00;00;00;00 - 00;00;23;07

Unknown

Welcome to the Profit First for Real Estate Investors podcast. This series is the simple CFO Case Files, where our CFOs break down real client scenarios, financial systems and practical decisions from inside the business. Enjoy the episode.

00;00;23;10 - 00;00;49;20

Unknown

We're back here with CFO case files. Case files. I'm Christina Gutierrez, and this is the second time Tony has been on our show. And the format is going to flip a little bit this time because we're going to talk through reviews because everybody wants reviews for their business. And Tony has been with us, as we talked about on the first episode with Tony, more than three years, he's worked with 40, about 49 going on 50 clients.

00;00;49;20 - 00;01;10;05

Unknown

He's had multiple clients that he's worked through with us, whether it be just 60 days and giving them a business plan or working with them recurring, getting them up and running so they can get their own CFO. In the picture, he's just he's had a breadth of clients, and then I would to really make a difference. I mean, he's had I can't even I don't even know Tony.

00;01;10;07 - 00;01;31;08

Unknown

You may know better. At least 15 reviews I can say come through and Tony's one person which will always share the good news, talk about good news. He's uplifting to everybody. It's always nice to share good news and not complain about things that happen constantly. So it's always good to have that person that gives you insight and says, hey, this is great news!

00;01;31;08 - 00;01;48;04

Unknown

I can't wait to share this with everyone. So today we're going to unpack all of that. We're going to unpack a few of the big clients that he's worked with using simple CFO processes systems, and really been able to dial in and help them get there. So Tony, thank you for joining me again today. I'm excited to have you here.

00;01;48;05 - 00;02;13;15

Unknown

Of course. What an intro in an intro. And I do think it's good to celebrate the wins big and small. So yeah, let's talk about some reviews. All right. Awesome. So let's go way to some of the string of clients that let's see who's been here the longest is who I kind of wanted to get up because they just start lighting up and I lose track of these clients because there's just so many.

00;02;13;17 - 00;02;22;20

Unknown

I forget how long they've been with us. So what's the longest standing one that we talked about before?

00;02;22;22 - 00;02;27;25

Unknown

I think probably Mike and Bill.

00;02;27;28 - 00;02;53;28

Unknown

I want to say been working with them for a couple of years now. So okay, Mike and Bill have a really and I'm going to actually I'll kill you up. So let me read the review because I'm sure you don't have it available. Let me see if I can. All right. So, that's not the right one. Yeah it is so, so Bill has no David for many years.

00;02;53;28 - 00;03;12;17

Unknown

So he actually knew David before signing up. And he's been working on simple CFO for a while. And he posted a review that he was just lucky enough to be paired up with Tony as a CFO. Honestly, I don't know where we would be right now without their systems and his guidance. Total game changer. The people of this organization are the highest quality.

00;03;12;18 - 00;03;34;10

Unknown

Highly recommend. So there is so much more to that because they're not going to write a book. So walk through how they came into us, what they do for a business, and some of the systems and things that you were able to implement for them. Absolutely. Yeah. I think again, it's been about two years. Quick background on their business is sort of three pronged.

00;03;34;10 - 00;04;04;22

Unknown

So basically in the real estate space, but they do traditional rentals. They also are in the storage business or buying storage facilities obviously renting them out. And then they're in the hard money business. So they loan to people who are out there flipping houses. So three streams. I will say this when they first came to us, it was all just in one entity and it still basically in transition.

00;04;04;22 - 00;04;33;27

Unknown

But working with our team, working with a CPA that that we brought in, who understands the tax advantages of separating some of these entities out, dealing with some asset protection, some anonymity, just a variety of things. We're in the middle of restructuring all of that. And so that's that's one transformation that we've made. But you know, they're growing both in taking on more hard money.

00;04;33;29 - 00;05;03;00

Unknown

I think the goal is to to have about 10 million out there on the street by the end of the year. So that's a pretty big goal as far as storage. We're adding facilities, we're adding units into some of these. Some of that means that we've got some extra land, and we can actually improve the property to be able to add more storage units, more square footage, which obviously makes a big impact in that business.

00;05;03;02 - 00;05;25;26

Unknown

So that's kind of the background. All right. So how did they come to you like when they came in to us. What was their biggest thing? I mean obviously they didn't know, right? They had everything in one entity. So they didn't know. That was like a huge no, no. So they they came in with a feeling overwhelmed. They feel like they had a lot going through one entity.

