Find Your Niche and Pay Yourself First: A Guide to Financial Success With Dave Rice

Episode 93: Find Your Niche And Pay Yourself First: A Guide To Financial Success with Dave Rice

The Profit First REI Podcast

June 27, 2022

David Richter

Summary:

With over thirty years of experience in the field, it’s a guarantee that Dave Rice gives unique and unmatched expertise when it comes to providing bookkeeping services. Dave’s business management background and a degree in pharmacy helped start-ups sharpen their business in the most profitable areas, maximizing their fullest potential.

With over thirty years of experience in the field, it’s a guarantee that Dave Rice gives unique and unmatched expertise when it comes to providing bookkeeping services. Dave’s business management background and a degree in pharmacy helped start-ups sharpen their business in the most profitable areas, maximizing their fullest potential.

Discover how he incorporates the Profit First system into his career while helping others build fast growth through actionable tactics. Tag along with us and learn more about his story in this week’s episode.

Key Takeaways:

[2:06] What got him into real estate and why real estate?

[6:06] What early lessons did he learn about money and what does he think about money today?

[9:20] How do they maintain their business and build their reputation?

[10:17] How did he get into the “Profit First” world?

[15:11] People are thrilled when they first see real financials and learn where they’re making money, where they’re spending money, and where it’s going.

[15:41] One of the most common mistakes made by investors on the financial side of the business

[18:08] Last minute advice that David wants to send to the audience

[18:14] You will want to have a handle on your finances and business. The key to success is having uncomfortable conversations.

Quotes:

[7:17] “Get paid first, and pay yourself first.”

[12:42] “It’s so rewarding to see that the business owner finally feels like a business owner and not just a slave to his business.”

[17:10] “I find it really fun to teach these investors who are visionary entrepreneurs but not necessarily ready to dig into the details. That’s the part of the plates that they hand out to us.”

Links:

REI Bookkeepers- http://reibookkeepers.com

Dave’s LinkedIn- https://www.linkedin.com/in/mrdaverice

Tired of living deal to deal? 

If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David

Transcript: 

Dave Rice:

Know, what’s yours know what’s not yours. If you’ve got employees, that’s a huge obligation. You need to be putting money into a payroll account to pay those employees and just keep your head on your shoulders about what’s going on here and just, just learn as much as you can about the, the numbers in your business.

Speaker 2:

Welcome to the Profit First REI podcast, where real estate investors, master financial management, eradicate entrepreneurial poverty, and learn to be profitable from day one. Now for your host David Richter,

David Richter:

Hey everyone. It is David Richter here again with the Profit First REI podcast, have another special guest today, Dave rice. And if you are in the real estate investing world, you may have heard of him cuz he is famous for his bookkeeping – REI Bookkeepers – and he does an incredible job. And right now I’m telling you, he’s one of the very few people that I recommend him and his company for the bookkeeping side. So he does incredible job with real estate investors, but he’s done fixed and flips. He’s been in the real estate investing world. He now focuses primarily on that bookkeeping business, but I’ll let him tell his story, but I’ve gotten to know him over the last year and it’s been, it’s just been a roller coaster, I think for both of us seeing, you know, where each other has gone and what we’ve done. So Dave, super excited to have you on thanks for being here today.

Dave Rice:

Thank you so much, David. It’s a, it’s a pleasure to be here, with you. I, I know when we met a year ago, I, I, I knew things were, I knew where things were going for you and I’m, I’m really proud to be a, a very small part of it.

David Richter:

Yeah. Well, I appreciate you and your support and Dave’s been a big support to me along this journey and a big encouragement. So I really do – Dave is just a good person. So you’re getting a treat here today of a businessman, someone who provides a ton of value and someone who’s very real. So Dave, let’s go, let’s go a little bit into your background. They’re like, tell me about your journey. You did real estate, but like what were you doing before that? What got you into real estate and you know, why real estate, so give, give to the listeners a little bit of the background?

