.

David Richter [24:17] Thank you. Can you hear me? Is it on? No. I'm just gonna use it the whole time like this, though, so... I am David Richter. Uh, let's see. Where am I? There I am. Okay, so how many have read profit first or profit first for real estate investing? either one. Have any idea what it is? If not, your mind's gonna be blown tonight. If you do know about it, You know the life changing. possibilities of it as well, too. Because what I want you to do is what they're all about, net profit, right? I really don't care about your growth. I care about what you keep in your pocket.

So how are you gonna keep doing the same amount of deals without anymore deal foil or anything, and keep more of it in your pocket. That's what we're gonna talk about. And you don't have to be a financial wizard anyway. I know I look like a financial wizard, like the numbers person. So, I totally get that's my MO, but my background is real estate investing. So that's why I have to put this light up, because I am not you lawyer, attorney, accountant person. Talk to them, but we're gonna be talking about some financial stuff. So that's what we're gonna be talking about tonight, and as the deal junkie as well. I want to put the slide up there. Okay, how many of you fixing flip in the room?

Is any fixing flippers? How about wholesale? How about rentals? How about Realtor? Awesome. So that about covers most of it? And had a guy come to me in 2019? His name's Joey, and he said, I hate fix and flipping. And that really sucked because that was his primary source of income. I'm like, okay, tell me the story. So he tells me the story, because there always is, right? We all have a story. So he said, I walked into my CPA's office just last week. She said, looking at your books, I never get into real estate. So I felt like that was a slap across the face. Then it gets worse. She said, you also lost $70,000 this year. So, yeah, that was like a gut punch to Joey.

But then he said, David, we were on Zoom, because this is the Zoom age, right? So we were on Zoom. And he said, David had actually gets worse. I had to go home and tell my wife. And yeah, that was the fun part. But it gets worse than that, because it was also the year that I tried to scale. I tried to do more. You know, I went from one to two deals a month to try to do three to four deals a month, to try to keep growing and growing and growing, was working the 8,00 hour weeks.

Speaker 4 [26:44] Then she tells me, the last kicker is, the CPA said, would have been better for you to work at McDonald's than have your real estate business.

David Richter [26:51] So it's like, it finally sinks in, and he said, Yeah, it was the year of growth, but it didn't turn out like I wanted to. He said to, like, Ashley, my wife started working in the business, and she started having seizures. It was so stressful. I mean, it was, it's definitely the craziest situation that I've seen come across one of them, I should say. They keep getting crazier. But that's where a lot of people are. We grow at all costs, right? You go to an event, not talking about this one. But those ones that you get on the plane to, or you see the latest Facebook gurus say, do 20 deals a month, you can do it.

Speaker 4 [27:28] Here's how you do it, and then you get their program, and you're like, what is this crap? You know, it's like, that's where Joey got sucked into that world.

David Richter [27:35] So he's like, do more, do more, do more. And he said, David, 2019, I did more deals than I've ever done, and I lost more money than I've ever lost. That sucks, okay?

Speaker 4 [27:45] I also tell you, from personal experience, 'cause at our highest point, I, in the real estate and investing world, have done probably close to 850 deals, and we were at one point doing about 25 deals a month, but spending 26 worth out the door. That math does not math anywhere. So it's like, we were doing so many deals, but it didn't matter that we had 25 people or that we had this big team and that we were doing all these deals, If at the end of the day, we couldn't get paid what we were worth, we couldn't do bonuses, couldn't do anything for the team. You know, like, the owners couldn't get paid more, like, getting paid the minimum amount, just to make sure that we could keep going.

I don't want you there. So if you've ever felt like Joey, 'cause I know this is a pain point of all of ours, 'cause I've whipped it. I don't want you to be there anymore. If you've never felt like Joey and you're on your way there. You're like, holy crap, like, it is going downhill fast, because I just am making money, but I don't know where it's going. I promise there's a way out. I've seen it happen 100s of times now, and I want to give you a simple system never to get here. So let's keep going. Here's the problem. Most owners, make money, but feel broke. Have you ever felt that? Like, I'm making money. Where in the world is it going?

You know, like, I just had the best month of my life and my bank account has $10 in it. We all have lived there at some point. But then, I think even deeper, it's, we don't know these three simple numbers in our businesses. How much am I making, spending, and keeping? What's coming in, what's going out, and am I keeping any of it? Can you pull those numbers on a monthly basis? If you can, great. You're usually ahead of 95% of the investing world, because everyone talks a great game, everyone talks gross, no one talks net. That's what we're talking about here. And even in deeper rooted issue is that most of us think as entrepreneurs, income solves all problems.

As long as I make enough, and I have enough deals closed, and that deal closes next week that's going to net me 6 figures, I'll be okay. That's gonna solve everything. And then you find yourself there 6 months later, a year later, 5 years into it, or like the guy I talked to last month on the phone. He has been in it for 20 years, and he's like, I never have felt like I've gotten ahead. It's like, you just keep living it over and over and over again. You know why? Because you're not playing the real estate game. You're playing the money game. But we're just using real estate as the vehicle. A lot of education stops the moment the money comes in the door. Hey, you got your 1st deal, great.

