Marcus Crigler on Improving Businesses and Profitability

https://www.jayconner.com/marcus-crigler-on-improving-businesses-and-profitability/

Jay Conner (00:07):

Well, welcome to another episode of Real Estate investing with Jay Conner. I'm Jay Conner, the private money authority. Your host, and a special welcome to you. If this is your first time to be tuning in to the show, we talk about all things real estate investing here. And if you've been tuning in over the last year and a half or so, you know I've had some amazing guests here on the show and today is no different. But before I introduce you to my special guest, this is going to tell you how to save a bunch of money on your taxes and how to increase your cashflow in your business, which I know you're interested in. I've got a free online class that will plug you in to getting funding for your deals. Regardless of what your mortgage broker, your hard money lender, or any of your other funding sources will tell you.



Jay Conner (00:57):

So if you're interested in getting more money to fund your real estate deals, I'm going to reveal to you the five easy steps as to how you can get funding. So when I started out in 2003 I was relying on the local banks to fund my deals. And then in 2009 I got cut off with no notice and I was introduced to this wonderful world of private money and I haven't missed out on a deal since for not having the funding. So head on over after the show to www.JayConner.com/MoneyPodcast. That's JayConner.com/MoneyPodcast. I'm so excited to have as my guest on today's show, my good friend and fellow mastermind member, Mr. Marcus Crigler. Before I bring Marcus on, let me tell you a little bit about him.



Jay Conner (01:50):

So after developing relationships with some of the biggest leaders in the United States in real estate investing, Marcus began to notice something that was rather problematic. And it was a trend in many of the real estate investing portfolios. And that was accounting and taxes. Our favorite subjects, right? We're being approached reactively. Listen carefully. Reactively instead of proactively. So Marcus said it out as his mission in the firm where he's at. Duckett ladd is the name of their company. So he set out on a mission. So using his firm's extensive experience in real estate as the platform. And by the way, these people, Marcus and his partners, he's a partner in the firm. They specialize in working directly with real estate investors. So he and the team have developed a very, very strategic approach to increasing cash flow. And as I said, reducing tax liability for their clients. And that's representing over $500 million in assets. So they've got a very partner focused approached to help their real estate investing clients make quicker, more accurate financial decisions. So the business owners, CEOs, what have you, can spend their time doing what they're most passionate about. And of course, as you all have heard me teach and coach, I say to automate the business, do what you're passionate about, dictate, delegate everything else. So with that, Marcus, welcome to the show, my friend.



Marcus Crigler (03:32):

Hey Jay! I appreciate you having me. I've been able to listen to the show several times and just getting to know you over the past couple of years, it's just been an honor to meet such a guy like you. It's been a blessing.



Jay Conner (03:43):

Well, same here man. I love your heart. I love you have a servant's heart. I believe that birds of the same feather flock together. So that's why we hit it off right after meeting each other a couple of years ago. And of course, as I mentioned, we're in a mastermind together and get to see each other four times a year. But first let's start with this, Marcus. How is it that you're qualified to talk about what you're going to be talking about on today's show?



Marcus Crigler (04:09):

Yeah, that's a great question. So first and foremost, I'm a CPA and that just means I went through and studied really hard and passed the test. That's pretty much what that means. But more than that. And the thing that probably qualifies me more than passing a test is what I've done to study this industry. And study how people in this industry can not only save money in taxes but save a generic cashflow in their business and become more profitable. And so I get the luxury and I say luxury and I mean luxury of working with some great, great real estate investors. And so I kind of get a cheat sheet, if you will, to see what are the really, really solid real estate investors doing it. And how can I help real estate investors all over the country, you know, take in some of those concepts and really grow their portfolio and grow their business with that knowledge.



Jay Conner (05:02):

Well, you know, one thing that really stood out to me about you, Marcus, is when we first got to know each other. Is you and your partners have got a very, very unique approach and perspective when it comes to how you view your real estate investing clients. And really what the relationship should look like and what your relationship looks like with your clients. So, you know, most people that you know are using a CPA or an accountant, most of the time it's, you see them one time a year, you're doing the tax return, et cetera. So what is it about you and your partners that is so different from the traditional relationship that a CPA would have with their real estate investing client?



