The Wisconsin Investor
Each week, we bring you interviews with some of Wisconsin's top real estate investors who share their tips, tricks, and strategies that you can implement right away. This show is dedicated to helping Wisconsin real estate investors elevate their game. Along with interviews, I'll also dive into hot topics in solo episodes and feature experts from various real estate sectors across Wisconsin.
The Wisconsin Investor
When Paying Zero Taxes Isn't Always the Right Goal With Marcus Crigler, CEO of Bec CFO
Can you legally pay zero taxes as a real estate investor? Should that even be your goal? CPA Marcus Crigler challenges conventional wisdom in this eye-opening conversation about navigating the post-bonus depreciation landscape in real estate investing.
As the 100% bonus depreciation benefit phases out (down to 60% in 2024), investors need to rethink their tax strategy. Marcus offers a refreshing perspective: sometimes paying some taxes is smarter than spending your last dollar trying to avoid them completely. His practical advice focuses on staying below the critical 24% tax bracket threshold rather than aiming for zero, potentially saving you thousands while maintaining business stability.
Beyond tax strategy, Marcus delivers a masterclass in financial management for real estate entrepreneurs. He breaks down his four-phase business model (Hustle, Secure, Expand, Exit) and explains why most investors fail by skipping the crucial "Secure" phase. His recommendation? Establish consistent owner's compensation and maintain cash reserves equal to three months of fixed expenses before attempting expansion.
The conversation takes a fascinating turn when Marcus reframes how we think about spending: "An expense is not an expense, it's an ROI." This profound mindset shift transforms financial decision-making, ensuring every dollar spent generates returns. Coupled with practical bookkeeping advice and insights into where savvy investors are parking their cash in today's market (money markets, self-financing, and hard money lending), this episode delivers actionable wisdom for investors at any experience level.
Whether you're a seasoned real estate professional or just starting your journey, this conversation will fundamentally change how you approach your business finances. Subscribe now and share this episode with other investors who need to hear this message!
To connect with Marcus, go to www.beccfo.com and fill out their contact form.
Welcome back to another episode of the Wisconsin Investor Podcast. I am again excited, as always, because I have one of my good buddies joining us today, who I'll introduce here in a second. Before I do that, though, I always give a little commercial for Wisconsin Discount Properties. If you guys aren't familiar with us, that's who sponsors the show. We have off-market deals every single week hitting your inbox. People always say man, what's your biggest struggle? I ask them that. They say I can't find any deals. Well, we send them right to your inbox every single week. 6 am Get on the buyer's list. To do that, go to wisconsindiscountpropertiescom. Real easy. You put in a little bit of information and bam, you're added to the list and every week you're going to get deals sent to you. So with that, let's get into today's episode. I got my good buddy, mr Marcus Krigler, here. What's up, marcus?
Speaker 2:What's up, brother? How are you?
Speaker 1:I'm good man. I'm excited to have you on here because you're not a Wisconsin boy but you work with Wisconsin boys. You've been helping us out a lot over the last year and a half two years, and tell the audience a little bit about you, your company and what you guys do.
Speaker 2:Yeah, so good question. So Wisconsin-based podcast. Yet I work all over the country, right, and so the reason why Corey and I met we met at Collective Genius. I'm sure Corey's discussed that on the podcast in the past, but I'm a CPA, so my accounting firm is Beck, cfo and CPA, and we work with real estate investors like Corey all over the country, and so what we do is we focus on helping people make more money, save more money and build wealth, and we do that through our accounting firm business. We have bookkeeping, we have tax, we have tax strategy, we have accounting, we have CFO consulting services. So we have a lot of different stuff that we work with. But we work with real estate entrepreneurs, right. We love that niche. We love those people that are in the business every single day trying to make it happen. The passive investor that's not really the target we target, right. So we work with those that are like Corey, that is, they're doing deals every single day, they're churning properties and ultimately, we help them run great businesses, and that's what our goal is.
Speaker 1:That's awesome. And so when you say you don't really work with a passive person, when you say that, are you talking about the guy who just invests in a syndication type of a situation?
Speaker 2:Yeah, that's right. So there's a lot of. You know, because of the amount of real estate entrepreneurs out there, there's so many real estate passive investors out there where you can go and you know, I'm sure a lot of your clients or a lot of the people that listen to the podcast, sell their properties to those passive investors, right? Those people that, hey, I just want to, I just want to hold real estate and I want to let the management come. Maybe I've got a W-2 job or I've got a whole nother business that has nothing to do with real estate, but I like real estate as an investment vehicle. Those people we don't necessarily always, always work with. We usually work with that real estate entrepreneur that then wants to turn that real estate business into real estate passive holdings and we help them do that and we help with all the tax strategies and all the bookkeeping strategies, all the accounting strategies that come along with that.
