The Impact of COVID-19 On Real Estate

Episode 5

The best thing to do during a pandemic, is to be proactive and add value to people. That – is something that can truly reunite us.


In a crisis, every decision we make shapes our future.

In this episode we discuss the impact of COVID-19 on the real estate industry.

I’m joined by Tim Jon who also works with me at SimpleCFO and in today’s episode he shares his insights of working in the real estate industry during a pandemic.

Uncertainty can be very intimidating! But as leaders, business owners and professionals what we do now, will determine our future.

Hope you guys enjoy it!


David: Hey everyone, it’s David Richter with the Simple CFO Solutions and on the Profit First REI podcast, and I actually have another co-host with me today, Tim John; he’s a part of simple CFO Solutions also, and we’re going to kind of shake it up a little bit with between the co-host we got Jaren Barnes who works with us Tim John we kind of want you to get to know a couple of people that work with us and that we want them to give them an opportunity to be on a podcast and share their experiences just because like in the first episode everyone who works with SimpleCFO solutions or who’s actually a part of the company that works with us is- has to have a real estate background so Tim John why don’t you introduce yourself just a little bit about who you are and why aren’t you just tell a little bit about who you are to the listeners?

Tim: Hey, everyone, thanks, David, for having me on the podcast. Really happy to be a part of the team. I’ve been apart of the team for a couple of weeks, but I do have a real estate background as well. In fact, Jaren Barnes, you’ve met earlier, I met him about seven years ago in doing real estate for the very first time. We worked for a fix and flip company, and Jaren was actually my trainer. We went around four or five different counties in our state, just doorknocking hey cash for houses you’re facing foreclosure, and we have the solution for you to type a deal. So we worked on boots on the ground in the trenches that way, and we also worked on building up the sales pitch we helped with the transactions we were in team meetings where you talk about rehabbing and all that and finding clients for wholesaling and even being participating in the showings for the end- the end buyer there too so that’s my background with real estate investing and I have a little bit of background to with private money lending also known as hard money loans as you fix and flippers might be very familiar with. I worked on that side with conventional loans with the loans for fix and slippers and for the construction loans, too, so I was the loan processor who probably heard about it from the underwriter where we would just make sure all the documents are good and ticked off there. So that’s a little bit of my background from the slip inside and financing side, and I’m excited to join David and his team on the coaching side too.

David: Yeah, I love that because we’ve got Jaren, who does his own land business. We’ve got Tim who is been inside of the real estate world working not only on the real estate side but on the lending side too and then with my background being a handful to do my own deals fixing flipping rentals and then be a part of several big companies doing lots of deals again to see the inner workings you can see that we’re not your typical finance people we’re not the typical ones where we’re just going to tell you what you know what you owe in taxes or what- what and that’s it no we’re here to help you in your business and specifically on a financed portion of your business and that’s what this podcast is all about so today specifically it’s a very relevant podcast for the time that we’re living in time we want to talk about covid-19 in the real estate finances so covid-19 or coronavirus that- what we’re going through right now the pandemic If you’re listening to this and it’s years later and you’re listening to this years later I congratulate you thank you for listening to us but if you’re listening to this and that’s past and it’s now in the history books we at least wanted to give you a relevant advice for today but this is going to be advise that you really could take it anytime in the future too but I did- that’s the main theme of the show today like I told you on the first couple podcast I want to give you one main theme I want to hit it and I want to hit it right at the beginning and make sure that we’re giving you the as much time as we can to get an actual nugget that you can use in your business so let me- I’m going to dive right In so right now during this time I want to make sure that everyone out there if you have a bookkeeper or not you need to be able to know your numbers you need to be able to look at your numbers and say and see where you are so right now you need to be looking at your numbers weekly and being able to get what you’re actually spending what income is coming in and be looking at that I would say on at least a weekly basis if this was a normal typical year and wasn’t anything crazy going on some people could probably get away with monthly or bi-weekly but right now during this time I would say be looking at at least weekly if not daily working at projecting what’s coming in what deals do we have in the pipeline? what numbers- you know, like what are my actual cash in the bank? what’s going on right now? so I would say that’s one of the first things that you could be looking at, but you say what if you can get your numbers from your accounting software or your bookkeeper that would be another system in process I would work on right now and that would be going and talking with your bookkeeper and setting the expectations with them of what you want from your books and how often you want them kept up what your commitment to them will be because that’s I’m not going to get off on a ramp because I- that’s a whole another podcast for another day but just what the commitment that you will need to make in order to make sure that you can have accurate numbers in a timely fashion. so what not only is reasonable for them but what’s reasonable for you because if you’re not able to pull those numbers, you don’t have that data and that power in your hands. So I just wanted to say that’s the first big thing. Can you get your numbers first of all? if you can, you need to be looking at them very intensely right now we’re working with just to give you an example we’re working with a client to where they have what they call an expense and an income that- that person that is actually every single week they call them the- the- the income and expense nazi where they’re actually free single week they’re looking at those income and expenses that come in, and they’re saying okay did this have to go out this week? and did we do everything that we could to get every single dollar into our business? did we- so they do wholesale deals they do some fix and flip they do some rentals too. so they’re looking at every single number they have someone designated on their team to say did we get everything we were supposed to in this week? and did we really need to spend every single dollar that went out this week? So they have someone dedicated like that, and I love that especially during this time honestly that’s a great thing to have at any point in your business and- and in their business is a virtual assistant so I’m not saying this has to be someone who has a degree in finance or a background in finance or anything like that that know it can be someone who really knows how to look at where you stand and what’s going in and what’s going out, so that’s one client that we’re working with has that person who is dedicated to look into what’s going in and what’s going out, and I love that model not just from the covid-19 perspective but fro knowing your numbers being able to have someone who is that dedicated to knowing what supposed to come in and out and especially during a really weird time or a time that people might have some in qualms about they might be like okay what’s going? just knowing your numbers kind of gives you a little bit more peace even if they’re not the greatest. It at least tells you here’s what I need to do in order to make the next step happen or just to stay in business. So, Tim, do you have any- any thoughts on what we talked about so far as or any comments on wanting to jump in here?

