36: How to Properly Mange Your Money as a Real Estate Investor with Sophie Plappert

Speaker (00:00:00) (-) - Welcome to Work it, Live it Own it! on a show that explores how to upgrade your lifestyle through life lessons, real estate and entrepreneurship. Here's your hostess SaCola Lehr When it comes to seeking financial clarity with real estate investing, you need a team behind you to make sure that your business is successful. And so today we have a phenomenal guess who's joining us on the show. And she's not just your average accountant. She is a financial maestro dedicated to helping business owners navigate the complex world of real estate investing. So please help me welcome Sophie Plappert. She is the brilliant mind behind SJP services group, and she has over ten years of experience in accounting, wealth management and financial planning. Now, having experienced many sides of the financial services world, Sophie has developed a passion for helping business owners reach their goals. So after leaving her corporate job in 2020, the height of the pandemic, she went off on her own, seeking more flexibility in a way to make a bigger impact. And so she started the SJP services group.

Speaker (00:01:24) (-) - She enjoys spending time with her husband, her children and her rescue lab, Ellie. And so in this episode, Sophie is going to be sharing her wealth of knowledge on gaining financial clarity through real estate investments. So it doesn't matter whether you're a seasoned entrepreneur looking to enhance your portfolio or someone stepping into the exciting world of real estate for the very first time. Sophie's insights is going to be sure to leave you inspired and informed. So. Grab your notebook. If you're driving, don't grab a notebook. But if you're at home and you're listening to this, grab a notebook. Get ready to absorb the wisdom that we're going to dive deep into. In the world of real estate and financial empowerment, this is work and living on it, where we bring you the voices of experts like Sophie Plappert, empowering you to take charge of your financial destiny. Welcome, Sophie.

Speaker (00:02:20) (-) - Thank you for having me.

Speaker (00:02:23) (-) - Thank you. It's our pleasure. So, Sophie, just to dive right in. Because I know this may be a hot topic and burning question.

Speaker (00:02:31) (-) - Because a lot of people have a desire, have a dream to start a business. But in your experience, what has been some of the common financial challenges that business owners often encounter, and how do you assist them in overcoming these challenges from an accounting perspective?

Speaker (00:02:49) (-) - Sure. So number one is always going to be cash flow, especially in real estate. A lot of my clients come to me because they're living deal to deal. And managing that cash flow and not having a real plan of where the money's going to go once the deal is closed. A lot of times it goes right into the next deal, and they're kind of robbing Peter to pay Paul. So setting them up with a solid cash flow management plan is key. So we I implement profit first with a lot of my clients where we're making sure we're setting money aside to pay taxes, because that's usually the number one area where it comes tax time. And if you've made money you're going to you're going to owe the government. And a lot of my clients aren't prepared for that.

Speaker (00:03:35) (-) - Uh, the next one is making sure they have money set aside to pay themselves because you started your business to earn a living. A lot of my clients aren't paying themselves or paying themselves enough. So having a plan to make sure they're compensated for the work that they're doing, and then again, making sure whatever's left over is what your business is going to operate on. So managing your expenses you're spending, making sure you're not overspending and giving them some parameters to operate their business in.

Speaker (00:04:07) (-) - Awesome. Thank you for sharing that. And would that include advising them to have multiple accounts, bank accounts, as well as one specifically for taxes, one for your personal to pay yourself and then for other expenses as well?

Speaker (00:04:24) (-) - Absolutely. Yeah. We set up several bank accounts and it's a great, um, kind of mindset shift and a great habit to get into, of physically putting the money in these different buckets and using it only for that specific purpose.

Speaker (00:04:39) (-) - Okay. Awesome. And so you mentioned cash flow. So with all of that that you just mentioned, that means that there has to be some strategic financial planning play playing a role in helping your clients as real estate investors to achieve their financial goals.

Speaker (00:04:57) (-) - So tell me, what role do you play in supporting this aspect of their business?