Speaker 1:I love that man, let's get into it. Because tax strategy to me, this is one of my favorite topics, which is weird. Growing up and getting into real estate, I never thought taxes would be one of my favorite things to talk about, but I love legally paying $0 in taxes. If I can talk to everybody a little bit about, like, what are some things right now, when this launches, we're probably going to be past everybody's you know normal April 15th deadline by the time, by the time we released this podcast. But talk about, like, what are some things you're seeing just in the tax world right now, as things are changing, and what are people doing to mitigate taxes right now?
Speaker 2:Yeah, well, that's a great question. So most of us over the last half a decade or so really took advantage of especially if you've been in real estate really took advantage of the Tax Cuts and Jobs Act, which really took into effect in 2017, but really fully took place in 2018 and has kind of been going since that point in time. And the reason why I talk about this is because that is the act, that is the law that put into action the 100% bonus depreciation right, and so when most people think real estate tax strategies, they think depreciation, they think buying assets and being able to write an appreciating asset off, and being able to write off an appreciating asset, right, and so that's a lot of you know. Really, 2018 to 2024, that's what a lot of people really focused on, or, sorry, 2022. But then in 2023 and 2024, that depreciation started to wean away, right, and so if you don't know what I'm talking about, that's okay. We can talk a little bit about more specifically what that is.
Speaker 2:But basically, depreciation is just simply a tax write-off. It's not cash that necessarily leaves your bank, but the IRS allows you to write off a portion of any investment property or, quite honestly, any investment asset. It doesn't have to necessarily be a property, but any asset over a period of time, and the IRS tells you how long you can write it off. And so what Trump did back when he was elected, the first time he enacted the Tax Cuts and Jobs Act, which was that 100% bonus depreciation or a lot of things in that, but 100% bonus depreciation was one of those that's been weaning away, and so a lot of my clients have been like hey, what do I do? What do I do with all of the depreciation that I was able to offset our current income with? And now I'm not able to do that? And so some of the answer is not the best answer. Right, some of it's taxes. Right, some of it's we've got to pay a little tax. It's not fun, but you know, this is the reason why we do.
Speaker 2:What we do in our organization is because sometimes it makes sense to pay taxes.
Speaker 1:And I know, I know, I know from people.
Speaker 2:They're like I don't even want to hear you say that.
Speaker 1:That's. I was about to end the podcast right now. I was like wait all right, we had enough of. Marcus, I'm just kidding, I'm just kidding.
Speaker 2:I don't blame you, but that's the answer Right now is we are not in a period of time where you're able to get your taxes down to zero unless you're heavily investing. Well, the problem with heavily investing right now is we are also overall in the real estate market in a kind of a cash-type perspective, and so there's not a lot of real estate that's necessarily being bought and purchased and held by real estate entrepreneurs, because a lot of times they're having to dispo those properties right now, and so once upon a time you could maybe buy 10, 15 properties in a year, which for somebody that's new may sound like, oh, I'll never be able to do that, but for somebody like Corey that's been doing this 10, 15, buying 10, 15 properties in a year, like he could do that in a month.
Speaker 2:Right and so you know, these people were so invested in buying these properties and offsetting their taxes. Now they don't have that and the IRS is not paying for some of that down payment. That's. The other thing with this depreciation is you get such a nice benefit from writing off that property that you may be low to no cash out of pocket by buying that property and you might get a tax benefit.
Speaker 2:Well, some of those have gone away. So what do you do now? What do you do now? Well, first off, you have to get out ahead of it. The days of waiting until the end of the year and saying, oh well, I think I bought enough real estate, let's cost seg them. Cost segregation is another term that may be unfamiliar. It's just simply a study that tells you what you can write off faster than others. And so the gone are those days where you can just stop planning and write off all your real estate and then, at the end of the day, you've got a loss and you're like, ooh, I did tax planning. Well, that's not really planning.
Speaker 2:That was just it just happened for you. Now we've got a plan. Now those little deductions that we may not have cared about as much, now they're much more important, and so it's about getting out ahead of it. It's about communicating with your tax accountant, and the reality is it's about having a discussion of how much is the right of tax to pay. Because, what you'll find is that and I know I'm going a lot here, but-.
Speaker 1:No, it's good, this is great.