Good luck. You know, like, from there. Now you close it. What do I do with those dollars? Where do they go? What do you make, spend, and keep? If you're building a real business, We have to act like real business owners. But we've been conditioned not to be business owners, okay? We can probably agree on this, 'cause how many went to a traditional school? You know, like, you went to school, the 8 hours a day or whatever, how many have ever held a W2 jab? In your life? Might have one now? Doesn't matter. But we've been conditioned not to be the business owners.

School, if you fail, you're a failure, you know, like fall in line, go to school, get a good job, get, you know, get, you know, go out there and do 40 years of it, and then retire. Then you get into the job and it's the same thing. They're not treating you to be an entrepreneur. Or you might have had parents. Money doesn't grow on trees. No, we can't go on vacation there. No, you can't have that. No, you can't buy that. No, no, no, no, no. So we get all this money stuff. All these different things floating around in our head. Then we become a business owner, and we're like, you know what? I'm gonna break out of that. Even though they haven't conditioned me, I want to be a business owner.

I wanna make an impact. I want to make more money than I've ever made or anyone in my family's ever made. But then you get to be a business owner, and it's the blind leading the blind. Because you think that they have the answer. entrepreneurship does. And, like, as soon as I become an entrepreneur, everything changes. But they're giving you this BS formula. Sales, minus expenses equals profit, meaning I make a sale. I pay everyone else and their mother, and then hopefully, at the end of the day, I have some profit. Or the end of the year. Or when I sell off this business. Or when I sell off all my properties. Or that someday in the future, it's all gonna be worth it. Just like Joey, right?

Joey was looking for that one day event, like, 2019, I'm gonna do more deals than I've ever done. I should have a bigger banking account than I've ever had, right? Well no.

Unknown [32:25] That's not what happened.

Speaker 4 [32:27] That's not what happens to a lot of people. So I don't want you living there. It's a constant rat race. So what happens? You spend money to make money. But you just reinvest every dollar. I hear that term all the time. I'm reinvesting in my business, code four, I have no idea where it's going, and hopefully it comes back. You know, that's... that's that code. I've lived that code. before in the past. But then, from there, it's the hope and pray plan. I hope I make enough, and I pray there's some left at the end of the year, or whenever. That's what most businesses are built on. One of the biggest mistakes we can make if you're actually building a real business that you want to sustain.

Like if you want that sales loop and you want people to be on your team and you want to actually grow, then you need to know where everything's going. So that's where I don't want you just reinvesting everything with no plan with no intention behind those dollars. Okay, I don't know if you've ever been here. Do you run an accidental nonprofit right now? I love that the icebreaker was charity for the first one. Should we be giving to your charity? 'Cause a lot of people don't run a for profit business. Some of that is conditioning from the past. Maybe you feel bad about making money.

You've got that deep rooted, seated thing, whether it's a Christian thing, or whether it's, you know, from whatever religion you come from, where money's bad or evil, and you feel bad about it, or you just have no idea what's going on. In side of the business. I don't want you to be an accidental nonprofit. The purpose of the business is to be profitable. And I'm sorry for the ring. The purpose is to make sure, if you're running a for profit business, that you have a profit. If you want to have a nonprofit, set up a nonprofit, and then fund money into that.

But please, if you're going to have a for profit business, for the love of God, run it, like a for-profit business, where profit is the purpose. of that business. Your purpose might be completely different. We'll talk about that later. How many have played? Robert Kyasaki's Casual 101, right? What a great game.

Unknown [34:35] Love it, right?

Speaker 4 [34:37] Does this actually work? Look at that.

Unknown [34:39] Cool.

Speaker 4 [34:39] So, if you've ever played the game, or if you haven't, you literally are in this circle, going around and around, trying to land on the little green spaces, get enough deals to get on the fun track, okay? That's, like, the whole purpose of it, to get your passive income, to be greater than your expenses, and then you get to go to the fun track. When you jumped into real estate, from your W2 job or whatever, you thought you were here. You thought real estate is the fun track. I'm gonna have financial freedom. And then you realized, oh, shoot, I'm on a rat race. Now, instead of paycheck to paycheck, I'm living deal to deal.

Never getting to this fun track because our current habits aren't letting us get there. Because we know how to do the deal. We know how to make the money, but we don't know how to keep it. And I'm not talking about just tax time. I'm talking about when a dollar comes in, what do I do with it to be most effective in my business. I was talking with Fabian back there. Ooh, boy, here we go. talking with Fabia back there, and he's a wealth strategist, and he's like, you know, like, once people start building this up, like, helping people place that money. And I'm like, we're a step further back. We gotta get people profitable first.

We, like, gotta make sure that you know that you actually have excess cash. Like, I want you to be able to have a solid business. How many of you got into business for financial freedom. That was it, right? A lot of people, that could be time freedom, money, freedom, that could be all the different types of freedoms that we got into it for. That's why we jumped into this. That's where, though, our current habits, though, are keeping us right there. That's where I want to get you out of it, though. This is not all just doom and gloom. So I want to take you from the land of hoping, hoping I make enough to the land of knowing. What do I need from my business to make sure that it's profitable?

So that's where this is where it starts to turn around. We will have our formulas as real estate people, so here you go. Here's the magic formula. You got sales, minus profit, equals expenses, meaning I make a sale, I take my profit off the table or profit first. There you go, title the book. And then the expenses are what's left over to grow the business. But we're making sure the business is profitable, and we're making sure that you as an owner have what you need. Because too many people run around like chickens with their heads cut off, serving everyone else, and then making then there, if they go down, the owner goes down. Who cares? If the owner goes down, there is no business.

