Imagine this: you’ve finally closed your first ever deal and it’s a very lucrative one. What should you do with the huge amount of money once it’s wired in? Understandably, it would be very tempting to splurge, spend the money, and buy the things you’ve always wanted. After all, you worked hard for it, right? Wrong!
In this special episode, Mr. TTP himself, Brent Daniels shared the untold secret of building a million dollar real estate business. And it’s not as complex as you think! However, it would involve planning accordingly and knowing where your money should go and how you should manage it accordingly.
Regardless if you’re new to the business or a seasoned one, today’s episode can provide massive value and can spell the difference between staying stuck or taking your business to the next level!
- Why your income should not go to your personal account
- What you owe when you make money
- The importance of having a CPA set up everything for you
- Percentage of your earnings that should go into your tax account
- Percentage of your money that should go to your expenses
- Your two options when you’re making money
- How to create legacy wealth
- How much should go to your rainy day and real estate fund
- What you should do with your money to win
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Hey everybody. It is Brent Daniels. Mr. TTP. You are closing deals. You went out there and you generated a lead. You converted it to a signed contract and you sold that contract. Now the title company or closing attorney is going to wire you money. They’re going to wire you the funds that you made on this deal. It is so exciting. But what do you do with it? It’s confusing. This is the first time, or maybe this is the first few times that you’ve ever received this kind of money before. You’re used to getting a W2 paycheck or you’re used to doing contract labor or whatever it is. This is different. What do you do? What do you do? Well, most people, what they do is it goes straight into their personal accounts, right? What is the problem with this? There’s an obvious and blaring problem with this, right?
This is going to you personally. You are responsible for this income personally. It goes into your account. And what happens when they go into a personal account? What happens is we start spending, right? We start spending because it’s in our account. Maybe we’re paying off debts. Maybe we’re buying things that we never thought that we could have before. Finally, I deserve it. I deserve these shoes. I deserve this watch. I deserve this pen. I deserve this flight and this trip and this vacation. My family does. I love them so much. I’m going to reward them for supporting me, right? The problem is, you know what? The problem is here. Where is taxes? Where’s your tax liability here?
And listen, I’m not a CPA. I’m not a tax attorney. I’m not a business attorney. But what I am telling you is you, and I say this with all confidence. When you make money, you owe taxes. We owe income taxes. That is the rent that we pay to live in this country. It’s the absolute fact, okay? They’re going to get it one way or another. So we have to prepare for that. So this is what 80% of people do. After they get their first deal, it goes into their personal account and then they have to scramble back again to save enough for their tax liability, okay? And I don’t want you to do that. Not only that, but once it goes into your personal account, how much are you keeping to grow your business? How much are you keeping to be able to get more deals?
Now, listen, I know that you’re being proactive. I know that you’re keeping your costs down. I know that you’re not spending thousands and thousands of dollars on marketing that just go out and create anxiety and stress in your life. I understand that you’re going out there and you’re talking to people every single day. You’re having quality conversations with distressed property owners every single day, building your business. So let’s set this up like a real business professional, okay?
My CPA sets up everything for me. Sets up absolutely everything. Sets up every LLC that I have. Every corporation that I have. My accountant sets that up for specific reasons. Go to a CPA or a certified accountant and say, “I want to set up a real estate wholesaling business. I want to set up a real estate business.” And then what they do is they will set up and you will get a tax ID. And once you have that tax ID, you can open up a business account at your bank. Now the beautiful thing about this is once the money comes in and you’re taking it seriously. You’re the 19 that understands that you can change your financial future by keep rinsing and repeating and getting deal after deal, after deal and creating a system and a business around this.
But you have your business account. And once it goes into your business account, you need to put 33% into tax. Your tax account. Just put it away. “Wait a second Brent, I only made $5,000. You’re saying I have to put over $1,500 in this tax account?” Yes you do. Now you can understand why I push everybody to be proactive. Why I push people to be profitable. Why I say don’t spend all your money on marketing and hiring people until you’ve got everything set up because it’s not all your money. You owe 33% to your tax man. And listen, I’m not a tax person. I don’t know what you’re going to pay, but it’s just to be safe. You put it away, okay? Now, if you pay less, then obviously you’ll get that at the end. And then you put away at least 33% for expenses.