Tim: Yeah, that’s do important knowing your numbers means that you know your business and you don’t know your business if you don’t know your numbers and you know right now with everything that’s been going on in the quarantine it might be really stressful for you guys to pay bills and all that and maybe you aren’t getting as much deals as you expected and all that and I want to encourage you the CFO team wants to encourage you to just take the time right now and take a look at what you have and strategize and plan ahead because you might not have a lot of work 9/5 here but there’s something that you can do right now to improve your business to know and to grow your cash flow.

David: I love that I- I totally agree with that too because here’s a practical way so if you’re a listener saying okay, you know I’m only doing a couple of deals I don’t have a bookkeeper I don’t have a virtual assistant you can make it as simple as possible and go through literally either week by week or day by day by printing out your bank statement for your banks and say- you know like for your bank accounts and saying okay these are really what came in and this is really what went out because if you have a bigger team, you might have someone that might be able to be dedicated to that but if it’s just you by yourself and you need help well then print out your bank statements, and you say I don’t want to take the time to do that okay do you want it- if you’re not- if you’re not having to deal flow if you’re not having the profit that you want right now if you’re not looking at- if you’re saying my where’s all my money going? That’s one thing that you can practically do, and I know will it be the funniest thing that you’ve ever done? Probably not no but it’s going to give you the power to be able to see that, so that’s a practical way if you have a smaller team and you’re not able to dedicate like we were talking about that one client who has someone dedicated to looking at every single income and expense that goes out the door if you if it’s just you- you might need to go and log into your bank look at and print out the transactions for the last week and just see what came in what came out if those number surprised you? Then you should be like, okay, what am I missing here? What’s not going on, you know, like what’s going on in my business? So that’s just a practical way, and I want to give you and something that you could take, and just okay, this is something this week I was into this podcast stop listening right now and go and figure out your numbers because during this time you want to be able to say I have the power to be able to look at my numbers and look at what’s in my business especially during covid and especially during a weird time like it is right now and even if you’re listening to this like I said in the future knowing your numbers practical ways to know your numbers those are a couple of ways just like that. So another thing that’s pretty practical if you are wanting to really push the reset button would be to cancel your credit cards, cancel your debit cards and get new ones issued to you- you might have heard of this before this trick before, but that forces you to then re-subscribe to those places that because right now you might have charges you have no idea that are hitting your account and if you cancel those cards and you say well isn’t that going to create a whole lotta work well what is it worth to you is it worth it- so you know several hundred dollars more in your pocket each month if you have a lot of subscriptions if you’re a bigger company and you have a ton of those 499 charges to 1999 you know hitting your account each month so is it worth it to you to actually take and- and cut those off. I’ve had some people recently, and even bigger companies that have done that just because they were like some of these things you can’t even reach out to them and I feel like cancel it or they make it super hard to cancel but if you cancel their- your card they’re going to be calling you. So I’ve had some of the bigger clients that were with multiple entities multiple things actually cut off some cards because they wanted to go that route so that’s something practical that you could do if you’re a bigger company or a smaller company if you wanted to try and actually save some of your expenses right now. Now probably do that and reset that, so that way you’re not having a bunch of extra expenses go out the door.

