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Real Estate Investing from the Ground Up
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Wednesday Oct 18, 2023
Wednesday Oct 18, 2023
David Richter is a former real estate investor who now runs a fractional CFO business for real estate investors. He started his CFO business because he saw a need for real estate investors to have a better understanding of their finances.
Richter believes that it is important for real estate investors to know where their money is coming in from, where it is going out to, and how much they are keeping. He says that this information is essential for making good business decisions.
Richter also believes that it is important for real estate investors to have a system in place for managing their finances. He recommends the Profit First system, which is a way to allocate money to different areas of your business, such as taxes, profit, and operating expenses.
Richter says that the Profit First system has helped him and his clients to become more profitable and to have more control over their finances.
- Richter says that many real estate investors are struggling with their finances because they are not taking the time to understand their numbers. He says that it is important for real estate investors to know where their money is coming in from, where it is going out to, and how much they are keeping.
- Richter also says that it is important for real estate investors to have a system in place for managing their finances. He recommends the Profit First system, which is a way to allocate money to different areas of your business, such as taxes, profit, and operating expenses.
- Richter says that the Profit First system has helped him and his clients to become more profitable and to have more control over their finances.
Ryan Goldfarb (00:05.322)
Welcome back to the Brick by Brick podcast. I am John Errico here as always with Ryan Goldfarb today We are extremely excited to have a special guest David Richter David is a many was many hats but
is also a podcast host as we are for the profit first for our podcast right i have appeared on david's podcast i don't know when that will be released relative to when this is being released but please check us out on that podcast and check out the podcast in general uh... is great information but david uh... first of all welcome thank you for being on our podcast yeah thanks for having me and always it's always a pleasure to get on and spread the message as much as possible so they want to start uh... if you could give us sort of the high level of
review of what you currently do and that I would love to kind of drill down into your career, how and why you are doing what you're doing and then branch off from there. So currently
I'm the author of Profit First for Real Estate Investing, a book out there for the real estate investing community. But I also run a fractional CFO business, so part-time chief financial officers, because everyone has a sucky bookkeeper in CPA usually, and they don't have anyone to be the glue there to actually say what's actually going on the financial side. So where are they making it, spending it, and are they keeping any of it? So that's what we really focus on to make sure people are keeping more of the money that they're making.
That's what I'm into right now and trying to spread the message of profit first as well too. Just making sure people make profit a habit inside their business.
Ryan Goldfarb (01:41.174)
That's awesome. So I would love to hear how that I, you know, I believe if I'm not mistaken that your path to that involved real estate, right? Owning real estate, closing deals, wholesaling, et cetera, et cetera. I would love to hear a little bit about that, that journey. First of all, do you have a background in finance? Is that how the CFO fractional CFO business kind of generated? If you can see me, I don't know if people are just listening to this or can see me. I know I look like I should have a background in finance and then I have a
I'm a fractional CFO company, but I have zero background in finance. I wasn't a bookkeeper, wasn't a CPA, didn't get my accounting degree or anything, but I run a fractional CFO firm. But the reason I did, I started that because my background is as a real estate investor. And so I started about 10 years ago, bought my first house on 12, and have never looked back. I read Rich Dad, Poor Dad, someone gave me that in college. That's what changed everything for me and my mindset. So it was a very typical story there.
Ryan Goldfarb (02:41.408)
The deal flow from about five deals a month, about 25 deals a month, doing wholesale, fix and flips, turnkey, rental, short term, long term, everything in between, lease options, subject to deals. I got to learn a lot in the five years I was there. And then one of the things I did learn, I did get to sit in a finance seat there even without a financial background because they must have looked at me too and said, you should fit in this seat. But then I sat there and I was like, okay, now that I understand because I literally sat down with our CPA for like six months and said, tell me everything.
Like I want to understand how the money flows through here and what does all these mean on the profit and loss, the balance sheet, everything. Once I had that, that power in my hands, I could like tell the full story because I had worked in sales and acquisitions and selling the properties and property management and a lot of different seats up to that point. And now I understood how the money flowed through and if we were profitable or not. So I'm like, this is good stuff. But then at the same time, we were doing 25 deals a month, but spending 26 worth out the door.
This is not working. So that's where it was like, okay, this sucks. So that was my first eye-opening experience to where it didn't matter that we did more deals that we had grown that much. If we weren't gonna keep more of it on the way up too, then I would go to these other events and hear on like different places, like whether it was a mastermind or a meetup or whatever, that people were like, oh yeah, we just did our most deals ever. We did a million dollars last year, whatever it might be. And then they're crying at the bar later.
because they're like, yeah, but I don't know where any of the money is. You know, like, all the money goes in, money goes out. Have no idea what's going on. I just kept hearing that story over and over again. Then I moved across the country after five years of working there. I moved to Virginia, started with another guy, and since I had the power of seeing the numbers on the back end, I immediately asked him like...
I don't care anything that you tell me how many deals you're doing, what's coming in, I want to see your books. Like I want to see your numbers. The numbers will tell your story." And he didn't have books. Like I mean he had books and a bookkeeper, but they weren't real estate investing bookkeepers. So it was like it was a mess. Like the story that I got was just a jumbled mess where I couldn't read it at all. So I'm like, we have to clean this up. We have to get it to where you know and are very confident. What are you making, spending, keeping?
Ryan Goldfarb (04:55.642)
on a monthly basis, like I need to get that. So got that within three months. And then from there, I wanted to make sure that he had a good system to like, you know, know where all the numbers were. So then we went through and was like, here's where all your cash is, it's in your rentals. Like it's over here because he had bought a bunch of rental properties and all of his equity was tied up there. He only had like 30% loan to value. So it was like, that's where all his money was. So that's where now I was able to just help him understand where the money was. So to me,
He said to me at that time, just knowing what I make, spend, and keep, then from here also knowing where the money was going inside of my business has been life changing because now I can make better decisions around my money. So that's where to me I felt called to do the company that I have today, to start Simple CFO because I'm like I have a real estate background but so many people I know are struggling with they think income.
solves all problems and it's like we're not taking the root cause and really knowing what's going on. So that's where I'm like. Yeah. So there's a lot there. Yeah, a lot. So thank you for that. Yeah, there's a ton of unpackers. So my initial impressions, first of all, I hear that. That strikes a very chord with me about money coming in, money coming out. One of the things I was shocked before I went into business for my own at all, right, is I worked a normal job.
probably like most people have at some point in their life. And when I went into business, I sort of had this naive assumption that every business that I had interacted with before as a W2 earner or would start, knew exactly how much money they were making. They had everything buttoned up. It was just this kind of magic thing that every business had. And I was shocked to realize that even something like.