00;05;25;26 - 00;05;47;24

Unknown

What was their biggest thing when they came in? Yeah. I don't even know that. It's just the pain of being in one entity as much as they they didn't really have clarity. Cash flow is is a very common issue, right. Everybody feels that cash flow constraint like, hey, I think I'm making money, but my bank account doesn't show that what's going on.

00;05;47;27 - 00;06;11;11

Unknown

Right? So we always start part of our roadmap. We start with financial clarity. You got to know your numbers. And sometimes that takes a little bit of time to kind of peel back the layers and understand truly what's going on in the business. And because there's three businesses, they're very different, right? We in profit first terminology, we talk about something like pass through revenue.

00;06;11;14 - 00;06;37;03

Unknown

You could consider that like a cost of sales or cost of goods sold in your business. Well, in the hard money business, that's pain investors. That's typically what that's involving. And how we make money is either through interest rate spread or in points or fees, things that lenders generate money from. Right. That's way different than renting out boxes, which is basically storage.

00;06;37;04 - 00;07;06;13

Unknown

Right. So in that case, we're paying property taxes and a little bit of maintenance and upkeep. But you know, and even different than traditional rental business. So their pain was show me how and how much money we're making. And then they wanted to implement profit first. They wanted to be able to pay themselves. They wanted to be able to save for taxes, for income taxes and have visibility to that obviously profit.

00;07;06;19 - 00;07;35;14

Unknown

So they are filling those coffers every single month. We're paying them. They're taking draws, they're running payroll. They're doing all the things that I would expect an owner to take. And now it's just kind of building that confidence that we can keep sustaining, that we can keep repeating, that we can keep growing that and doing other things. And I will say to that angle, once those blocking and tackling items are behind us now, we can get more strategic.

00;07;35;20 - 00;08;01;03

Unknown

So in their situation they had brought up at one point. Hey, we we have some cash and we can go out and make a purchase to go buy some additional storage units to place on our facility where we can go get a lender and finance it and use our cash for other things. And so the topic of infinite banking came up and we said, why don't you do both?

00;08;01;06 - 00;08;27;27

Unknown

Why don't you get into a whole life insurance policy? Basically earn a dividend in your policy, take the cash out, go finance from yourself the purchase of those units. And now we're we're earning interest in multiple places. Right. So we can start introducing some of those more strategic type of plays once we get the basics behind us. Yeah.

00;08;27;28 - 00;08;50;15

Unknown

And I bet they came away for that. I know they all like the strategy and that's that's what we do. They come to us and a lot of them that come to us want to pay themselves or they don't pay themselves. And then we implement profit first. So when they say that they're excited that you implemented some procedures and they have a good process, do they do you feel like they seem relieved?

00;08;50;16 - 00;09;09;01

Unknown

Do they follow the process as well? Are they are they on board now? And they seem like, oh my gosh, this is a great process because people's personality changes when they start following a process, because we all strive for that in the end. Yeah, absolutely. So in the beginning, we had to get our arms around where we're spending money.

00;09;09;03 - 00;09;35;18

Unknown

So we typically as part of our process as simple CFO, we do what's called an expense analysis. And we look at historical spend and all the different categories. Look at the monthly run rates and then start looking at places that maybe we've been overspending. We can make some cuts. And I like to try to get away from just being a spreadsheet, academic exercise by holding my clients accountable.

00;09;35;18 - 00;10;05;21

Unknown

If we're going to make a reduction, we have to have an action associated with it, and that's where the results start coming in as we're meeting every couple of weeks or maybe even every week. And I can be checking to make sure that those expenses are going down because we're taking those actions. And then once we see the impact that we're bringing, the expenses, the overhead down, that just goes straight to the bottom line, we can start building up those those bank accounts we just talked about.

00;10;05;23 - 00;10;32;25

Unknown

And so that also starts to become routine that in the beginning you design profit first. Looks good on paper. We start to run it. Maybe it's not quite right. We might feel a little bit pain. It's different. It's new. But over time that's routine. And so now I'm just checking in every couple of weeks and checking the bank account balances, making sure they're moving the money, taking the money, doing all the things that they set out to do when they came to us.

00;10;32;27 - 00;10;55;00

Unknown

Awesome. So hold your you're definitely holding them accountable. And I'm sure they like that. Yeah. And it's it's kind of like an exercise program. Right. You go to the gym for a few months. You kind of lift in the same weights. Eventually that starts to become routine. It becomes easy. If I'm coaching, I would say, okay, now it's time to add the weight, right?