Marcus Crigler (05:58):

Yeah, it's a great question. So one of the things that, when we set out to do something a little different in the CPA profession, we're all younger guys and you know, we all have kind of a mission behind us. And when we set out to kind of make a change in this industry, one of the changes we wanted to make was the ability in the common nature, I guess, for our business owners to come to us and ask us questions about how to make their business better, how to make their business stronger, not only saving taxes. We can do that and, and most CPAs that know the industry can help you in that realm. But where we differ a little bit and where I think we have a little bit of a better opportunity to serve is that we don't care just about how much money you're saving in taxes, but we want you to make more money as an individual, as a business.



Marcus Crigler (06:46):

And so we want to see you at a minimum quarterly. And go over your books, make sure they're correct, make sure you're able to make decisions on those books or records that you have. Because if you're not, if you're not basing decisions in your business, off of data, it's just simply a guess. And if you're guessing at your business, eventually it's going to hurt you. You may be able to get by with it for so long. Once you get to a size and business where you are, you're a full time in this industry. Having somebody with a financial background that can analyze your books and give you an idea of, Hey, this is what's going right in your business and this, this isn't, you know, this is really, you're struggling here. Either need to focus on this a little bit more, maybe drop, maybe this is a piece of your business that you need to focus on.



Marcus Crigler (07:30):

And so those are the kinds of conversations that I'm having on a daily, weekly, monthly, and quarterly basis. As a matter of fact, just yesterday I spent a full eight hours with a group in setting up a plan for their 2020 goals and how to get them, how to achieve them. Not only set, you know, everybody goes and sets goals. You can set these big enormous goals and you're never going to hit them. What we look at doing is setting these goals, but then backing into, okay, strategically, how can we actually manage to hit these things? And now we can hold them accountable to those goals throughout the entire year. So that's just a completely different relationship than just going in and seeing your tax guy once a year and hoping that, you know, at the end of the year you don't have a big tax bill or you know, finding out at the end of the year. Oh wow. I didn't make any money.



Jay Conner (08:18):

It sounds like part of your relationship is being an accountability partner.



Marcus Crigler (08:24):

It absolutely is. Yeah. I, you know, it's funny, you know, we call it sometimes, we call it CFO, fractional CFO type work. Almost every single client that we have is on some sort of fractional CFO type level. But you know, and the reality is, some of it is being a psychologist. Some of it's being a coach. Some of it's being kind of a mediator between partners. All of those things kind of play in because we're so hands on business and we allow the business owner to have a really a third party representation in their business that most businesses don't have. But they, but they really need,



Jay Conner (08:59):

Yeah. Well, you know, most entrepreneurs, most, not all, but most from my observation lane towards being the visionary, being the creative type and us people, I'm one of those, we really need somebody to help us have the discipline of looking at the books, looking at the numbers, looking at the balance sheet, looking at the year to date profit and loss and comparing those line items. I mean, you know, last year through the first three months we spent X number of marketing dollars in these different areas. Well, you know, is that stuff being tracked and measured and can you really measure effectively, you know, your costs to conversion, your cost of lead and really be able to see you. What are you getting a return on your money? Right?



Marcus Crigler (09:52):

Absolutely. Yeah, that's a great point. And you know, reviewing your books and really getting an understanding. What do they mean, what's on the balance sheet that should be important to you? What are the things that you should be looking at and analyzing? What are the things on the PNL that you should be looking at and analyzing? And what's the difference between the two? And what's the cash flow statement? And why should I look at that? Those are all the things that we talk about, but you know, you made a good point there. You know, I went through an exercise and you know, two weeks ago or something like that on a marketing. And you know, we dove into this, this company's marketing budget and where they were spending their money and it was interesting, they were in a bigger metropolitan area and they were spending all of these direct mail money in a zip codes that they were, they weren't making any money in those zip codes.



Marcus Crigler (10:42):

So they were just throwing bad money, good money and bad over and over and over again instead of dialing it in, using analytics to drive your decisions, not just go out and plaster, you know, direct mail everywhere. In that situation we were able to take 80% of their deals and narrow it down to half of their zip codes and now they have the decision to, okay, do I want to have the same budget for direct mail and hit those zip codes harder? What do I want to reduce my drag mail budget? Now they've got the ability to make that right decision for what they're, what they want to do. And so those are the kinds of things that we try and dive in and help our clients become better that way.