There is no helping other people. There is no putting food on your table or other people's table. So that's where I want to make sure profit is a priority and a habit in your business. So here we go. Three steps to become the wealthy business owner and avoid financial ruin. I don't want you to be where Joey was. I cannot stand there. I want you to be where Joey. Don't want you to end up like Joey. I want to help you along this journey, just with three simple things.

Speaker 5 [37:31] There's three big mistakes I see people make on the financial side of their business, and there's three simple solutions. What's the first one? Is you build your business on the hope and pray plan?

Speaker 4 [37:40] We already talked about that. Don't build it on that. Find what you need to keep. There's point number one. What do you need from your business to make sure that you are taking care of. So many people get into it and just say, I want to make more money than I've ever made in my whole life. Or I just want to keep building it, growing it. I have no idea what that number is. There you go. That lack of intentionality will start to eat away at you and eat away at your business. How many have read the book crucial conversations? Anyone? such a great book, right? I love that book. Life changing book. In chapter 10, it's called Retaking Your Pen.

And when you're born, you're born with your pen in your hand. The pen, metaphorically, is your self worth. Okay? So when you're a little kid, you're out there scribbling all over the walls, metaphorically too, and everywhere, because you've got yourself worth in your hand. I've got a six year old little girl. She gives no rats behinds about anything. You know, it's like, just have fun. Yes, I wanna wear a red shirt with red pants, and red shoes, and a red headband, and go to school like that. You know, like, I don't care, she goes there. You know, it's like, let her do her thing. She's just writing her story. But then, you get a little order, right? You go to junior high, high school.

What are they wearing? How are they acting? How do I fit in? How am I accepted by them? Then guess what?

Unknown [38:58] You give up your pen to someone else.

Speaker 4 [39:01] And now they're writing your story, and then you wonder why you feel so crappy all the time. But your pen's floating around, and someone else is writing yourself worth. That's a sucky feeling. As a teenager, usually we're too dumb to realize what's happening, and don't have a good influence telling us what's really going on. But at some point, if you're in this room, and you're doing deals, you're making that impact, you said, you know what, screw that. Give my pen back, I don't care about what anyone thinks. I'm starting this business. I'm gonna start writing my story again, and that felt good. Right? When you did your first deal as an entrepreneur. Didn't that feel good?

Do you remember your first deal? You remember that first closing? It was awesome.

Speaker 5 [39:44] Maybe I should just talk like this. Can you hear me if I talk this No?

Speaker 4 [39:49] I was like, We gotta find that. didn't do it for them, so...

Speaker 5 [39:53] But that's where you took back your pen, you started writing your story. You had that self worth. That first deal feels amazing. You get it closed. Money's in the bank, boom, it's done.

Speaker 4 [40:04] But then, just like Joey, you listen to Facebook guru land, or you go to these different events, and they're like, oh, wow, they were doing 25 deals a month, that sounds amazing, until you listen to the back end of, like, they're spending way too much, and that isn't the glamorous life that it is.

Speaker 5 [40:19] But then you base your numbers off of them as the business owner.

Speaker 4 [40:24] And then you're trying to do that amount of deals, just like Joey was. And that's where you're giving up your pen again.

Speaker 5 [40:31] And now, it's ruining your life, your business, your marriage, everything's going off the rails because your self-worth now is that comparison game monster. And now you want to get to a certain amount. And then you're not there. And then you feel bad. I was on a phone with a guy about two months ago, and he said, okay, I just had a $500,000 a year last year, and then a net profit of $300,000. That's pretty good, right? That's pretty good in the real estate world. Very high margin. He's typically wholesaling properties. And I said, how do you feel about that? He's like horrible. I'm like, what? Why do you feel horrible?

Because he said, I'm a part of this mastermind where most people are doing 7 figures.

Speaker 4 [41:11] I should be doing that. I said, how old are you? 25. doing 500K and 300 net profit. I'm like, okay, wait a second. think our priorities here are a little screwed up. Right, but that's where most people live.

Speaker 5 [41:26] They just compare themselves, and then you end up like Joey or this guy who, this guy was the opposite of Joey.

Speaker 4 [41:31] He was doing really well, but felt bad about it. where Joey was really in a bad financial strait, and felt bad about it.

Speaker 5 [41:38] But that's our perspective. I don't want other people holding your pen. I want you to take it back, because you've got that self worth. So how do we do that? That's what I want to teach you here. You need to find what you need to keep on a monthly basis. That's what owner's comp is. I'm gonna use that terminology several times, owner's compensation, but you need to know what you need to keep from your business. So pre-profit first. You're doing one of 2 things. You're either starving yourself or starving your business.

where I was interviewing one of our clients on the Proud 1st RI podcast, and you said, I used to stand up in front of my in front of my employees and say, I'm not taking a paycheck for you.

Speaker 4 [42:17] And that was supposed to be motivational to them while they're all scrolling on indeed. you know, like underneath the table. You know, it's like, that's where a lot of people think that they need to be sacrificing all the time.

Speaker 5 [42:29] For multiple years. I'm not saying there's not going to be sacrifice at the beginning, but it doesn't have to be like that forever or for years at a time. Definitely not as long as this guy, this guy was in business for 7 years in the real estate world, had done 100s of deals and was still living like that.

Speaker 4 [42:45] You don't need to do that. It's like, there's a better way out, but we were there too. We had grown that bigger business.