00;10;55;01 - 00;11;26;23

Unknown

We got to stretch ourselves and it becomes uncomfortable again, but that's where we're growing. I like that analogy. That's a great analogy. I did a podcast the other day and I talked to the guy about us working through profit first and splitting everything up into different bank accounts, and it just kind of came to me there, and I was like, it's kind of like, if you didn't have different rooms in your house and you just walked into one big building and you use the bathroom in the same room, you cooked in the same room, you slept in the same room, you worked in the same room.

00;11;26;24 - 00;11;42;13

Unknown

Imagine. Like, it's so simple. But it just kind of came to me like, we wouldn't do all of that in the same room. Yes, yes, even dogs don't eat where they were. They pee. Right?

00;11;42;15 - 00;12;00;17

Unknown

That is true. Well that's great. I mean, I really like that story. I think they're they're like, I, they're a good client because I feel like some of them come in and they don't realize what they're about to get hit with, right? They're like, oh, I want profit first, I want this. I want you to hold me accountable.

00;12;00;17 - 00;12;21;16

Unknown

But not every client realizes what they're going to get hit with and is as dialed in as they think they are. So it's not like really good clients that wanted the system wanted to work with. You are excited now about working with you and then really dialed in, so they sound like really good ones. I wouldn't want to go down the road of action, right?

00;12;21;17 - 00;12;45;26

Unknown

A good client if you're coming to us brand new and you're looking to get fixed, it doesn't work like that, right? There's there's a two way street here that I'm going to help you see what needs to be done, and we're going to do it together. But I can't as a CFO, I can't fix a business. It really is a collaboration.

00;12;45;26 - 00;13;10;13

Unknown

And Mike and Bill do a wonderful job of following through actions that are on their plate, and they hold me accountable to that. If I've got something on my plate, I mean, they're going to want me, expect me to get it done as well. But that's the kind of collaboration is the teamwork. And even if we say have maybe two meetings a month, that doesn't mean they can't work in between those meetings.

00;13;10;19 - 00;13;28;28

Unknown

I highly encourage that. We can jump on a call ad hoc. We can work through email. There's lots of things we can do to keep moving the ball down the field. Oh yeah. Yeah, definitely. And we want them to come to us. We want it's a it's a relationship of trust. We I want you to come to me.

00;13;28;28 - 00;13;51;26

Unknown

I don't want you to make a decision that's going to cause an uproar in your financials. And then you come to me after the fact and inform me of what you just did. That might have blown up your whole business. So the fact that you can gain that trust with people and they can appreciate what you're actually implementing for them, tells us that there are 100% dialed in, especially when they'll come to you and say, I want to do this, not I already did this.

00;13;51;26 - 00;14;13;01

Unknown

Now you fix it, right. I can appreciate clients like this. So let's walk. Let's jump into another client. There's so many reviews we don't have all day, but we'll go through some of the good ones. So let's talk about Harley. Harley and Alex are partners, as you informed me. Here's a review that Harley wrote. Symbol CFO was a true find on our entrepreneurial journey.

00;14;13;02 - 00;14;40;09

Unknown

Through recommendations regarding the profit first methodology, we discovered a strategic partner that, beyond assisting with strategic decisions to help us achieve the best financial results, supports us with broader business decisions and provides backing through an extensive professional network. I highly recommend simple CFO. So again, same type of same type of review. Getting into profit first, having a strategic partner, getting the best financial results.

00;14;40;09 - 00;15;00;23

Unknown

So walk me through Harley and Alex. That's his partner. Walk me through Harley and Alex how they came and what do you feel like was the biggest thing when they came on board? I think with with Harley and Alex, when they came to us, it was more, I'll use the word crisis. That kind of came to us in crisis mode.

00;15;00;25 - 00;15;30;13

Unknown

They recognized that they were getting overwhelmed with high interest rate debt. They had a great business, still have a great business, generates revenue, and they're starting to get control of the costs. It's a money making business there, by the way. They're in the fiber construction type business. They're the guys out there that are laying lines for fiber, for companies like Verizon and some of the big carriers out there.

00;15;30;15 - 00;15;53;17

Unknown

So how cool should have noted that because they're a little different than real estate. So you specified. Yeah. And it's it's truly a construction business you can take away, you know, the specifics. They run the construction business. They have clients. They can either be subs, they can be the prime depending on the relationship and who the customer is.

00;15;53;22 - 00;16;18;12

Unknown

They own equipment. Sometimes they lease equipment, but they have their own fleet of equipment. Sometimes they even lease some of their equipment to other people, other operators. So there's lots of different ways to make money in the business, but there's a lot of ways to spend money. And some of the way they spent money is, frankly, I would say from predatory lenders out there, just, you know, it.

