Optimizing Profits in Real Estate: How To Strategically Scale Your Business w/ CFO Michael Glaspie

Michael Glaspie: [0:00] One of my clients right now, they do about $20,000,000 in revenue annually, and this is consistently over However, the past couple their net profit margin when they came to me was 1%. 1% at 20,000,000 in revenue? 1%.

Dan Austin: [0:18] Were they giving themselves salaries or was it just

Michael Glaspie: [0:20] Not even. It's just the fact that everything was so convoluted and it wasn't being tracked accurately. They had multiple companies. They separated their companies by state, by asset class, by everything. And then they had a management company too. They were just like, Oh, we're going to move this year and do all this, because it was advised to them by a CPA, right? A tax advisor. Oh, this would be really good. Then they heard through that tax advisor, Oh, this is great for legal compliance as well. We'll be able to separate your assets and your liabilities. The biggest thing is, when we get into these complex situations, if you don't have somebody who's laying out the strategy for you or walking you through these strategies, oftentimes, even when you set these up, it all fall apart because you do not know how to manage these. Welcome

Speaker 3: [1:06] to the collecting keys podcast. The show where you'll learn how to use real estate to create massive income, not just passive income. Real estate doesn't have to be a get rich slow game. Listen to the country's top real estate operators, and you'll have all the tools you need to replace your w two income and go beyond in under twelve months. Ready to take things to the next level? Let's jump in with our hosts, Mike DeHaan and Dan Austin for today's episode of the collecting keys podcast.

Mike DeHaan: [1:42] What is going on, guys? On today's episode, the collecting keys real estate investing podcast, we have Michael Glasby, who is a very successful real estate investor out of Fayetteville, North Carolina, and he also runs a fractional CFO business focusing specifically on real estate based businesses. So what that means is he comes in as basically a financial consultant to help figure out how to optimize people's business and how to optimize their cash flow, how to make sure they're being as efficient with their cash as possible. Know, You they're planning effectively for their taxes, how they're going to grow. They're doing all the things that they need to do that are kind of like additional strategy to what your bookkeeper and accountant can probably do. For this episode, we do do like a pretty big deep dive around business and business finance and all those sort of things. This is definitely a bit of a dense episode. You'll wanna take some notes, and you will also wanna reach out to Michael after the show and see if he has some additional information for you. If he did tell me afterwards that he actually has some, like, free services and stuff that you can ask him for, if you wanted to get to, like, some additional information about how to set some of this stuff up yourself, if he's not quite the right fit for you, you're not ready to bring someone in to work with you on, like, kind of a paid basis. So hit them up there and ask for those.

Mike DeHaan: [2:54] And besides that, if you are trying to scale your business, definitely don't be afraid to reach out to him because if you find that you are kind of always dealing with cash problems as a lot of us as real estate investors typically are, Usually, it's kind of just because of poor management because we don't know what we're doing. K? So don't be afraid to reach out to them because of that. Besides that, guys, you should go to collectingkeys.com/scale, and you can check out our scale community. We will probably be having Michael Glasby come and speak to our group soon, since many of the people there as they are growing and scaling their businesses as part of our scale community, they start to face these cash flow problems. And part of our value add to that community is to bring people like Michael in to help them figure out how to do things a little bit better. So if you're interested in being a part of that, need to go to collectingkeys.com/scale and see if you're a good fit. Aside from that, guys, reach out to Michael. People do these shows because they want exposure. They want you to reach out to them. They wanna engage with you. So seriously, don't be shy. Anyways, everyone, thanks for listening and enjoy the show with Michael Glasby. Alright. Michael Glasby from Fayetteville, North Carolina.

Mike DeHaan: [3:56] Super excited to have you on the show, man. And I don't wanna introduce you as like Shelby's business partner, because I don't think that that is a fair way to introduce somebody as like directly connected to somebody else. But you are a... The business partner of the very popular Shelby Johnson that we had on our show, I guess, about a couple months ago when this one comes out. So welcome in. Super excited to have you on the show. So I guess to give the people a little bit of a preview, we're going to be diving into Michael's investment background. We're going to dive into his additional job that he has as a fractional CFO, which I'm super excited about. And as we found out before the show, we're actually going to be going into his $55,000,000 tax fraud that Yeah. If you Google his name

Dan Austin: [4:38] Google his name, you'll find

Michael Glaspie: [4:39] out. Yeah.

Dan Austin: [4:41] It's like a... Not a really good one too because the fact that you are like doing fractional CFO stuff, like Please. You could like really draw the line to that.

Michael Glaspie: [4:47] Yeah. Yeah. Oh, 100. And the fact that it was the 55,000,000 on real estate at that.

Dan Austin: [4:53] So it was like It can't get worse than that.

Mike DeHaan: [4:54] Exactly. Yeah, so just because that's a little bit of a joke we discussed before the show. If you Google Michael Glassby's name, you will find an elderly gentleman that has been indicted of $55,000,000 tax fraud, and there is no relation here at all. So don't let that affect your your interest in in Michael's CFO. So anyways, man, people who haven't heard of you, let's have a high level overview of kind of, you know, who you are, and what exactly your business looks like right now.

Michael Glaspie: [5:20] Yeah, absolutely, thanks for having me guys. So Mike Glass, we have no relation to the 72 year old man with all that millions and millions and millions dollars of fraud. So my over high view background is, I am originally from Texas, which is the greatest country in the world. I joined the military coming out of college, right? So as I joined the military it took me all over the world. I had opportunities to travel to several different countries, and I was actually in it for eleven years. But at around year four or so, I had actually bought my first property, and ultimately I was house hacking. Had no idea what house hacking was at the moment. Had a couple of my single soldier buddies staying with me, you know, really just kinda reducing that lure. Well, lo and behold, I started playing around with a ton of different things, and real estate just kind of kept coming back to the surface. So over that time, I've been able to, at the height of my portfolio, had over 134 properties. I've done subject to's, wholesales, syndication, wraparound mortgages, lease options, fill in the blank, and I've done a little bit of everything. During that time you mentioned Shelby Johnson, which is my business partner, we actually met, so I had already been investing for a couple years, and she had been a rockstar real estate agent by the time that I've met her. And that's actually kinda how we met. I was trying to get her to represent me on an investment property.