Speaker (00:05:04) (-) - Sure. So I am absolutely monitoring their financial performance and what they've done in the past. But I'm also forecasting out to see where they're going to end up, what deals they have in the pipeline, what the market's looking like and what is going right or wrong in their business, which allows us to really be proactive and forward thinking instead of just reactive in the moment of, you know, what's going on in their business. So it allows us to clearly see what needs to be fixed. And then I also will give them an actual actual action steps to take with them between our meetings, so they will know exactly what to do, not to fix it, not just what the issue is.

Speaker (00:05:47) (-) - Okay, great. Because you like I said, a lot of people want to start a business, but they don't know the ins and outs and how to make it profitable.

Speaker (00:05:57) (-) - Number 100%. Yeah.

Speaker (00:05:59) (-) - How many bank accounts you need to have and why you need to have those bank accounts, and then talking about the financial planning piece.

Speaker (00:06:06) (-) - So that way they can be successful. And it is a thriving business and not a hobby. You're going in?

Speaker (00:06:14) (-) - Exactly. And it's not just about understanding your numbers, but knowing what to do about them is the other key piece. So a lot of my clients will say, I know I'm not profitable, but I don't know what to change or I know this isn't going right, but what do I do about it? So those really go hand in hand of not just knowing, you know, how profitable you are, but what what changes in your business will make a bigger impact in your in your final goals. Really.

Speaker (00:06:42) (-) - Okay, so I have to ask you because I know you worked corporate as an accountant and a financial advisor, what actually led you to branch out on your own? I know it was for more flexibility, but why specifically real estate investors? What made you choose that particular niche? I'm curious.

Speaker (00:07:02) (-) - Um, I mean, I started my business because I didn't want kind of the 9 to 5 life anymore with just my family.

Speaker (00:07:09) (-) - And I find that real estate investors are also very similar in that they want the passive income or they want, um, to, you know, create generational wealth and just a different lifestyle. And it's so nuanced. And I just I love talking to people about their goals too. And what and helping them try to figure out, you know, how to get closer to them.

Speaker (00:07:33) (-) - Right. And so for all my listeners out there, whether you're a realtor, your real estate investor, you're dabbling into real estate for the first time and having an accountant who knows the ins and outs when it comes to real estate and investments in real estate, you need an accountant on your side like Sophie. So Sophie, we're going to dive a little bit deeper now. So that way the audience can have some takeaways and some insights that they can put into practice. So can you provide some insights into effective financial management practices for real estate investors, specifically if they're dealing with multiple properties or even diverse real estate projects?

Speaker (00:08:18) (-) - Yeah, I think the most important is to have a real estate specific bookkeeper and a real estate specific CPA.

Speaker (00:08:26) (-) - And then eventually, once you're at a higher level, a CFO that can bring all the pieces together and help create that plan is key. But people try to do the bookkeeping themselves, or they have a CPA that might just be filing their tax return and not providing, you know, kind of the strategy. And the more, um, complex tax strategies when it comes to real estate. So having a team around you, a financial team that can support you and what you're doing is, is key, especially as it gets more complex as your business gets more complex.

Speaker 3** ((00:09:00)) - - Okay.

Speaker (00:09:00) (-) - Good to know. So you want a bookkeeper who specializes in real estate. And then you want an accountant who specializes in real estate, such as yourself?

Speaker 3** ((00:09:12)) - - Yes.

Speaker (00:09:13) (-) - Okay.

Speaker (00:09:13) (-) - Absolutely.

Speaker (00:09:15) (-) - Now, I know you're based out of Tennessee. Are there do you work with people just in person? Do you work with them virtually? How does that look for you and your business?

Speaker (00:09:27) (-) - I am virtual and actually almost all of my clients are in other states.

Speaker (00:09:31) (-) - My only local client is actually my husband and his business. So I work with clients in California, North Carolina, Florida, New York. So yeah, I'm all over.

Speaker 3** ((00:09:42)) - - Okay, great.

Speaker (00:09:43) (-) - And you're looking to expand, right?