You need to run your business. You need to get more opportunities. You need to get more deals. So you’ve got to third your taxes. You’ve got a third saved in there for your expenses. And then the last third goes to your [inaudible 00:05:20]. The beautiful thing about this is that 33%, now you’re setting a personal budget for yourself, right? If you have 100% to spend like 80% of people do, and then they get behind the eight ball with taxes and then they get stressed out and then their business isn’t growing because they’re not reinvesting it or keeping at least enough expenses in there to be getting all the fresh lists and the fresh phone numbers and their resources that they use. Whether that’s deal machine or TTB data. Whatever it is, that’s where your expenses are. If you’re not setting aside money for that, then it goes away.
You need to be able to set aside money for that. And then you’ve got your personal account, okay? This keeps you disciplined. This keeps you hungry. This stops you from hiring four people that you shouldn’t be hiring after your first deal. This stops you from making silly, silly, silly choices, like getting a big office space or buying a bunch of equipment and computers and websites and all these other things that you don’t need as you’re building your business. Now, at some point, it is reasonable as long as it’s in your expenses budget, right? But remember you need to be putting money into your personal. You need to put 33% into here and you need to be living off of that.
Now, once that gets high enough to where it’s replacing your income, that’s when you can go to this business full time. That’s when you decide. You’re not just quitting your job hoping that you’re going to be able to make this work. You’re using the facts of your business, the facts, the results that you have to be able to make really smart business decisions. This is what 19% of the business owners do and are successful at it. And let me show you what the 1% do.
There’s a lot more checks coming in. There’s a lot more wires coming in because they were disciplined, because they invested into their business, because they kept their personal expenses at a reasonable level that they were able to build a system, build a process to be able to get more and more income that goes into your business account. Again, you put it aside for taxes, always. Put it aside for taxes. But now you’ve got an investment account. Remember, you only have two options when you make money, to invest it or to spend it. The 1% know that we need to invest it for the future, and you can invest it if you are keeping your personal budget low. This is what is so critical.
Do not run out there and just start spending and spending and spending because you want to look good on the gram or you want to look good on YouTube or whatever it is. It doesn’t matter. You’re impressing people that don’t care about you. Go for the people that do care about you, your family. This is what I’m talking about. This is how you create legacy wealth. This is how you build an unbelievable real estate portfolio. Is once you get it from here, you put it into your investment account and now it goes to your personal. But a part also goes to your rainy day. At least 10% of your personal goes into your rainy day fund, okay? This is just if the sky falls, then you need cash, you’ve got cash. That’s your rainy day 10%.
And then you got your real estate fund. This is what we’re doing. And this is the only reason why we have a wholesaling business, is to make money so that we can buy assets so that we can have long term wealth. That’s what we want. And that’s what is going to keep us diligent with our business expenses. This is the problem with the 99%. 99% don’t pay themselves enough because they want to put it all into their business expenses, because they want to have a big office. They want to have a big team. They want to be the guy. They want to be the person on the white horse leading the charge. They need that for their ego. But that ego is going to tear you apart. You need to put it into your personal account. You need to scrape the top because yeah, great. You’re building it. You’ve got a big team. You look good. You look strong, but what are you netting? That’s the most important thing. What are you netting in this business?
As you start closing deals, it is more important, more important, more important to understand that you need to take this money for yourself so that you can invest. So that you can do something special. So that you can build that legacy wealth. So that you could build the net worth. If you’re putting it all into your business expenses, with marketing, with hiring people, with office space, you will destroy this. It is going to take way longer to build this up. But I’m telling you, you go seven strong years. Seven strong years of scraping 80% of what is left over after you set aside for taxes for yourself. I am telling you your financial future will be set. It’s going to be absolutely phenomenal. And that’s what I want to push you to.
I want you to be in that 1%. This is what kills most businesses. This is what kills most people’s financial, because they’ll have million dollar, multimillion dollar businesses, but they’ll only be netting 10%, 5%. That’s not what I want for you. What I want for you is to take home 80% of after tax revenue, okay? That’s what I want for you. So that is the difference. That’s the difference between the 80%, the 19% and the 1%. I want you in that 1%. Remember 1,700 millionaires were made today and every single day. Where on the calendar, where do you look? Is it five years? Is it seven years? Is it three years? Where in that calendar is your day that you’re one of those 1,700 people that became a millionaire?
Because this is the path. This is the way. This is how you do it. You’ve got to keep your money. Put away for taxes. Watch your business expenses. Invest your money. Don’t spend your money and you will win. You guys are the absolute best. If you’re interested in joining the most proactive group in real estate and investing, it is the TTP family. Go to wholesalinginc.com/ttp. Wholesalinginc.com/ttp. Scroll down, check it out. If it feels good in your gut, sign up for a call. I’d love to work with you personally. Until next time guys, love you.