00;16;18;15 - 00;16;40;16

Unknown

The industry of lending has gotten a little crazy, especially as of late. And it's pretty easy for any business to get a little bit desperate. And if cash flow is strained and they've got to make payroll and they got to pay the bills to go out there and secure funding from somewhere, that maybe is really hard to get out of and to keep up with.

00;16;40;16 - 00;17;07;15

Unknown

And it's not just Harley and Alex. I've seen many companies that get blindsided by this, and it's a spiral that they just can't seem to stop and it's just bleeding them. So what what we did was with our network of partners, we recognized that if if this is a problem, we have a person or a company that has been down this path.

00;17;07;18 - 00;17;47;07

Unknown

And so let's use the term MCA merchant cash advance type lending, that's a common thing out there. Maybe people don't know what it's called, but basically this is where companies are charging weekly interest, expect weekly payments, and it's super expensive. And if you get behind, it's impossible to catch up. And so we brought in a specialist who literally like has templates and can tell you exactly as an owner what to say to to the MCA people.

00;17;47;12 - 00;18;22;10

Unknown

And it when they respond back, there's another template to respond to that. And it's literally just a systematized process that I've seen just worked like a charm. And we can negotiate those payments down. In their case, so far, we've been saving $7,000 a week on on some of that interest. That's in 30 K a month. That's amazing. Does anyone hear that the amount of money that they're saving $7,000 a week.

00;18;22;11 - 00;18;43;26

Unknown

I mean, that's not that out to a year. I mean, that's crazy. That is a great amount of money. They must be very thankful for that. They are. And it everything's a snowball effect, right? When you get into this debt situation, it's a snowball that got you there. And once you're coming out of it, you start getting some breathing room.

00;18;43;26 - 00;19;13;14

Unknown

You can make better educated decisions. One win leads to another win. So like in our case, we started freeing up some of that capital. And now we're looking at how do we how do we handle our assets better. We have a whole inventory of all of our equipment, our vehicles or trailers, our construction equipment. And looking at what are we paying for interest?

00;19;13;14 - 00;19;37;22

Unknown

What's the term? Are there prepayment penalties? Can we get out of this stuff? And we're basically looking to refinance out of all that bad debt and save a ton on interest. That's awesome. That and then so when you're doing that, that has to be done before you fully implement a profit first. Or can you partially implement profit first?

00;19;37;22 - 00;20;02;03

Unknown

How have you worked through those those implementations? In their case? We're doing all this before. And I'm not saying you always have to do that, but let's just be honest. If all of your money, all the the revenue you generate in the gross profit goes to cover your overhead and then your debt service, there's really nothing left. Right.

00;20;02;04 - 00;20;30;06

Unknown

And we could say let's put profit first. But if you're bleeding cash and you know, all these predatory lenders are on on your case, you know, I'm not going to add more stress to that situation. We're going to fix the underlying problem first and generate some free cash to work with. And now we can start placing it into owner benefits, profit compensation, tax savings, etc..

00;20;30;08 - 00;20;59;22

Unknown

Yeah. So back to what you're saying with Bill, like doing your expense analysis first and even seeing where everything is going, that's how you that's how you figure out this is where they're actually spending their money. And if you don't have a plan to actually bring those expenses down and keep them within the regular range to be able to see money, at the end of the day, it doesn't it doesn't help to start putting money aside because some people do to do it yourself, profit first, and they just run numbers, but they don't make a profit, and they start putting all this money in the bank accounts, and then all they do is transfer it

00;20;59;22 - 00;21;21;05

Unknown

right back. So, you know, you know, hats off to people that want to implement it themselves. But it's it's difficult if you don't have a good system and you're not being held accountable and you don't actually go through your expenses first and change your habits. It's same thing about the gym. If you don't change your habits, you're not going to make make an actual change in your business, right?

00;21;21;06 - 00;21;55;26

Unknown

You just put the mandate on it really well. And and I'll deep dive just a moment on one of Alex and Harley's businesses. So Alex's wife, Claudia, she runs what's called a dealer business. She has equipment and she leases it up. That's the core business, similar clientele, but that's where they purchase equipment and lease it. And so she was getting a good handle on her expenses, but she really didn't know what kind of margins she should expect.

00;21;55;28 - 00;22;23;20

Unknown

And so we reverse engineered it to to look at her overhead, to look at what kind of money would be good for her to, to take out of the business. So is it 10-K a month? Are you looking for $100,000 at the end of the year? What what is a successful business? And so we came up with a baseline number that would make her feel like she's moving this company down the road.