Michael Glaspie: [6:36] Well we started clicking, and at that time we found a really good opportunity to work together where we wanted to create a team of agents, she told the whole story there with an investment focus, where I really brought in a lot of the investment side of the house, and she brought in a lot of the agency side of the house, and that company has now grown to, we're over 170 agents spread across the country, so that one is still up, running, and functioning. So during that time, you know, we got that built out. I really focused on commercial real estate, and we can talk about that a little bit more later on, but the commercial real estate takes a lot of the emotion out of it, and it gets really down to the numbers, and what are the results, And I really enjoyed that part of real estate and finance. So I had also pursued my MBA at that time, and during this whole time after building up a decent reputation within real estate, having the financial background, I got an opportunity to work as a CFO for a small private equity firm that focused on hotel acquisitions, Airbnb portfolios, things of that nature. And that's where I really found that where my interest all aligned, right? Really understanding the finance, looking at operational efficiencies. How do we improve profitability, Keep more of the money that we earn, and all within the realm of real estate. That led me to starting my own fractional CFO company that I have been running now for a little over two years, and yeah, leads me to where we are today. Awesome.

Dan Austin: [7:57] So, a few questions here. Some of these will be a little bit odd, or people might think they're odd, so what did you get your undergrad in?

Michael Glaspie: [8:03] Business, yeah, it

Mike DeHaan: [8:05] was a Business,

Dan Austin: [8:05] okay, so business, okay. Not accounting.

Michael Glaspie: [8:07] It was general management with a minor in finance.

Dan Austin: [8:11] Okay, then when you joined the military, were you an officer or were you enlisted? I was enlisted. Okay, now that leads me to my next question. Why did you go to Ranger School? Like, For me, when I went to Ranger School, that was required. But for you, not being an officer, you were in Special Forces, most of those guys don't like to go to Ranger School. After you've already put yourself through all

Michael Glaspie: [8:32] that crap, why would you do that again? 100%. Yeah, going through Special Forces, I mean we already have to go through a three week selection and then a two year training to even get the opportunity to be calling ourselves a Green Beret. So you're right, I would say maybe 80% of the regiment, they don't wanna go to rageous school, they're like, Why? We got the wall intact.

Dan Austin: [8:52] Oh dude, it sucks.

Michael Glaspie: [8:53] Yeah, well you know, was something for me man, because I didn't join the military originally with the idea of going SM. Right, I was actually an 88 Mike, and I was actually in an ROTC program I joined, so I did the SMP kind

Dan Austin: [9:04] of thing. Gotcha.

Michael Glaspie: [9:05] And I had full intentions of commissioning, but after I had joined the guard, I jumped out of, I went to Air Force School and Air Assault School within like eight months after I had listed as an 88 Mike. At that point I was hooked, I was like, what is the toughest things that we can do? And immediately anybody in the Army knows one of the most coveted schools that you can go to is Ranger School. And for me that, it stayed with me, it was kind of like always in my heart or whatever, all the way through, even though I got the Green Beret, was like, still gotta go, still gotta get that tap.

Dan Austin: [9:37] Nice. What class were you? Sorry Mike, this is probably boring to you, sorry to our audience. You're good man. What was your class, I'm just curious.

Michael Glaspie: [9:44] You talking about winter or summer?

Dan Austin: [9:46] Yeah, yeah, what year, what month?

Michael Glaspie: [9:47] It was 2016 and I don't It remember was definitely around, it was considered a winter class, but it was at the beginning of the winter when it didn't even get cold yet. So it was like one of those first class. I was

Dan Austin: [10:03] just curious, I went in 'four, so totally different span of time.

Michael Glaspie: [10:07] Oh, Oh, yeah.

Dan Austin: [10:08] I'll see if we're close to it if we knew somebody that went through, but anyways, we can go off of a different topic.

Mike DeHaan: [10:12] Literally like twelve years apart, Dan. Oh,

Michael Glaspie: [10:15] for sure. Yeah. A lot of years apart.

Mike DeHaan: [10:17] Well, I mean, from Dan, from what you've said, when you went to Ranger School, they were still trying to kinda figure it out, like they were just like throwing you into stuff to see how it would make you guys break. Imagine that 2016 would be different.

Dan Austin: [10:28] Not Ranger School, maybe some other stuff, but like in general and some other military like early on in the war, right back in like o four, o five when we were deploying like things, it was the Wild West. But Yeah. Ranger School is pretty much so figured out because I was... That's been around since like Vietnam era. They've changed it a few times and actually they've changed it quite a few times, but it sucks no matter what you're doing.

Mike DeHaan: [10:47] Yeah. That's terrible.

Michael Glaspie: [10:48] It's a great time. Great time. Plenty of Ranger School stories.

Mike DeHaan: [10:51] Right. There you go. Oh, I bet. Yeah. I know. You guys you guys have started a different show. Know, we're just talking about

Michael Glaspie: [10:56] Ranger stories.

Mike DeHaan: [10:57] Yes. Yeah. Yeah.

Michael Glaspie: [10:59] Ranger I'm just seeing a few guests. All... Nothing but Ranger tab guys.

Mike DeHaan: [11:03] Jeez. Exactly. Man, that would get canceled so fast with the stuff that Dan says when no one's around. Let me tell you. But... No, of course, he would never do that. Dan's very PC, he's also the head of our HR department in our company, so he better be. Exactly. Yeah, exactly.