For example, as we talked about in this podcast, Ryan and I have operated and currently operate a construction business, right? But even determining something as, shall we say trivial, sounding trivial, sounding as saying like, did I make money on this construction project, right? Period, like as a general contractor, right? Did I pull in more money than what I made? That itself is not.
Ryan Goldfarb (07:09.346)
One, that's not a trivial question, and two, if you ask general contractors, no one knows the answer to that. That's like, I don't know, maybe. And if so, how much? Did I make a lot? Did I make a little? Is that good? Is that bad? I don't know. We encounter that a lot. With our affiliated businesses, for a construction company, it doesn't really matter how much we make, because we don't really take any money out of that business. But even something like that is, it's like,
It's almost like forensic accounting type of stuff, right? It's like going back being like, well, I bid this up and then I had this over to this and that and then I rented this car and that was kind of for this, kind of for, you know, it's just like, oh my God. Yeah. So I feel that pain a lot.
And then the secondary question to that is, if you made money, was it worth all the time? Exactly. Yeah. Yeah, exactly. Very much so. One thing that you said that I found interesting and I want to drill down on too is, when you were doing real estate investing and now you're kind of
interfacing with real estate investing, I'm sure you're still investing, but interfacing also with other investors in a different way. Is it the case that...
A topic that comes up a lot in real estate investing is, do I make money through cash flow, through rental, revenue or whatever, or do I make money on appreciation? Why am I doing it? Am I making money so I don't have to work a day job? Am I making money so that I can retire? I think that those distinctions are pretty important, and I'll just say candidly from my own experience in real estate, I've made money through cash flow, through rents.
Ryan Goldfarb (08:51.412)
a lot of my real money, like the money that I would actually go into real estate for from like selling properties, right? Like from appreciation. So I wonder what your, A, what your background for the five years that you were working in this company was with that and B, what are your opinions on that today? Oh, sure. So back then I was buying my own rentals and I like the cashflow game, but I also like the appreciation game as well too. I mean, my first house was a home run where I like rented it out, then lived in it for
a lease option on it and then the tenant cashed me out six months later so there was like no capital gains because of the tax law. This was a great deal. I got everything from it. I got cash flow, I got rent, I got the lease option, then I got the actual cash out. So that's where in the business too we were doing a bunch of different exit strategies. So we were doing wholesale and flipping and rentals and so I liked all of that so we had a mixture. I also feel like too at that point, one of the reasons why we were doing 25 deals but
too unfocused. We had too many exit strategies, so it was too much overhead and the people that we had to employ to do the different types of exit strategies and growing that big. So I feel like that was part of the downfall. If I had my way, we would have kept growing the lease option portfolio we had. We had about 80 lease options in Indiana and like a
Michigan area and then we had about 20 year long term rentals and the lease option properties were really good and because this was like 2014, 15, 16, a lot of people still couldn't get a loan or because of the bankruptcies of 2008, 9, 10. So it was like we were helping people that were good people that just couldn't go out there and get a mortgage at that point. So it was like I really like that and they paid better as well too because they had an option to purchase the property. They had first rights to purchase it. So it was like...
We did a lot of good stuff back then. So that's probably what I leaned a little bit more towards because it was, you got the cash flow, but then you got the option.
Ryan Goldfarb (10:48.234)
to sell it to them as well too. And then to capitalize on that appreciation at some point of like, okay, I know I can at least make this much on this house and lock that in and maybe give them a good deal if it does keep appreciating, they're going to have some equity too. So I felt that was a win, win. Then in today's market, I am all about what is the best thing for your business? What can you capitalize on and be intentional about? That's where even when we were talking on my podcast and Ryan, I had asked him, I had
you like you've done a lot of things in real estate like why'd you pick the different things that you're doing it's like Finding what doesn't work, you know Like what doesn't work for me because like what you can do and your expertise is gonna be different than someone else's So I feel like in today's market, of course with higher interest rates It might be difficult to do like the burr strategy as much as you were doing it a year or two ago So it's like some of those strategies you're gonna just have to pivot into something different Maybe subject to is a lot better acquisition strategy at this point because maybe you could get one of those two three four percent
that someone has locked in so you're so that way you have more options when you acquire that property to can I sell this can I just keep it because it's such a low interest rate and then I could do a short-term rental or a long-term rental on it Or like whatever it might be but there's just it's you know Just in this environment with a higher interest rates it the strategies just change. So that's why I also like
teaching the proper first methodology to because it's like it no matter what the market does elisa don't have to worry about even if it crashes you'll still have cash you'll still be okay you just have to pivot to what works for that market and what you do as well to because a lot of people can make it just making sure you're keeping is as well so that way you can you're not going down when everyone else is you know it's jumping ship on the titanic so let so let me take you to the moment we decided to start simple cfo
You know, you obviously, so that's a business, right? That's its own venture. Did you think?
Ryan Goldfarb (12:50.21)
Maybe the way I envision that you might have started is you said, I see this problem that you describe, which is that from my own experience, it's this problem that no one knows where their money's going in real estate, which absolutely is a problem. Did you then go and say, OK, I can solve that by being a consultant. I can solve that by starting a business that has a process. I can solve that by offering, like selling a good. I know that you've also given the book that you mentioned and all of that. What was the, how did that come to be?
I guess and what were your thought process behind it? My first thought process was just going into these businesses and do the same thing as I did with that first guy and say like, okay, here's where your money is going and just giving them that clarity. So more of consultant.
I guess from the beginning, even though I didn't even think of it then, I was thinking more I want to create a business eventually and have systems and processes. But I got a call from my mentor and I called him and had a good conversation when I first started it and told him what I was doing because he was in the real estate world and coaching and consulting but he was doing it for operations and not the finance. So I was like, hey, you see a lot of businesses. Are you seeing the same things that I am? And would this be a …
a good business to start. So I had a good mentor who was like, yes, I could even refer people right away to get in there. So that was a good in and a good confirmation. But then he told me the biggest piece of advice that I'm still using today. He said, you need to read the book Profit First. If you're going to start a financial company to help them, it's a great framework. So I read that book that evening when he told me, took 10 pages of notes and said, this is incredible because it speaks to me as the entrepreneur.
