On this Storii Time, Saad and Mike cover how to boost your productivity and finances, and how to stay consistent when you’re working independently on a 1099.
Saad: Alrighty. I did.
Mike: I hadn’t looked up yet!
Saad: You were just in awe. Just shocked.
Mike: I hadn’t looked up yet! I was on my one-on-one. What happened?
Saad: Well, my barber, my normal barber, wasn’t available. My backup barber wasn’t responding.When I do my beard, I usually just like have it done. And I was just like, you know what? It’s getting too scruffy. Need to let my face breathe. And that’s what I did. I was on my one-on-one with Rasheed, and I was like this. I was like, to start off,
Mike: Yeah, yeah, like you’re calling the police.
Saad: And then he was like, oh my god.
Mike: The issue is when you have the beard, it doesn’t get tan.
Saad: true. it’s Yeah, light skin sod. There we are. Well, there you go. There you go. You know, Saad: I’m curious to see what happens when I go pick up Dua. She’s gonna be like…
Mike: Oh, no, I have at my cousin’s house Christmas Day. My dad or no. Yeah, my dad had come like separately and he came down the stairs and he had shaved his mustache. I just I will never forget that moment ever. Freaked us the fuck out. Man.
Saad: I mean, it’s not like she hasn’t seen me like that, but like now obviously kids are different. they now she’s like recognizing things and like super alert and observant and what have you. So we’ll see. We’ll see what happens. Yeah.
Mike: You’re not a, you’re not a blob anymore. You’re actually like a human being.
Saad: Yeah. Um, so Mike, what are we talking about today?
Mike: Money! I still have money! Give me, give me, give give give me.
Saad: I think it’s an interesting one because we’ve been thinking about talking about this for a while. um And I think for anybody that hears this, I think it’s probably worthwhile just to mention why, right?
Saad: One, we don’t get taught this. None of us get really taught this in school, in college, maybe like, I I guess like it’s starting to become a little bit more like I’ve ever heard at least part of curriculum and things like that. But it’s not a common thing. Families don’t talk about it. It’s almost like taboo.
Mike: I still feel like I don’t know shit.
Saad: And I think that’s what we’re trying to kind of get at, is like address that we’re obviously going to be talking about it from the lens of real estate agents and real estate professionals, but a lot of what we’re going to mention today is relevant to not just business owners, but everybody. um again, and two things I should mention, neither of us are experts. We are not professionals in this space.
Mike: Weren’t you?
Saad: Well, I was. So we’re going to share our experiences, but we’re going to talk about getting the right help too, because that is definitely a factor. So where do want to start?
Mike: Gosh, let’s start with being a 1099, being a contract worker and how that differs and how many more things are in your control, but also your responsibility. As you are a contractor, whether that’s taxes and expenses and what have you. How do you kind of like keep track of things?
Saad: Amadeus, how you doing? Thanks for joining.
Mike: Amadeus, Amadeus. Amadeus, Amadeus.
Saad: I think the first tenet for me is organization.
Mike: Yeah.
Saad: You’ve got to have…if you just kind of like let it go. Yeah, it’s great being 1099. There’s so many benefits and things like that, but it’s not going to matter if you’re not organized. No, like it’ll be a complete mess. It’ll be super stressful. So, like you said, you mentioned taxes. Like if you’re 1099, not paying your taxes, right? Well, you are. You to pay them in a different way. They’re not getting paid. They’re not getting taken out of your paycheck for you.
Mike: So they’re not?
Saad: So you have to figure out how, when, all that kind of stuff, how much, like all that stuff needs to get figured out and you need the right systems to do that. So I think getting the right system set up, which is not the same for everybody. Like I have my system that works for me. But, know, somebody else might have a…if they’re real estate agent, there’s some real estate agents who just have a bank account where their commissions go into, and then they come out of that account to a household account to pay bills. But whatever’s left in that commission account, so to speak, is where they pay taxes out of, business expenses out of, all that kind of stuff. That account is also linked to their business credit card, if they have one. It’s also linked to their QuikBooks if they are using it…like software to help manage the bookkeeping and things like that. That works for some people. That’s not the system I use.
Saad: A big thing for me is part of the systems, bless you, as part of the systems is like having the right help and a couple of the right accounts set up. I’m old school. I use Google Sheets for my Torii expenses, to track investment property expenses, to track expenses at my own house because part of it is a write off. All that. And it works That works for me, and I just share that with my accountant on an annual basis, and then they take care of everything. They ask questions and again, that’s a system that works well for me, but for some people it may not.
Saad: When it comes to organization, get the right systems in place, get the right accounts in place, and get the right help as well. we’ll talk about help later in the call.
Saad: So, Man, what’s up? Osama, what’s going on? Thanks for joining us.