Speaker 2:At a lower income level, your taxes are much lower, right, we kind of all understand that, right. But once you get there's a gap in the in what we call the marginal tax rates, okay, and you go from 24% paying 24% in taxes to 32% in taxes Once you hit that amount of income.
Speaker 1:Okay.
Speaker 2:So, once we get a hold of you, our goal is to get you below that 24%. Yes, we would love to get you to zero, right, but we also know the economic environment we're in. I don't want you to spend your last dollar trying to not pay taxes, right, because at the end of the day, then you're not in business, right? And so what we try to do is get you out of the top rates, get you to the lower rates, and then, if we get you even lower, great. But when you're paying 20 percent in taxes, 15 percent in taxes, that's way better, way better situation than maybe what you could have been in the past. So that's where we really start to focus our time, and there's a lot of different strategies that you can look at there, but that's the goal right Stay out of the 32%, stay below in the 24% and, because of how marginal tax rates work, if your highest tax bracket is 24%, generally you're going to be in the teens as far as your effective tax rate.
Speaker 2:So, that's what we want to do.
Speaker 1:Okay, well, that's really fascinating, man. I always knew about the brackets and the different step-ups and different. I didn't realize there was a section of such a big gap between the 24 to 32. That is a big difference. And it's not what you make, it's what you keep. Right, right, that's exactly right.
Speaker 2:Yeah, wow. So what you're seeing overall, what you're seeing overall, you know, let's say, bonus is bonus, still 30. Is it 30% this year? 40%? What is it this year? 40% in 2025. Now the expectation is that you know Trump's back in office. He has stated multiple times that a hundred percent bonus depreciation is going to come back. However, it's not passed yet. So you know, just like just like when we talk about doing real estate deals, we don't count any of our money until it actually hits our banking.
Speaker 1:That's right. It's not done until it's closed man.
Speaker 2:That's right. That's right. So we feel the same way about the tax code. We're playing in the in the sandbox that we're we've got today, and as soon as it changes, we'll look at that new sandbox and then we'll play in that one. That's awesome.
Speaker 1:What about like so. So when I was starting out, we had a really good mentor that said, basically get a great bookkeeper day one and we're like well, we're not even doing hardly any deals. Why do we need a bookkeeper? Like, what are some of those things? Maybe, if somebody's newer out there, marcus, what are some things they can do today to start setting themselves up for success long-term when it comes to bookkeeping, tax planning, those types of things.
Speaker 2:So your number one bookkeeping hack if you're somebody that hey, I haven't done any bookkeeping yet and I don't even know what to do and I don't know when I'm going to be able to afford somebody to do it, you can do the simplest and easiest and cheapest thing you've got. You should have an LLC set up. If you don't have an LLC set up, go get that taken care of. Okay, that's step one Step. Go get another bank account opened up. With that bank account, you can also get a credit card, maybe through that bank, or maybe you can go.
Speaker 2:I prefer this is a little hack I prefer cashback credit cards. Here's why I don't need my business to pay for my vacation. I need my business to generate cash, and so any chance I get my business to generate cash, I'm going to take it Now. If I want to take that 2% cash back and go put it in a plane, cool, I can go fly, but I want to have the opportunity to Heck. I was just looking at my points today. It was like $4,000 of points for the first quarter. Well, guess what? That's money that goes back in the business. That's just what I mean.
Speaker 1:That's a bonus in the business.
Speaker 2:So I love credit cards. But here's what you do If you have, I love those credit cards. For that reason, don't leave money on them, of course. Then, once you have that, you've got your bank account, you've got your LLC, you've got your credit card Every transaction goes through those accounts. Yeah, okay, every transaction, no personal. You don't put personal stuff over there and you don't put your business stuff on your personal credit card.
Speaker 2:And if you can do that, that's step one, and what will happen is, eventually you're going to need to go to somebody like me or some other accounting firm and they're going to need to put it all together into some sort of financial statement. That way you can go get a tax return done. But that might not be your core priority If you want to just start with getting organized. Getting organized is getting everything all in one place. I'll give you a little hack here. I'll give you a little cheat. Your bookkeeper, your accounting firm, is going to take all the information from your bank account and your credit card and the first thing that they're going to ask you is write down everything that's personal and write down everything that's business. That's what they're going to ask you first, and so, if you've separated it out already, you've eliminated that process.
Speaker 2:Well, as an entrepreneur, as a visionary, as somebody that doesn't want to get into details, you definitely don't want to go through months worth of financial statements and say, hey, this was business, this was personal. And, by the way, not just it was business, it was business for X, y and Z, because I have to prove that to the IRS too. I've got to get you into a spot where, if I'm saying it's a deduction, I got to prove to the IRS that it's a deduction for you too. It's not just about bookkeeping. So getting it all in the same spot's the right way to do it.