And like this, you don't have to be a numbers person or a financial wizard or guru, like you just, or have any accounting degree, but this system will help you know where the dollars are going in your business. So that's when I started incorporating it. So there was like that product as well of like implementing a cashflow system with an actual framework that Profit First teaches. Then eventually once I was implementing Profit First for about a year, I went to Mike Mikalowicz, the original author of Profit First and said, I have a real estate background.
Ryan Goldfarb (15:02.474)
And now I've implemented Profit First successfully and see people going from like out of business with their hair on fire to like nice, orderly, calm, have money in the bank, you know, and like actually see that transformation. So I just asked, could I write Profit First for real estate investing? That's how the book came to be as well too. So then from there, I knew I couldn't just be a consultant anymore either, like it was just me because I was going to have too many requests to work with us because of the message that we were getting out there. So that's when it started scaling as well.
started bringing CFOs on the team and just growing from there. So that's kind of how the progression went.
you know, of like that metamorphosis of the business. So what is that business look like right now, that simple CFO business? Is it how many people do you employ? Like how is that structured? How does that work? So we have about 25 CFOs, have a leadership team of six people, and then work with over 100 real estate investors on a monthly basis where the CFOs are going in there and helping them make real decisions on the money and just get a good, we call it the very first 90 days, we call it laying the financial foundation.
the one on one stuff you need as a business owner, like getting the cash in order, getting your books so that you can get a clean P&L balance sheet, cash flow statement right from the beginning. We implement a dashboard with all of our clients that's customized to their business. It's a simple Google sheet, because we want it to be very easy working back and forth, but it's tailored to the real estate investing industry. So that's what they get up front.
And that's where I'm just trying to get them to know three simple numbers. What are we making, spending, and keeping on a monthly basis? And which dials do we need to turn?
Ryan Goldfarb (16:38.582)
Are we not making enough or are we spending in the wrong areas? Like, do we get to keep any of it? And like, or is my hair on fire in my personal life? Like, I can't keep living like this because usually like we've talked about here, people think income is always the answer, right? More income solves all the problems. And then they get to six figures, six, you know, then the 500,000 mark and then the seven figure mark. And it's like, the problems are just that many zeros bigger. And it's like, that's where the true financial freedom comes from knowing I can also make the money.
keep it as well too and have a system for it. So that's what we're trying to impart to people, is helping them become that savvy business owner. And that's what the business looks like today. That's great. What is the average profile look like of your clients in terms of real estate experience, scale, financial experience, et cetera? We have two main programs. We have one where we just lay the foundation. So if you've done five deals or less, we're usually, that's where you are. You know, like you've, you're starting to ramp up.
but you're like I need the foundation but I don't need other things. So that's where we have one but the one that we work with the people the most is when they're either doing five to ten deals on a yearly basis or up from there. So usually that's 200,000 in gross profit a year or up and then probably five million and down because once you hit five, seven, ten million depending on what type of business you have and the margins that you have.
Then you can have a full-time CFO, which we've actually graduated some people out of the program of the part-time CFO to a full-time CFO But that's kind of like the client profile But then we in the real estate world we work with since my background is real estate investing We work with a lot of people in the single-family side where it could be short-term long-term Could be the you know rentals it could be also the fix-and-flip or wholesale We work with some multi-family some with debt funding, you know and have the big funds that they put together So there's a lot of different types, but a lot of real estate investors
what about ten percent is other businesses usually because the real estate investors have the other businesses like we have a jet ski rental company like just some random stuff that they have as well and then we work with some marketing coaches and stuff like that as well too but that's kind of like what makes it up now and like who we're trying to serve do you see patterns I think it sounds like you have a lot of exposure to you know city of a hundred plus investors that you work with real estate investors work with every month you see patterns in those clients where it's like hey you know every
Ryan Goldfarb (19:02.864)
and flips is blank or whatever. Is that like the... Fix and flips, they're out of money all the time. They're usually either using their own or if they're using private money, they're getting into Ponzi schemes because like, hey, I've used project A's money already and it's gone and now I'm already on lender C for project A and then it just keeps going and going and going. So that's something we try and get people away from with this system and like, okay, how much money do we need?
versus how much is coming in versus how much is going out. I want people using as little of their own money as possible to be able to use to either grow the business or to provide a good life for them. So it's like, how much can we get from other people and does it make sense with the interest that.
You're paying them versus what you can pay out for yourself. For the flipping side, I feel like everyone's always running out of money just because they don't have a good system to know where every dollar is going. That's why I love Profit First because it solves that problem big time of giving every dollar a name in your business and being able to see it from a high level. I would say on the rental side that a lot of people over there, when they come to us, I feel like their hair's not as much on fire.
Ryan Goldfarb (20:29.325)
the
Ryan Goldfarb (20:42.846)
or even sell something on land contract or whatever one entry might be five lines worth but you don't have a real estate investor bookkeeper they might just market as income all income it's like well no
in order to get the best tax strategy here. We need to put it to where it goes and to be compliant as well too. Not to mention just that, but that's where as well. That's a lot of the things. Everyone who comes to us, I would say, and probably 97% of the entrepreneur community just don't have a grasp on the business finances because a lot of us in our personal lives never got this. If you went to a Dave Ramsey course or a Red Suzie Orman or some of those people, you're probably ahead of most people.
if you follow some type of personal finance program but a lot of people have it or they've made their ever at rich at port at but that's not a good enough education to know what to do with the business finances
So it's like, I feel like that the business finances are just personal on steroids. So like if you have good discipline habits and stuff in your personal finances, it usually translates to the business and we can get it under control faster. But then a lot of people that come to us don't have good habits in their personal life, so the business is a mess. And then it's like we have to unravel some of that.
plus implement the systems and habits that are going to help them for the future. So everyone, no matter what side of the fence they're on, the long term or like the fix and flip or whatever, most of them come with one of those two in their background as well too. But those were some of the things that I've seen from specific niches.
Ryan Goldfarb (22:11.022)
Do you see, how do I say this? I feel like the nature of the problems, as you said, can be driven by any of those three buckets. Does it tend to be more of people having a liquidity problem or is it oftentimes more of just an underlying profitability problem where they just, they're doing that as just something that is fundamentally not profitable? Yeah, I was gonna say it's usually that. And usually that's driving the liquidity problem.