Speaker (00:09:45) (-) - Absolutely, yes.

Speaker (00:09:47) (-) - Okay, so guys, you heard it here. If you are looking for a real estate specific accountant. You need to check out JP services and Sophie Plappert. All right. So Sophie I want to know. Are there any resources or tools that you would recommend because say for example, if someone is just beginning or just starting out, they may not have properties, they may just want to take their current home. And use it as an investment property. When do they need to reach out to someone like you to start off, or should they try to manage it themselves? What insight would you provide them?

Speaker (00:10:32) (-) - Um, I mean, it would definitely. I mean, someone like me or in my field would definitely be open to conversations like that and helping them get started.

Speaker (00:10:40) (-) - I think, um, there's local real estate investors, not like networking groups in your area. Those are great places to find people that have been in the industry longer, and you can kind of, uh, network and mastermind with them. Also, there's a great book that I love to recommend, it's Profit First for Real Estate Investing by David Richter. Um, I work with David with some of his clients as well. So, um, it's how to implement the profit first system in for real estate specifically. And that has been so helpful, especially if you're just getting started and want to start out on the right foot with a good foundation for your business.

Speaker (00:11:20) (-) - Okay, so mentorship is key.

Speaker 3** ((00:11:23)) - - Yes, I always say.

Speaker (00:11:25) (-) - Find someone that's been doing it longer or there's always someone like, for me that's smarter than me, and I pick everyone's brains, um, to help. To help learn and grow.

Speaker 3** ((00:11:37)) - - Okay.

Speaker (00:11:38) (-) - All right. Thank you so much. So you've given us quite a few takeaway tips.

Speaker (00:11:43) (-) - Number one is. Cash flow? Yes. And for those who are just getting into the world of business, can you define what cash flow is? What does that mean in layman's terms?

Speaker 3** ((00:11:58)) - - Yeah.

Speaker (00:11:59) (-) - Cash flow is your, you know, your net profit, your takeaway. But you also need to back out money. You take out from the business, money that you pay in taxes, money that you pay back debt. And what's left is really your your bank balance. So you might have been profitable on a deal, but after paying back your investors or paying back paying taxes or paying yourself, you might not be walking away with, you know, that money in the bank. So it's not just what your personal profit and loss statement is saying, it's what your bank account is saying that you need to pay attention to.

Speaker (00:12:38) (-) - Okay, so like a regular paycheck, right? You get paid. Yeah. And then everybody's going to take their piece of your paycheck first. And then what's left over is your profit.

Speaker (00:12:49) (-) - And then from that that's where you pay yourself.

Speaker 3** ((00:12:53)) - - When you're cash. Okay. All right.

Speaker (00:12:55) (-) - So I just wanted to break that down because we can talk about it because you've been in it for a while. I've heard the term cash flow, but to just break it down for those who may just be getting started or may be curious about it, this is an important piece, guys. So, like she said, you may start off thinking, hey, I've made a lot of money, but then you've got to pay back. If someone has gone into this with you and invested with you, you got to pay them back. You've got to pay all the people who had a piece of action into this real estate deal. Pay them first, then you pay yourself right. My father would always say, pay yourself first.

Speaker 3** ((00:13:34)) - - Yes.

Speaker (00:13:35) (-) - Now, when it comes to taxes, though, I know it may vary, but how much of a percentage on average would you say someone needs to actually set aside for tax purposes?

Speaker 3** ((00:13:47)) - - Yeah, it.

Speaker (00:13:48) (-) - Depends on how much money they're making and keeping. But I always aim start slow because but I always aim for around 15%. 20% can be kind of high and challenging. 10 to 15 is a good is a good number to start with.

Speaker 3** ((00:14:06)) - - Okay.

Speaker (00:14:07) (-) - And that's per transaction that they're doing or every time they're getting paid, save an average of 10 to 15%. Set that aside for taxes okay. And that's great. And do you advise your real estate investors to pay quarterly. Yearly. How does that look?