Speaker 2:And then, eventually, when you get to that spot and, by the way, 1231 of every year is that spot for everybody, and so you've got to get your books cleaned up as of 1231, no matter what, you got to be able to have some sort of financial statement. So if you're just starting the business today, you have all year to kind of get your bookkeeping squared away. I wouldn't do it, that's not, that's not what I suggest, but you do have that. Yeah, if you started last year, you need to make sure your books are up to date as of 1231. So you need your tax returns, yeah.
Speaker 1:That's so good. I love that idea, cause when I, when we started Marcus, we didn't know a lot of this stuff. You know, we had gotten a bookkeeping company but we didn't really like keep up with it. And then they would. They would hit us up like every quarter, every six months, and be like, hey, can you go back and tell us what all this stuff was. And I would get so frustrated because I'm like I can't remember what I did yesterday. How am I supposed to remember all this stuff? So, like, just keeping up with it, it's.
Speaker 1:It's now that we, you know, we work with you guys. You guys have a cool little system that, like, you'll send us a little ping, you know, a couple of times a month. That's like, hey, we don't know what these charges are. Go and put some detail in and then it categorizes them. And it was like, oh my gosh, it's a laundry list of like a hundred things and I'm like dang it, like this is the last thing I want to do. I want to go do deals, I don't want to be out categorizing expenses. You know, I love that idea. So, getting back into into some of the other things that you work with a lot of you know some, some of the bigger boys in our industry, right, what are you seeing trends-wise those guys are doing? Are they stashing more cash nowadays? Are they investing in a lot of deals? What are you seeing for trends overall as far as what some of the guys are doing? That are some of the big boys that you work with out there across the United States?
Speaker 2:Yeah. So if I would say the one similarity across all of them would be, I would. I would sum it up in one word and shift Okay, right. So I think I don't think there's anybody today operating the way they operated 24 months ago and I would say, depending on that operator, they are at the end of the shift, in the middle of their shift, or they're just now realizing they need to shift Right. And so that's kind of where we're at as far as my opinion, from the inside, looking at it, there's a lot of businesses shifting, and not necessarily for a bad thing, meaning that's a negative thing.
Speaker 2:But I think what we're seeing is what we, what we're getting more comfortable in, is what today's market is, and we're not preparing for any. You know, big expectation changes in the market. We're just going to kind of. You know it feels like my clients for the most part are hey, yeah, there's black swan events, there's things that can pop up, but we feel like we can predict the pricing of the market, which is all real estate investors ever care about.
Speaker 2:Right, can we predict the pricing of the market? Because if we can predict the pricing, we're good. It doesn't matter if the market's up or down, we just need to be able to predict it. And so my clients feel like they're confident in getting their ARVs right, which is new and at one point in time their ARVs were way too low because the market was going up. And then they shifted and their ARVs were way too high and they were overpaying for properties. And now we feel like, okay, I think I know what the ARV is. I've got to change some things in my business to make this work, but I can make it work.
Speaker 1:Yeah, no, that's so. True man. We saw that too in our business. When interest rates skyrocketed, everybody pulled back. Dude, we ended up flipping a ton of properties which we don't flip hardly anything in our business but everything pretty much for us is wholesale or if it's a bigger deal we're going to look at, maybe buying and holding it. But we saw that we had to start flipping a bunch of stuff because none of our investor buyers were confident in what they could buy that thing for and then resell it for four or six months down the road.
Speaker 1:And now we've seen probably we saw it a little bit earlier, I would say within the last 12 months here in Wisconsin we've seen a lot of investors kind of come back to the table and now they're pretty comfortable, they're buying deals on a regular basis. The same guys are showing up at all the every week. They're showing up looking at deals and they're staying pretty consistent. So I think we've seen that now Like it's nice to just have. Like you said, I don't care where interest rates are at, as long as I know what the market's going to roughly be. I can now I can make my buys right. I can now I can make my buys right, because we make our money when we buy right.
Speaker 2:So yeah, absolutely, and I think that's a really good point that you made there. As far as the fix and flippers coming back into the market, I you know, again, no market can sustain not having activity in it, right? So the activity has got to come back. Obviously, individual companies, they can't stop flipping and keep the business open, so that's got to come back. But I think the other thing that has helped with, you know, all of the kind of the flipping coming back, is we need it, right. This is such a necessity in our.