Tim: Yeah and I really- we want to really encourage you guys to take a step, take a step today take the step this week towards knowing your numbers towards printing that out towards looking at your credit card expenses and yeah it might seem really stressful it might seem really overwhelming but like it’s like the first step of the journey how do you eat an elephant one bite at a time and you’re going to get through this and we believe in you guys and you know here at SimpleCFO we provide a lot of different tools and resources too so you’re welcome to reach out to us too if you have any questions like that and there’s something I want to share with you guys to is with your expenses sometimes we don’t know where they’re coming from or- or why we have them and that’s exactly what David was talking about from earlier for example we had a client who has a marketing budget and we went through a particular month and we realized they were spending twice as much as what they were expecting oh like that’s really important to take a look at why is that? Is it just happened to be prepaid or is it over lifting or we really spending as much- double the amount of marketing that we really expect? and that money can be used for future campaigns that can be used towards payroll can be used for pain different in venders, and that’s really important too, and in profit first Mike Michalowicz talks about this idea of PRU of listing all your expenses or just printing out your bank statements or whatever you have right now and read through is it PRU? is it profitable? is it replaceable? or is it unnecessary and profitable is hey is this making you money? Is this making you money today? or is it going to make money in the near future? not like a year from now, but really think about that really come to that- meet with your team talk- talk with a person who’s in charge of that department that expense and just ask him a few questions to gain understanding in this. is it replaceable? Can you actually have the cheaper option than others? Do you have to use this $100 a month premium exclusive gold platinum product here or can you downgrade to a basic service and revisit that like do I really need these? or even negotiate with your vendors with different people sometimes like hey, I’ll pay upfront ahead of time but can you give me a discount? I’m sure David and other people out there have a lot of stories of you just pick up the phone, you spend 5 minutes, and you can cut a bill by 10% or even 50%, and finally you unnecessary take a look you may not need that all pretty- pretty self-explanatory.