It's like fundamentally they don't know how to be profitable and there's so many reasons for that in the past whether they've not No one usually talks about it like I do where or like the profit first message talks about the financial usually It's someone boring, you know It's like someone that's gonna put him to sleep a bookkeeper a CPA who talks about the stuff That's not relevant to what's happening in the day-to-day business. That's actually gonna help them
That's where a lot of people just don't have that background or that knowledge. So it's like, can we just give this knowledge at a base level? That's what drove me to profit first and why I preach that message so much, because it's such a simple system and message where it's like, I can understand this, get a good system in place. And at least that's one step closer to profitability. Like knowing that the business is profitable. Cause I say this a lot that the
purpose of the business is to be profitable. So many people lose sight of that and become an accidental nonprofit. It's like, please don't become that. Be intentional about where the dollars are going. Become a profitable business. Your purpose might be different. We were talking about on the podcast when you came on with us that you want to make an impact in Atlantic City. You want to make the nice things and the dollars and cents are really nice, but then it's making sure also that you're...
living a fulfilled life and you're actually helping people and getting that out there as well too. So it's like you're not able to do that if you're always just running around with your hair on fire, worried about the money. Where's it coming from? Where's it going? You can't put as much emphasis on your purpose if the business's purpose of making money is not happening. So that's where we just talk about that a lot. So that was a great question because most people's underlying problem is they just don't have a profitable business and don't know how to drive.
Ryan Goldfarb (24:22.37)
profitability and the margins and the safety net and getting that all in place. Yeah. When you, when you get to the point of having, sorry.
Ryan Goldfarb (24:32.586)
So when you get to the point of having something that at least has the foundations of something profitable, I assume the next step once you've checked that box is to understand how you're going to maximize that profitability or sustain that profitability. I assume there's a pretty substantial kind of planning and budgeting component to this. Can you speak to that and how you guys try to address that need? Sure. So that's where we drive. Once we get the baseline
which is like the envelope system, but for businesses. You can pick up the book and it goes into great depth there. We can talk about that a little bit if we want to, but then also we set up that dashboard, and that dashboard drives the rest of the conversations. It's like, do we need to focus on make, spend, keep, because we want to make sure you're keeping enough because those keep numbers of like, what's the profitability, what are the owners taking, do we have enough for taxes next year, and we're thinking about it this year. Like those keep buckets, like are we making sure
And if they are on track, then we get to talk about, are we spending the money in the right place, or are we making enough to keep the keep buckets filled? You know, like making sure that we have enough for ourselves and for the business to be profitable. So yes, it's like setting up that system, but then all the conversations are driven around, how do we make sure that those three are in alignment, what you're making, spending, keeping, and maybe you say, it's time to scale up.
So you say, I still want to be profitable, but maybe I have to take some percentage points from profit and put it towards OPEX, but then you're still making sure you have profitability. So that's the thing too. You're just protecting that at all costs, even though you might be intentionally taking a little bit less profit, but then you're still putting towards that for a new hire or a new system or whatever. But then at least now it's intentional.
versus what most people do is build their business on the hope and pray plan. I hope I make enough and I pray there's some at the end of the year. It's like now I know what I need from my business and I'm gonna aggressively attack that and if I'm going to make it, you know, like take some percentage points from profitability, I'm going to put them towards OPEX but I'm still going to have.
Ryan Goldfarb (26:37.298)
at least this amount of profitability, even if it's a lower percentage than it was, because you have to protect that. So that's what we do with people, and it depends on what they want to do. Some people, we've worked with some people, they finally get profitable, and they're like, yeah, maybe I don't want to scale, because it's really nice having a lot of this profitability come to my pocket and be able to be where we are, and it's not too much headache now. We had one guy who was trying to do three to four deals a month in 2019.
And then at the end of that year, he lost $70,000. Like a CPA told him that. And the CPA said, it would have been better for you to work at McDonald's. You know, like then your real estate business. And he told me, this was the year I did more deals than ever and lost more money than I've ever lost. And that's where I'm like, oh my gosh, like just having a system like this can turn around. So he's still with us three years later. And last year, with the system and everything, he had all of his accounts and like everything for his business for the rest of the year by June.
Meaning he funded his whole entire business like the operational expenses his profitability goals The amount he wanted to pay himself by june of last year Because he had a simple system to know where every dollar was going to know where those dollars were and being able to direct them He even gave from one account last year $70,000 to a camp for kids like he set up a giving account and that's where he was like two years into this He was almost like where was this money going before?
You know, like, because in the last three years, he's done less deals than he did in 2019. So he's done less deals, yet he's had more money in his accounts because he's been more intentional with every dollars going. That's where I became a believer, like through him and other stories that I've seen through him and like through other people now of like, it doesn't really matter as long as you're making a certain amount of income.
it really doesn't matter how much you're making it really depends on how good are you at catching those dollars on the back end because you're probably missing out i'm not only you know the money that you could be make it there the opportunity cost but then like just all the stress and headache comes with that and not being able to fulfill it so that's where feel like a lot of people get into that group of just it's just the income let's go after the income let's keep going but that's where see a lot of people that have that
Ryan Goldfarb (28:52.704)
I mean, we actually did a podcast episode recently on, which has spawned a lot of things that we've been implementing. But our business, I think probably like many other businesses in the real estate space has relied on expanding, right? Buying more stuff, doing more things, whatever else. And the premise that we did this episode on was, well, what if we could buy no more properties, do no more things? We just had our current portfolio of stuff. What would we do to really...
maximize essentially the portfolio of assets that we had. And we brainstormed collectively about it. And it was a really valuable exercise for us. And we've ended up implementing some of those things. It was like, well, yeah, we could capture more bookings. As I think I mentioned on your podcast, we have this direct booking website for our fundamentals in Atlantic City. That idea was born out of that conversation. Because we're like, well, we're leaving a lot of money on the table.
you know, are the people that stay with us are spending, you know, double digit percentages to Airbnb and we're getting charged with Airbnb, 20% of the amount of money that is being spent is going to Airbnb, right? So like, how hard is it to start a direct booking website? We already pay for Gasti, right? Which offers that functionality. You know, how hard is that, right? So that, you know, that among many other ideas was sort of the genesis of it. And I think that mentality, I think when you're...
maybe more speak to myself but like you know like that kind of entrepreneur mentality always want like go bigger go faster go you know, whatever and I think that
works for some people, that works like if you're kind of, like a lot of startups basically it works for because they never make any money, right? They're just funding their operations with investor funds or debt or whatever. But the reality is that, I think to your point, David, if you don't have a foundation that actually makes you money for whatever reason, and it sounds like in your experience that reason is because people just have no idea how to manage those businesses, but you have a business that doesn't make any money at all,
Ryan Goldfarb (30:57.248)
that business or quadrupling that business is not going to make you any money, it's just going to quadruple the current situation you're in, right? I think one cool thing that you're doing, and this is something that has occurred to me a lot too, is that when a lot of real estate investors I find are...