00;22;23;20 - 00;22;53;18

Unknown

And we reverse engineered and learned that her gross margin was just not enough. And so then we peeled that back and said, why aren't we getting more gross profit? And it came down to to basically three items where she's spending money that we can go and fix and make improvements and juice up those gross margins so that she covers all the overhead and still walks away with net income every single month.

00;22;53;20 - 00;23;13;14

Unknown

So that's a real tactical thing that we've literally been working on over the last few weeks. That's awesome. That's good. I mean, we have to reverse engineer it because a lot of people to have the problem of like, oh, well, my friend runs the same business that I should be doing X, because that's what he's doing. He could have partners in his pocket.

00;23;13;15 - 00;23;38;00

Unknown

He could have three employees versus ten employees. He could have a lot less equipment or his payment terms are better, like, you just never know. And that's the FOMO that people go through or the comparison aspect of, oh yeah, I should be doing what they are doing. But without somebody, truthfully, that knows your financials and can dig into them, like you don't need to live somebody else's story, you live the story that works for you and what you need to bring home.

00;23;38;00 - 00;23;55;13

Unknown

And that's that's why you have to, like, maneuver your numbers to make it work for you. So like how you brought that up. That's that's a that's a good highlight. But I want to I want to touch I want to walk back a little bit to something you said earlier. Because I think this is really important than simple CFO.

00;23;55;14 - 00;24;12;06

Unknown

You said bringing your network of partners in and so on to talk through, because a lot of people do that. Do you do this? Do you do that? Does anybody know this? And I know we post to other CFOs that work with us. And that's one of the great things about working with the team, a CFO as opposed to just one.

00;24;12;06 - 00;24;33;01

Unknown

Because if Tony doesn't know someone that does x, y that, you know, then somebody over here may know and be able to connect you with someone. So, talk me through any clients because you've worked with a lot of them. What's some what's a network of partners that you've been able to link them up with that have really made a difference in their business?

00;24;33;03 - 00;25;08;07

Unknown

Yeah. No names, just type partners they look for. I'll say this in addition to a network of partners. When you started kind of kicking us off here, you mentioned like the volume of clients that I've worked with that we work with. Well, if you work with that many clients, there's bound to be overlap, right? So one of my clients, Mike, Mike Minkowski, he is shifting his business model a little bit, been a traditional flipper, doing a lot of assignment deals, that sort of thing, but now wants to move more into the space.

00;25;08;07 - 00;25;33;22

Unknown

I'm going to call it the cloudy title space. Right. So instead of solving problems, which is buying homes and fixing them up and selling them retail, now we're talking about trying to to purchase homes to solve problems that are more on paper, and it's more like there's multiple heirs to a property and the errors aren't talking to each other.

00;25;33;22 - 00;25;56;17

Unknown

And so it's just sitting there. It's kind of tied up in legal paperwork, and it requires somebody to come in and solve those problems. So it's kind of a fun chess match of sorts. It can be. And there's some good margins in those type of deals. Well, as Mike was going down this path and he's in a training program and so forth.

00;25;56;17 - 00;26;17;17

Unknown

So he's learning. But we have a client that I've worked with in the past that it's been down this road for a number of years, and that's what he does in his business. And so like while went off and I made the connection. And these guys are talking now and you know who knows what that that will you know what kind of fruit that will bear.

00;26;17;18 - 00;26;47;08

Unknown

But it's education of nothing less. It's one more person to run something by. And so we do that a lot when we see that there's overlap in a win win situation with any of our clients. Right. Or permission. Yeah of course. But that that is a plus. You know, it's just like us sharing amongst CFOs. Our clients have the ability to be connected through us as well, because there's a lot of real estate investors in this world, and there's a lot of business owners in this world.

00;26;47;08 - 00;27;14;08

Unknown

And having just that, that inkling of one person that you can connect to that will completely get what you're doing, that that's worth all the money in the world. So that's great. I'm glad that you added that too. Well, and so on the business partner front, maybe 1 or 2 more examples. So like in Harley and Alex's case, yeah, they got themselves into some interesting debt and we can work on the MCA stuff.

00;27;14;09 - 00;27;37;01

Unknown

Kind of put a strategist on that. But then the other part of it is, well, if we want to get more traditional debt, what do we need to do? We need to first understand what our business credit profile looks like. A lot of business owners know what their personal credit score is. They have no idea what their business credit score business profile looks like.

