The Science of Flipping
The Bank Account Setup That Will Change Your Real Estate Business | David Richter
Fri, 31 Jan 2025
Download David's Free eBook 'Profit First' & Cheat Sheet: simplecfo.com/JC -- In this episode of The Science of Flipping, I sit down with David Richter, author of Profit First for Real Estate Investors and founder of Simple CFO. If you’ve ever felt like you're making money but still feel broke, you’re not alone—I’ve been there too. David breaks down why traditional money management fails real estate investors and how the Profit First system ensures you actually keep more of what you earn. We talk about setting up the right bank accounts, avoiding costly tax mistakes, and structuring your finances like a true CEO. Whether you’re just starting out or running a multi-million dollar business, this episode will give you the tools to take control of your cash flow and build real wealth. -- Download the Free eBook & Cheat Sheet: simplecfo.com/JC Follow David on Social Media: @SimpleCFO Visit His Website: SimpleCFO.com Read the Book: Profit First for Real Estate Investors (Available on Amazon & other platforms) Hire Simple CFO Services: If you need hands-on financial help, visit SimpleCFO.com to work with David’s team. -- The #1 training and coaching system to launch, grow, and scale your investing business! 𝐋𝐞𝐚𝐫𝐧 𝐌𝐨𝐫𝐞: http://www.thescienceofflipping.com Turn cold real estate leads into engaged motivated sellers on auto-pilot using the power of A.I! 𝐋𝐞𝐚𝐫𝐧 𝐌𝐨𝐫𝐞: https://www.rocketly.ai/ Have a question? Ask me anything at https://www.askjustin.ai/ 𝐀𝐛𝐨𝐮𝐭 𝐉𝐮𝐬𝐭𝐢𝐧: After investing in real estate for over 17 years and almost 3000 deals done, Justin has created a business that generates 7 figures in active income through wholesaling and fix and flipping as well as accumulating millions of dollars of rental properties including 5 apartment buildings, 50+ single family homes, and 1 storage facility Justins longevity in real estate is due to his ability to look around the corners, adapt to changing markets, perfecting Raising private capital, and focusing on lead generation which allows him to not just wholesale and fix & flip, but also accumulate wealth through long term holds. His success in real estate led him to start The Entrepreneur DNA podcast and The Science Of Flipping podcast and education company, where he has coached and mentored thousands of aspiring and active investors over the last decade. He is a nationally recognized speaker and is on a mission to educate as many people as possible on becoming a successful dynamic real estate investor. 𝑾𝒉𝒂𝒕 𝒕𝒉𝒆 𝑷𝒓𝒐𝒔 𝑯𝒂𝒗𝒆 𝑻𝒐 𝑺𝒂𝒚 𝑨𝒃𝒐𝒖𝒕 𝑱𝒖𝒔𝒕𝒊𝒏: “Justin is one of the best trainers in this space. He really gives everything to his tribe.” – Brent Daniels (TTP) “Justin’s ability to connect with people and help them understand what he is teaching, is unparallelled” – Kent Clothier (REWW) “We have been in the trenches flipping homes in Phoenix for over a decade, he is one of the best to do it.” – Sean Terry (Flip2Freedom) Subscribe To Justin Colby: http://youtube.com/justincolby View All My Videos: https://www.youtube.com/c/JustinColby
Chapter 1: What is the Profit First system?
If you're running a for-profit business, you need to be thinking about profitability. You should be making money because without it, you won't be able to grow, scale, or have people on the team or give or travel or whatever you want to do with your business. And so he's just like, here, here's a system. That's what I loved about Profit First.
I went a step further than all those other books and said, here's a system to actually do that. And that's what Justin was alluding to with the bank account set up a couple minutes ago. It literally revolves around you being intentional with every dollar.
What is up, everybody? What is up, my Science of Flipping fam? This is gonna be a good one, because if you are in real estate, if you're doing deals, if you're making money, but you still feel broke, and we've all been there, including myself, then my guest, David Richter, is here to help you. He is the author of Profit First for Real Estate Investors. He thinks like a CEO.
He helps us think like CEOs and CFOs. So, David Richter, what is happening, brother?
What's up, Justin? It's good to be on here.
Yeah, I'm excited to have you. You know, I had you come speak to one of my smaller group events and people loved it. And I said, it's about time you come and join the podcast and make sure everyone in my world knows who you are, knows your book, reads your book, but starts acting like treating it like a real business and not just a hobby, right?
Yeah, big time.
So tell us a little bit about your story. Where did this come from? How did you develop this idea, concept of making sure you're running a business with Profiting First? Because obviously it seems pretty like a no-duh statement. And as you know and I know, it is anything but a no-duh statement.
True. It definitely came from pain. I was a part of a real estate company in my early 20s where I jumped right from college into real estate investing. And with this company, they were doing about five wholesale deals a month when I first started there. So they were doing a pretty good amount of business outside of Chicago.
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Chapter 2: How can I keep more money as a real estate investor?
And literally he's telling you, take your dollars out of the bank and put them in envelopes, you know, and earmark them for certain things. But in business, you're not going to do that. You're going to set up bank accounts. And because a lot of people here's the wrong thing.
Here's what I see a lot of people that and just where we were and just where lots of people that I've worked with our they have one big bank account. And that's the big black hole bank account. We call it now. It's like money goes in money gets sucked out to the swirling vortex of doom never to be seen again. And that's when you're asking yourself, where did my money go?
And it's like you have no clarity. And that's where separating out the money into different bank accounts to know where your money is gives you clarity, which gives you control versus the chaos that's just ensuing in that bank account.
And the specific bank accounts, if you're listening to this now, this might be a time to take out your paper and pen and write these down because this is an actual action step you can take from this episode. You can set up the fundamental accounts from Profit First. The first three are the golden trio of bank accounts. I call them the golden trio because I'm a huge nerd.
I love Harry Potter, Star Wars, all the big epic sagas. They've got three main heroes, right? Luke Hanleia, Harry, Ron, Hermione, like making sure good wins along the way. And it's a fun story. And then when you get to the end, good ultimately conquers over evil, right? Your business, though, is so much more important than those. And it can take a lesson from it, too.
Like we need three main heroes in our business, and that's the golden trio. They help you keep more of the money. I'm literally going to give you three bank accounts that will help you focus on the profitability of the business. The first one is profit. The second one. Yeah. Shocker, right? Second one is the owner's comp, which I love just as much. We'll talk about that in a second.
Then the owner's tax account. I love these three bank accounts because they all focus on you, the owner, the difference between all of them. Profit is more of like, why did I start my business? And it's like the big want, like, what do I really want from it? Do I want to take, you know, crazy trips? Do I want to give, you know, a lot of money away?
Do I want to go and be a part of a mastermind that I've never been part of before? Like, you know, like, do I want to jump in with Justin and get mentoring from him? It's like, these are the things of where you get to go out and do the fun things you want from life. And I would do that on a quarterly basis, taking the money out of their owner's cop. Here we go.
This is how we could have solved the 25 deals a month issue. This is how Justin and his business could have solved the 1% or whatever, you know, like the single digit percentage, you know, like making all those seven figures that I see this over and over having an account dedicated to the owner to pay themselves consistently. by a percentage that you decide, that the owner decides.
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