25K Dollars Appears in Your Account, How Do You Invest It?
Do you have money and are not sure how to invest it? In this episode, we run the thought experiment on how we would invest $25,000. Listen to get 3 different takes on how we would use this money to make more! --- Transcript Tom: Greetings, and welcome to the remote real estate investor. My name is Tom Schneider. I'm joined by Michael: Michael Albaum Emil: and Emil shore. Tom: And today we're gonna run through a thought exercises. What if $25,000 showed up in our bank account? All right, let's do it. Welcome, guys. So before we get into the episode, I think it's a good time to refresh and do a quick introduction kind of background on our remote investing experience all that jazz. Mike, why don't you lead us off? Michael: Yeah, absolutely. So my name is Michael Albaum, California guy, I was working. Previously, I was used to work as a fire protection engineer, and the commercial property insurance industry and started investing about the same time I started working in single family homes in Southern California, and pretty quickly realized that that wasn't going to get me where I wanted to go fast enough. So I was traveling a lot for work. So I was traveling out of state. And so I was looking at properties wherever I was trying to work and realize pretty quickly that out of state, small multifamily cash flowed a lot better than single family home in Southern California. So I started purchasing those, and then organically grown into medium sized multifamily. And then of over the last several years really specialized and found my niche with medium sized multifamily value add. So finding the junky dirtiest most beat up properties I can find then getting them repositioned, performing better and either selling cash out refinancing or just sitting on the killer cash flow, and now find myself working as the head coach with the rootstock Academy. Tom: Cool and Emil. Emil: So Hey, everyone, my name is Emil shore. I am also a Southern California native. I'm a marketer, by trade or by profession. And I started investing back in 2017. My dad invests in Los Angeles, and so I grew an interest in real estate investing. But when I had built up a little bit of capital, realize that Los Angeles was very cost prohibitive for me to invest in real estate, so sort of looking around at other options, so other people investing out of state. So for people living in high cost of living areas, some people were making out of state investing work. And so 2017, I bought my first single family property out in Jacksonville, and then went on to buy a couple more single families across the southeast and Midwest. And now I am also focusing on small multifamily in the Midwest to grow my portfolio. So yeah, that's my background. Tom, what about you, man? Tom: So a little bit about myself, I got out of college a little bit before the housing crash. And while I was in college, I was very influenced by reading Rich Dad Poor Dad, which I think a lot of real estate investors. So getting out of college, I knew that I wanted to work in real estate and I wanted to work in system. So I really found a dream job working as a product manager for one of the very first publicly traded single family reads. And this was a super fun experience where it was before as a publicly traded, it was a brand new industry of single family where before people thought single family was too tricky to manage. But with the advent of mobile computing, cloud computing all of this cool technology, it made managing single family rentals at scale. And through that process, I got into it, I got the bug of investing on myself. So I just have been slowly accumulating single family rentals throughout the southeast, as well as the Midwest of the United States and try to add a couple properties every year. I am also a California real estate broker. And I am the parks and recreation Commissioner for the city of Orinda, California, Michael: Right on. Tom: Little Orina shout out. Excellent guy. So let's go ahead and jump into the meat of the episode. So this is a fun exercise of you wake up this morning and you find an extra chunk of money in your bank account. So what I want to hear your guys's responses is the way that you're thinking about spending it the way that you're thinking about allocating it, what is your thought exercise and I get to pick who's on the hot seat first. And I asked Michael to introduce themselves first. So I'm going to mix it up and go Emil. All right, so you wake up this morning, and there's an extra $25,000 in your bank account. What is your next steps? your thought process? All that good stuff? Emil: Yeah, I woke up well, are we painting the stage saying we have no rental property? We have no, my a brand new investor or am I just in my current spot in life and I have an extra 25 K? Tom: You're in your current spot and in life, you know another fun thing about us as the hosts as the investors I'd say a meal is a little bit newer into his career. I have a couple more years of experience a couple more units and Michael has quite a few units as well. So he's got a ton of them. So in each of our answers, you're gonna get this lens of of how much experience and I guess units they have under their belt. So I think the context meal is you are a meal with us today on whatever the date is February end of February. Emil: Yeah, I would probably do one of one of two things. I would either use that money to renovate some units that I currently have that you know if i renovated them, we could get rents up, you know, right now is a tough market to buy in not a lot of inventory. So one thing I'm thinking about as well, if I can't go buy something new, if I'm not finding what I'm looking for, can I use money to improve what I currently have and increase the profitability of those. So that's one thing I might do is look at some of this triplex I bought in November, and all in all, is by three $400 under market rent, but we're gonna have to make some upgrades. So I may invest in that right now. Like, let's, let's make these improvements. Let's get the rent up, and let's get this thing performing better. That's, that's one area, I would probably focus. Michael: And as a performance metric measure, how do you determine whether or not to spend that money on the improvements or go elsewhere? I mean, how do you determine the return you'd be getting on that capital? Emil: As real estate investors, I like to look at everything as a cash on cash return. So let's say I were to spend $10,000 to improve a unit I know, I can get $300 more in rent per month. So yearly, that's going to be 30 $600 3600 over the $10,000 investment. That's a 36% return on my cash, which is awesome. We're using the stock market. Typically, I