00;27;37;05 - 00;28;06;29

Unknown

And so I brought in a partner in their case to help us explore that for each of their companies and see what what names are tied to this, because there's multiple partners here and how the individual credit scores are impacting the business credit, how any derogatory on the business credit are showing up, even so much as how much credit could they go out and get right now in any of those companies and where?

00;28;07;00 - 00;28;28;10

Unknown

I don't want to say credit repair, but we're working to improve the credit profile so that they can qualify for better financing. That's awesome too, because that and that, that can take you sometimes to like traditional lending where money is a lot cheaper. And that's that's a good thing to have. And most people don't think through that. You're right.

00;28;28;10 - 00;28;49;13

Unknown

It's like, oh, I can pull. I was going to say Expedia, what is it? Experian Experience and Bradstreet. There's a lot of tools that yeah, yeah. All right. So I know this is going to be a long episode, but I can't get off the phone with one more, one more, one more review. All right. So let's talk about Brett Long.

00;28;49;15 - 00;29;14;24

Unknown

He said Tony Assemble CFO has helped London Living look at our business in a way no one previously has. We are now looking forward, fully expecting our business to become cash flow positive as we follow the roadmap set before us, hoping it's not a strategy and we are grateful to be on the journey with simple CFO. So this review is just it's really cool because we we definitely go through our roadmap.

00;29;14;25 - 00;29;34;20

Unknown

So we talk through our roadmap a lot when every client that comes in to us goes through an onboarding and we actually show them our roadmap and walk them through what the relationship is going to look like. So he obviously is pretty new, because he says he's looking forward to expecting our business to become cash flow positive. So he's excited about that.

00;29;34;20 - 00;29;58;19

Unknown

And the fact that he said hoping is not a strategy is like key, because a lot of people think that hope is a strategy. So that's just a great line. It sounds like just that just a tagline. Or maybe it could be something that you actually said to him before and that's where he got it from. Talk me through what being cash flow positive and what that hope looks like for him.

00;29;58;21 - 00;30;30;01

Unknown

Yeah, I don't know that I planted that thought or seed with him, but it's true right. And sometimes it takes somebody that's a third party like myself to come in, look at the business objectively and not bring emotion into it. Because as a, as a owner, an entrepreneur, you're always optimistic, right? You're always, you know, vested in any property or asset or whatever that that is a lifeline of your business.

00;30;30;01 - 00;30;52;18

Unknown

In his case, he's in the multifamily space. He's in a bunch of other new construction. He's even got a farm. You know, he's got a lot going on. But multifamily is a big part of his business. He's got a good sized portfolio, but it's highly leveraged. And so the easy button, you know, if anybody that's listening is call your in real estate.

00;30;52;18 - 00;31;17;29

Unknown

You get this right. Cash out refinance. That's the easy button. When when you need cash you leverage your equity. And before you know it you got second mortgages. You got, you know, lots of debt. And if you don't make changes in your business, you're still going to be right back where you started, right? So in his case, we literally went through every property.

00;31;18;00 - 00;31;41;11

Unknown

We're still evaluating this, but we've looked per property how is it performing. And let's not let's not put too much in a Dotel on it. Let's look at the numbers. How is it performing. What's the gap. Let's look at gross potential rent. Is there opportunity? Are we not bringing in as much revenue as we could? What about the expenses?

00;31;41;12 - 00;32;07;23

Unknown

Did this property just go through a rehab and maybe, you know, it's it's going to have a lower expense base going forward? Or is this just a dog? And I'm fine to say that's a dog. You need to take it behind the barn. Shoot it. Maybe the owner wouldn't. I had somebody tell me that once and I did, I shot it, I, I needed a coach to tell me to get rid of an underperforming property.

00;32;07;23 - 00;32;34;17

Unknown

I was too close to it, and I held it for too long. But thankfully, I got that advice. And so that's the advice I bring to my clients. I look at the property objectively and, you know, we're not just going to jettison properties that have potential, but if something is a cash suck and there's real, no real potential going forward, then it's time to really look at pruning your portfolio.

00;32;34;24 - 00;32;58;02

Unknown

And the biggest portfolio is in the best portfolio. The most profitable portfolio is the best portfolio. So I bring in this lens of let's let's look at the energy, the net operating income for every property. Let's look at the debt service. Is this thing cash flowing? Does it have the potential to cash flow and just really peel it all back.