Speaker 2:If you look at all of the MSAs, the only housing that's getting built is so far outside of that MSA that flippers are the only option to get good housing inside of a city, and so there's a need for it. There will always be a need for it. Somebody asked me one time. They said, hey, if I wanted to never have to worry about the ups and downs of real estate, what should I know? And I said, well, obviously that's not ever going to be the case, but you should't have to buy it at a discount.
Speaker 2:You can allow your construction company to create the value in it. And so you know, a lot of times we talk about this with people that wholesale and flip, where, okay, I buy direct from the seller and then I flip it. Well, if you buy direct from the seller at a retail price what I'll say retail for a flipper you didn't really buy it at a discount, right, right, you didn't. So we talk with our people that do wholesale and flip. They should buy it at a wholesale fee, they should get a wholesale fee for it, and then, if they add extra value to it, then they should get a profit from the flip too. So there's two profit buckets in that transaction. Profit buckets in that transaction, and I think what a lot of people have realized in flipping is that we've got to at least be in one of those buckets. We have to, Otherwise we're going to be in trouble, if not both of them.
Speaker 1:Yeah for sure. I think you brought up a really good point. I've been preaching this to a lot of people that I talk to on the investment side who are worried about a market crash. That's everybody's concern, and I've been here. I've been in real estate since 2016. Every single year I've had the naysayers that are like, well, the market's going to crash, the market's going to crash. And here we are, nine years later, and they're all kicking themselves. They weren't buying deals back in 2016. Same is going to be true today.
Speaker 1:The inventory is so low across the country, especially for affordable housing. Right, and what you're talking about here, marcus, is they can't build an affordable house anymore for what a flipper can buy it for and fix it up and then resell it for it. So the competition, your competition, is not new construction. Not only that, your competition. New construction, like you said, is outside of the MSAs. They can't, they're not building brand, unless it's some kind of government subsidized program or something like that. But there's no developer that's going in and buying infill lots in the city and developing it for what somebody could buy an existing property for and fix it up and sell it for.
Speaker 2:Not competitively priced right. I mean because you have to go in, you have to destroy something that's already existing right.
Speaker 2:These MSAs are already full. So you've got to wipe out a building, you've got to wipe out a block, and then your cost per lot is so high to do that. That it just doesn't make sense. So you're right, you have to have subsidized housing and a lot of times they're not doing that. They're not doing single family homes, they're going to do a multi right, because they can build up. They can put 150 units on that size of a lot instead of 10. On that size of a lot instead of 10.
Speaker 1:Correct. Yep, they're going to get some density going in there because there's a shortage, exactly Right. And they want that tax base up too right.
Speaker 2:A hundred percent. That's the other thing.
Speaker 1:Yep, that's another piece. What about? Like some of the new construction guys, you work with new construction guys at all. Marcus, yeah, you do no-transcript.
Speaker 2:And so part of that is you're building infill lots. There's infill lots at discounts of developers that didn't do well or maybe they need to get out from underneath them, or they didn't plan on the interest rate heights or whatever. So buying a discounted lot is no different than buying a discounted house, and so in that realm there's people that are going out finding those discounted lots that make sense to put some sort of unit on, and then it just depends on what that investor's doing. I've been a big proponent if you are an investor that's looking to buy and hold and I look at buying and holding as a 20-year play, not a five-year play.
Speaker 2:So I look at buying if you're buying and holding. Otherwise it's just a long-term flip.
Speaker 1:Right, oh, that's a good point. I've never thought of that.
Speaker 2:And so if you're buying and holding to your point, you can't really lose money. Right, you can buy today, prices are high, everything's high, but it's going to be higher in 20 years.
Speaker 1:We know that.
Speaker 2:Yeah, or we all were fooled. One of the two, yeah, yeah, but I think the. I think that I missed mine. I'm losing new construction.
Speaker 1:Yes, so the new construction.
Speaker 2:So the other reason so what I'm really a big proponent of is for new construction is to build a rent right.
Speaker 2:Build a rent your own assets. Because here's what I tell people If you're going to own that for 20 years and you buy a 30 year old property, it's 50 years old in 20 years, Right, Right. But if you buy a new one, you've got all the deferred maintenance is off the table. You've got the most efficient house possible in the market. You've got everything that you want, Plus, you've got the best product.
