You Don't Need More Leads

Jordan Samuel Fleming returns with a must-hear episode of That Real Estate Tech Guy, featuring David Richter, author of Profit First for Real Estate Investing and founder of Simple CFO Solutions. This conversation is essential for investors who are scaling and wondering why more deals aren’t translating into more money in the bank.

Together, Jordan and David break down the fundamentals that never go out of style: cash flow, profit, and financial clarity. They unpack why revenue is vanity, profit is sanity, and cash is king, and how many investors scale volume while ignoring the leaks that quietly drain profitability. The episode also explores where technology can strengthen financial visibility, and where too much data can create analysis paralysis that slows decision-making and growth.

About David Richter

David Richter is an active real estate investor who has been involved in over 850 deals across nearly every major investing strategy. While helping scale a business from 5 to 25+ deals per month, he discovered that high volume didn’t guarantee profit, which led him to focus on the financial side of real estate businesses.

As the author of Profit First for Real Estate Investing and founder of SimpleCFO Solutions, David helps investors gain financial clarity, build cash reserves, and stop living deal to deal. He has been featured on BiggerPockets, Real Estate Disruptors with Steve Trang, and numerous industry podcasts and stages, with a mission to help investors not just make money, but keep it.

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Revenue Is Vanity, Profit Is Sanity: Scaling without Losing Profit ft. David Richter

I can tell you one thing: technology is the single most important aspect of every business that has successfully scaled. It’s time for That Real Estate Tech Guy, your weekly chance to explore how technology can help your real estate business explode. Each week, you’ll hear from real estate investors who have been there and done that, and find out their favorite technology tips.

Listen in as Jordan speaks with tech companies and learns about new technologies and new ideas that will help you scale your business. And now, join your host, Jordan Samuel Fleming, CEO of SmrtPhone, for this week’s episode.

Hey, welcome to this week’s episode of That Real Estate Tech Guy. I’m your host, Jordan Samuel Fleming, Chairman of SmrtPhone. And today’s episode is a cracker: my good friend David Richter from SimpleCFO Solutions. He’s also the author of the amazing book, Profit First for Real Estate Investing.

This is a really great episode, not as much from a technology point of view, although there’s a great dive into some key technology pieces. But this is one of those episodes where the fundamentals of running and scaling a business matter, and getting your finances right is one of them. David brings an enormous amount of insight, value, and thought leadership around this. He’s someone who understands it, wrote the book on it, literally, and implements it on a daily, weekly, and monthly basis with people across the country.

We have some really interesting conversations, not only about the core financial fundamentals you need to track, but also the advantages and disadvantages of certain technology as it relates to finance, especially the risk of analysis paralysis.

You’ve probably heard that term, where people sometimes focus so much on data and endless reporting that they stop being able to move and make decisions. We dive into a lot of different elements of this, and David is someone who’s seen the evolution and growth of so many investors as they’ve tried to scale.

He’s also someone who built and worked in a very successful real estate investment company, successful to the tune of around 300 properties a year, but realized the profit wasn’t there and started to focus on that. So if you’re a real estate investor scaling your business and you’re thinking, “Am I scaling in the right way? Am I getting what I need out of this business?” this is the episode for you.

Please take a look at David’s book, it’s amazing. Take a look at his company, SimpleCFO Solutions, as well. You will not regret it. Getting those numbers right is critical.

So let’s dive in and talk to Dave.

I’m live with David. David, welcome to the podcast. I really appreciate you being here. Why don’t you give a little introduction to yourself and what your focus is?

Yeah, sure. So I’m David Richter. I wrote the book, Profit First for Real Estate Investing. I own SimpleCFO. My background, even though if you see me on camera it looks like I should be a bookkeeper or accountant, is actually real estate investing.

I’ve been in this space since my early 20s, for the past 12 years, and I’ve seen a lot. I was in a company where we were doing about five deals a month when I joined, and we scaled it to 25 a month, but we were spending 26 deals worth out the door. So it’s like, who cares how much is coming in if that much is going out?

That introduced me to the whole idea that it does not matter how many deals you do, it matters what you’re keeping. That’s what got me down this road. That’s a one-minute elevator pitch on who I am.