Jay Conner (11:21):

That's great. Now your firm, particularly you. You focus on real estate investing clients. So you probably, since you, you know, served quite a few real estate investors as clients, you have probably noticed a trend of commonalities of to where, there's just some, some common missed opportunities if you will, that real estate investors through using their local accountant. That doesn't specialize in, you know, like you all specialize. What are some of the areas or items that real estate investors could be taking advantage of that they maybe are not taking advantage of? And, or you know, errors.



Marcus Crigler (12:09):

Yeah, absolutely. So I'll tell you the biggest mistake that I see and the one that causes the most surprises is incorrect entity structuring. And when I say an incorrect entity structuring, that has everything to do with knowing when to have a disregarded entity. Knowing when to have an S corporation. And knowing when to have a C corporation. And know when to have a partnership. And those are all taxed a little differently. And so the IRS has different rules for all of those. So if you don't mind, I'll just kind of give a couple of quick examples of how people can use those types of entities to benefit them.



Marcus Crigler (12:45):

So in S Corp, and I'll just to kind of talk about the two main, which is an S Corp or partnership. So an S Corp is where you want to house your active income business. So this is a business that, you know, if you're a flipping company, that's where you house your flipping company. If you're a wholesaler, that's where you, house your wholesale. It's active. You're out actually out there, you're physically doing work or you've got a team physically doing work and you're generating income from them. Now, that's an S Corp. Now if you have rental properties, this is very, very different. This is where I see the big, big mistakes happen. If you have rental properties and you have those inside of an S corp, it could cause you a huge, huge heartache as far as hidden taxes that you don't know about. I won't go into those because they're kind of complicated and we don't have enough time on this podcast to do that.



Marcus Crigler (13:37):

But what I will tell you is anytime you're on a rental property, you're most likely going to want to have that into what's called a disregarded entity, which is an LLC that you own 100% yourself or in a partnership. And again, we're all speaking in generalities here cause I don't know anybody's specific situation in that kind of stuff. I got to get my disclaimers there as an accountant. Right. But, but generally speaking, you're going to want to have those rental properties in a partnership because it gives you more flexibility and it eliminates a lot of the tax traps that you've seen in S-corporation with real estate. So just by doing those two things right off the bat, that probably is going to eliminate, I'd say 50% of the mistakes that I've seen, especially hidden mistakes that I've seen that, you know, I hate to say this, but last year I had a new client come to me this year and just because they didn't follow those rules, that cost them $200,000 in additional taxes. It is just entity structure, right?



Marcus Crigler (14:34):

And just knowing where to put the right things in your business. And so that was not a fun conversation for me to have. And unfortunately there wasn't anything we could undo about it. But that's how important it is. Right. So other things that I see quite often, you know, we talk about this QBI deduction and if you've been an entrepreneur, and over the last year you've probably heard of that. That came in with a new tax code changes. Well, once you reach a certain threshold and get on and go into the details too much here, but once you reach a certain threshold, you have to pay out salaries in your business in order to maximize that QBI deduction, which is 20% deduction for you of all your income. So that's a huge deal. But if you're not paying out salaries, if all your, your employees are 1099 and you're not paying yourself out of salary, you've lost that opportunity. And so that's a huge mistake and it's a simple mistake to fix. That's the great thing about it. Those two things are both really, really simple things that can save a ton of money on your textbooks.



Jay Conner (15:38):

I got you. So in addition to that, I know you've got a free report that you're going to offer of the audience here in a moment. And that free report I think is titled the three biggest mistakes in 2019 that real estate investors either guilty of or whatever,



Marcus Crigler (15:59):

Yeah, the three mistakes real estate investors make on their taxes is, is, and it's from 2019 I wrote this right after the 2019 tax season was over with and just kind of compiled three big things that I saw real estate investors mistake. Both of those things that we just talked about are all in there. It goes into a little bit more detail about what you need to know about those and how that kind of fix those problems going forward.



Jay Conner (16:21):

Alright, well before I ask you another question, let's go ahead and give out your contact information mortgage as to how people can go get a copy of that report and how they can continue the conversation with you.



