Living Off Rentals: #103 - Know Exactly How Much to Pay Yourself From Your Rental Company (and NOT Feel Guilty)

#103 - Know Exactly How Much to Pay Yourself From Your Rental Company (and NOT Feel Guilty) - David Richter

Feb 2, 2022

One of the biggest mistakes of business owners is avoiding the financial aspect of their business. It may be because it's scary and intimidating. Or perhaps they don't have enough training on managing their finances. That leaves them having that one big melting pot where everything goes in, and it's very easy to spend everything inside there with no goals, clarity, or control over their decisions. When you make money, it's natural to feel the need to reward yourself for your hard work, and that's perfectly ok. What's not ok is unknowingly spending almost the same amount of what you're earning, and you end up feeling like your business is not benefiting you after all. Seeing your business growing but not knowing where the money is going is a big question. It should be an eye-opener. How are you managing your money? Do you make a regular financial check in your business? If so, what does the number tell you?

In today's episode, David Richter talks about understanding the power of finances in his business. Listen as he shares his secrets to finding clarity in numbers to keep up with cash flow management in business and be in control of your finances. He also discusses the secret to creating a more profitable system while also balancing how much you should be paying yourself from your business.

Key Takeaways:
[04:06] David’s background in real estate investing road to the Profit First world

[06:07] Getting clarity about numbers

[09:50] Shifting the focus on the income statement

[13:11] How to you make profitable habit inside your business: The golden trio

[19:33] Setting up your financial system can help you make better decisions

[23:01] Bigger is not always better

[29:49] How much should you actually take from your bank

[35:14] The PRU exercise and expense analysis

[40:18] How to discuss the Profit First system with your personal accountant

[45:57] How to handle loans: The OPM account

[48:54] David’s advice on money management

Links:
Profit First for Real Estate Investing - https://simplecfosolutions.com/profit-first-david-richter/