David: Yeah, right, no, no, I love that example, and when we do our- we’re going to have a podcast episode here coming up too. I’d love to share that again on that one with the power of knowing your numbers and whatnot, and I love that you shared that here now too because it’s- that is so powerful looking at each expense and putting it into one of those buckets because I love the examples like you said that Mike gives. is it profitable? replaceable? or unnecessary? so that’s- I love that I love that example and yes, there’s definitely a lot of examples where we’ve come through with clients just like you said I love the one like we went through this week this- this week that really happened they still looked at their marketing they said they saw the double charge and they were like oh man you know like so they had to dive into that because they wanted to see are they going to see a return on that? or was it paid accidentally? you know like and double charged and so that’s just one thing, and it was kind of a significant number, so we wanted to make sure like okay do you need that money back? or is that going to actually help you get another deal down the road? so I love love that so another thing that I wanted to say right now during- during this time is we need to be focusing on what brings money in right now too so like a lot of things that we worry about that could be put on hold you know the nitty-gritty things are those urgent tasks that we think or emails that are flying into our inbox because what- what’s bringing money into you right now? as a real estate investor you probably have rents or the house sales the funding for your flips you know like sometimes you outlay the money to purchase the property but then you get a private money loan or a type of loan to get the purchase price press repairs are you getting done in a timely manner, so you’re not having that super cash crunch that cash flow crunch right in the middle of it so are you getting the money in that you need? you have someone that’s looking at that, or if it’s you are you working at that be able to get that money in? I’ve actually was some of the class that we work with right now that are landlords they’ve got over a 100% collections during this time just because there’s a lot of people sitting on cash there’s people on unemployment right now that are making more than they would if they would go to their job so they’re not only making more they’ve had the stimulus checks go out too and people are actually catching up on their rent I will say though here’s a tip for you that the people who caught up on the rent and the landlord actually did nice things for them he like sent them rolls of toilet paper like he went to- went to Costco or one of those big wholesalers and bought big rolls of toilet paper and the actual big boxes of them and then sent them out to the tenants and then he had some actual people who hadn’t even communicated with them for like a month or two and you know were kind of behind, reach out to him and now they’re catching up so he showed them like I want to do something for you and that was during covid-19 was one specific example but how great of an example is that for a landlord or for what you want in business if you’re going to take care of them and show like hey we’re going through- you’re going through a tough time we want to extend a hand to you okay does that happen every time where- where the tenant comes back and you know there’s a happy ending to the story no but if you’re going to be able to at least have a chance sometimes not beating them over the head isn’t there isn’t the only option is to be able to get your rent sometimes it’s saying and listening to them and saying what- what I know you’re going through a difficult time now especially we’re all going through something together but asking them what is that difficult time we’re going through? can we help, or is there some plan that we could work out with you? so I just love that example too because that not only got him more money in his bank account and got him better relationships with his tenants. so that was just another great example like during this time that was something that united the landlord and the tenant but then also down the road that passes this pandemic, and everything what are those types of things that you could be thinking of that would add value to not only your business but to your tenants’ life or those people that are actually living there in your house taking care of it just thinking of it a different way. I’ve got another client who thinks of it that way to he’s like these people are my responsibility. They’re my clients those tenants are my clients I need to make sure the house is kept up they’re treated well and guess what he has about a 100% collections every month because he knows how to treat them, he knows how to make sure that the houses are in shape and you make sure that he has a good relationship with them, but it goes for every single area it goes for like if we’re waiting on houses to close and you are trying to beat some people over the head sometimes or like why isn’t this house closing maybe actually you’re saying are you overwhelmed? is there anything we can help to do? just being that proactive and trying to add value to other people and I- we’re saying this around the whole theme of the COVID and the coronavirus that’s going around the pandemic but we also that is just going to help your business no matter what time period you’re in, but right now that’s definitely something that can reunited everyone on that same page and you have a common ground with a lot of people right now in order to be able to stay how can I add value to you? we’re all going through this together. What can I do in order to make them and bring them? because obviously, it comes back to you it might not be monetarily and might be in a different way, but obviously, with what we’re talking about in a lot of the ways it is monetarily and it- and it provides more value to your business to find that ground common ground and have a good relationship with the people that you’re interacting with.

Tim: I really love those two examples that you’ve brought up because there’s a lot of practical things that we can do that don’t involve money or as much money as we think- may think like sending an email out to somebody maybe to a vendor where you’re or someone that you’re behind it or maybe someone that you want to collect money from and just say like hey we’re taking a look at our numbers, we’re working on it like we haven’t forgotten about you and there’s a lot- as important as is to know your numbers you also need to know the people in your business too and how to build a relationship and how to continue that and even though you might not be hammering away or working on your projects right now there’s still a ways to build your business beyond just physically being there through email online through drop a text drop them a phone calls say hey- hey how are you and also time to strategize as well with your team too. Not only relationships with other people, but within your company you now have more time to work on the business and not just running around doing the different projects that you’re working on right now.