You know, one way to look at a real estate investor is that you're just operating a small business. Your small business is that you buy real estate or whatever you do in real estate, that's the business. But like, you can say you're a real estate investor, but you're really a small business owner. You just happen to be operating in the real estate domain. And I think an issue that a lot of small businesses have, perhaps this is the entire premise of your company, is that I don't have the money to...
hire a CFO, right, like a treasurer, like I just don't have the expertise, I just don't have, like my business makes $100,000 a year, $300,000 a year, or whatever, like how am I gonna spend $100,000 in a CFO, right? And the same is true, I think, for, you know, my background as an attorney, like I'm not gonna hire an attorney, right, I probably make $100,000 a year, I'm not gonna spend $25,000 an attorney to do whatever. So I think, like, you can pile that up about everything, right, and so at the end of the day you get people that are.
these real estate investors, small business owners who have really, maybe they have expertise or whatever in a small domain and that's what they do, but they don't have the business acumen to actually run the business. So, having a fractional CFO business seems to make a ton of sense in that context. It's like, yeah, great. I can't afford to actually pay a CFO if I need that service. Yeah, exactly. That's why it was born. Because I was like, I don't want to be another bookkeeper, another CPA. I don't want to have that type of business.
that makes a difference in the business owner's life. And I feel like that's had to be a higher level service and something where we could talk as actual equals. Like if you're the CEO, we're the CFO, we're coming to you as being like, okay, you're gonna make the money? Like for the love of God, have a system to keep it as well too. And like, let's talk about that. So like that's where I, you know, this was born because now we could work with people a lot smaller than people that.
Ryan Goldfarb (33:07.19)
work with full-time CFOs. So it's like being able to actually work with a group of people now that have access to someone like that, but they don't need a full-time person. They only need that access to them on maybe a monthly, bi-weekly, weekly, depending on where they are of this is how much that they would need someone like that in their business life. And like you said, to get a lot of just the traditional like the...
business acumen of what do we do with the money and here because a lot of people just say like we've talked about it's the income like Let's just do more deals and then they end up living deal to deal even though they lived paycheck to paycheck before, you know It's like trading one rat race for the other. So that's where it's like, okay, let's slow this down Let's make sure we're getting to you to what your actual goals are A lot of people haven't even sat down to say what are their goals in their personal life? Like what do we really need from the business? That was that one guy that was seventy thousand in the hole
He was doing a great thing doing the three to four deals a month. The next year I said, after knowing what you need, because we go through this process of like how much do you need for your personal life and for your actual from the business. He figured it out. He figured it out in deal total and he said, I only need to do five deals.
I'm like, that's a lot different than three to four a month. Like you realize that, right? And he's like, that was just freeing to him of like, I don't have to work 80, 90, $100 weeks to do five deals this year. You know, five of these fix and flips and, you know, making sure that I close these. It was like, just having those numbers at the palm of your hand, you know, and right there at your fingertips to be able to say, okay, this is what, that's why, like I said, the fractional CFO, I wanted to give a cost-effective option for the people who couldn't go out there and hire a full-time, you know,
I'm a chief financial officer. So with your business as it is right now, I assume when you started, I'm guessing you had just you. It was just you in the business. Now you've grown to these employees and whatever else. What's the plan? Do you want to keep expanding? Do you want to keep growing? I'm assuming you're implementing the profit first stuff in your own business, right? So are you hoping to, would you want to get?
Ryan Goldfarb (35:16.734)
from a hundred to a thousand is that the goal or you know what what's the what's the end game the end game because yeah i love when people ask me this question because i'm honestly like i'm not sure how far i can take it i've got a i've got a background of faith so i'm like how far does god want me to take it before he says you're not the leader to do this anymore so like for me i want to keep expanding but i also want to keep expanding at a rate that doesn't blow up the business and i also want to expand at a rate that makes sure that we're helping the people that i can make an impact on
So it's like, is that the real estate investing market this year? Because we have a revenue goal for this year and over the next few years here. So probably in the next.
you know, probably three to four years, we want to be at like the 500 client mark, you know, so that's probably of a more realistic timeline over the next three or four years to be at there and working with that many on a monthly basis. But that's where I'm like for the long term, I'm not sure how far I can take it or like how, cause I've seen it. I've had to level up to from a six figure business owner, you know, like to the seven figures now. And it's like, okay, can I, what about being an eight figure leader? And then from there, how far can I take it once we're at eight figures? And like it, that.
how far do I want to take it to because I also have a wife and a daughter and I don't want to miss out because She's six years old now and I'm like, this is the best time of life I love six years old so like this is stuff that I also don't want to miss out on so I'm like how far do I really want to take it without giving up my you know, my family life as well to just throwing that all away I can relate. Yeah, I have a three-year-old and a one-year-old. Oh, yeah
Yeah, it's a fun time. Those are a bit fun. Yeah, I'm not going to say I miss those ages completely, but I love six. Six is amazing. Yeah, well, I'll let you know in three years. Yeah, I was going to say, just stick it out. Stick it out a few more years. It gets 10 times better. Do you still do real estate investing on your own, or has this consumed your... This has consumed the last three and a half years of my life, so this is what I've been doing for three and a half years, and so I sold everything back then. But now...