Dave Rice:

Sure. Sure, sure thing. I’ve been, self-employed almost my entire working career. My background is actually pharmacy and over the course of about 25 years, my partner and I built a a veterinary pharmacy practice. And we worked with veterinarians all across the country. At, at one point we had 15,000 veterinarians buy from us and it was a great business but a great number of regulations in the pharmacy industry. And it just got to a point where it made sense to sell the business. We we sold it we’re boaters my wife Laurie and I disappeared on our boat for about five years which we’ve cruised the entire cari… Well, the entire Gulf coast, the entire east coast and all over The Bahamas. And, and frankly I highly recommended it if you wanna drop outta the world for a little while.

Dave Rice:

We, we got back, we got into real estate investing because it just made sense. We bought sold homes all over the place forever. And we got started and had a pretty good fix and flip business going in a couple of different states. And we were getting into wholesaling. I was working with well, I’ll, I’ll plug in Tom Krol. Who’s brilliant. And was really one of my early mentors. And we were just getting rolling and I was diagnosed with an oral cancer and it, it was pretty serious. The doctor said, get your affairs in order. We did, I had surgery and radiation. I’ve got a lot of scars left over and we went through two years of frankly, pure hell and everything kind of ran to a halt. We got our lives back together, got recovered. My wife helped me every inch of the way.

Dave Rice:

And we got going again. We were, we were just getting rolling again in the getting back, going with our previous contacts with investors. And I was talking to other investors and bookkeeping came up and I just said, well, my wife, Lori’s an accountant and has done our books forever, really knows her stuff. And I just figure everybody has somebody like her. And the response was we definitely do not. And so Lori and I talked about it for a while and we’ve been home based business people for forever. And we said, let’s see what happens. So we put a note out on LinkedIn that we were available, and that was four and a half years ago. Our business has blown us out of the water. We we are no longer doing any fix of flips at the moment. Our, our bookkeeping business has really consumed us. We’ve got 13 bookkeepers working for us now and they’re virtual they’re spread across the country. We only hire us based people and the businesses is growing as fast as we can add good people. So we’re thrilled and blessed to be where we are. I feel like I have a real window into the, the lives and finances of real estate investors.

David Richter:

Yeah. Yeah. I understand that if there’s someone else on here that understands getting to see behind the scenes and getting to see what’s really going on. So, but that’s awesome. I’m, I’m glad that, you know, it’s, it is few and far between where you feel like that you get someone that’s done the real estate investing. That’s been a part of that world has incredible mentors like that to Tom Krol and then offers the service like that. So it’s awesome that you have that background and you know, that you are, you are making a difference in these people’s in people’s lives and in real estate investors’ lives. So cuz it’s one of those areas that no one likes to focus on, no one likes that side of the business. So it’s definitely something that is very, very much needed. So thank you for providing that and for helping people and thanks for sharing your journey. So let’s talk a little bit about money since this is the first REI podcast. I always like asking just some general, general deeper questions with people. One of the big ones I like asking is what early lessons did you learn about money and how does that compare to how you think about money today?

Dave Rice:

Well, it’s interesting. My, my parents were small business people and so that’s the world I’ve always lived in. They were savers, they were conservative. They didn’t spend money that they didn’t have. And I think we picked that up at an early age. Although I certainly am happy to I mean, I think there’s a balance we’ve made plenty of money over the years and we live a, we live a really good life, but we live it within our means. And as long as you live on a little bit less than you make you’re gonna be in good shape. And I’ll tell you when I had my, my, my cancer bout, we were, we didn’t earn a dime for two years, but we had done, we had done the right things up until then and it wasn’t a strain. We were, we were just fine. So that, that’s really the the first thing that I learned I’ve also learned a few other things, you know, get paid first and pay yourself first. And I mean really that strikes at the heart of Profit First, but that’s been our philosophy forever.

David Richter:

Awesome. Now I love that for sure. Cuz that is the heart of Profit First and making sure that you as the business owner are paid. And do you feel like that’s why you were able to take off maybe, you know, like those, some of those mentalities being able to have that money and sort away and saved up

Dave Rice:

Absolutely. It was because when we started this business, I speak to a lot of other bookkeepers and a lot of people are trying to get where we are and, and we’re happy to help all of them. Yeah. and the, the world is so big. The ocean is so big. It doesn’t matter. It, it took me a while to learn that mentality, but we understand that now. And one of the things that many bookkeepers when they get started, when they start think, thinking about “who do I wanna work with,” and they’re usually their answers, whoever is willing to pay me. And that’s a nice thought, but I’m telling you the two things that really helped us get rolling. A, we chose a niche. We chose to…we like small business and there’s no more definition of an entrepreneur than a small real estate investor.