Dan Austin: [11:16] I guess the reason I went on that line of questioning though is because like, it just I think speaks to some of your background, Michael, because like, it really is like, if you're, once you become a Green Beret, there's no incentive to go to Ranger School. Right. That's like some David Goggins shit, man. Like, I'm just gonna go do it to get my ass kicked, you know what I mean? Because I want to, and you have a goal, and you do it, and it's not an easy task to do when you don't have a reason to do it, right? You just did it mostly just because that was your goal.

Michael Glaspie: [11:43] Yeah, 100%, and you know what? I've never been compared to David Goggins, I'm gonna take it, for sure, right? But, and I've been told this a lot by my fiance and by others, it's you know, it's like Mike, why are you doing it? Why are you going back and maybe getting your master's degree when you already run a successful company? And it's like you know, well one, the military paid for it, that was a very big incentive.

Dan Austin: [12:02] But

Michael Glaspie: [12:03] two, it's like why not improve yourself in some area one way or another?

Mike DeHaan: [12:08] For sure.

Dan Austin: [12:09] Totally. I mean, absolutely.

Mike DeHaan: [12:11] I will say, I think Dan kinda like gave you a slight compliment there, so you should be honored Michael because he doesn't do that very often.

Michael Glaspie: [12:16] Oh, I'm taking the David Goggins. As soon as we got here, I'm I'm literally getting that tattoo.

Dan Austin: [12:21] Right? Mean, because he went to Ranger Boy, I guess he was kind of forced, he said, but he went to Ranger School too, as in Navy Sill. He had no reason, he didn't, they

Mike DeHaan: [12:28] don't typically do that, so. Let's dive into your your fractional CFO stuff, because I think that that's something that is super, I would say, like, unique. I feel like it's a newer style business model. It's only been around for a couple of years, and it's probably super applicable, especially to a lot of real estate operators out there. So what exactly is a fractional CFO, and how is that different from just having, a bookkeeper or an accountant, or you know, whatever, a VA that like does your books shittily every month. Right? Like what do you do? What do you do that's different?

Michael Glaspie: [13:00] So what a lot of people don't really understand, there's actually two styles of accounting. You have your tax accounting, and then you have managerial. And so tax accounting basically says, what have you done? Let's react to what's already been completed, and then we're gonna do our tax preparation or whatever we can do to help them pay less in taxes. Managerial accounting is saying, hey look, this is what we're doing, what can we improve on so we can focus on our future, our forecasted profits and things of that nature. So it's two different styles of accounting. And a lot of times people will go to tax professionals, CPAs, or bookkeepers, and they're expecting to get some sort of advice of what should I do with my company to improve my profits? Hey, is this a good real estate investment? Hey, even though I'm making $30,000 on this flip, is it actually worth Is there something else I should look at besides the dollar amount? And so that's where fractional CFO services kind of come into play. We step in and we actually do the coordination with the bookkeeper, with the CPA, but we keep the entire financial department on the right track, right? So when we're looking at taxes it's not just what do we file for? No, it's what's the strategy that we can implement in 2024 and in 2025 to get us to our ultimate goal five years down. It's interesting. Hey you have two or three different investment strategies, well let's evaluate all three of them and see which one's most profitable.

Michael Glaspie: [14:25] Maybe we stop wholesaling and we only focus on wraparound mortgages or whatever the case may be.

Mike DeHaan: [14:30] Yeah. So almost like a strategy. So so I guess, like, who's your sort of ideal client in this case? Is it like larger companies that are, I don't know, have like a bunch of different facets of their business? Are you, like, targeting people that have like just large portfolios? Are you targeting a person that flips 15 houses a year, I can't imagine that that would necessarily be quite as applicable, like who's your ideal person?

Michael Glaspie: [14:53] So anybody who has an established business, we can help. Now that's the very key distinction there. So we look for some key markers. You mentioned 15 deals a year, if that is the trajectory, that's the standard, we do about 10 to 15 to 20 deals a year, to me that means you have a system. You have a system in place that can generate leads, get to the closing table, and produce revenue. So that's kind of one of the metrics that we look for. There's a lot of people who said, hey I've done seven or eight deals, and maybe they've made a lot of money. It's not really a system, it's just them, they're just out there kinda flipping. And in those situations we may not actually offer CFO service, we do offer bookkeeping and tax strategy services, so maybe that's more of a one time deliverable type of conversation, but the CFO services are more in tune with people who have systems that we need to work on improving efficiency.

Dan Austin: [15:45] Nice, makes sense. Okay. Yeah, this gives me like, I don't know if it's good memories or bad memories, but when Mike and I first started, we didn't really realize it, but we kinda had like three businesses at least. We had our buy and hold portfolio Yeah. Which needs a lot of people, like even if you go to a lot of accountants, like they're like, yeah, we don't really do real estate. Or they say they do real estate, but then they don't know. So we went through a few bookkeepers and accountants before we found somebody that could even help us from a tax perspective on our portfolio. But then we were doing wholesaling. We had a wholesale business, and then we would also, we layered in flipping, which you can kinda count as a third, but you know, same as wholesale business doing its own thing, but then there's these opportunities where when you're flipping it, you carry it through one tax year, or you keep it longer than twelve months, and now it kinda falls into a different category. And it was a mess, it was a nightmare, and we really struggled with understanding where to, which levers to pull and when to pull it, because like, just figuring out how to account for all of the income and expenses in the right way was overwhelming.

Dan Austin: [16:45] Do you have any like, I don't know if it's stories, or tips and tricks? Because I think a lot of people are in that situation, especially in our network, they're investors, and they're wholesaler flippers. Like, what do you see that you're like, hey, yeah, you should raise your hand, you need help, Or what do you give them advice on those people, because you know that they're probably struggling if they were like Mike and I?

Michael Glaspie: [17:06] Yeah, 100%. Your situation is extremely common. We see oftentimes people will come in, and I've got all kinds of stories, one of my clients right now, they do about $20,000,000 in revenue annually, and this is consistently over the past couple years. However, their net profit margin, when they came to me, was 1%. Oh, one One at $20,000,000 That revenue?