Speaker 5 [42:52] It's just so many people fall into this trap. That's where Joey wasn't doing a ton of deals. At the beginning.

Speaker 4 [42:59] That's where you have to make sure you have a process for, where's my money? And am I keeping any of it? And what do I need to keep?

Speaker 5 [43:07] So don't starve yourself or starve the business. Star of the business is the opposite extreme. You do your 1st flip and you buy the Lamborghini, right then.

Speaker 4 [43:15] Most people don't have that problem, though. Usually it's the star of the business thing. Usually there's much deeper things around money. Let's just be honest. Money is an emotional topic. It's an emotional issue. It's tied to a lot of things.

Speaker 5 [43:26] A lot of us based our worth, what's in our bank account. Okay, I've lived there. This is why this has helped me tremendously, break out a lot of that crap. So I want, at least for you, to know what you need to keep, so you don't have to be thinking about the money as much. I know we're talking about money a lot, and that's what my topic's about, but this is all, so you don't have to be worried about it constantly. So you don't have to be thinking about it. So you can enjoy what the money's supposed to provide for you. So here we go. More is not equal better, better equals better. So many think, I'll scale out of this problem.

Keith Cunningham puts in his books, you scale cancer, the tumor grows. I don't need you to scale a cancerous business. If, okay, I'm just gonna pour more money into it, and that's gonna fix everything. No, we need to make sure that the business is built better. So how do you actually conquer this? Number one, find that keep number. Number two, make sure that you build a business plan around what you need to keep. Like what do I need on a monthly basis to bring home to my family? I also have a form at the end that you can download 6 questions to ask yourself. Put this in front of your spouse, too. What do we need from our business? So that way you can stop asking me, when are the groceries?

You know, like, when will I have money for groceries? Or like, when can we go out to eat? That type of stuff. The stuff that happens to everyone. So that's where I want you to have a simple plan of this is what I need to keep. This is how I find that number, and I want to make sure you're at least getting that first step. Don't build your business on the hope and pray plan, know what you need from your business. That's where Joey sat down with him. Did that exercise. He found what he needed to keep, and he came back to me and said, David, guess how many deals I need to do, because I did the math. This is what I need on a monthly basis. This is what it translates into deals.

And he said, you know how many? I said, what, back to one or 2 a month? He said, no, I need to do 5 deals this year in 2020. I'm like, what? Five? He's like, yes. He's like, before, and I don't know if you've ever been here, he had a rental company, which had a couple rentals in it, not a great amount, but he was taking cash flow from his rentals to cover the deficit in his fixing flip business. So, kind of stealing his own cash flow to cover the holes in the other business.

Speaker 4 [45:38] You know, if you've ever been there, or I had to take personal money and put it into the business, and, like, I'm reinvesting into the business. Well, you ran out of money. So that's not a great plan. But that's what Joey was doing. And I said, Okay, five deals. Can you do that? He's like, yes. And I don't have to work 80 hours, a week, this year to do that.

Speaker 5 [45:57] Which was freeing mentally to him. Like, he was beginning to see the light at the end of the tunnel just at the very beginning. So this gives you a better North Star right out of the gate. So find what you need to keep, find that number. Number two create the actual system. So I'm gonna just give you everything. I don't care. Like, you can buy the book or not. I want to at least give you the overarching framework, a profit 1st for real estate investing, or real estate, if you're an agent. This is a core fundamental system that you can put inside your business. This is how to know what you're making, spending, and keeping. This is the other big, the 2nd big mistake a lot of people make.

You have one big bank account. Okay?

Speaker 4 [46:37] I know your secret. You have one big bank account, and you manage the whole business from that one big bank account. Money goes in, money goes out. Do we have enough today? Yes, we can spend the money. Do we have any money in that? No, well then hold off on everything. You know, so that's where there's no clarity, it's just confusion with the one big bank account.

Speaker 5 [46:55] And then you feel guilty about taking money out. You say, is this mine? Is this profit? Is this for the IRS? Is marketing still going to run?

Speaker 4 [47:05] Is payroll still gonna run? Then you really manage the whole entire business by bank management, bank you know, bank balance management, but you have one big bank balance, hopefully, and hopefully some days it's big, and then the other days where it's not, you're just like, nothing.

Speaker 5 [47:20] So I want to give you clarity around this because I'm not going to stand up here and tell you, you need to become a QuickBooks expert, and you need to become this financial wizard. No, you're gonna do what you've always done. So why don't we put a system around that? So what is it? It's a modernized envelope system. Love Dave Ramsey or hate him? He's got some good principles. There's just some laws of money that work. And one of them is telling every dollar where to go.

Speaker 4 [47:47] For your personal life, but also in your business. That's what this is all about. Making sure you know where every dollar is going and that you give every dollar a name.

Speaker 5 [47:55] So then from here, what do we do? We're gonna bank balance, manage it. We're gonna account it with the bank balances.

Speaker 4 [48:01] And you say, wait a second, you just told me like, but now I want you to set up multiple bank accounts and name them specific names and tell the money where to go. which is like, boom, mind blowing, because it's so simple.