00;32;58;04 - 00;33;23;01

Unknown

And that's basically where Bruns coming from. We've been doing that for him. And I'm bringing this objective lens to help him take some of these underperforming properties, get him on the market, don't just cash out refi but kind of get a stabilized portfolio. Once we have that now we can start looking at profit first. But we got to rate the ship first.

00;33;23;03 - 00;33;44;07

Unknown

Yeah. And and that's it's not just looking at it from way up here going in and finding the issue. Breaking down every single property is what's important. That's why bookkeeping is so important. Because without proper books and even tracking stuff by property, which some people don't, you don't even know what you're spending on property like you think they they think they make money.

00;33;44;08 - 00;34;03;19

Unknown

I did this, I did that. It went great. I sat at the closing table and got a $30,000 check. And that's really what happens. And then they don't break anything up and you can't even start to analyze it. So, you know, with that said, bookkeeping is super important to having good books is key. I mean, you've you've hit that a couple of times.

00;34;03;19 - 00;34;25;04

Unknown

Like you can't do an expense analysis without good books, and you can't set up profit first unless you know what you're spending, what you're what makes spending keep. We go over those three things all the time. So without bookkeeping, you can't do that. And then without actually having a financial partner that understands what all that even means, you can't even start to make the next strategic steps into your business.

00;34;25;04 - 00;35;05;29

Unknown

So these guys are obviously dialed in and see that. So you reminded me of of an exercise I went through with one of our clients just yesterday. Name was Dan, and I do this for a lot of our clients. Anybody that's in the flipping space, this is a great exercise. I love being able to go in the books and run NLS by property and literally stack them up against each other, look at what kind of gross profit we made in the margins we made off of those properties, and then just do a little bit of a postmortem analysis and say, okay, this one, you made a 30% gross margin, and this one you lost 5%.

00;35;06;02 - 00;35;34;02

Unknown

What happened? What's the difference? And we can literally if we do the right bookkeeping, we can see all the different levers, what we bought it for, what we rehabbed it for, how long we held it, and the holding costs associated with it. The financing. Every one of those is something we can fix or improve. And maybe your issue is that you're just paying too much with a hard money lender and and you're holding it too long.

00;35;34;02 - 00;35;55;23

Unknown

It doesn't make sense. Yeah. It's so yeah, we got to have the books to be able to do that. Oh yeah. And point things out and be able to look them strategically and see like what they're even saying, because that's a lot of people feel like how come I bookkeeper this? Well that's what that's not what they're hired for their recording the transactions and then handy.

00;35;55;25 - 00;36;14;11

Unknown

So then you can figure out what happened in your business. So in your CPA just wants to buy your taxes. So they're not going to go and tell you what went right. Well I'm wrong. They're not going to take the time to do that. They're going to take the money. They're going to follow the tax return and not speaking all CPAs, because I know not all of them are like that, but 90% of them are.

00;36;14;12 - 00;36;30;24

Unknown

I'm filing a tax return. That's what I do. And so having a CFO on your side, that's like, okay, strategy, what do we need to do next. How do we implement profit first? Do you even know what you're keeping? How do we pay you? What's your next move in your business? How long do you even want to keep your business for?

00;36;30;24 - 00;37;01;18

Unknown

Because that's important. What? Your goals. We have to tie everything to where they truly want to be in their business or in their life overall. Yeah, I think the biggest thing that we bring is we're pragmatic, right? So we can come in and observe what's happening. We can then draw conclusions as to what we think the root causes are that are causing the results that are happening, and then we can suggest strategy and tactics to address it.

00;37;01;19 - 00;37;24;04

Unknown

So in the example that I just gave of stacking these properties up next to each other, looking at the margins, looking at the levers, as I call it, what do we do with that? We put that into an underwriting template, and we fix your gross margin and say, here's a gross margin you need in your business to achieve this kind of net income given your overhead.

00;37;24;06 - 00;37;47;19

Unknown

And don't try and make it up on the rehab. And you know, you can sell this for greater than market value because you're going to make it the best house on the block yet. Those assumptions just follow the underwriting process, right. You're going to hunt well there for five months. This is how much you can afford to pay on hard money.

00;37;47;22 - 00;38;21;01

Unknown

Here's the rehab that we're going to go with. You can do that rehab. You've done it ten times before, right. And if you can do that now, I can help you keep a limit on how much can you pay for that property when you're going out there and associated with the seller? Yeah. For writing real, actual data like hope is not a strategy data, real numbers running things up against each other, figuring out if 10% 1.12%, no points for you know which type of lending is best.