Dan Austin: [17:31] Were they giving themselves salaries or was it just

Michael Glaspie: [17:33] Not even. It's just the fact that everything was so convoluted and it wasn't being tracked accurately. They had multiple companies. They separated their companies by state, by asset class, by everything, and then they had a management company too, and they were just like, oh, we're gonna move this here and do all this, because it was advised to them by a tax. Not a tax attorney, excuse me, a CPA, right? A tax advisor. Oh this would be really good. Then they heard through that tax advisor, oh this is great for legal compliance as well, we'll be able to separate your assets and your liabilities. The biggest thing is, when we get into these complex situations, if you don't have somebody who's laying out the strategy for you or walking you through these strategies, often times even when you set these up, it all fall aparts because you do not know how to manage it. A lot of times when you have multiple companies, if you're moving, you know that's called co mingling. Can co mingle between your personal and the business, or between two businesses. And those are the important things to know. So ultimately the biggest tips that I put out there is one, everybody needs bookkeeping. Period, across the board. If you're not skilled in it or you're trying to learn it, don't do it.

Michael Glaspie: [18:43] Get somebody who knows how. Now here's the other thing, because you mentioned this, there's a ton of bookkeepers out there. You need a bookkeeper who understands real estate. Totally. Because there's gonna be situations where people are gonna ask, well hey, I'm doing these improvements or these repairs, do I put them on the balance sheet or do I put them on the income statement? Yep. Hey, when I sell this property, do I report the sales price or only what I received on the HUD?

Dan Austin: [19:05] Yep.

Michael Glaspie: [19:05] All of these things are important to know, and if you do not have it accurate, your chances of getting a loan goes down the drain, right? The what you're paying on taxes will always be inaccurate. You might be overpaid and never know it, right? Never taking advantage of

Dan Austin: [19:18] those things. Yep.

Michael Glaspie: [19:19] So all these things are important, but I think the easiest way to start is getting a bookkeeper who understands Yeah, real

Dan Austin: [19:25] absolutely. It's so funny like too, so I learned through business school as well, going to a lawyer, you're going to get their perspective, going to an accountant, you're gonna get their perspective, going to a tax accountant, gonna get their perspective. And if somebody doesn't know or have the ability to understand your entire goal and strategy, they're going to give you what advice they're experts in.

Mike DeHaan: [19:46] Yes. And

Dan Austin: [19:46] then you should definitely talk to multiple people when you're doing these things and get multiple answers, and I think that's where working with a fractional CFO or CFO who really is looking at you, at your entire business and talking to you about strategy is going to help. One other point I was going to make too was like, the bookkeeping piece of like, definitely I agree, Mike and I struggled with that for so long, and part of it was like, we were trying to bring it in house and have a VA do it, which there's nothing wrong with that, and we actually have one of our virtual employees doing our coding for us, but we pass it off to a bookkeeper now because it's just, for us, why do we wanna become experts in that? We wanna become experts at buying and selling properties, we wanna become experts at flipping houses and wholesaling houses. That's kinda what I have found. That's not the only task in your business you should be outsourcing.

Mike DeHaan: [20:32] Yeah, well I think that's like an evolution that business owners have to go through, right? When you're starting a small business yourself, you think you have to do everything. Know? And everyone, I mean a lot of people don't even get past that. Your cost sensitive, a lot of people never graduate from that, and that's why you have this like hustlepreneur culture where people are, you know, working a hundred hours a week. A lot of the stuff that they're working on, they probably don't need to be doing. Mhmm. Especially when it comes to things like their finance and their accounting. Like, there are whole companies like you Michael that specialize in this. Know, if you don't need something as big as what you're doing, there's lot of smaller versions of it as well, whether

Michael Glaspie: [21:03] it's a bookkeeping service or something different. Yeah, think it's really important for, you said it perfectly, it's about the scaling, It's the evolution of it all. And so many times, and this is why, in my opinion, it's very important to have a total target, right, an end goal, something that you're actually working for, an objective. Because too many times we hear people say, I want a 100 doors, why? They say breach financial freedom, where'd you get that number? Well $300 of cash flow times x amount, that's how I needed it. It's like alright, but that has nothing to do with how many people are you gonna hire to manage this. What are you looking at for your time commitment into this? Who's handling your finances? Are you outsourcing all of that or are you bringing that in house? Right, what else do you wanna do with your life? And as you start to put those pieces together, the road becomes very clear of where you should move money, how you should scale, when you should hire somebody, what's gonna be the most valuable use of your time. And as entrepreneurs, especially in the real estate space, if we're good at finding deals, we need to be spending all of our time on finding deals. Not doing the renovation, not doing the books, all of those other things. I think you hit the nail on the head that a lot of people don't realize when they're ready to evolve, they also have to graduate mentally and be prepared to have those levels of conversation.

Dan Austin: [22:19] Totally. I wanna pivot a little bit and ask you some questions about different metrics, right, because I think that when you're talking about managerial accounting, like, yeah, our tax accountant is not telling us how to manage our cash flow, right, and not managing how to get a better return on our assets. He's really just giving us, it's almost like play by play of what already happened, from a tax perspective. And so, Mike and I are actually knee deep in trying to make sure we're paying attention to the right metrics in our business. Are there key indicators, and we'll just keep it isolated to flipping and wholesaling type businesses, that you would recommend, and that you're basically, as a fractional CFO, you're helping them set up those key indicators, those KPIs from a financial perspective.