Speaker 5 [48:13] It is a very simple system. I'm not telling you anything new or fangled here. This is just something for you as the business owner to know where your money's gone. Where is it and can I get, can I direct the dollars instead of it just, you know, jerking me all around? So I want you to have bank balance accounting, but have it work for you. Okay, like I said, I'm a numbers guy, but I also look like I love Harry Potter and Star Wars. So I get that MO too. But I love the big epic movies where they have Harry Ron Hermione, Lou Conleia, you know, the big heroes, the 3 main heroes, making sure good wins in the end. Okay? That's what the whole point of their role.

Your business that you're building right now is your epic saga. Okay? It is your Star Wars. It is your Harry Potter. It's your whatever you like. But that's where you have to make sure there's three main heroes. There's the golden trio of bank accounts to open 1st that are the heroes of your business to make sure you win in the end, and that you're winning today. And that's not some event in the future. So what are those three bank accounts that I would open up right away? Profit, owner's comp, and owner's tax. This is the secret right here. This is to help you know what you're keeping. I'm giving you the framework for make, spend, and keep.

These 3 bank accounts help you keep more, intentionally keep more of the money that you're making. This is where people have said to us, like, where was all this money going before? You know, like, now I see the money start to accumulate and start to build up in there. This is fun. This is where we can do fun stuff with the money. But what's the difference between these accounts? Owner's tax is pretty self explanatory.

Where instead of, if you're doing any type of active real estate investing and you always owe taxes, don't scramble at tax time and get the financial headache and financial heartburn of tax time of like, oh, shoot, it's tax time, I got to do 4 deals right now to cover this tax bill. It's more like, let's spread that out over the year. From every deal that closes, a certain percentage goes in there, and we don't have to worry about it until tax time. The other 2 accounts are my favorite, because profit is the icing on the cake. The difference between these two are frequency that you take out and their intended purpose. So how often do you take out a profit?

I would take up to 50%, every quarter, and then do whatever you want with it. This is the icing on the cake account. This is your Y account. Why did you start your business? It was to be profitable and use those profits for some reason. Take the trips, give to charity, do the things that you want to do. That's the profit account's purpose. The owner's comp account is to make sure you get out of your rat race and you have a habit in your business to pay yourself. I've literally, this is why I'm so passionate about it. I've literally been on these calls with people, making 7 figures plus, and they're paying themselves 30, $50,000 a year, and, like, scraping by.

They could almost go in, you know, like, and get food stamps sometimes, because they're not paying themselves hardly anything, and they're scared. They're scared about the money that they're able to spend or not. Or you're just spending money and you're like, I don't know where it's going, but at least there's always something there. This is giving you a system to actually know. This is how much I'm able to pay myself. This is where it's coming from, and this is how much I have in reserve, to be able to get out of my rat race. Because then you start filling up that account, and maybe you have two, three, four, five, six months worth. Is it time for a pay raise?

Or do you want six months worth of reserves? Like, then you have options. But that's what these accounts are for. Very simply. And this is not just for real estate investing world. If you're an agent or any type of business, this is where the fundamental principles can help you. Just focus on what's important in your business and where the money should go. So what are the other accounts too? I want to help you know where you're making it and spending it too. Apex, you already have. That's Voldemort or Darth Vader, you know, it's a bad guy of the business. Opex is where everything's going out of, that's what you spend.

Then you've got income, which would be a separate bank account that you set up, you could call it deposits as well. It's where the money is made. It deposits into that account, and then you make physical transfers from income to the golden trio first, keeping your money, profit first, and then transferring to Opex to keep the business going in the marketing and the payroll, and, you know, all the stuff you still need to spend. But that's where it's giving you power over every dollar. Because even at the beginning, even if you're only able to do like one% to profit and the other accounts, at least you're getting in the habit.

The point is the habit, not a system or the hack, you know, or whatever. It's more of you getting into that. You want to know the real secret? It's just making sure you don't spend every dollar that you make. That's what this is all about. Giving you a system to give yourself a fighting chance to build a real business. Number 6 there is the get out of the Ponzi scheme account. That's the OPM account. How many have ever borrowed money from a private lender, a hard money lender in the real estate world? Anyone? No one. You're all loaded. That's awesome. So this is the room I need to go to if people need money.

But if you're borrowing money from other people, the OPM account, other people's money account, is that if you borrow it from them, you put it there, and then you don't mix it in with those 1st 5 fundamental accounts, so that way now you have rehab money that's designated for the rehabs. So you don't get tempted to touch it and be like, oh, shoot. Project A is not done yet, but project A's, lenders, funds are gone. I need to now go to lender B to ask for money for project B, but maybe a little bit more to cover project A 2, and then it's just the, here's the cycle. Here we go. Ponzi scheme, starting to roll. real quick, because now, you know, lender Z is now covering projects A through M.

That's where I don't want you getting into that situation. OPMs to help you know, this is for the projects that we have going on, and we're not going to mix this money in with the rest of our money. There's the fundamental accounts you set up to give yourself a fighting chance as a business owner to know where your money's going. How am I doing on time? I want to make sure that I'm doing okay. Two minutes? Just... five minutes? Here we go. We gotta really go, then. Taps, you can have this sheet. I'm giving it to you at the end. These are targets of where you should be, depending on the size of your business.

If you're selling, the top could be for agents, or if the end goes to sell the property, the bottom is if you're going to hold the property, then these are the percentages based on the size of the business to try and shoot for. This is not gonna be where you first start. Because probably right now, it might be 97% opex and 3% to everything else. But this is a goal to shoot for. So from here, I know Joey was one of the ones that was like, oh, that's a lot of bank accounts. But then once he saw the visual picture, because he's an entrepreneur, like, I know where my money's going. Like, where's it coming from? Where's it going to?