Dave Rice:

And I don’t mean small in, in any kind of negative sense at all. I, I love small business and we said, you know what, we’re gonna wait for the right clients and see if they come along and see where this goes. And so that’s what we did. The second thing we did is doesn’t really matter to everybody here, but we pick QuickBooks online as our software. We don’t work in any other software and we’re experts in QuickBooks online and we’re experts with real estate investors. So we don’t have to reinvent the wheel every time we start with a new client. And those have been really, really beneficial to us. And the second thing, and I have to lecture a lot of bookkeepers about this as well is people will say, well, I, I took on a client and I did a whole bunch of work for three months, and then you didn’t pay me.

Dave Rice:

And I said you just learned the first rule of business, get paid then do the work. If they, if they need you and wanna hire you, they will prepay you and you’re gonna come through and do the work and then they’ll be happy, don’t work and then hope to get paid. And so we’ve, we’ve stuck with that. And it’s, it’s absolutely never been an issue because your, your reputation is all you have in this or any other business. Yeah. If you just do what you say, you’re gonna do, you’re gonna be ahead of almost everybody else,

David Richter:

Right?

Dave Rice:

Yeah. So that’s how, we’ve how we’ve operated.

David Richter:

Awesome. Yeah. And you guys do have a great reputation, so I love that because that’s all you do have in business. So what about Profit First, then you’ve talked about that, the pay yourself first mentality, and like, mm-hmm, let’s get into that. Where did you either first hear about it? Or like, was it from clients that you were working with or, you know, like how did you get into that world? The Profit First world?

Dave Rice:

Well, of course I have Michael’s original book. Awesome. And I I’ve had that for a long time. And we certainly, we we’ve started to talk to our clients about it. I mean, for a, and, and even more in the last year, since I’ve gotten to know you and it’s, it’s really interesting. We such see such a large variation in clients. They’re all real estate investors, but their, their financial knowledge is all over the map. Mm-Hmm, I mean, we have new clients who do not know what a balance sheet is. Yep. And so we started at the basics there and depending on their level of, of where they wanna be, we, we can help them either implement all or part of Profit First. And because for some people, the whole system is just playing too much for them to absorb. So we start in, we start in baby stages if we, if we have to.

Dave Rice:

And so like for instance, we wanna get, as soon as a client has regular recurring income, we wanna get them on payroll. And I, because I believe that payroll and withholding is the first way to start making money, getting paid, pay your taxes and have it automatically recur. So that, that that’s to start. Then we start to split out into some of the other accounts that we can get them to. And I mean, I have clients who don’t use Profit First at all, because they’re super disciplined, but the majority are not. And we have a lot of clients using Profit First. We have a lot more of who needed and it’s hard as rewarding. Like I took on our clients a couple months ago and he said, most of my transactions are, are transfers.

Dave Rice:

And I said, well, I know what we’re looking at here. And he, he’s a large wholesaler takes in a lot of large wholesale fees. And he religiously to the penny with every dollar that comes in wholesale fee, he’s got distributions to all of the different accounts. So the owners pay account to the profit account, to the taxes account, to the operating expenses account. He’s really regimented about it. And yes, it’s extra work for us as bookkeepers, but we’re happy to do it. It’s fast. And it’s just so rewarding to see the money getting put aside,

David Richter:

Right. It’s, it’s rewarding to see that the business owner finally feels like the business owner and not just a slave to his business and, you know, being intentional with every dollar that comes through the door. So I absolutely love stories like that. Like yes, it’s, you know, you know, you know, if they’re coming to you saying we have transfers, I know what this means. They’re probably on profit verse. So that’s awesome. Absolutely love that. So have you seen it, I guess, during your, your time bookkeeping and what have you seen the transformation of people too, that are on Profit First, where like they may have started in the early stages, and now they’re seeing some of the fruits of what Profit First has done for them. Have you seen kind of that some of those transformations take place?