Michael Glaspie: [23:02] Yeah, absolutely. So one of the biggest things that we need to look at holistically as a company is the net profit margin. That basically says, did we profit compared to how much we've earned? And a lot of times people look at the net profit and only the dollar amount. They also don't look at it from a company perspective, because a lot of times they'll say, hey, I flipped this property and made $20,000 I made a 20% return on this property. Now if we look at that on a financial statement, that $20,000 really and truly is our gross profit line because now we have salaries and other expenses that we need to take into account. And so understanding our gross profit margin and net profit margin is very key. Now when we think about this, gross profit margin basically tells us how efficient or how skilled are we at creating a product. Right? How much time, energy, money we need to put into the renovations, the purchase, so forth and so on. So when we look at a wholesaling business, let's think about that. We're not purchasing the property. We're not doing improvements unless maybe it's a wholesale. So our gross profit margin should be high. It should be very high. Above 80%. Now if we think about the flip, now the flip, we gotta purchase the property. We have to put in 50 to $150,000 of renovation. We have holding costs now. We have all these other things before it's ready to go on the market.

Michael Glaspie: [24:24] So now our gross profit margin is gonna be significantly lower. So we need to understand that. By looking at, and then net profit margin, it washes out across the board. Shows us how efficient are we at making a dollar and earning a profit from it. So I'll use the same client as an example, makes $20,000,000 a year. He came to me with a 1% profit margin. His gross profit margin was 10%. Gross profit, that means he spent 90% of all of that $20,000,000 on purchase price, renovations, everything else. If I was to ask you, hey, where's the first place we're probably gonna look to improve this system? Where would you stay?

Dan Austin: [25:09] I'm going purchase price if I can knock it down. Yeah.

Michael Glaspie: [25:12] Yep. How are we purchasing? What's our buy box Are we making smart decisions? Do we have go, no go criteria? What are we doing with the improvements? We actually on a budget? Are we negotiating any that? Are we holding the contractor to a standard? Are we meeting a certain timeline? All of those questions become very clear that that's where we need to focus when we look at the finances and we see these glaring disparities in certain key areas. So I mean those are just two main ones. I mean obviously the list goes on, but that gives you an example.

Mike DeHaan: [25:42] I mean, going through that you can instantly think about all these different like influencers and business groups here on social media and realize they're all full of shit.

Michael Glaspie: [25:50] I'm so glad you said it.

Mike DeHaan: [25:51] Right, they

Dan Austin: [25:52] don't know any, yeah.

Mike DeHaan: [25:52] They don't account for any of that.

Michael Glaspie: [25:54] I'm so glad you said that, man, because right now the biggest push with everything, and it's been this way for two decades, really, but people and the gurus promote how to sell more, how to sell make more, how more money. Way I look at it is how do we keep more of that money? Because if you tell me you want $100,000 in profit every year, well we could do that with $150,000 worth of sales if we just run it efficiently enough. We don't need $10,000,000 worth. So I'm glad you said that because that's something that a lot of people don't pick up on, the sales versus just how do we be more efficient? How do we just Yeah, keep more

Mike DeHaan: [26:26] absolutely. Well just when the financial education and business education with the average person is low, I mean, is complicated to learn. Right? It's very easy to have someone that comes on and says, we had 10,000,000 in sales last year. It's like, but what does that mean? You can do it like you just said. You had a client that did 20,000,000 in sales, and they were doing a 1% profit margin. $200,000 a year. Right? Yeah. Offering 20,000,000 in sales. That's a lot of work for not a lot of money. It's a lot

Dan Austin: [26:50] of work. Yeah, and I think the the challenge is is as you start a business, you know your product, or you know the service, or you have the plan of what you're going to do, and generally speaking, a lot of us entrepreneurs, like, know, we do know how to make money. Right. It's what you do after that, to get to scale, right? Because you can optimize one flip really well without anything. You can just add up your receipts, you can look at your purchase price, and you say, hey, I need to I need to reduce my cost, right? That's one isolated project. But what you can get into the cycle of is not actually knowing how much money you have, especially if you're managing your, I'll I'll say it this way, and Michael tell me if this makes any sense to you. If you're managing your p and l based on what's in your bank account, you're probably going to lose, because you're gonna say, well, I have money, let's hire another staff member, or let's buy this, let's do this, and really, you're just sinking, just because you have money in the bank account doesn't mean that you're helping yourself by doing these things, and you're really just adding that, you're making the expense portion of your P and L grow, and you're not really doing anything with the top line, which is just problematic.

Michael Glaspie: [27:48] Yeah, yeah, you're 100% right. There's a principle out there, a law, I think it's called the Parkins Law, but essentially it says like if we have it, we will use it. That's a human characteristic trait. Know, the best example that I kind of always recall is every single one of us has been on that one lane road before, that we're just like yo, this traffic sucks. And so all of a sudden what do they do? They build it out to a two lane or a three lane, and then as soon as construction's done, what happens? Traffic still

Dan Austin: [28:13] sucks, Because

Michael Glaspie: [28:15] if we have it, we're gonna use it. And that's the concept around money. So when we look at managerial accounting, it's all in the word there. It's in how do we manage our money? How do we manage the money that comes in and goes out? Do we allocate a certain amount to new projects? Do we allocate amount to bonuses? Do we allocate amount for us to enjoy life? Know, do we reinvest some allocated amount towards new employees? The management is where the biggest mishap happens in small business. And if you just have a plan, budget or whatever, you know all of these different things, well then it takes out all of the guesswork of where do you move your money. Now as entrepreneurs, we just focus on the deal. We just focus on how do we make money off this flip or this wholesale. Everything else becomes automated or systematized to make sure that your chances of mistakes are very slim.

Dan Austin: [29:07] Yeah, right. That brings up a good point, what I've seen and what I've experienced, like entrepreneurs and business owners, they are pretty good at a delayed gratification, right? Like, hey, I'm gonna put some inputs into a business, and I can wait. I'm gonna make an investment in myself or my business, I can wait. The problem with that is, and Mike and I see this with a lot of new folks coming into the industry is, they don't appropriately allocate profits to themselves. Yes. So you can run a business for three to five years and go bankrupt, basically, and not have taken any profits, or good profits from that business. Do you have a way in which you help entrepreneurs and business owners figure that piece out of how they should be taking their profit, and when, and all that sort of stuff?