Where's my taxes, my profit, the income for the other business, OPM rehab. Then on the other side here, he was able to give himself a tax refund. The last 2 years because in the tax account, he had more than what the tax person said. If I had enough time to tell the story, he walks in, and then she tells him the amount, she says, you know, like, here's the amount. He tells her that I have the money, and the last 2 years, he's had over 10,000 extra that he saved. So 1st year he bought an RV. Second year, he gave to a camp for kids.

And this one up here was from his 1st profit draw as a business owner that's on profit 1st to be able to say, hey, I took a mini vacation, a 3 day vacation in my local area, but I used the profit account and didn't have to touch the rest of my business money. That was very freeing. Then, the third point, build the wealth habits. This is probably the third failure I see, and a lot of mistakes that people make, is they don't have wealth habits inside their business. They don't know how to keep more. Here you go. Here's a simple system. Every week, move the money. So now that you have the bank account set up.

If there's ever money and income, just make sure by Friday that the money is moved to the other accounts. So now you've got a system to actually say, okay, I'm keeping more of it. I know where my money's going. So move the money once a week. If you're like, Hey, I don't do a deal once a week. That's fine. If I'm saying, if you close a property, then by that Friday, that's when you should move the money. 'Cause Joey did it once a quarter of the first year in 2020, because he only sold five properties. He did.

He set that goal and hit that goal, but had the best year of his life, because that's where he was able to also focus on his family, the things that mattered, and do the deals he needed to do. So move the money, to review the money. So every month, review it, because now you have a framework for make, spend, and keep. Make it is the income account. So what is coming in, spend the opex account, what's going out, and then the keep accounts is the golden trio. So now you can see at least, from the entrepreneur's point of view, where's my money coming from? Where's it going? Where am I spending it? And am I keeping any of it? From the bank account level.

Most people don't even have that clarity, let alone diving into their P&L balance sheet and cash flow statement every month as well, too. Because that's advanced. So we'll get there. But that's where with here, I want you at least to know where your money's going, to have that, like I said. the fighting chance to be the entrepreneur who has a profitable business. Then every quarter, take the money. This is the real secret. You don't feel like a business owner because you're not taking the money and using it for what you wanted to. Why did you start your business? Think about that. Why did you start it?

Is your business helping you get closer to that goal, or do you feel like it's a drain on you? Like Joey did at the beginning, where it's like, why am I putting this amount of time when my ultimate goal is to spend more time with my family and to give, you know, like to give to charities and such? He was not hidden that in 2019, even though he did more deals that year than ever. That's where our goals and our actions have to align. They have and you have to make sure the money aligns with that as well. So take the money. Up to 50% out of the profit account every quarter and have fun with it. If you have bad debt that's crippling you, take up to 90% out, and use it to knock down that debt.

That's the other big thing too, lots of people in the real estate world have debt that they don't like. Let's get that out of the way as well, and then use the profit for the fun stuff. So find what you need to keep, create your wealth system, build the wealth habits, make sure you take back your pen. He had self-worth to pick it up at one point. Find your keep number. Find that number and attack it aggressively. Here we go. So then here, in the, this is Joey, and I said, do you really want me to show this picture? He's like, yes, this is 2019, Joey. This is 2020. Being able to actually focus on other things besides just the rat race the 80 hour weeks.

Then, this is the slide that always gets me. So here we go. He bought an RV last year with his tax refund that he gave himself from 2021, took a three-week road trip, because he had filled up all his profit first accounts by June of last year. and then took a month off with them, and that's part of the purpose of his business. On the right hand side, that's why I love that they had the question, what charity are you giving towards? Joey gives to a camp for kids. And he's like, I wanted to hit a certain number this year, like a five-figure number. Then he told me, he bumped it up to 71,000 in the last quarter, then he sent me at the end of the year what he was actually able to give. $71,500.

I called Joey up and he said, you realize you gave $71,000, right? He's like, yeah? I'm like, do you remember what you lost in 2019? He's like 70,000. I'm like, do you see you gave 70,000 this year? And then that just lit him on fire. He was like, you gotta tell people that. Because that's where he didn't touch his profit, didn't touch his owner's cop, didn't touch the operational expenses, didn't touch anything else, and was still able to give $70,000 from one account. The purpose of your business is to be profitable. So that way you can go out there and do what you were born to do. I want you to unlock your full potential.

So many people let money stop them from becoming who they're supposed to be. You don't need to do that. There's a simple system out there. that has changed my life, other people's, if you could just implement any part of this. It would be a win. Number one, find that keep number. Most people don't even have that. And number two, set up the accounts from there. So from here, I'm just going to skip this. What I do? I'm just going to give you the stuff. Full copy, a profit 1st for real estate investing.

So if you want the full book, it's the e-book, because that's the easiest way to deliver it, but I want to give you a fighting chance to go even deeper and say, okay, what accounts do I set up first? How often do I do them if you want more information? Get the full e-book, and then the find your keep number worksheet. Then you could schedule a call with our team if you want to. It's going to be me on the phone, because if you come from Rodrigo or anyone, I want to make sure that I take care of you. You have a big team, but I want to make sure that you get personal connection. So also here.