David: Yeah I love that that is so true it’s just- you got it- you have to encapsulate the whole business cuz that made me think too during this whole thing not only like your vendors and like the people are externally what about your people internally do you have employees? if you don’t and it’s yourself obviously you want to be if you want to make sure you’re- you’re healthy what are they going through? what challenges have they been working at home? and you need to talk to them about you know the struggles that they’re going through. Have you been working from home as the owner with your kids running around and now they might be out of school and they might be with you more those different challenges that you can put yourself in because obviously at the end of the day you want to be profitable you want to make sure that your company is healthy because that affects not only you but your employees you need to be profitable for your employees you need to be profitable for your vendors for your clients for the people that you work with for those buyers and sellers for the people that you help you need to be profitable so putting yourself and you in the shoes of the people maybe not just externally how about internally too? what are they going through? How can you help them? Because obviously the more you take care of them the more they want to take care of you and I know that sounds selfish but that’s just how we’re built as humans. do you want to- if you’re- if you’re generally you- here’s the key though you have to be genuinely interested in helping them and not just for the sake of here’s what I want back from them not no you have to come from it with a heart of I want to be a giver I want to make sure that I’m giving and I’m- I’m big on giving and I want to make sure that in our company we are givers to but if you have that true heart of giving that’s going to come back to you the’re- you’re going to- those tenants are going to know that you really care about them those people internally are going to know that you care about them and I really loved that statement might be cliche but I don’t care because I love it. People don’t care how much you know until they know how much you care and that’s really true that’s true for business that’s true for your relationships that’s true for any area and right now during a time with like I said we have something as kind of uniting us all in it that common that common hardship that we’re all going through so you can- you can relate with the employees now you can empathize more with people just think about that you now have common ground with almost with- almost any person in the whole world so now how can you make sure that you’re helping those other people? and helping them get to where they want so that way in your business that’s helping you either collect the rent or helping you make a better profitable business or helping you with those different areas of your business. so that was kind of the last thing that I had here for the covid-19 and the coronavirus. I’m hoping that I helped you with some practical tips Tim do you have any last-minute thoughts to give our listeners or anything? Do you want to share?

Tim: yeah you know it’s so important to look at this not as a problem but as an opportunity and yes that does sound cliche but there are things that we can do even if we have- happen to have a slower cash flow or less projects to work on just like through profit first we limit ourselves by having only certain amounts of money in certain accounts in this regard we have opportunities here to use the limited resources that we even grow that further and get creative you know find- find places where you can be a little bit more frugal and you know there’s a lots of times we invest in the business and not just going out there running around all day and a question for you David in knowing your numbers do you recommend any specific tools, any practical things websites, nay software to use for this?

David: Well I love QuickBooksOnline for sure because of all the automated tools that are there and I know a lot of companies have heard of QuickBooks of course so I- I know that that’s already out there but that’s one of the best ones to know your actual the finances of your business and then I would say on top of that have a great bookkeeping system and we’ll go into that in another podcast episode as a theme but I want to make sure if you don’t have a bookkeeping system and that makes it very very easy for you and easy for the bookkeeper then you’re probably not going to be able to know your numbers but that would just be some practical things use QuickBooks use an actual system to track your finances if you’re a onesie twosie operation and you don’t have much there’s wave which is a free tool for tracking your finances so that it could even be something if you don’t have as much or you don’t want to use QuickBooks right away I would not suggest that if you have a bunch of deals that you’re doing in a year or even if you’re doing three or four you know that’s more for if you’re a much smaller you know you’re just starting out you might just be doing your first- looking to do your first deal so that’s and there’s also QuickBooks Online I recommend online just because of a lot of the banking features and a lot of the automatic bill pay that you can do to there, the automatic payroll processing there’s a lot of good features about the online and I like automating things as much as I can so that was a great question Tim so to our listeners out there once again we really appreciate you listening to us. we really want to bring value to you. We hope we provided some very practical things. Not only for today’s word but if you’re like I said you are listening to these years down the road but also just a couple things to end it here. if you want to tell your story or be interviewed on this podcast then you could actually go to ProfitFirst REI. net and on that page we have our podcas-t there’s a podcast tab on there where you can actually put your story in and you can- we can see if we you’d want to be interviewed and then we’re also-also in talks to write the book for profit first for Real Estate Investors and if you have a great story related to either profit first, your finances are just a great real estate story and want to be considered to be in that book then you can go to the same website and there’s a book page on there and you could potentially pick a story that your best story and we’re going to see what the best stories are so that way we could see which one we want to put inside of the book and then also if you’re looking to- for a profit first professional or a team of profit first professionals that specifically know real estate investing and that can help you that’s what simple CFO Solutions is and that’s our company that I founded and a Tim works with and that we work within a simple CFO if you go there there’s an apply button if you want to work with an actual profit first professionals that does specifically real estate investing between landlords, fix and flippers basically anything that you can think of in the real estate investing world so we really appreciate you again listening to this podcast hopefully we provided value. Hope you have a great day!

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