Ryan Goldfarb (37:14.774)
I'm actually working on some deals with my brother-in-law who just got married last year to my sister. He he's young, early twenties, but now I'm like mentoring him. He's doing a lot of the work going out there, talking to the sellers, that type of stuff, and I'm like, I'll fund the deal and make sure it's a good deal on paper and like that.
guide you to make sure we're actually making money in this thing and we'll set a profit first and we'll do all this to make sure that we're not running around like chickens with our heads cut off. So getting back into it finally again, because I felt like I was like my head down and was buried and now that I'm not doing the CFO work and I've got a great team and a lot of good people that we're working with, it's like now I can pop my head up a little bit and get back into it. But I've been head down focused. What are the constructs of most of your clients' teams look like?
one of their first hires or first main consultants that they would hire? Or do they generally have an existing team of some kind of COO equivalent bookkeeper and all that? Yeah, some of them have a small team. So they have maybe a bookkeeper and they have some of the people we work with have been solopreneurs. They're just making, in real estate, you can make great money. You know, like you could do a flip and do 50, 60, 70, $100,000, depending on the market, even wholesale deals that much. So it's like we work with some people that
man, woman operations, but then most of them have a small team. Some of them have had maybe operational consultants before. Now they actually need some systems in place and they need the right things and the right systems processes. But then we're usually the first one that made it where they're like, holy crap, we've never been talked to before like this on the financial side. Usually they have a bookkeeper or CPA, but never the conversations that we're having. So it's definitely a wake up call for a lot of people we work with of like, oh wow, we've
I love what you said about the question you asked, John, when you and Ryan had that meeting. How do we, if we weren't to take any more properties on, what do we do? It's like asking good questions like that. Questions that the owners sometimes just don't even know to think about to ask themselves. It's like making sure that they know, okay, what do the numbers mean? Yes, but then what are the questions that they unlock once you know what the numbers mean too?
Ryan Goldfarb (39:26.05)
What, what's the typically the dynamic between you and the bookkeeper or the CPA? Are you guys generally working in concert or is it more adversarial because you're trying to usually in concert because if the person hires us, they either have an issue with one of those people that they want us to either help or replace, or they come in and say, I have a great bookkeeper, a great CPA, but those are their lanes. They don't do the fractal CFO work. Can you work with them? And then we just help to manage that team. So it's more in concert than anything.
making sure that the stuff is flowing. But if we ever butt heads, it's like we go back to the owner and say, hey, we're butting heads here. Would you like to retain us or do you want to not retain them? Because they're not wanting the systems that we're implementing and this is for your benefit. So if it ever gets to that point, just bring the CEO into those conversations. If you, when you work with a client, are you generally working with them on a holistic basis? Like are you working?
them or are they bringing you on to work on, let's say their, their flipping business or their rental portfolio or like some subset of what it is that they do? Usually with the people that we're working with, it's if they, like a guy we just are working with right now, like he signed up today, he's got a wholesale and flipping company that are kind of like tied together and then rentals. And we're going to manage like both of those. So we want to do a rental analysis of his portfolio, but then we also want to see. He's switching from less to doing less flips and more wholesaling.
to make sure like as I'm doing this, like, am I going to still be profitable? Are we doing enough of the deals? Like are the margins still as good and like how many deals do I need to do to replace like if this is my average wholesale, just a lot of the numbers that he needed on that side as well too. So we'll manage both of those as well. Like usually it's all one price unless you get to like five, six entities that are doing like six different major functions, but like if you've got a selling business and you've got rentals or long-term or short-term like.
That's usually like, okay, we can manage both sides of that.
Ryan Goldfarb (41:27.61)
This is maybe a silly question, but do you encounter, I wonder, you know, Ryan and I encounter a lot of real estate investors in one way or another and like, you know, sometimes we encounter them, we're kind of like, how are you, like, how is this, you know, how do you make any money? Like, what is it that you, do you encounter businesses where you're sort of like, you look at the business and you're like, this is hopeless, right? Like, you know, your business makes no money and like, there's really, like, you know, the solution to your problem is like, stop doing this or do something vastly different from your current way.
of operating. I don't think we've ever had it be that drastic. We've had people where it's been a rough time period for them or we can see a trend that it's bad. And so sometimes we recommend pause our services, pause these other things because we're in that seat of like, which is a very unique seat in the business. We're not just a marketing company saying, just spend more dollars. It'll be better. You'll get more deal flow. We're actually saying, you might need to pause some of these things in your business, take a step back to be like, okay.
here's the next steps but not up to this point have we ever sat down and said like you just need a you need to rethink the whole thing you're doing what the worst scenario was two hundred eighty thousand i think in the whole for the last year when he thought he was profitable like he'd he didn't know it was that bad but and he thought he was in the black which was just
not a fun situation but within he we worked with him for two and a half years and he was able to get not only dig out of the hole but like be able to have money for taxes at tax time and like do all this stuff and it was just being able to direct the money better of like where okay you have enough that's coming in we just have to stop spending the areas that are not returning you anything and really spending where it should go so that's what that's one of the worst situations we've come across where even then we didn't
It was, he had some assets like rentals. So we were like, you might have to sell off some of the rentals that you've built. And he started crying on that phone call because he was like, you know, this has taken me, you know, a decade to build a lot of these rentals. And it's like, okay, we totally understand that. This, these are your options though. Like you could either sell some of these to get back in the black. You can do more of this wholesale, like this vertical here. Do you think you can hit this amount of, you know, properties or do you want to give up? You know, and like just turn it, turn the keys in.
Ryan Goldfarb (43:46.11)
so i for him he chose to sell a few the rentals state you know i go to only commission base for office you know the people the acquisitions people because he wasn't doing that before it's like to some big strategic things he was able to do start getting himself out of that hole did i know we are wrapping up here i wonder what if you want less personal different than what we're talking about for the people that are listening that are you know relating to what you're saying and what
is there from that profit first mentality methodology is there uh... overarching piece of advice that you can impart and say like you're something you do you know i mean i'm sure they can contact you is that something they could do but you know i did addition to that you have something they can do to you know to kind of like take control of that right now so the whole system and i didn't get into it as much in the nitty gritty but the whole system is based on you look at your bank account on a daily basis usually like most entrepreneurs do
and not at a QuickBooks system or something, because you'd rather stick your head in the sand or kick sand than do that. So it's like, hey, we'll utilize what you're already doing and set up the envelope system for your business, but with business bank accounts. So having accounts that are literally set up named different things like profit or owner's pay or owner's tax, making sure that the things that matter to you.
also have a bank account name for them and you can see where the money is. What's to pay the bills versus what's to pay me and to make sure that I'm okay, to make sure the business is okay, like having those types of accounts set up. So I would just say from this one, go from this episode, open one new bank account, call it profit and transfer 1% to it. Like start to get into the habit, then pick up the book and go deeper. Like what other accounts could I set up? What are the percentages that should go to these accounts? Like how do I know if I have a healthy business or not?
