Posted over 3 years ago

Concentrating on Your Bottom Line Profits

Your bottom line profits are how much money you are putting in your pocket when your real estate transaction is complete. 

I’m willing to bet that most investors have no idea how much money they are making on their deals. I talk to investors all the time and they think they know but can't provide anything more than estimates. Accounting, bookkeeping and tracking profits is not a guess.  Its either right or wrong...  

Devote some time to becoming an expert on the financial side of your business and be aware of what everything costs.  Any tracking software will have a good, easy to review breakdown of your income and expenses per job.   Pay close attention and hone in on your purchase, financing, construction, holding, overage, and resale costs. Everything, Everything, Everything needs to be properly calculated and tracked! If you need help estimating what your costs will be on a flip or rental check out and use the Deal Tracker feature to see everything broken down based off your projected and actual numbers.  It won't keep your accounting records or link to your bank account but will keep you cost breakdowns.

It’s just crazy to me that most investors I talk to don’t know what their actual numbers are. They’re not keeping books or tracking anything. At the very least, start tracking in Quickbooks— although it’s not the best software for this kind of business, it suitable. We use a program called Sage Construction which I highly recommend. Most investors use Quickbooks, or an Excel spreadsheet, or their CPA takes care of it. Go take a look at your actual numbers and I’m willing to bet you made a lot less than you think you did. It happens all the time since you estimate things in your head but those numbers are different than what actually occurred.

You don’t have to make less money on your deals, you can make exactly what you want on them, but they have to be tracked properly so you know where you are at on a real time basis.

It doesn’t impress me when someone tells me they are doing tons and tons of deals. I’m impressed by how much money they make per deal. A lot of times you can do a lot less deals and make more money because you are a lot more profitable per deal.

Make sure you’re checking your finances within your real estate operation daily because it’s extremely important to be sure you’re making the most you can on each deal.