Dave Rice:

We absolutely have, and we see it in two ways. We see it in when you’re, when you’re speaking to them and they’re no longer apprehensive because I, I can tell you, our typical client comes to us. They do not, their, their books are a disaster. If they have anything, they have no idea if they, if even made or lost money in the last year. Right. They think they’ve made money, but they really have no idea. Yeah. And so that’s when we have to start talking about separating other people’s money and which, by the way, is one of the really great additions that you’ve come up with on top of Michael’s original Profit First other people’s money is a supremely important account. So we see that. But the other way we see it is pure financial. When I see a client that’s made, that’s got $200,000 of income over the last year, sitting on their books. And then I see 70 or $80,000 sitting in a tax account. I’m proud <laugh> yes. That’s,

Dave Rice:

I’m not gonna worry. I’m not gonna have them call me and say, you know what, I’ve gotta sell properties in December in order to raise money, to pay taxes, because we see that happen. Hmm. And when they can, when they can make business decisions based on the market and their abilities and not the desperation to raise money, to pay taxes, it’s super rewarding. I mean, I’ve had clients who have to go out and borrow money in December to pay property taxes on their rental properties. Hmm. And so then the first thing that we say is, okay, listen, if, if, if your mortgage companies are not escrowing property taxes, then we have to escrow it. Yeah. And that means we set up a separate account and you’re gonna start putting money and I’ll tell you how much needs to go in there every month. So we, we see it in two ways. We certainly see it in their demeanor and how they’re looking at things. And people are thrilled when they first can see real financials and learn and see where they’re making money, where they’re spending money and, and where it’s going.

David Richter:

No, I, I love that. That’s, that’s awesome. So that leads me to a question then, since you do have such a, a, such a behind the scenes, look of people with their finances in the real estate investing world, what would you say is one, or, or maybe a couple of the biggest mistakes that you see investors make on the financial side of their business?

Dave Rice:

Well, there’s two really obvious ones. When they have one bank account with a lot of money in it, and I’m talking a lot of money for small businesses they, they figure if there’s money in the account, we can, and we should be buying properties. Hmm. And we, we see this all the time and I, you know, I never wanna be doctor. No, but if they’ll take our advice, we always tell them, listen, we’ve got to think about, what’s going to happen down the road here. We’ve got to be able to pay the bills. We’ve got to be able to, to pay those quarterly taxes when they come up. And this is often something they haven’t, they haven’t thought about. So we see that. And then of course the other thing we see is they’ll have money in their tax account or their profit account, and they’ll move it back into the operating account.

Dave Rice:

And that’s another red flag where we say, listen, you’re violating the rules. <Laugh> right. We need to, we need to leave that money sequestered, where it is. It’s there for a really, really important reason. And even though we talk about the profit account as to go and blow on whatever you want, it’s not to put back into your business. That’s what the operating expense account is for. Yeah. We wanna keep that sequester. So we run into that once in a while, but Hey, we’re all teachers David. Right. And I, I find it really fun to teach these investors who, who are visionary entrepreneurs, but not necessarily ready to dig into the details. Well, that’s, that’s the part of their plate that they hand to us. Yeah. And so we can go back and say you know, we’ve gotta reign things in just a little bit here and make sure that we can pay for what we’ve already got on our plate.

David Richter:

Okay. No, I, I like that. That, yeah, that’s a, that would help so much if you just rewind that, listen to that, listen to that a couple times, if you’re listening to this podcast, you know, go back through, make sure that you’re not falling in some of those traps and make sure yet you can get where you can really understand those finances from your level and, you know, taking that action. And this has been awesome, Dave, so just a, I just have a couple last questions here. Do you have, do you have just general advice for the real estate investing community that’s listening to this podcast? What would you say? Here’s some last minute advice that I wanna give you before we end?