Saad: Yeah, so that’s, think, the main thing on my end is get organized.
Mike: And how, in terms of the spend and everything like that, like that all stays on one credit card for you separate from anything else that you’re paying for or what?
Saad: So that’s what I used to do, right? I used to do that. And I changed that because, know, with especially when you factor in investment properties and stuff like that, like, dude, I’m not going to have a different bank account, different credit card for every single thing.
Mike: Yeah.
Saad: So that’s why. So I put it all on one. Right. then, know, Salman just mentioned like, you know, they have apps for budgeting. He’s like Sheets, caveman. But listen, he’s right. It is. do you think?
Mike: Yeah. At their core, these apps are just glorified sheets. Yeah. And, know, I’m a part of me is like, I don’t want to divulge too much to all these apps and things like that. They’re sharing information all the time, and what have you. For me, again, it’s quick. It works. And I just pass that information on when I need to. But right now I do have and there’s know, there’s gives and takes to this. There’s no perfect solution. But now because of the multiple properties, you know I have a couple of partnerships involved with those properties and some of them I own on my own and then we have Torii and then which is like its own business. Like having multiple credit cards for each one or multiple bank accounts for each one would just be too much to manage. But you can do that and then have a bookkeeper too, right, that tracks it all. So there’s again, a system for everybody. It doesn’t always have to be exactly the same for everyone.
Mike: I was thinking of the memes you always see about like a realtor waiting to like making up tax numbers or like waiting till the last minute like, oh, I spent it already. that’s like, I think that that’s the most dangerous game for folks is not allocating that.
Saad: And yeah. And that’s why that’s where the planning comes in, right? I think once you’re organized, it’s so much easier to plan. And that’s where in our business, you know, they call it the real estate roller coaster, like it is a roller coaster, you’re going to have some months where you do a lot of business, you don’t want to spend all that money. You want to put it away into a few different buckets, a few different accounts and things like that. On those months, that way those months where things are a little slower, you’re not scrambling. You can’t get that money back that you spent on a watch or a vacation and what have you. These bills, you’ve got to pay them. Your insurance and your housing costs and things like that. So you got to plan ahead and create a budget so that’s part of the organization piece too…Especially initially create a budget and then once you create it and yes, it’s going to change It’s gonna iterate on it, you know, your income goes up your budget changes blah blah blah, but eventually you’ll get used to it You’re getting to get into a rhythm where the budget’s just there if you need it, but most of it’s gonna be up in your head. So, whatever level of organization you need, do it, put it in place, and then as you get reps with it, it’s like second nature.
Mike: Yeah, as someone who is a lifelong procrastinator, it’s not worth the stress in the end. It’s just not worth the chaos and the stress of all that. So I just had to go through that a bunch. Why am I forcing this upon myself? I don’t really, you know, I don’t understand.
Saad: It’s not hard to like, one key thing to I guess mention is when you get started with this stuff, when things are relatively simple, right? And you evolve as things get more complicated, when things get more complicated, you’re not that hard. You’ve been doing it for long enough where it’s just one additional app that’s plugged into what you’re doing, or one additional tab on your Google Sheet like me. So, it doesn’t become overly complicated if again, you start, spend like a little bit of time to get the systems, the organization in place. You mentioned it…taxes and emergency fund and things like that.
Saad: Like, yeah, you need to, as a 1099, as a contractor, you need to set money aside for taxes, for your emergencies, everybody should be doing that. But that looks different for different people too. I’m not a fan, for example, of the idea of having a six-month cash reserve. I know that’s kind of like what people say, is you need to have a six-month emergency fund. That’s a lot of money to set aside doing nothing. I’m a fan of making sure that your money is working hard for you and all that kind of stuff. So I have a different way of doing that and that’s making sure I have an equity line open that I can tap into if I need to. It’s there. It’s easy cash that’s accessible. But my actual cash, I want it invested. I want it working even when I’m sleeping. I don’t want it sitting in a checking account or you know savings account or something like that Yeah, so regardless of what your strategy is on the emergency fund side you should have a strategy You should put some money aside or have some money accessible that you can use in the case of an emergency.
Mike: enough that you feel safe otherwise…
Saad: Right. Yeah that you can get like, know, your car breaks down something happens at home You know, you need to make an emergency trip somewhere like that you haven’t planned for like these things. Yeah, these things will happen. But it’s part of life. So you need to be prepared for that.
Mike: Next question is, are we are we writing off this podcast? Can we write this off? Can you write off the hat? Can you write off the glass? What are what are we doing? What’s what are write offs and how do they become advantageous? And I’m going to segue that into stuff that I only came to more into knowledge of, the uh investment property type, writing off things, how advantageous that is. So let’s start off with just like your typical behavior: you’re going to lunches, you’re going, you’re driving your car, you’re purchasing things for the business. How do you kind of manage that?