Marcus Crigler (16:33):

Yeah, absolutely. So the easiest way to reach out to us is Duckettladd.com it's our website. On the website you'll have a little button that says, are you a real estate investor? You push that, it's going to take you to our real estate investment page. And you can see everything you want to know about us as a firm, as far as real estate investors. And on that page you also get the opportunity to get that free guide throw in your email address. We're not going to spam you with a bunch of stuff. We don't actually even have an email campaign going, but it's just so opportunity for us to kind of get ahold of you and reach out to you if we have some cool things going on.



Jay Conner (17:08):

Alright, so we've got viewers and we got listeners here on the show. So let me make sure I got this right. So your website is www.DuckettLadd.com. Correct?



Marcus Crigler (17:26):

You got it.



Jay Conner (17:27):

Alright! Super! Well everybody, you definitely want to take advantage of getting on over there to that website and getting that free report. So Marcus, so you've got real estate investors as clients, pretty much all over the nation, right?



Marcus Crigler (17:41):

Yes. That's accurate.



Jay Conner (17:42):

Right. And so tell everybody where are you located?



Marcus Crigler (17:45):

Yeah, I'm in Springfield, Missouri. Which, you know, most people probably have heard of Kansas city, no not there. No where near Kansas city's at. We're about two and a half hours South of Kansas city. We're an MSA of about half a million or so.



Jay Conner (17:58):

Gotcha. So let me be the devil's advocate for a second. So you got clients all over the nation, so clearly you're going to be able to help people with the federal return. And of course you can coach them and consult them on, you know, the cash flow and saving taxes. But how do you work it when they're needing to file their state taxes? How does that work?



Marcus Crigler (18:23):

Yeah, that's a great question. So, just as you kind of alluded to, we do have real estate investors all over the, all over the country. So we do have to file a number of state returns. Matter of fact, I believe we have a state return in every state except Hawaii and Alaska, which I wouldn't mind doing one at Hawaii. I'll specifically go to that client to see them. But yes, so we have experienced in just about every single state. If we don't for whatever reason or if we need to learn a little bit more about it, we've got a great group of tax professionals that can do a little dig and do a little research plus, you know, to be honest with you, we have a, we pay a good amount of money for our tax software that also helps guide us through these States and these various States in the intricacies of every state, that kind of stuff.



Jay Conner (19:10):

Gotcha. Now when you're working with your clients, you know, with you being there in Springfield, your, you know, your meetings that you have with them, I mean, did you all get together in person or do you have throughout the years, zoom conference meetings or you know, how do you communicate with your clients?



Marcus Crigler (19:28):

Yeah, it all depends. Mostly zoom, video conferencing, very similar to what we're doing here. Most people, that's their preference anyways. Even if I was in their town, they would rather you kind of sit in their office, in their, you know, in their location that they're comfortable with. And be on a zoom and we can pretty much accomplish everything possible on that. Longer meetings. When I do strategic planning full days, one, two day meetings, we usually do that in person and that can either be in our, in Springfield, Missouri, we have the ability to host that or sometimes I go out to clients. It just kind of depends on the situation.



Jay Conner (20:04):

Excellent. Excellent. Alright Marcus, well we're out of time for this show, but any parting comments you'd like to share with the audience?



Marcus Crigler (20:12):

Yeah, Jay. Well, I just appreciate you having me on here and I hope that you know, we're in, we're in 2020 now tax season is here. I hope everybody has been able to do a little bit of tax planning and you know, they don't have any surprises on their tax bill. And then like I said, I just appreciate you having us on here and I really appreciate what you do for your audience. I think it's just fantastic that kind of value you give out for free, which is even more incredible. The kind of free value that you give out. I just have certainly respected that



Jay Conner (20:40):

You bet, you Marcus. Well, I appreciate you, Marcus. I appreciate our friendship and our time that we have together the mastermind. So everybody, again, take advantage of that free report and reach out to Marcus at www.DuckettLadd.com Well, I'm Jay Conner, the private money authority. Thank you for tuning in. Be sure and not miss out anymore of the episodes we have coming up. So if you're on iTunes, be sure to rate or subscribe, rate and review. If you're on one of our YouTube channels, be sure and subscribe there as well. So we look forward to seeing you on the next show. And here's to taking your real estate investing business to the next level. Bye for now.

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