00;38;21;02 - 00;38;46;20

Unknown

I mean, data, data make decisions that are data driven, not hope driven. So so true. So all the reviews that we obviously can't, I can read them all. We'll post them all in this episode, but probably 10 to 15 reviews that came through all five stars, all within days, weeks of each other. So we know that Tony is in the trenches with these clients, working in and out with them.

00;38;46;20 - 00;39;04;26

Unknown

I know you have your meetings where you're live face to face, but as you said earlier, there's no reason why you can't email or answer questions or work during the week. So it's I know you're a humble Di about it, right? We like to hear wins, but what what does it make you feel when you see all these good reviews?

00;39;04;26 - 00;39;27;17

Unknown

Or you hear these good things, or you really make a difference in someone's life? Like, let's talk about how how do you feel about that? Yeah. I mean, the way I feel about it is if I can take some stress off my owner to enjoy them growing a business because they maybe they left the W2 and they wanted to just have some financial and time freedom.

00;39;27;17 - 00;39;51;08

Unknown

And so they started a business. Or maybe that's just how they kind of grew up. They never had a W2 and they just, you know, followed a path that that felt right to them. I want them to be able to focus on the business and not the numbers so much, and how they're spending and how they're tracking. And that's where I bring value and I take that stress off of them.

00;39;51;10 - 00;40;14;21

Unknown

Right. I truly, if anybody's ever, like, follow traction and kind of went down the rocket fuel path, I'm the integrator. They're the visionary. Yes, I can help them. You know, with expand the vision. But most of my my clients, my entrepreneurs, they got into this because they got great ideas and they want to see those ideas come to life, but they need a partner.

00;40;14;21 - 00;40;35;09

Unknown

And that's where I come in. That's true. And you do a great job. Clearly. So we I know me simple CFO David. All of us are like truly thankful. Like not only do you do you serve clients well. You help us. You have a lot of meaningful insight. You pretty much never miss meetings with us. You're you're always there.

00;40;35;09 - 00;40;55;02

Unknown

If someone asks a question, you're always there to jump in and have a contact or find a way to help. So for anyone that's listening, like this is just Tony. So and we have 13 other CFO, 14 other CFOs, you know, just like him. But Tony brings tremendous value as the rest of our CFO is do as well.

00;40;55;02 - 00;41;13;26

Unknown

So if you're if you hear these stories and you hear these business owners and they sound like you or sound like something you could use help with, then, you know, reach out, go. And you can actually see all the reviews too. So if you just go to simple CFO, you can book a discovery call. You can look at the reviews, you can find out more information about us.

00;41;13;28 - 00;41;34;22

Unknown

One last thing, Tony. What if you're working? If you were talking to someone that doesn't have predictable cash flow, doesn't have clarity, wants some planning, want the financial partner, what would you say to them? I mean, some people get a little bit taken aback on, hey, I have to spend money, have to hire a company like simple CFO.

00;41;34;23 - 00;42;02;02

Unknown

But yet I have this fear of my cash flow. And you know, my bank account is going down. If if I or a CFO like me can't help you make that back and then some, then we're doing something wrong and you're not locking yourself into some long term contract you can get out of. I mean, a lot of times we come in and 60, 90 days, we're making some immediate improvements right away.

00;42;02;02 - 00;42;23;08

Unknown

And you're going to see that. And if you don't, then, you know, again, we're not doing our job right and nothing is holding you back. So I would say it's at least worth giving it a shot. If you feel that any of your situations, you're back to to what we described in the case studies. We're here to help.

00;42;23;10 - 00;42;43;06

Unknown

Yeah. Agree. We are here to help. So if whether it's with Tony or someone else. Tony's here. I'm here. We train the CFO. Everybody goes to the same procedure, the same process. This isn't independent of Tony. Even though everybody has their own way and brings their own set of skills to it. We run the same process. We're all part of the team.

00;42;43;08 - 00;43;04;16

Unknown

So head over to if you want to find out more information. Thank you, Tony, for being here. I appreciate you sharing all these stories. It is exciting to see all the stories come through and you know, super, super nice to see all of these comments getting back on track. So we appreciate you. Thank you for being here and see you all next one.

00;43;04;18 - 00;43;21;06

Unknown

Thanks for listening to the simple CFO case Files on the Profit First for Real Estate Investors podcast. If you found this helpful, make sure you're subscribed so you don't miss our guest interviews featuring other real estate investors and our Profit first chats with David Richter. If you're ready to bring clarity and structure to the finances in your business, visit profit.

00;43;21;08 - 00;43;23;26

Unknown

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