Dave Rice:

Well, I would say you really wanna, you really wanted to have a handle on your, on your finances for your business. I mean, I know it’s important. You need to be out buying properties. And what I often tell clients is your highest and best use of your abilities is to be out searching for discounted properties, having those uncomfortable conversations with with sellers. I’ve always said one of the keys of success is to be willing to have uncomfortable conversations. Mm yeah. And entrepreneurial people like real estate investors, they usually get that. But then at, at that point, just remember when you’ve got money sitting in your checking account, remember who it belongs to. Hmm. Know what’s yours. Know what’s not yours. If you’ve got employees, that’s a huge obligation. You need to be putting money into a payroll account to pay those employees and just keep your head on your shoulders about what’s what’s going on here and just, just learn as much as you can about the, the numbers in your business.

David Richter:

Yeah. Yeah. That’s so good. So there we go. That’s our advice there. Now, Dave has given a lot of value here. I mean, literally the, from where he was in his business to where he is now from Profit First and how that’s helped him see how it’s helped the people that he’s working with. So Dave, how can people provide the listers, provide value back to you? I know you’re probably slammed because you are in such high demand and so good at what you’re doing. So how could they connect with you? Or like, what do you need as well too? Maybe it’s not more clients, maybe it’s something else, or if they have a bookkeeper recommendation and could send your way or something like that too, like what could you, what could the listeners help you with?

Dave Rice:

Well if you, if you just would like more information about what we do, you could reach out to us at reibookkeepers.com and our contact information is there you can schedule a consult if you, if you’d like, of course those, those are free and we’re happy to, we’re happy to talk to people if you’re, if you’re real new in real estate investing and probably not raised to hire somebody like us, or you’re just not sure, I feel free to schedule a consult because we have a lot of advice for newbies who aren’t ready to hire us yet. I can help you set things up for the future so that when you are ready to maybe outsource your bookkeeping, whether it’s to us or to anybody else, I can give you a few pointers that will, that will have you ready to go so that it’s not a disaster when you do start.

Dave Rice:

And I can understand, I like to see like new wholesalers. I like to see them put a few deals under their belt and have some cash in their pocket before they hire us. And if you’re properly prepared, we can go back and clean up whatever we need to, as long as, as long as you followed a few a few simple rules. So we’re happy to help. We’re not taking any new clients until January of 2022 right now. We frankly just would like to regain a bit of our sanity the last six weeks of the year. But, and, and the other thing is we’re gearing up, we’re bringing on we’re bringing on people and we are not gonna take new clients until we can properly take care of them. Awesome. And, and that’s a, that’s a big responsibility on our end as well.

David Richter:

Yeah, yeah, it is. And don’t totally understand that. So there you go. It’s R E I bookkeepers with an s.com. So that’s where you can get that information. Dave, it’s been incredible having you on, thank you for sharing your knowledge, your wisdom around the finances. Something that we don’t talk about enough and giving people that giving people that, like you said, that confidence of being able to come to you and talk about it and what that gives to them once they start on these systems. So thank you so much. Great having you today.

Dave Rice:

Thank you. It’s been a pleasure.

Speaker 4:

Thank you so much for listening to today’s show. If you found this episode valuable, could you do me a quick favor? Could you give us an honest rating within iTunes and be honest, you could say whether you liked it or not. And obviously with iTunes, the more reviews and ratings we have, the better it is for other people that are searching for a Profit First and a podcast. So we’d love to be ranked on there and that’s thanks to your help. So we would really appreciate that if you would like to go give us a rating. Also, if you’re looking to connect with us further, I would highly recommend checking out our Facebook group Profit First for real estate investors. And that’s literally what it’s called. So you can type in Profit First for real estate investors, and you’ll be able to find <laugh>, you’ll be able to find our Facebook group right there.

Speaker 4:

So come join active real estate investors who are supporting each other and growing their businesses and profits together. That’s what that group is all about. The link should be in the description below. And if you’re interested in working with us and implementing Profit First in your real estate business, we offer coaching and guidance. So if you wanna work with someone who’s actually Profit First certified and who works right now, currently with real estate businesses, you can actually go start your application process by going to simpleCFO.com/apply, or just go right to simpleCFO.com. And there’s an apply button right on there. If you wanna actually start your Profit First journey with someone who can actually walk you through those step by step and help, you know, and grow your cash flow. Thanks again for joining us for another episode of the P first REI podcast. See you next episode.