Speaker (00:14:26) (-) - Quarterly is great, especially if you're making good money and want to get ahead of the game. And again, talk to your CPA because there's definitely requirements on if you're making over a certain amount. The IRS wants you to pay quarterly. Um, but I'm doing these allocations and setting money aside with my clients. Um, if they're more of a buy and hold rental type client, we'll do a monthly and set money aside every month. Um, if they're flipping clients, rehab clients will do it after every deal, after every closing, when they sell a home.

Speaker 3** ((00:15:00)) - - Okay.

Speaker (00:15:01) (-) - Thank you for elaborating on that and how you work with your clients, because that is important to know if you are doing a long term where you're collecting rent every month. Setting that money aside for taxes every month is great. And then if they're just doing a fix and flip or a renovation, like you were saying, rehab, doing it after every transaction.

Speaker 3** ((00:15:23)) - - Yeah. You know.

Speaker (00:15:24) (-) - Thank you so much for giving us so many valuable pieces and valuable takeaways. Sophie, I appreciate it.

Speaker 3** ((00:15:30)) - - But before we let you.

Speaker (00:15:32) (-) - Before we let you go, I have two rapid fire questions for you so my audience can get to know you a little bit better.

Speaker 3** ((00:15:38)) - - Okay, I.

Speaker (00:15:39) (-) - Promise you, I promise you, they're not hard. They're not tricky. But if you had, what's one skill or hobby you've always wanted to pick up but you haven't had a chance to do yet?

Speaker (00:15:51) (-) - Oh, I really want to take cooking classes. I love to cook, but I've not had. I've wanted to like up my skills and take actual classes and learn, so that's definitely a big one on my list.

Speaker 3** ((00:16:05)) - - Okay.

Speaker (00:16:06) (-) - Good. Anything in particular? Italian? Greek? Mediterranean. What type of cooking? Just any type of cooking.

Speaker 3** ((00:16:12)) - - Um, I think.

Speaker (00:16:14) (-) - Any type of Italian or French would be great. Or baking because I'm a terrible baker. So yeah.

Speaker (00:16:21) (-) - And if you had a day completely to yourself, how would you spend it?

Speaker 3** ((00:16:28)) - - Uh, I would.

Speaker (00:16:29) (-) - Spend it probably on the couch by the fireplace with a really good book.

Speaker (00:16:35) (-) - Same here, same here. There's nothing better or comfy than being by our fire and drinking something like tea or coffee.

Speaker 3** ((00:16:44)) - - Whatever your.

Speaker (00:16:45) (-) - Favorite beverage is, and curling up and reading a book or listening to a book. For some who are just like, look not about the reading or.

Speaker 3** ((00:16:53)) - - Watching a movie.

Speaker (00:16:54) (-) - So great. So guys, if you want to reach out to Sophie, she does a lot of her work virtually. So if you want, can my audience reach out to you? If they just have questions, they want to pick your brain. What is the best way for them to reach out to you and contact you?

Speaker (00:17:11) (-) - Um, I would say email is great.

Speaker (00:17:13) (-) - Sophie at SJP services group.com. And you can also if you want to go to my website SJP services group.com and book a call. There's a link on there as well.

Speaker (00:17:23) (-) - All right. You guys heard it here. First reach out to Sophie, email her or check her out at her website if you have any questions about getting started and especially seeking financial clarity when it comes to real estate investments. All right. Thank you, Sophie, so much for joining. You're so.

Speaker (00:17:42) (-) - Welcome. Thanks for having me.

Speaker (00:17:44) (-) - Thank you. All right guys until next time. If you have any questions about gaining financial clarity in your business or in real estate investment or you're already in it, what are some valuable tips that you would like to share with other members of the work community? We would love to hear from you, so make sure you reach out to us at info at work and live at com. Don't forget if that. If this episode resonates with you to download it, share it with your friends and members or tribes of your community.

Speaker (00:18:20) (-) - And so therefore that's it. That's the end of this particular episode. And guys, don't forget to work it, live it on it in your everyday lives. Take care. Okay.