Michael Glaspie: [29:50] Absolutely. I tend to lean back on the profit first method. Profit first has been popularized by Mike Michalowicz, he's the one that kind of coined the term, but now there's profit first out there for almost every industry to include real estate investing, and so there is a book called Profit First for the Real Estate Investing by David Richter that I do recommend the audience goes out there and reads. The concept behind it is it takes in a ton of different psychological impulses that we as humans or as creatures are accustomed to, and it allows us to put in barriers. So we talked about the principle of if we see it, we're gonna use it. The other concept is the every dollar concept, which Dave Ramsey has made very popular. Every single penny that we earn should be working, not just sitting there. So we allocate certain money to pay down debt, certain money to go to reserves, so forth and so on. And then with the profit first to the name, we focus on making sure that we allocate money aside profits. Now that profit distribution, there's a ton of different ways to look at it, this is what I like to use. We build up this profit account, and then once every quarter we actually take those distributions from the profit. We split those profits fiftyfifty. So let's say we got 10,000 in there, 5,000 is gonna come to us as the entrepreneur to do whatever we want to do. We wanna put a down payment on a Lambo, we wanna go on a beach trip or whatever the case, the Cancun, that's where that $5,000 goes to. The other $5,000 goes back into the business.

Michael Glaspie: [31:19] Now where does it go in the business? That's all part of the strategy we have to develop. Maybe it's a reserve, maybe it's a new investment, maybe it's something else. But by doing that, two things happen. As an entrepreneur, we actually get to start enjoying the fruits of our labor, which a lot of us, like you said, are delayed gratification. We'll grind for three or five years and be like, man, I still don't feel like I made any money. It's because we never purposely allocated money to ourselves. Maybe just a salary to live, but not really purposely allocated. And then the second piece is it makes sure that we are investing back in the company for strategic growth. Not just, oh, I got a gut feeling, we need to hire somebody because I feel overwhelmed. It's like, oh man, let's look at the metrics. Do you really need somebody else? If so, let's move this money towards hiring somebody.

Dan Austin: [32:04] Yeah, totally, yeah that makes a ton of sense.

Mike DeHaan: [32:07] So, you know, use the profit first method. You go into a bunch of different planning things. So I guess, bigger picture, what exactly does it look like to work with someone like you? What are like your main deliverables? Do you have a team? Are you coming in personally and you're just like engaging with the existing team? If someone doesn't have, say a bookkeeper or a good accountant, are you providing that? Are you making connections? Like, what can someone expect if they were gonna bring on someone to be like a CFO role?

Michael Glaspie: [32:34] Yeah. Absolutely. So every company's gonna be a little bit different. My company, personally, is a little bit more inclusive, meaning that we do a lot more of the additional services such as bookkeeping or tax strategy and things of that nature. So really what it looks like is we start off with that introductory call, we get a good idea of where you are and where you're trying to go. We wanna make sure that that's pretty clear and pretty outlined. Now from there, once we start the engagement, we're coming in and we're working with your existing team. If you have a bookkeeper, if you have a CPA, if you have a VA, or if you have whatever is on your staff, we're integrating with you guys. We're coming in as your CFO to your company. And we take that role very seriously. The CFO typically is the right hand man to the CEO. So we're going right in there, we're gonna sit down next to the CEO, and we're gonna operate just that, as a leader within the company. If our clients need help finding or screening or interviewing CPAs, bookkeepers and things of that nature, then we absolutely help Once we're in that role, we go into a full dissection, but we're deep diving into every aspect of the finance. So kind of how I alluded to earlier where we talk about gross profit versus net profit, we're looking for specific KPIs to see if they're out of whack, and then we're deep diving into those areas. So there's times when we're going to conversations about let me see your SOPs, let me see your process map, let me see your buy box criteria.

Michael Glaspie: [33:58] What's the script or the qualifying process that your sales agents have? Know, things of that nature. What are your chart of accounts inside of your financial statements? Does it make sense? It, do you understand it? Hell, that's half the problem. If you don't understand it, we need to change it. Right. So we go through this entire reformation process. So at the end of it, of working with us for however long you intend, the idea is that your company's financial department has completely shifted, and now it's efficient. And now you know how manage and operate it as you scale it.

Mike DeHaan: [34:30] Gotcha. So then working with someone like you or, you know, a fractional CFO just in general, is it normally, I guess, like, you on as, like, a salary? Is it a monthly subscription? Are you committing to a year? Since you say to Reduction CEO, are you looking to take additional profit for the company as it grows? Like, what is that originally? You don't need to give specific numbers, I don't know how you negotiate that, but just like what should people expect in terms of like that actual transaction?

Michael Glaspie: [34:56] Yeah. 100%. So when you go to a fractional CFO, just in general, they're first gonna do the analysis on your current situation. So just like you guys mentioned earlier, somebody's doing 15 deals a year and with lower profit margins, they're not even ready for like a full all in tail, we're coming in, we're sitting in every week, hey move over, I'm gonna run this meeting, they're not ready. We do offer that. But when we offer that, typically it's at a much higher level for a slightly larger company and we're probably doing a percentage of the revenue or the profits that we can help you. As we kind of scale downwards, sometimes you'll see annual agreements or engagements, or six month or three month intervals. But for the most part you'll see some of these locked in at a monthly retainer. So I'll give you an example of like for me, we can come in and we can work together for one month. But as we all know, this takes time to develop. So I always ask for a minimum of three month engagement. But our actual contracts are only month to month, so you can cancel at any time, right? Most fractional CFO services are gonna operate very similar to that, but there are gonna be some that will put you into some sort of agreement, just to make sure that we get the progress that we need to get, because it's not gonna happen overnight.

Dan Austin: [36:12] Yeah, right. Yeah, that makes sense, and that's like, goes, Mike and I found that with our services in real estate, like as we run a lot of services through our partnership program, or even just through our coaching group, people, I don't know if it's instant gratification that they want or whatever, but you can't do things in a month, you can't do anything in a month, Right, you can't, definitely can't improve your financial outlook for your business, or build a good forecast that's even valuable in a month, right? You really gotta spend time, three to six months I would imagine, to really let things marinate, and actually see the progress, and dive in, and find the knobs that you need to be turning.