Speaker 2:Now here's where your issue is is that you're competing against the inner city rentals. That's sometimes a problem, but there's still areas that make it work. Or you can come in and build a new house on a torn down lot or a fire lot or something like that that we see. But I think the new builds I really like the new builds If you want to keep it for the next 20 years that's a great asset to have in your portfolio because it's new, it's fresh, it's a good asset. Because it's new, it's fresh, it's a good asset and a lot of times you're going to get better renters and you're going to get better interest on those new interest rates, better financing on those new properties.
Speaker 1:Yeah, that's a great point. You know one of the Like that.
Speaker 2:Go ahead.
Speaker 1:Oh, as I say, one of the things I always hear too, or I let people know too, is like they're looking at maybe a big rehab, right, like they're looking at maybe a big, a big rehab, right, and it's going to need a new furnace and an AC and windows and a roof and siding and all this stuff. And I'm like I love those If you can get a discount, like if you can buy it at the right price, because if I'm going to hold that, that asset, just like you said, now my foundation is still 50, 60 years old or whatever the case is, but if everything else in there I'm basically replacing and I'm starting fresh, I can't rebuild a brand new house for when I can remodel the entire thing and take all that CapEx and just do it all in one fall swoop. And now, like you said, similarly, I don't have to budget as much for CapEx in the future. I've got a lot of that stuff covered and now I've only got a handful of things that could possibly go wrong in that short period of time. And so, even if I'm not cash flowing quote, unquote much my tenants are paying down my debt, my property is going to appreciate like crazy and I'm creating that big spread in between what the property is worth and what is owed the longer that it goes on, Like you said, in 20 years.
Speaker 1:I always tell people and people I listen to this podcast regularly like you could buy today and look like an idiot on what price you paid for it, and in 20 years you're going to look like a genius and you are. You are so smart to buy that property. They'll forget. 20 years ago they called you an idiot for what you paid for it today, Right?
Speaker 2:Sure, and we see that now. Right, like, I mean, how many people have you talked to? And they're like, yeah, I bought, like all these houses at $30,000 when nobody was buying, you know, in 2008 and 2009,. It's like people were looking at me like I was an idiot buying these houses and I'm like, well, no, you were brilliant and, by the way, this is the one of the things that I always talk about and maybe we'll pivot to this but, right, cash, and so they, they had opportunity to buy these houses, and I think that's where you know, so many people are at today is that we had these big, this big swing, and for a lot of us, we were able to to do really well in that in the housing market over the last, you know, especially those couple of years after COVID.
Speaker 2:But now you know it's coming back to normal and we need cash right. And so what the smart, what the smart investors doing is they put that cash on the sideline and they're waiting to pounce. Right, some of them are pouncing a little bit. Now I'm starting to see some money come off the sideline a little bit, but I still think there's a lot of money sitting out there waiting for discounts.
Speaker 1:Yeah, and is that what they're doing with the cash? They're just going in?
Speaker 2:and making cash offers on these houses that normally they were getting financing for, or what are you seeing the best use for their cash right now? Yeah, two different spots that I'm seeing at places where people are storing cash. The number one spot is just in money market or treasuries right, you're getting four to five and a half percent in that and it's hard to argue against that because it's so safe. But then, well, I should say three different places. Then they're becoming their own hard money lender, right, so they're lending on their own properties that maybe in the past they would have gotten and got third party financing or whatever. And then I'm seeing a lot of people getting into the hard money lending business.
Speaker 2:Maybe, not in the tune of, hey, lending $20 million a month or something like that, but having a million dollars sitting on the sideline and deploying it into their market and you know, and helping maybe flippers or you know some of the other people that I always tell people. If you want to get into hard money, lending as a real estate investor, super easy only lend on a property that you would have bought for the, for the, for the purchase price you would have bought of that, and in worst case scenario, you end up with a property anyway.
Speaker 2:Yeah, exactly, so yeah a lot of people are doing that.
Speaker 1:Yeah, we've actually started to do a little bit of that too, like we're not trying to go out and start a fund or anything like that right now, but for people that we have relationships with and that we know, especially our employees, a lot of, we lend a lot of our employees, but we're starting to do a little bit of friends and family hard money lending and we'll see where that goes and we'll see if it continues to grow and all that sort of stuff. But I enjoy it. Like you said, it's, it's fun to get involved with some deals and partner with some other investors and be a part of that whole process, more than just giving them the deal, you know, and supplying the deal. Now we can also supply them cash, potentially for their deals as well. So that's been kind of fun, that's been kind of exciting.
Speaker 2:Yeah, makes it even a more of a one-stop shop, right? If you can, if you're like, hey, here's the deal. Oh, and, by the way, I can help you out with the financing on it. That's that. That helps them out a lot too, so I would encourage you to keep, you know, going deeper into that as you, as you see fit.