Saad: Yeah. So everything. I do everything I spend money on for the business, whether it’s my car, whether it’s a client event, whether it’s uh swag, whether it’s a gift for a client, whatever. It’s a write-off. I typically budget for a certain amount every month. I reconcile on a semi-regular basis on what I actually did spend. I update those. I update kind of like those sheets on my tracker regularly on that front. It’s not something I have to do super often, but I know that there’s a certain amount I’m probably gonna be spending on a quarterly basis, so it’s kind of like forecasting and planning ahead. Yeah, and all that’s a write-off, and all that, you gotta make sure that it’s tracked in the event that you get audited or something like that, so that you can prove it. So you want to make sure that, and for that reason, one knock on my process is that an app would make that super easy and keep receipts and things like that, right? In the event that something like that happened, right? So I think that is definitely, you know, especially given where things are right now in my life and in my financial life, it’s something to consider. But I also hope for the best that that never happens. So it keeps getting pushed off in that regard. You’re right. That is something to keep in mind to keep things simple for yourself.
Mike: The looming boogeyman of an audit.
Saad: Yeah, exactly right. I mean keeping track of all that stuff is critical because it can say, literally, I think I’ve shared this with you, but it literally, whole write-offs and things like that, it cut my tax bill in half for last year. It doesn’t matter what the number is; that’s a lot. And if I wasn’t tracking that, my accountant would have no idea.
Mike: Let’s get into that, the assistance of proper folks being in your circle. How do you communicate with your accountant? When do you file? Do you file earlier? Do you push for a difference? What’s the…
Saad: No, I file on time. They usually reach out to me two to three months ahead. What is it, April for us, April 15th or what have you, just to start getting things in order and getting the information they need, any documents that come in, whether it’s through snail mail or digitally, just so they can get them and start putting it all together. I used to do my taxes by myself. And that was helpful. I learned a lot, but I can’t now anymore. I just don’t have the time and now it’s just quite complicated. It’s like I just don’t know. I know I’d be leaving money on the table if I were not paying somebody a couple of grand to take care of it. So, an accountant is critical. I thought about hiring a bookkeeper, but again, I keep my own books, and it’s a simple process right now. But you know, we have a couple of bookkeepers for the business. You and I do. That’s been super helpful.
Mike: Shout out to Big Rich, Brandon.
Saad: These guys have been awesome for us to help really put the right, again, to put on the business side, the right systems in place, the right organization in place. That’s the big boy stuff of when all the systems are connected. QuikBooks with the bank account, with the credit card, that’s what we’re doing specifically for the business. I don’t do that personally yet because everything’s kind of like, because again, I don’t have different accounts for everything. So it’s like, it’ll be too intermingled. So yeah, so I think bookkeeping, accountant, I think on the personal side is critical. And I think there’s something to be said about doing it yourself for a little bit and learning.
Saad: Nobody can really understand your situation better than you. I think really having a good handle on it is really important, but eventually you’re going to need help, and it’s good to pay for it because these guys and girls know what they’re doing.
Saad: On that note, a financial advisor. That can help you with tax planning but also in terms of the future, like wealth building, retirement planning, all that kind of stuff. Because yeah, you’re saving money for emergencies, you’re saving money for taxes, but you’ve got to save money for the future too. And that’s where somebody like that is really critical. Those are kind of the key pieces to the help I get on the financial life side of things.
Mike: Yeah, do you come to them with a next year’s goal in mind? What does that look like? What are your conversations with your financial advisor look like to you?
Saad: Kath just joined.
Mike: Kath! Hey! What’s up? in the house.
Saad: Got Mila. Yeah, what’s going on everybody? Thank you for joining.
Saad: Yeah, so I think, so in terms of my conversations with financial advisors, financial planners, those types of folks. Yeah, it’s a little bit in the next year, but like the way to kind of break it down is what’s your goal for the next year and where do you want to be like in the next five and 10 years, right? I have a pretty like, like pretty set, like there’s a few in terms of my personal goals, like financial goals. I’ve made it very clear to them like what I want to do and how I want to do it and what have you and I just need them to help me make sure that the money that the money needs to be in the right accounts right in order to accomplish what I want to accomplish and it needs to be invested in the right things. Right. I can’t control that second piece. I can’t control the markets and how they go up and down and what have you. But what I can’t control is the accounts that they go into. Am I getting the right tax benefits and are they tax advantaged and all that kind of stuff? And also how much money I’m putting in. So, I just have them help me based on my goals determine what needs to go in while at the same time knowing that hey, I have short-term goals of…we’ve talked about this on the investing side, how do I keep doing that too? Because it’s all kind of related. That’s a very open conversation that we have and we revisit probably every six months.