Well, I like the elevator pitch. And honestly, your point and the book, Profit First for Real Estate Investing… I’ve been in business for myself for 20-some years at this point. I’m 47, and I started my first business when I was 27. And there is not a business I’ve ever been involved in, seen, or touched in some way that doesn’t ultimately come down to fundamentals of profit and cash flow. Those business fundamentals are always valid, whether we’re talking about AI or anything else.

That’s why I’m really excited to have you on today, because these fundamentals are unavoidable. You can pretend they’re not there, you can ignore them, but you’re going to fall into the same trap everybody falls into.

Yeah, exactly. And Robert Kiyosaki hit it on the head with his rat race game, Cashflow 101. That’s what we were doing, doing all those deals, spinning our wheels, but never getting to the “fast track” and financial freedom. If we don’t tighten up the back end, it doesn’t matter how much is coming in the front end. We’ve got holes in the bucket.

I remember when I first got in business years ago, the phrase everybody kicked around was: revenue is vanity, profit is sanity.

And there’s a lot of truth in that. Everybody loves the big numbers. “Oh, I did 10 million, 20 million.” Yeah, okay, but how much net profit are you making? That’s the bit that ultimately matters.

That’s why I like Profit First too, because revenue is vanity, profit is sanity, but cash is king. There’s a difference between profit and cash. A CPA can tell a business owner, “Yeah, you made $200K, $500K, $1M,” but you’re thinking, “Where is all that money? I’ve got no cash in the bank.” Especially in real estate, that’s incredibly common.

So yes, you need profit, but we take it a step further and say: we also want you to have the cash to back it up.

If you’re talking to beginner and scaling investors, that’s the group most at risk for drifting away from these fundamentals. If you’ve built an eight-figure real estate business, chances are you’re either really lucky, or you built a proper business that actually cares about these things. But beginner to scale-up is where you can go either way.

So if we look at a beginner investor or someone just starting to grow, what’s the start point for them to take this seriously?

Let’s throw this out there: finances are the redheaded stepchild. A lot of people give the advice, “If you’re not good at it, hire out a bookkeeper, get a CPA, get an accountant.” And many people do that, and I’m not saying you shouldn’t. But especially for someone getting started or scaling, getting a handle on your cash is critical.

You’re not a bookkeeper or CPA, you’re the business owner. You’re handling cash, dollars coming into your bank account, dollars going out, and making decisions on hiring, firing, systems, scaling. All of that deals with money.

That’s why I wrote the book. Profit First is a system that gives the owner an opportunity to implement a framework, even if they’re new, even if they haven’t done a deal yet. We work with people who have a deal in the pipeline that hasn’t closed yet, and we help them lay the foundation.

Profit First helps you make profit and cash from every deal and be intentional about it.

So the first step is implementing a cash management system like Profit First, so you can say: “I’m in control of my money. I’m in control of my cash. I can tell where it’s going,” instead of, “I just closed a deal, where the heck did all the money go?”

You don’t have to be a CPA. You don’t have to look like me to be good with your money.

Hey, you’re wearing a hoodie, so you’re doing okay.

Exactly. But to your point: the “I’ll just hire a bookkeeper” attitude… you still have an obligation and responsibility as a business owner to understand where your business is financially.

In our business, we have 60 to 65 employees, it’s established. Every month our CFO and co-founder Alex delivers a T12 report. When I was CEO for the first eight years, I’d get that report, and it gave me the basics I needed to understand: are we okay, or do we have a problem? I didn’t have to examine every line, but I needed the overview.

If you delegate it away completely and fly blind as the owner, you’re risking a lot. Not just fraud, but also pure stupidity, because you won’t see a problem until it becomes unmanageable.

One hundred percent. That’s why I say the three most important numbers, especially when starting out, are simple: what you make, what you spend, and what you keep. Don’t complicate it.

What’s coming in? What’s going out? What do you get to put in your pocket?

If you know those, you can start solving real problems. Keith Cunningham in The Road Less Stupid says people “run enthusiastically in the wrong direction,” because they’re not facing the real problems in their business.