Speaker 1:Yeah, for sure, For sure, Marcus. What are some other things out there that you see just going back to? I want to go back to kind of the newer investor. Let's say they're out there and they're like man, I don't have cash, right, what are they doing? Or how are you seeing, like, what would your advice be to somebody to try to get their start? Like, what are they doing as far as from a cash management position or from a planning position or something like that?
Speaker 2:Totally, totally so. The first thing I will tell you is recognition where you're at in business, and so there's four phases of business. Every business, every entrepreneur, goes through it. You hustle, you got to secure, you got to expand, and then ultimately you exit. And no matter what you do, you're going to kind of be in that realm, right, and so most of your newbies are in that kind of that hustle stage, for sure. And what happens in the hustle stage you're going to remember. So you're going to hustle, secure, expand, exit.
Speaker 2:What happens in the hustle stage is we don't go through this period of security, right, and so in hustle, you should be thinking about how do I secure my business the best possible before I expand? What does that mean, okay? Well, that means a lot of different things are going to happen, right? Number one we're going to have a cash position that is supporting our monthly expenses Okay, that includes your personal expenses, okay. And so, as an entrepreneur, you don't have the ability to expand unless your business is paying your salary, right, and so that's a big belief that I have is you're not a business owner until you're getting a salary out of your business and it's the same salary every single month, no matter what the month is, no matter if it's a good month, a bad month. You get the same money every single month. That's number one. Got to have that. Some people call that profit first. I don't. I don't call that profit first. I call that paid to work Like you were you're working in your job.
Speaker 1:You're getting paid to work. Yeah, pretty basic yeah.
Speaker 2:And then so that's, that's the number one thing. The number two thing is having a cash position to where it's it's in accordance with your fixed expenses. So if you're sending out, let's say, $5,000 a month in marketing and you know you got a $2,000 a month VA and you might have maybe $1,000 a month in other software costs, so maybe it's like $8,000 a month in fixed costs. That's probably kind of a newbie fixed cost ratio. Well, you need to have at least three times that in the bank.
Speaker 2:That means $24000 bucks so and, by the way, if you want to increase, this is the hack I'm telling you. If nobody listens to anything from here.
Speaker 2:listen to this, If you want to your expense growth based on your or your, your cash growth based on your expenses. So if you want to extend your expenses, you got to compile cash first. Why do I say that? The reason why I say that is because an expense is not an expense, that is for an individual. As a business entrepreneur, you have to change your mindset. Expense is an ROI. It is expected to give you a return, and so if, at $8,000 a month, you can't get to $24,000, $25,000, $26,000, $30,000, you don't have the right expenses, yet they're not giving you a return. So good. So what happens is that you go too fast. So you're like, oh well, I can't get to $24,000 in cash, so I'll just go to $16,000 in expenses and then I'll be able to get to $24,000 in cash because I'll get the returns off of that. It's not how it works, right, and so if you want to go slow, you'll go fast, that's so good, low is smooth, smooth is fast.
Speaker 1:That's so good. I just want to repeat that An expense is not an expense, it's an ROI. I think that's what you said.
Speaker 2:That's right and, by the way, it's different. That's why we're weird as humans, because when we go as an individual if I go to the bar tonight, right, that's an expense, right, there's no return on that Matter of fact. It's probably giving me a negative return.
Speaker 1:Yeah, you're going negative there. Yeah, right.
Speaker 2:Yeah, but that's personal. I'm not using my business credit card to spend that. I'm not doing that right. I might if I'm meeting with Corey right.
Speaker 1:If I'm getting Corey drunk, to charge him more.
Speaker 2:I might do that, but I'm not going to do that. That's an expense of my personal life, but it becomes an ROI. I need to make sure it has an ROI in my business for any of those things.
Speaker 1:That is so good. That's the nugget right there, marcus, I think that was the one for me. I just heard that and I'm like, dude, that is so good. Everything in my business does as you said. Then I'm like, well, marketing, duh, right, what's my rate return on ad spend? That's an easy one. But then I'm like thinking about our staff and all software, like anything that we spend money on. What's our ROI on that? And we can, if you filter it through that lens, it makes it really easy to determine do I keep this expense or do I cut this expense or do I expand this expense? Right, that's right. Wow, that's so good, dude, I love that.