A lot of the questions I answer in the book as well too. And it's like that book, I don't make a ton of money off the book. I'm not trying to sell a million copies. I'm trying to get you a good system where if you're like, I'm just living deal to deal at this point and just I thought income solved everything and it's not and it never has for me, then like just get a simple system in place. But that would be like one action step they could take is if you're listening to this, open one account, transfer 1%, get into the habit of not spending everything you make.
Ryan Goldfarb (46:00.062)
of just being a profitable business, starting to build margin in. And if you're like, I can only do 1% at this time because we've been spending so much, how about next quarter? Can you do 3% next quarter? Do 5, 7, 10, 12, 15. Like that way you could start scaling up your profitability as well too, just because once you have a grasp on it.
This has been awesome, David. Thank you so much. How can people get in touch with you to learn more about the Fractal CFO business, about the book, about your podcast? What's the best way for people to reach you? One stop shop is simplecfo.com. Trying to make it very easy. So simplecfo.com. You can find the podcast there, the link to the book. And if you want to book a call, it's right there. No obligation. If we're not the right fit, we'll make sure we pin you to a good real estate investing bookkeeper or CPA or something like just to make sure that you have that piece buttoned up.
So that's where you could go, simplecfo.com. Awesome. Awesome, that's great. David, thank you so much for being on the podcast. We really enjoyed having you and we'll check back in. Hopefully, we were on your podcast. Maybe we can do a follow-up episode in like a year or something. Yeah, yeah, that sounds good. Great, and thank you all for listening to the Brick by Brick podcast. John, I'm here, John with Ryan. If you'd like to contact us, the best way to contact me is through email. It's johnjohn at libertyhudson.com. And I'm Ryan, R-Y-A-N.
Ryan Goldfarb (47:18.306)
We really love talking with our listeners, so if you can like us or follow us on whatever platform you listen to us on, that would help us a tremendous amount. Feel free to ask us any questions or comments for future episodes, and we'll be back next week with a new episode. Thank you guys so much.
Tuesday May 02, 2023
Tuesday May 02, 2023
BREAKING NEWS: John and Ryan talk about something other than real estate!
This week, John and Ryan plan a hypothetical 72-hour trip to Atlantic City.
Where will they eat? Where will they drink? How will they pass the time?
Tune in as the hosts discuss each of their preferred itineraries, including a visit to a newly reopened restaurant, indoor activities, outdoor activities, and more.
What would your ideal 72-hour trip to Atlantic City look like?
[00:00:02] 72-Hour Non-Real Estate Itinerary for Atlantic City
[00:03:24] Exploring Limited Dining Options in Atlantic City
[00:06:23] Planning a Day in Atlantic City
[00:09:29] Recommended itinerary for a trip to Atlantic City
[00:12:35] Ideal itinerary for a day in Atlantic City
[00:15:56] Day and Night Plans in Atlantic City
[00:19:05] Exploring Atlantic City and New York City
[00:22:00] My Ideal Summer Day in Atlantic City
[00:25:25] Weekend Plans in Atlantic City
[00:28:37] Ideal Activities for a Day in Atlantic City
[00:31:40] Dining options in Atlantic City
[00:34:26] Redefining Atlantic City Beyond the Casinos
[00:37:23] Exploring Food and Culture in the City
[00:40:24] Things to do in Atlantic City
[00:43:14] Summer Activities in Atlantic City and Beyond
[00:46:21] Things to do and eat in Atlantic City
[00:49:09] Lack of diverse dining and family activities in Atlantic City
[00:52:04] The Need for More Amenities in Atlantic City
[00:54:58] Creating a Vibrant Commercial Corridor
[00:58:00] The Future of Atlantic City's Amenities
[01:00:55] Updates on 'Brick by Brick' Podcast
Tuesday Apr 25, 2023
Tuesday Apr 25, 2023
This week, John and Ryan introduce their largest project to date -- a 48-unit condo building in Atlantic City called La Renaissance. The duo details the challenges they face in every phase of the project, from pre-closing obstacles to mechanical systems and everything in between.
[00:00:02] Renovations of Atlantic City Condo Building
[00:03:49] The Deterioration of a Timeshare Building in Atlantic City
[00:07:34] The Complexities of Buying Big Buildings
[00:11:20] Acquiring Title for a Challenged Building
[00:14:22] Purchasing Property Without Inspection: Renovation Challenges
[00:18:18] Challenges of Renovating a Tall Building
[00:21:44] Renovating a commercial building with complex systems
[00:25:18] Navigating Complex Building Systems
[00:28:50] The Cost and Condition of Elevators
[00:31:52] Renovation Progress Updates
[00:35:18] Renovating a Large Building for Short Term Rentals
[00:38:28] Designing a Unique Hotel Experience
[00:41:42] Challenges of Renovating Large Building
[00:45:19] Determining Cost Basis for Building Renovation
[00:48:45] Leveraging contractor bidding for better pricing
[00:52:11] Considerations for Occupying a Building
[00:55:34] Challenges in Construction Project
[00:59:00] Water Penetration Issues in Atlantic City Building
[01:02:00] Handling Stress and Excitement in a Project
[01:05:04] Year in Review and Building Updates
Tuesday Apr 18, 2023
Tuesday Apr 18, 2023
Hosts Ryan Goldfarb and John Errico are back to discuss the benefits of creating their own direct booking website for their short-term rental properties in Atlantic City. Tired of relying solely on third-party platforms like Airbnb, they aim to increase their control over their business and provide a better guest experience. Through their discussions, they cover topics such as RevPAR, pricing strategies, marketing initiatives, the importance of a domain name, and collecting email addresses.
[00:00:02] Direct booking website for Atlantic City rentals
[00:04:06] Improving RevPAR through Direct Booking Platform
[00:07:17] The Power of Direct Bookings
[00:10:31] Benefits of Focusing on One Geographic Area
[00:14:01] Measuring Vacation Rental Marketing Success
[00:17:08] Benefits of Dual Property Management/Ownership Model
[00:20:25] Pricing Strategies in Vacation Rental Industry
[00:23:51] Pricing and value issues on Airbnb
[00:27:13] Maintaining Quality for Airbnb Rentals
[00:31:14] Benefits of Using Guesty Channel Manager
[00:34:39] Benefits of a Suitable Domain Name for SEO
[00:38:03] Marketing approach for vacation rental properties
[00:41:30] Email Collection Strategies and StayFi System
[00:44:39] Maximizing Existing Resources for Atlantic City Rentals
[00:47:36] Importance of Quick Decision Making
[00:50:39] Special Offer and Call for Guest Suggestions
[00:53:44] Podcast hosts encourage social media engagement
[00:03:49] By taking control of the distribution, we have an opportunity to do things like increase ultimately increase our RevPAR, which is the primary metric by which we gauge the revenue or monitor revenue of argument properties
[00:05:41] This is an opportunity for us to really showcase our properties, the quality of them, showcase the experience and attention to detail and focus on hospitality that we've been building out over the last few years
Having additional levers to pull from a promotional standpoint, including videos and more information, is hugely valuable and something that Airbnb doesn't like to show
[00:13:11] An advantage for us is that we can offer a discount to our Airbnb pricing and still ultimately make more money
Tuesday Mar 21, 2023
Tuesday Mar 21, 2023
What could we do if we couldn't buy any more real estate?