If you know where your money is going and whether you’re keeping what you want to keep, you can ask: is it a revenue problem, or a spending problem? Should you invest more in marketing, or is your marketing spend inefficient?

A lot of people just cut marketing when they feel pressure, but that can be the wrong move. You need revenue, you just need to spend smarter.

That’s why I’m big on Profit First. It’s built around those numbers from a business owner’s point of view.

And if you’re trying to scale, there’s a difference. If you’re doing one deal a month, it’s not that complicated. You can track it with pen and paper. You can still mess it up, sure, but scaling is different.

The first time you hire someone, the weight of that responsibility hits hard. At the end of the month, they expect to get paid. If you can’t make payroll because your numbers aren’t right, you’ll feel that personally.

That’s why it’s important to get it right sooner. If you build good habits when you’re small, it’s easier to grow those habits as you get bigger. A lot of people build bad habits when small, take them to a million in revenue, and then wonder why there’s still no money in the bank. They didn’t bring good habits with them.

Those are fundamental business lessons you either learn well or learn hard.

Exactly. I’d rather you learn it before it becomes an issue that sets you back a year or blows everything up.

If you do a couple bad deals, or you get in over your skis and go from four flips to 14 without managing it, a few thousand dollars over budget on more properties turns into real money fast. That’s where people end up in a dumpster fire.

So don’t become the dumpster fire.

Now let’s bring it back to technology, because most people don’t like balancing books every month. But there are tools that act as accelerators and helpers.

So if someone is scaling up and wants to do this properly, what tools should they focus on?

For cash management, you can read the Profit First book and set up your system. There are banks and fintech tools built around Profit First. Profit First is based on the envelope method, so you have multiple bank accounts and you “name every dollar,” like Profit, Owner’s Comp, Taxes.

There are tools like Relay and Baseline that support Profit First setups on the banking side and can do automatic allocations and transfers. So you can have one income account where money comes in, and automatic transfers push it into other accounts. It becomes “set it and forget it,” the cheat code version of Profit First.

Baseline is built more for real estate investors, and Relay is more general.

And yes, the new gen of fintech companies wipe the floor with traditional banks on technology. There’s no reason to be writing checks today.

On the expense management side, tools like Bill.com and Ramp help reduce manual entry and add approval workflows. You can have a bookkeeping team or VA team enter bills, but they don’t have access to pay. You approve everything, see every dollar going out the door, and someone else handles the grunt work. No check-writing, no carpal tunnel.

Then there’s the gorilla in the room: QuickBooks Online. Xero is another option. Wave can be a good free option if you’re just getting started. These tools give you an accurate P&L and balance sheet.

For us, QuickBooks Online is one of the best. They’ve invested heavily in it. We also connect a dashboard to it using the API, pulling numbers into a dashboard we built for real estate investors so they can see the financial KPIs they should actually be watching.

Now, I’m sorry to interrupt this amazing conversation, but I wanted to make sure you knew that SmrtPhone, the only phone system built for real estate investors, connects to best-in-class real estate investing CRMs. And because it’s my show, and I’m co-founder and chairman of SmrtPhone, I’ve got great deals for you. Click the link and take advantage of 5,000 minutes of free calling with SmrtPhone, the only phone system built for real estate investors. Click, call, close more leads, and back to the show.

QuickBooks is QuickBooks. Back in the day people were still using the desktop version, and integration was a nightmare. But today, for most SMBs, QuickBooks Online is cheap, easy, and really good unless you’re doing something extremely specialized.

They’ve poured money into online, and they even have enterprise options if you have multiple entities and don’t want a bunch of separate subscriptions.

Now talk to me about dashboards. I have mixed feelings. Used correctly, dashboards are an early warning system and a snapshot. Used incorrectly, they can lead to paralysis and decision fatigue.

So when you introduce dashboards to a real estate investor who’s starting to scale, what do you focus them on first?

First rule: never track a number unless you’re going to make a decision from it.

We start with the fundamentals: the profit and loss statement and the balance sheet. As a business owner, you should be able to read them at least at a basic level. And for real estate investors, the balance sheet is especially important because so much is tied up in assets.

