Justin Wilmot discusses how he has 15% automatically moved to a separate account on deposits over a certain amount, specifically so that he can use the funds to reinvest.
By taking the money out before it ever “touches your hands”, it’s normally easier for you to reinvest it without you ever really missing the money.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Justin: How are you? My name’s Justin Wilmot with mobilewholesaling.com, and today I’m going to be your host for the FlipNerd REI show. All right, today I want to talk to you about something really, really important. This was a key element for me in scaling my wholesale business and my renovation and development company as well, so pretty much everything altogether. It’s the idea of reinvesting 15% automatically.
Mike: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.
Justin: Back in the day when I was just getting started and I would hear people talk about, whether it was on a podcast or whether it was through blogs, I would hear them say, “Yeah, we just dropped 10,000 pieces or 15,000 pieces or 20,000 pieces,” I was like, “Wow, 20,000 on a direct mail campaign, that’s a little high.” I was having those thoughts. At one point a good mentor of mine said, “Justin, if it’s never your money, it never affects you.” If it never comes out of your checking account, it makes it a little easier to spend that kind of money on a direct mail campaign or whatever campaign you’re going to do for any type of selling, lead generation or any type of scaling that you need to do at the time whether it’s employing somebody or whatnot.
For me particularly, I want to hone this down on direct mail, because I still believe that direct mail is a very critical piece in seller lead generation no matter what your business model is. What I did is I set up at a local bank an auto deduction. For every deposit that gets wired–most of our profits are wired, we barely get checks these days–for every deposit that’s over X amount of money, and you can set up your own parameters, but for every deposit that’s over X amount, you can automatically get that redirected to a savings account. That savings account we just titled the “marketing account.”
That account, there’s no debit card, there are no checks, it’s just a withdrawal. It’s like a credit type of card. Every bank probably will set this up differently for you. It’s just an account that you really can’t touch, you can’t play with, you can’t write checks out of. It’s not your debit card sitting in your wallet.
This over time as you’re doing deals, whether it’s your first deal and you get your first $10,000 cash . . . Picture it this way. Let’s talk for a minute about somebody that’s doing their first deal. If you just got your first deal done and you want to be a full time investor, you’ve got to be able to reinvest in the market. As a real estate coach I’ve been blessed to coach thousands of people across the country. All too often I see people, let’s say, make their first $10,000 and hold onto it like it’s theirs. It’s, “Oh my God, I made my first $10,000.” They’re excited, but then they go spend it on . . . maybe there are bills or whatever. Maybe they go buy a boat. Maybe they have a job and they go do something crazy.
Really, you did not make $10,000. You made $8,500. That’s the only money that’s available to spend. This one rule of discipline, when you take yourself out of this and you just set it up automatically, will change the climate. It will change the progression of your business. When you automatically start getting deals done and that money starts compounding, the next thing you know, you’re just having that savings account build up, build up.
When you’re ready to attack a market or you have a good strong buyer’s list for a specific area, you can now really just go after this thing and drop the 10,000 pieces, 5,000 pieces, 15,000 pieces or more – 30,000 or 40,000 pieces – because this money’s been accumulating in the account from deals that you’re doing. The 15% is just getting slammed into that account and now you can scale your business. Just be prepared for the phone calls and be able to take in all those leads when it does happen.
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