I want to give you the cash flow multiplier, which is a simple spreadsheet of like, if the money comes in, where should I put it, and how do I divvy it up, relay, which is a profit 1st bank now, they have officially signed that contract, and you can literally go online, create an account tonight, and have the profit 1st system, like, start to set it up, because they do, like, up to 20 bank accounts for free. Then the tap sheet. So if you were wondering like, okay, what target should I be shooting for? This is the targets for real estate investors and agents, then profit 1st for personal. I get asked a lot. This works great for the business. What do I do in my personal life?

I did a little video walkthrough and a spreadsheet for proffers for personal as well, too, so you can set that up in your personal life. So that way you can keep more of the money there as well. So here you go. If you go there, you can just put that info in, it'll send it to you right away. simplecfo.com, AVLmeetup, but I wanted to at least give you that and give you the full book because it changed my life. It's changing a lot of people's lives. If you want that, great. If you don't, I get it. You probably are probably have enough money, you don't have to worry about it. But if you're ever felt like Joey or don't want to feel like it, at least get the first couple steps.

Get the keep number form, walk through it with your spouse, and say, what do we need? As a husband wife, or a couple here, or whatever. So that way we're on the same page with our finances. But thank you very much. I'm done.

Speaker 2 [1:02:01] Yeah, thank you. Thank you. So, we're gonna do audience, audience, Q and D, I sound very, very strong and big. Okay. This is all of the bonuses and materials, they're free, right? Just clarifying? Okay, yeah, so you don't have to buy anything to get that stuff David just talked about. Um, so as always, free 99. But yeah, so audience Q&A, I'm going to repeat the question just for the recording after you ask it. So yes, go for it. So I'm a newbie with all this.

Unknown [1:02:35] So bear with me, but is it your recommendation to set up all these accounts for all your entities.

David Richter [1:02:41] That is my most asked question. So we were gonna cover that tonight. Yeah. Do I need to set up this system for all my entities? I would say if you want clarity in different entities, the caveat would be if you have a rental company, there's a holding company up here, and then you've got a bunch of rental LLCs, and you don't need to set it up for each rental that you have. But if you have rentals as a collective, I would just set up the system as a collective for that, because this is cash management we're talking about. Not P&Ls, bound sheets, all that.

It's where the money going, but if you've got a wholesale company, rentals, a brokerage, and a speedboat rental company, like one of our clients, that's a real estate investor, like, has these different things, I would set it up at least the core accounts... Like the category. The categories for those... Yeah exactly. The main categories, business functions, yeah, exactly. I would set the foundation up for each one of those. Thank you.

Speaker 2 [1:03:35] All right. Anybody else? Yes, sir.

Unknown [1:03:40] What was Joey spending a lot of money on?

David Richter [1:03:45] What was Joey spending all that money on? Are you talking about that he lost in 2019? Yeah. Okay. Well, more deals, more people, and events. Making sure that he was still on track and still doing the amount of deals, marketing as well, too. That's the first thing usually to go out of whack, like, Hey, I want to scale. Why don't I just dump more into marketing without any clear knowledge? What's my return on investment? My return on ad spend? Like, what are the different metrics that I'm, you know, be held to? And he just wasn't keeping any of that in check. He couldn't tell me at the beginning, either. Where's it all going?

You know, it's like, that's just the clarity that most people are seeking. I thought... Yeah, that's why the big ones, but then there was other things, too. Usually, marketing and people are the first things to look at. Like, is everyone profitable in your business? I know you love Uncle Bob, but, like, is he doing anything? Is he producing? Is he just on payroll, or is he a charity case, and you should just be giving him money every month, instead of expecting something in return? So, like, or running the charity, if you trust them. You know, that type of stuff. Cool. Any other questions?

Because that's definitely the one I get asked the most, trying to think of the other ones that I get asked as well, too. But any other questions before we're done here? I would say probably the other biggest question I get. There's quite a few that I get. Oh, are these checking accounts? Yes. These are checking accounts. Mike McCowitz talks about setting up savings at a different bank, you know, as, like, for your profit and tax, which is good. It's just another level of discipline.

If you know, I'm gonna set this up, and I'm just gonna, like, transfer money willy nilly, however I want to, you might need to set up some accounts at a different bank, make it, like, no online access, make it difficult to touch and have the profits stored there. So that's another thing as well, too. It's like, checking accounts usually, if you need an extra layer of discipline built in, set it up at a bank that's hard to work with, basically. And hard to get the money out of. Silicon Valley Bank. Just kidding. Most people, most tax accounts that are worth their salt would say, yes, this would force, you gotta take a salary, right? Of, like, and that's reasonable. That's reasonable.

Most people don't. Number one, even though it's required, most people just don't. Number two, then from there, if they are taking something, they've never put a number 2 at that matters to them. Okay, why are you paying yourself 100,000 a year? or 30,000 a year. Like, where did you come up with this number and is that what you need? So that's where, yeah, it kind of forces them to, but this gives the clarity of like, what do you really need from your business? Wherever you guys, you're able to pay yourself a legal animal, like, for your industry, like, your, uh, realtor, and you pay yourself what, the lowest amount, are they able to get? I don't know. Is that what you need?

I don't care about the industry average. I don't care about the industry lows. I don't care about the minimums or anything. I care about what do you need?

Speaker 4 [1:06:52] What do you need from your business, and are you taking that? I'm not the tax guy. So if you're asking, like, should I take this because of that, who cares? Honestly, talk to your CPA.