Michael Glaspie: [36:45] That is such a good point, because even if you just think about this, bookkeeping. How often do you get the finalized bookkeeping report? Once a month. You might be able to get it weekly, but now you're paying extra for that. Once a month you're getting our reconciled books. So before we can even make a change on anything that's happened, we have to see what happened that month. Then we gotta know, hey what's the pattern? So I can't look at one month, I gotta look at three months or four months. So you're exactly right, it does take time. There is that instant gratification pool for a lot of entrepreneurs just in general, but when we start thinking about how are we developing the company, how are we gonna start treating our business like big business? Like it. But at our scale. We have to invest, we have to be patient with the intervals and understand that it could be a twelve month plan, six month plan, two year plan, five year plan, so it works on.

Mike DeHaan: [37:36] Yeah, that fast gratification that people always want is just makes these things so challenging. So our main business, Michael, we run this... Sam mentioned the partnership program where we stand up and operate wholesaling operations for people. Nice. Basically, they wanna launch wholesale operation in Fayetteville. We bring the marketing, we bring the sales team, we bring everything. And then how it works is we basically charge a monthly fee. And then our team closes the deals. And we ask for like a fixed wholesale fee for every deal. And then you get all the upside. You would be amazed at how many people are like established operators and come to work with us. And after month one, we haven't closed like three deals and they're like, I I'm gonna keep doing this.

Dan Austin: [38:16] Right. It's like escrow process is thirty days, bud.

Michael Glaspie: [38:18] Exactly. Give us some time.

Mike DeHaan: [38:20] Dude, it... It's wild. And the thing is too is like our our monthly cost isn't like extremely extremely over over the the top. Top. It's It's less than it would cost them to have the team on staff that we have working. But just something about like when you're a service, and so like imagine for you as a CFO, because if someone was to hire a CFO, they're like, yeah, I'm gonna give them six months to figure it out. They go and they hire a CFO service, they expect it to Even be though it probably costs net similar or probably less than if they had a high level executive on staff. You know, and it's such a weird thing. I don't know. I think it's because, like, when it's a service, people mentally treat it like Netflix. Like they feel like they can sort of turn it off whenever

Dan Austin: [38:58] Fair enough.

Mike DeHaan: [38:59] Yeah. But, you know, that's that's not how any of these things work, especially in business. No, man. That that's super awesome. So I guess what is your your company overall look like right now? Like are you taking on new clients, are you trying to aggressively grow it, are you working nationwide? Yes, so we

Michael Glaspie: [39:14] are working nationwide. Again, we focus on the real estate niches, so this is a real estate investor, real estate agent, property manager, contractors, things of that nature, we stick with the area that we really know. And we are taking on new clients, yeah, we just actually brought on some more team members with the expectation of scaling in 2024, so absolutely. Awesome,

Mike DeHaan: [39:35] Very cool. So, yeah, so you guys are interested, you should definitely be hitting on Michael here. We'll probably have chat with you after the show as well. But, awesome, I... Well, I really appreciate all the insight on this. Super, super valuable, you know, and it's a it's a part of business I think gets butchered, especially by real estate people. Uh-huh. And there's a probably a lot of missed opportunity they don't even realize. We're gonna start to wind down the show here. So we have our end of show questions, which are the same three questions that we ask everybody that comes on the show. And the first one, which is always the crowd favorite, and I'm sure you have some good ones as you use... You have a decent sized portfolio. But what is your craziest real estate investing story? And this can be a big win, a big loss. This can be about the time that you had a tenant that went off the deep end and decided they were gonna start raising copy borrows in their living room, like whatever.

Michael Glaspie: [40:24] That sounds like that was a personal story there, it sounds like that one is close to home for you. One of my craziest stories, I I tell this one sometimes, but it was when I first started investing, and it was one of those situations where I'm a very logical thinking person, so I looked at this opportunity to wholesale a house, and everything just made sense to me. Numbers made sense, it should've been a good deal. So I was still active duty military. So I go in, I'm negotiating with this individual, and she's like, I would love for you to sell this house, I'm tired of it. However, my brother's still living it. And so we talked to the brother, the brother doesn't have a place to go, he's like, hey look, I'm unemployed right now, you check me out, I'm basically gonna be homeless in the moment, but if you can sell this, the sister promises to do something with this and give me a spot. So we go, we go, we get it under contract, the brother moves out and everything, all of a sudden, due to my profession, I get orders, we're moving out, we're flying overseas in like three weeks. So now I'm like crap, I can't see this thing all the way to close, I'm about to deploy, I don't even know if I can close while I'm overseas, which by the way, you can, I didn't know at the time? And so what I did was I handed off the entire contract to another wholesale, and I said hey man, you can keep all the profits man, I just really want you to be able to close on this deal because now I wanna make sure that they get seen through follow through.

Michael Glaspie: [41:47] I deploy, I come back, I've been trying to hit up the seller and the other wholesaler to see what was happening, nobody responds, I finally get in touch with the seller and she's like, well whoever you handed off to never contacted me. Wow. My brother was actually homeless for about three months and I ended up Oh foreclosing on the wow. At that point in time it was like a dagger to the heart because I felt like I just completely ruined this person's life. Now long story short, we amended that, you know I was able to make it up helping them out a little bit here and there, but that was one of the biggest lessons for me at the time. A lot of times as entrepreneurs we come into something looking at the dollars that we can make, and that's the first real experience where I realized that we impact lives every single day within the real estate industry. So that's probably the craziest one that I have that comes to the top of my mind.