Speaker 1:Marcus, uh, we're going to get to the uh, the the question here. I know you got a busy day, brother, and I appreciate you getting in here, man, and helping out this team and, uh, people that are listening to this. Uh, before we let you go, though, usually we ask what's your favorite Wisconsin tradition or place to visit. Since you're not from Wisconsin, maybe do you have a favorite tradition you want to experience or a favorite place you'd love to visit.
Speaker 2:Oh, I gotta be Lambeau field. Yeah, buddy, gotta be Lambeau. I mean, you know it's not going to be Aaron Rogers throwing the rock around, but it'll be all right, maybe, you know, maybe it'll be all right, jason.
Speaker 2:Jordan love will be be a good quarterback for you guys. I feel very confident in that. But, man, I got to think that there's that might be one of, like, the top places. Like, if I want to go to a football game, I'm a big Kansas City Chiefs fan, so don't hold it against me, Sorry, guys, hey you're an AFC guy.
Speaker 1:We don't hold feelings too hard about AFC people.
Speaker 2:I know, I know, but everybody hates on. You know the chiefs. I was a chiefs fan when we lost every game. So you know, I'm, I, I'm there. So, but other than a chiefs game, I think Lambeau field would be the place that I would want to go see a game that is. There's so much tradition and and it's such a cool place to to see all the all the just tradition. That's there for sure.
Speaker 1:Well, dude, maybe just tradition, that's there for sure. Well, dude, maybe we'll have to do a reciprocal trade. I'll get you up here for a packer game, you get me to a chief's game, because I would love to go to chief's game I love. That's one thing I think we respect. We respect certain teams like the chiefs fandom. You know, in in arrowhead, like the, you know we love that buffalo. We're kind of like all right, other than the table thing. I think it's kind of dumb. But other than that I I have something though.
Speaker 2:Yeah, yeah, I mean.
Speaker 1:I respect it. I respect their dedication to the team. Yeah, that's right. That's kind of how we are here in Green Bay. So well, man, I appreciate you being on, guys, everybody out there.
Speaker 1:If you got some value out of this, please share the episode. It's not so that we can grow and create this huge audience, but as we talk about on pretty much every episode now you know there's a ripple effect out. There could be. This episode could be the one conversation somebody needed to hear to absolutely change their life and get started in real estate investing and you, by you sharing this episode, that could be the catalyst for them. So please share it If you're out there and you're like hey, corey, you know, earlier I heard to talk about getting on the buyers list that Wisconsin discount properties, but I'm not ready to do that yet.
Speaker 1:I'm just kind of just getting my feelers out there. Right, just go to our website, fail to contact us for them and that'll go to myself or Reese or Connor on our team and one of us will give you a call and we'll just have a conversation with where you're at, what kind of help you need, and we'll try to point you in the right direction and get you connected to some folks, to get you on your way to getting involved in this fun, crazy life we call real estate investing. So with that, marcus, any final thoughts for the audience, or, if somebody wants to get in contact with you and Beck, what's the best way to get ahold of you guys and and uh, inquire about what you guys could do for them and their, their and their business?
Speaker 2:Yeah, totally. So, first off, I want to second, uh, second, corey, share this episode, make sure and like, subscribe all that stuff. That that makes the these podcasts work. Here's a here's a little secret for you If you share this stuff, what you're going to find is that people on your contact list don't know what you do, and if nothing, else, if you're like, hey.
Speaker 2:I don't care about helping them grow their podcast whatsoever. If nothing else, this is going to help you share what you're doing and what you're interested in and maybe that becomes a partnership. It may become a deal, may become a JV, who knows? But I know about the community of real estate and it is a community and the more you tap into that community, the more that you give in that community, the more you receive. So I highly, highly highly recommend that. Yes.
Speaker 1:That is so good.
Speaker 2:Lastly, if you want to get ahold of us again, we work with people all across the country. We'd even work with you in Wisconsin as long as Corey allowed it. We'd even work with you in Wisconsin. As long as Corey allowed it, we'd even work with you in Wisconsin. So reach out to us at BeckCFOcom. You can check us out. We've got a whole bunch of different ways to work with us. We even have a little education course that, if you're like hey, I don't want to change accountants, but I'd love to learn more about how to become better in my finance you can learn about that at beccfocom as well.
Speaker 1:And Beck is B-E-C-C-F-Ocom.
Speaker 2:B-E-C-C-F-O. That's right.
Speaker 1:Yeah, don't be throwing a K in there in a Beck no.
Speaker 2:Ks.
Speaker 1:You're going to get some weird websites if you go to Beck with a K CFO. That's right, you don't want to go there. Awesome, marcus. Thanks for being on, brother. Thank you guys all for listening.