In our long awaited return to the airwaves, we debate a life-altering hypothetical.
Would we even want to live in such a world?
[00:06:37] Maximizing Distribution and Advertising for Direct Bookings (AtlanticCityVacationRentals.com)
[00:10:21] Optimize Space
[00:13:39] Stimulate Off-Peak Demand
[00:17:25] Planning Unique Experiences for Workers and Special Events
[00:28:02] Budgeting and Cost Controls
[00:31:19] Grow PM Company
[00:38:14] Maximizing Side Businesses
[00:47:57] Using Occupancy and Pricing to Maximize Profit
[00:50:55] Debt and Debt Management
Thursday May 12, 2022
Thursday May 12, 2022
In this episode, John and Ryan discuss the hidden gem that is Atlantic City with former Mayor of Belmar and CRDA Executive Director, Matt Doherty. They dive in the impact of casinos in AC, real estate opportunities, and why it is high time to invest in Atlantic City today.
00:00 Intro
05:35 Role of Government in Private Investment
07:43 The Hard Truth of Redevelopment
12:51 Flip Side of Rooming Houses
14:00 Real Estate Opportunities in Atlantic City
18:37 Why Did it Take Long for AC to Flourish?
23:58 Why Invest in AC Now?
32:14 Matt's Time in CRDA
33:58 The Domino Effect of Improvement
36:21 Are Casinos PRO Atlantic City?
39:37 Transportation Issues To & From AC
44:46 Diversifying Neighbourhood Amenities
47:40 How Involved Are Casinos in City Development?
49:51 What's Next for Matt Doherty?
Podcast Channels:
🎧 Spotify https://tinyurl.com/56z3tk78
🎧 Apple Podcasts https://tinyurl.com/bdhwrxj7
🎧 Google Podcasts https://tinyurl.com/yabdwv38
Connect with us!
▶︎ www.facebook.com/brickxbrickpodcast
▶︎ www.libertyhudsonsolutions.com/podcast
▶︎ www.facebook.com/LibertyHudsonCapital
▶︎ www.instagram.com/libertyhudsoncapital
Monday May 02, 2022
Monday May 02, 2022
John and Ryan re-visit the existential challenge: balancing working "IN" their business vs. "ON" their business. While they have a long way to go, they've made substantial progress in the 28 months since they last discussed this.
Catch up and listen to Part I from 2019 here: https://tinyurl.com/bdexzcmm
00:00 Intro
01:46 The Genesis of Our Partnership
04:32 Working Evolution
05:34 2019 vs. 2022 Business Scale
13:53 Personnel = Business Growth
36:39 Advantages of Hiring Virtual Assistants
42:21 Tech Upgrade = Business Growth
46:14 People Management
51:40 The Small Business Paradox
54:18 Leadership Aspect in Business
57:50 Outro
Podcast Channels: 🎧 Spotify https://tinyurl.com/56z3tk78 🎧 Apple Podcasts https://tinyurl.com/bdhwrxj7 🎧 Google Podcasts https://tinyurl.com/yabdwv38
Connect with us! 📩 john@libertyhudson.com 📩 ryan@libertyhudson.com ▶︎ www.facebook.com/brickxbrickpodcast ▶︎ www.libertyhudsonsolutions.com/podcast ▶︎ www.facebook.com/LibertyHudsonCapital ▶︎ www.instagram.com/libertyhudsoncapital
Tuesday Apr 26, 2022
Tuesday Apr 26, 2022
John and Ryan discuss the short-term rental market drivers and discuss their approaching to evaluating new markets for investing in short-term rentals.
00:00 Intro
01:57 Asset and Location Based Demands
09:09 STR Regulations, Logistics, & Qualitative Factors
16:11 Understanding Demand Drivers
23:54 Consumer Tastes 26:05 Seasonal Market
31:33 Macroeconomical Concerns
35:15 Our Portfolio’s Baseline Demand
38:09 Analyzing Asset Price
42:48 4 Variables to Consider for Investors
46:24 STR Secret Sauce: Personnel
49:27 Operating Concerns
53:14 Our Approach to Entering a New Market
57:10 Outro
Podcast Channels:
🎧 Spotify https://tinyurl.com/56z3tk78
🎧 Apple Podcasts https://tinyurl.com/bdhwrxj7
🎧 Google Podcasts https://tinyurl.com/yabdwv38
Connect with us!
▶︎ www.facebook.com/brickxbrickpodcast
▶︎ www.libertyhudsonsolutions.com/podcast
▶︎ www.facebook.com/LibertyHudsonCapital
▶︎ www.instagram.com/libertyhudsoncapital
Monday Jan 10, 2022
Monday Jan 10, 2022
Welcome back to the Brick x Brick podcast. Today we have a special guest, Stefan Tsvetkov. Stefan is the founder of RealtyQuant, a firm that focuses on approaching real estate investments with a data-driven strategy to minimize the inefficiencies in the U.S. multifamily market.
Stefan started his career as a financial engineer and after a successful career in finance, Stephan ventured on his own path of innovation t start RealtyQuant. Throughout the episode, Stefan shares his wisdom on utilizing the power of data to improve the returns of real estate investments.
Connect with Stefan:
Website: realtyquant.com
LinkedIn: linkedin.com/in/stefantsvetkov
Tuesday Jan 04, 2022
Tuesday Jan 04, 2022
A year after Airbnb’s IPO, it’s fair to say STRs as an asset class are here to stay.
But, where are we in the life cycle of this emerging asset class? And what does the future hold?
Tune in as we dive into the trends we expect to shape the future of hospitality.