Dan Austin: [42:39] That's so understated right there, is like people forget this in this business, they think about the money, but they don't realize, you know, getting a property under contract, people make life changes. Right. Just like you would when you were selling your house, you'd be looking for a new place, you would be packing, you might hire a mover, you might put a deposit on a new house, or an offer on a new house, where you have, you know, earnest money that you could lose, and a lot of times these are people that, you know, they can't afford to do a lot of things, you know, unless it's the landlord situation where they don't really care about the property or something, but man, it's, I'm glad you said that because all too often I think, I feel like sometimes it's just Mike and I screaming that and nobody actually else nobody else talks about it. Yeah.

Mike DeHaan: [43:19] Yeah. And it's it's such a problem right now to, like... Because the new determination of what your business looks like if it's successful is, are you making money? And they don't actually look at the impact that you have Mhmm. With the people involved in your business or that the people are doing transactions with. Totally. It's become super prevalent right now too with, like, all the pace more be subject to bullshit, which I can't stand. Because you have all these people that do not understand the ramifications of those style transactions, and you have them going and lying to the seller about the fact that the mortgage is still going to be on their name, and they're selling it to some dipshit buyer who's brand new, who has no intention Not qualified. Who's not qualified, has no intention of being able to perform on the deal. And then all of a sudden, you have the buyer that's probably overpaying for it, and you have the seller who's now going to have this debt, this debtor pursue them, and you have the person in the middle, you know, the Pace Morby show that's like, peace, I got my $20,000, I'm out of here, and then they're gonna go and talk about this deal that they just did and how great they are at business.

Mike DeHaan: [44:18] When they just screwed over everyone involved, right? Yep. And any sort of transactional business, this is a huge thing and It is. You know, wholesalers get a bad rap, but really it can be a services based business even though people don't believe it.

Michael Glaspie: [44:31] 100%. You know, I believe that we always operate in integrity, right? What you do follows you. Absolutely. Right, it follows you period. And there's a lot of people that have put a bad name on wholesaling, that have put a bad name on creative financing. And what's crazy is that if you just lead with value and you just operate with integrity, you know that you'll never be without. You will never be without. Now you may not be making as much as somebody else might be making in the moment, but I'm positive you're gonna have more longevity.

Mike DeHaan: [45:02] Of course, yeah and it all just starts with intent, being willing to recognize that. That's a that's a pretty wild one now. That's a that's a lot of good lesson. Alright. So second question, what is the number one tip you would have for an investor trying to take their real estate business to the next level?

Michael Glaspie: [45:19] I'm gonna re reiterate this one. Bookkeeping. Real tip your money.

Mike DeHaan: [45:28] That's the

Michael Glaspie: [45:29] real tip. And so it's not only your money out when you're paying for marketing or paying for services, but the money coming in. Track to see where is it going. Are you spending it on gas station snacks? Are you spending it on things that are actually returning value or increasing your investment in the company? Just track. Because often times when you track, what you track will grow. And people don't often track their finances enough.

Mike DeHaan: [45:55] Do you know why people don't track

Dan Austin: [45:57] their finances? Because they don't wanna see the shit show.

Mike DeHaan: [46:00] No, so seriously, it's because it is really fucking depressing when you know that you just made a million dollars, and you realize that you're only getting like 20 to 25% of that.

Michael Glaspie: [46:11] Yes. That's a really good point because a lot of... Well, money money conversations here in America tend to be taboo anyway.

Speaker 3: [46:18] Mhmm.

Michael Glaspie: [46:18] But you know, now we have this comparison that has really been scaled up due to social media and everything else. And ultimately that's why I think having an end goal, if someone came to me and said hey look, I need $5,000 a month because that will allow me to do x, y and z and that's all I really care about. Well let's create that business. Let's not worry about chasing the PACE mortgage or whoever. Let's not chase that, let's create that business. Which changes the game about, it gets rid of comparison, it allows you to comfortably, intentionally track your money, and it's something that's a little bit more tangible and bought ins. But yeah, you're right, it's a very hard conversation to have when somebody pushes a lot of work in, then they realize that they didn't really keep much up.

Mike DeHaan: [47:03] Yeah. Hard It's conversation to have with yourself and then it's even worse when you see something like, you know, David opens his toys on YouTube, he's like nine and makes like 8,000,000

Dan Austin: [47:11] You're dollars a making so much money.

Mike DeHaan: [47:14] And you're like, what is happening right now? I'm not doing

Dan Austin: [47:16] That's something funny.

Mike DeHaan: [47:16] Alright, Michael, last question for you. Where can people find you, follow you, and reach out to you?

Michael Glaspie: [47:21] Absolutely. You guys can find me on Instagram at Michael. S. Glassby. You guys can also find me on YouTube, Michael Glassy, the real estate CFO. That'll probably be best way to reach out to me, and then you guys can go to the website as well, www.gtubesissolutions.com, but if you wanna reach out to me directly, the YouTube and the Instagram is gonna be.

Mike DeHaan: [47:44] Perfect. Right on, man. Shot show follow-up. Check out YouTube channel as Awesome. Sweet. Right on, man. Well, thanks so much for coming on the show. That was a great clinic on real estate Super, management right super helpful. If you guys are new in your business or you are trying to figure out why your business isn't growing as well as it should be, probably go relisten this episode and probably reach out to Michael as well because I guarantee you, you're not looking at your numbers as well as you probably should be. And doing so could change the trajectory of your entire business. So reach out to Michael. I see people come on these shows just because they want to engage with you. They wanna get in front of more people. You know? Michael seems like a nice personable guy, but at the same time Yeah. He does this for a reason. He took time on his Wednesday night to come and, you know, talk to you guys and give you guys information. So definitely let him know that you listen, reach out to him, and let him know that you love the information that he shared and potentially inquire about his services as well if you're interested. So besides everybody, we appreciate you all, and thanks for listening. And we'll talk to you guys next week.

Michael Glaspie: [48:43] Yeah. Thanks

Speaker 3: [48:45] for listening to collecting keys. Drop us a five star review on iTunes and send us a screenshot to Mike@collectingkeys.com for your chance to receive a free collecting keys t shirt.