David Richter [1:07:01] That's what they're there for. I'm here to tell you, you need to be getting what you need from your business. So yes, you should be doing all the legal stuff. What I care about is, are you getting what you need from the business and paying yourself? Like, maybe the require minimum in W2, and then you take distributions for the rest of what you need. That's what I do in my business. I take a W2 salary, but then I fund from the owner's cop account the distributions that I would take on a monthly basis. So it's like, you can set it up how you want to. It's just giving you the clarity and the direction of how much do I need and how much do I have to actually draw for myself. Make sense? Awesome.

Good. Love it. Keep doing it. Help other people do it.

Unknown [1:07:43] All right, questions, yes. If you, like, just started your business... Yeah. Yeah. Would you bring up, like, percentage or where would you start?

Speaker 4 [1:07:55] Yeah. Great question. Her question was, I'm just starting out.

David Richter [1:07:58] What the heck do I do? and like, do I break this up by percentage? Do I still implement it? I would still implement the system. The earlier you can implement it in your business life, the better your habits will be when you get to be a bigger business. So, yes, set it up still, then I would set it up by percentage. If you're like, hey, I know I'm doing my first couple deals, deals here. I know I can't, you know, just pay myself 100%. Start with where you can. What can you, do you still have a W2 and your business? So, like, okay, a lot of people come to us? Do they still have a W2?

They have a business as well, and they're getting the business up and running, and they're like, I can't do the taps. You know, the target percentages. So what we tell them is, okay, can you take at least what you need from the W2, pay yourself, but then set up 5%, you know, to the owner's comp accounts? You're getting in the habit. So when you do walk away from your W2, there's money sitting there, number one, and number two, you're in the habit of moving money to the owner's comp account. So at least start with some percentages, and then start to increase it once you know. You know what? I think I want to make the leap from W2 to full time in real estate, and guess what?

Now I have a cushion. Plus, I have a system built in that when a deal closes, I know where the money's going, what I need, and that translated into how many deals I need to do. Just helps give you, like I said, I keep saying, a fighting chance to not be the statistic that everyone falls into, like, then 90% go out of business by year 10 and, like, 50% by year 5 or whatever from the SBA, this at least gives you a chance not to go down that road. So, there you go. That's what I would do as a new business owner.

Speaker 2 [1:09:30] All right, last call? Yes, ma'am. takes a bunch of it for your gifts to me.

Unknown [1:09:43] Yeah. So many booths now, like, I just feel like I don't see what's going to be different in how they feel there because it just seems like so out of my control. Sure.

David Richter [1:09:58] So then you go through out for the upset of $1000, you're gonna have to meet again. you know, I don't see Yeah. Great question. Her question is, I have a bunch of rentals, and a property manager who gives me the money at the end of the month, but they control a lot of the decisions, or a lot of the factors of what I actually get. I would say, this system is more built for the cash that you actually receive. So you receive money in. Where do I put it? Some of it is out of your control. Like, even if you were the property manager of your own properties, that money would have to be used for turnover, that type of stuff.

So it doesn't matter if it's you or someone else, just with them, you're getting more of, like, the net cash you're getting from the property. Maybe they pay your mortgages, too. Maybe they're paying everything. I don't know how it's set up, or the terms in agreements. Everyone's different. But it's like the money you get in, then you have to make sure that you know where those dollars are going. Do I need to save extra?

Like, if they have to come to me for this property, that they didn't collect enough to be able to have a reserve to be able to fix the AC unit, well, then the money I do receive needs to go into a bucket for, you know, CAPX and different, you know, and the different repairs and vacancy and turnover. That's why, for the tap sheet, I give an extra line on there for repairs, vacancy turnover. Like, even the money you get from a property manager, be saving some of that, because, you know, when you're first starting now, too, you know, one repair could wipe out your cash flow over a year. It's like, well, that's why we gotta get into the habit of whatever money I get in.

I am just making sure I'm managing whatever I have effectively and efficiently and being able to give what I really want from the business. So it's just helping you with the money that they actually disperse to you, even though you might not have control of a tenant moving out. But there's a whole other thing there, as well, as property management and all that, and, you know, just how are you managing them? How often are you meeting with them? What type of reports are you getting? Are they being honest with you? There's a whole can of whoope, you know, on that side as well, too, that we could walk down, but that's what I would say on the profit 1st side. Does that make sense? and help?

Okay, cool.

Speaker 2 [1:11:59] Anyone else? All right. So, couple of things as we wrap up. We'll say thank you for David at the end in a second. Slide me. Yes, okay, so next week or next month, we're doing Power of Local. We got Caleb Phillips, Mike Vergora, and I don't remember the last guy's name, unfortunately. Looking Glass Realty.

Zac Ruiz [1:12:20] Mosaic Realty and Loso Realty. So the Powerhouse local real estate companies. So the power of local and what's going on here.

Speaker 2 [1:12:27] So, and we're gonna be meeting at the highwire events base that's in Biltmore Village. We'll put it out in the newsletter and kind of make sure parking and all of that is clear. And then as well, before we all leave, as a reminder, thank you for showing up, you get the coupon code for tickets. Going all the way. It's I showed up. So I showed up. I showed up. So with that being said, remember, tip and drink like it's your last night, because it is. And big thank you to David, guys. Thanks for coming out.