Our dashboards include specialized tabs based on the investor’s model. For fix-and-flip investors, we track projects, loan amounts, remaining budgets, lender funds versus project needs, and whether they’ll need to raise money or inject their own.

That helps flippers avoid running out of cash. We also have a stoplight report: red, yellow, green, showing what’s on track and what’s off track. A lot of that comes back to cash.

We include Profit First percentages, where all the cash is, whether the owner is paying themselves, and the basics: revenue, gross profit, net profit, and how to improve net profit and put more money in the owner’s pocket. We keep it simple. If there’s specialized needs like a debt paydown plan, we add that too.

But again: it doesn’t go on the dashboard unless we can make a decision from it.

That’s such an important approach to reporting. Back when I was building custom systems in Podio, I saw two camps: the cowboys who just go, and the people who want endless data.

The data people often spend all day staring at dashboards instead of selling or operating. So your rule is the right one.

Exactly. If you’re tracking a number because you heard someone else tracks it, but it’s not relevant to you and you’ve never made a decision from it, then why track it? It’s clutter and it feeds analysis paralysis.

If you’re not a numbers person and your dashboard is just a wall of numbers, you’ll avoid it completely.

If you’re listening to this and you identify with either camp, you can learn your way out of it. Sales fundamentals can be taught. Financial literacy fundamentals can be taught too. Neither is black magic, and neither is only for a certain kind of person.

That’s why Profit First resonates. It speaks to entrepreneurs. It’s not about becoming a bookkeeper or tax expert. It’s about managing cash, knowing what’s coming in and out, and what you can put in your pocket. A real business pays the owner.

And if you build good habits in business, it often bleeds into personal finances, and vice versa. Profit First is essentially the envelope method, being intentional with every dollar. It’s not complicated, it’s not rocket science, and it’s not even accounting. It’s a system.

So in closing, you have the book, which I’ll link in the show notes, and you have SimpleCFO Solutions. Tell me what you offer and who you help.

If you’re under $250,000 in revenue, we have a 60-day program to set everything up: QuickBooks, Profit First, and a simple decision-focused dashboard. You work with one of our high-level CFOs. You’re not working with just a bookkeeper or a CPA who brushes you off. You work with a part-time Chief Financial Officer for 60 days, and we get it implemented.

If you’re above $250,000 to $300,000 in revenue and doing multiple deals, we have a recurring program where you meet with the CFO regularly.

We do three things for every client:

  1. We make sure you have the right books, numbers, systems, and people.
  2. We implement Profit First so you know where your cash is going and you put more in your pocket.
  3. We set up the dashboard so you can scale profitably and make decisions together.

That’s at simplecfo.com.

And I definitely recommend it. If you’re scaling, it’s never too early to put the right systems in place. It’s easier to implement at lower volume.

I’ll share a confession: with SmrtPhone, last year we did just shy of $10 million. We didn’t have a full understanding of our finances for the first three years. I was CEO, and I take responsibility. But our CFO and co-founder Alex really upped his game, got help, and brought clarity to the business.

Once we had the clarity, with T12 reports and monthly cash flow reporting, forecasting, and a real understanding of what was going on, the stress of running the business almost went away. Our decision-making improved dramatically.

So don’t think you’re too late. We were doing a few million a year when we finally got serious. You can do it at that stage and still reap the benefits.

But it’s better to build the habits early. As you grow, the stress doesn’t disappear, but it doesn’t have to be the same kind of stress. It becomes different stress.

Absolutely. David, it’s a pleasure to see you again and have a chat. I’ll make sure the links to SimpleCFO, the book, and your podcast are in the show notes.

I encourage anyone listening to drop David a line. You can find him on the website and on social media as David Richter.

If you’re starting out or scaling up and don’t feel like you have a handle on the business finances, it is absolutely worth your while to reach out and get clarity and peace of mind.

David, thank you so much for coming on the podcast.

Thanks for having me, Jordan.

Thanks for listening to another episode of That Real Estate Tech Guy. Head over to ThatRealEstateTechGuy.com to check out all episodes and get special discounts on tons of awesome real estate technology platforms.