Mike: Can you give the uh listeners a little advice of like, it seems like once you get one investment property, you can start then rolling one thing into another, just kind of how that works, why it’s easier once you get going to acquire other ones.
Saad: Two main things on that. Number one is I mean actually they’re both related to the same thing, that’s financing. When you own one and it’s an investment property, eventually, let’s say you’re not living in it, your plan is not to live there anymore and you’re to get rent, that’s housing costs that you’re not going to have anymore because the rent’s going to cover that. But not only that, you have an asset, an asset that can be used as collateral against a loan. So basically, your risk profile goes way down because you have a substantial asset, especially in Greater Boston. You have a substantial asset that can be used to help you get financing and limit the amount that you’ll need to kind of uh show in terms of income when you’re trying to get a loan or what have you. So, that’s number one is the fact that the asset makes you much more attractive as a mortgagee. Even though it’s not paid off. Even if it’s not paid off. Because if there’s a payment on it, theoretically, you’re getting rent. And that’s going to cover the whole thing. It’s basically like that doesn’t even matter anymore.
Mike: That might be our first comment of big fan of the show. New level unlocked. Oh, yeah, that’s like whispered to us in like a confessional manner like or like a sympathetic manner…
Saad: Yeah, so and then the second piece is what a lot of people fail to realize is that you can tap into that equity? Right like that equity. Yeah, it’s not free. You know you get an equity line. There’s an interest rate on it stuff but I’ll tell you this…This is Storii Time, let me use an example. My first property, help me buy my next three. So I tapped into the equity, kind o…a first time commentor. Love it, love it, love it…But I tapped into the equity, bought my first investment property, and I paid it down, bought my second, and then I didn’t use it for my third, but on my fourth when I bought my first multifamily, I used it again. That same equity line. Basically, it’s like part of my budget. know there’s going be a payment that’s going towards that equity line every month. But again, it doesn’t just serve the purpose of that, like these big expenses. It’s also my emergency fund. So it accomplishes two goals at once. It’s not possible to do that if you don’t have the property. It opens up so many more options, I think, but if you know how to manage it. If you don’t know how to manage it, if you’re not paying it down regularly and what have you, forget about it. It’s not a good option for you. Like I said, think it’s something that I’ve had now for almost 10 years, two versions of it, because I use the place I live in now, I use equity in the place I live in now to pay off that old equity line to create a much bigger one. So basically now it’s that much easier for it to help accomplish the goal of buying more property but also maintaining that healthy cash reserve or built-in cash reserve without having into cash. The strategy is different for everybody. Just because I do it does not mean, Mike, you should do it or Harry should do it or anybody else should do it. But it works for me because of the systems I have in place and my goals. But that’s why it’s so important to have the right people in mind, accountant, bookkeeper, financial advisor, what have you, people you trust, and frankly, people you pay to do good work for you so you can have some peace of mind.
Mike: They’re worth it. They’re, they’re worth it. Yeah. I mean, if some, if someone’s trying to, I think we say, we take the same approach. If you feel like you’re being sold to, then you, that’s probably not the person that this is like, I’m going to talk about this confidently and you can take it or leave it in terms of my services. And usually at that point you want to take it like, right.
Saad: Right. Yeah, I you got to feel good about the people you’re working with. Obviously have to like them. Have to be competent, all that kind of stuff. like, we’re too busy to do all this ourselves. We’re not professionals in all these areas. So getting the right help, like I told you, I think my fee to my accountant last year was $2,500. I saved half–I reduced my tax bill by half. That’s 100% worth it. That was more than $2,500. That’s what I’m saying. That’s more than 100% worth it. Granted, I have no idea what my bill would have been if I didn’t have a good accounting team, but I know I would not have had the same level of benefit. It was worth at least the $2,500. Let’s put it that way. I think good help is worth it. Go seek it out. We’re all too busy to try and do all this stuff that we’re not experts in on our own. I think the key thing that we can’t control is being organized. Yep, on.
Mike: I love that.
Saad: Awesome. Thank you everybody for joining.
Mike: You did great. This is a nice one. This is nourishing.
Saad: Hopefully you learned something too.
Mike: I did. I did.
Saad: The world gets to see my… I mean, we’ll see. It’s not going to be like this next week.
Mike: That’s for sure.
Saad: But yeah, I think, yes, again, this is a topic that is not discussed enough. We’ll probably revisit it because things change all the time. I wish more real estate agents joined so we can get their take on it, but maybe we’ll get some comments and stuff like that later on.
Mike: We’ll just DM them.
Saad: He’s Mike. I’m Saad. This is Storii Time.. We’ll see you guys next week.
Mike: Bye everybody. Bye-bye.
This Instagram live is transcribed for your easy reading. If you want to catch Storii Time live, every week, follow @saadmun1r and @photolowski on Instagram.