know this year, last year has been crazy. But typical year in stock market people say is like average of 8%. I'm far exceeding that. So to me, that's definitely worth my time and energy to make that investment. Michael: Awesome. Awesome. And so what would your ideal purchase be if you were choosing between purchasing something, or doing these renovations? I mean, what would your ideal purchase look like? Would you leverage would you buy something all cash? Emil: Yeah, if I was buying right now, I mean, debt is so cheap, right now, interest rates are at historic lows, I would want to be juicing my returns and taking advantage of this low interest rate environment, especially if you're buying a single family home to lock something in 30 years at us, you know, sub 3% interest rate, I think, is what we're at that I mean, that's amazing, like your cash flow. It's unprecedented how much this helps, like we were talking about on another episode, I just recently refight one of my properties. And because the interest rate dropped by a percent and a half, I was able to pull money out without even changing my monthly payment that much. So right now, it's just such an awesome environment to go get some long term fixed rate debt. Tom: Yeah, this is just one of the awesome things about real estate investing is you can just borrow other people's money so cheaply. And so easily, you have this huge infrastructure of lenders that you can just tap into and take that 25% multiplied by four with debt and you have for buying power. I like it. So you're debating with your magic $25,000 that you got for selling GameStop you're debating either some optimization, perhaps some little improvements on the episode Emil, you got to pick something. What do you do with that? Emil: I don't know. It just depends, man. I know that's the worst answer. Michael: No, it doesn't. You just got 25 grand in the account. It doesn't depend. What are you gonna do? Emil: I mean, if it's 25 K, because I'm currently looking for smaller multifamily requires a little bit more capital than 25. k, I would probably be focusing on improving my portfolio, or just taking that 25 K and just using it to save up for the next small multifamily purchase. Michael: Boo boring! Emil: I know. I know, if I was just starting out. Michael: Yeah. If you don't spend it in a week, it's gone. I mean, put it in a CD that gets point 2%. Tom: I love that we keep changing the assumption says or I like that answer. I like that answer. That's prudent. Michael: Emil was like, woah, woah, we didn't talk about the rules. All you asked was the question. Emil: Yeah, Jesus, I didn't have time to think of all these possible scenarios God. Investing decisions aren’t made in two seconds, guys, Michael: Yes the are, or at least they should be! Tom: Emil. You're you're off the hot seat. All right. I like it. All right, Michael. Waking up this morning. Michael: Yep. Tom: 25,000 in the account, an extra 25 k? Michael: Yep. I'm gonna wait one day and make sure that the deposit clears my account, because how big of a bummer would that be to find out Oh, it was an error. And I go spend 25 grand and then it gets pulled out of my account, so I get a negative balance. So once I make sure that it clears the account, I'm going to Vegas red 22. roulette going to turn that 25 into several 100,000. Tom: That's a mistake. Red 16 all day every day. Go ahead, man. Michael: Classic rookie mistake. So I'm kind of with Emil I invest in multifamily properties, specifically multifamily value add. And so 25,000 is not going to go really far in terms of purchase. But right now I'm in the middle of several pretty significant rehabs on some multifamily projects, I'll probably use that to fund that deal. to fund some more rehabs in those deals. And very similar to me, I would probably use that 25 to get those units rent ready and then rent it out. And like Neil said, the exact calculation that's what I'm doing. I'm saying, Okay, how much is it going to cost to do the rehab work as compared to how much is that going to bring in additional rents? And if I can get a better return elsewhere by investing although elsewhere, Tom: I'd love to hear you walk through. So you guys have Similar responses in that, like the bigger multi families are a little more expensive. I'd love for to kind of work backward on like, what, in getting to a fully performing multi stuff that's in your wheelhouse, like, are we talking about like a $300,000 building we're using like 50% debt, and then you're putting X amount for construction because you said this is a rehab, if you can just walk through just really kind of simple terms on like, what that type of capital requirements and that kind of project looks like. Michael: Yeah, that'd be interesting. Totally. So like Emil said previously, it depends, which is the worst answer. But so I'll give kind of two extreme examples. Tom: Vanilla. Vanilla me. Michael: Yeah. So one is I bought a five unit building in the Midwest several years ago. And it was advertised at like, I think 155 or 160, or something like that. And I bought it for like 130. And it was already leased up… Tom: With debt out the gates? Michael: No so that was an all cash purchase. So one of the reasons I was able to get it for so cheap was was an all cash purchase, and then went and refinance 30 days later and got 75% of my purchase price back. So put dead on it immediately. And so that was a fully leased building that didn't need a ton of work. Some of the units had already rehabbed, but the rents were way under market. And so what I did is basically day one went in and increased rents across the board by about $200 per unit, and three people stayed and two people left, and so was immediately generating significantly more cash, I think that's an extra 1000 bucks a month in cash flow by having to do nothing physical. Now, the two folks that left we did do some unit turns on those and that was, I think, ran like six or seven grand each, I think is what we ended up spending what I end up spending. So that was relatively light. Now I have another building I bought, it was an eight unit. Again, units were way under market rent for the area. But so were the updates. And so we did a full update on an eight unit building that was well into the six figures in terms of rehab costs. And so we have eight brand new units now brand new fixtures, appliances, plumbing, electrical throughout. So that's a much more intense rehab. And a significantly requires significantly more capital. Part of the reason I think that it costs so much was because we were trying to do brain surgery and keep some tenants in place so that we could keep some cash flow coming in on the building. But it just ended up I think adding time and labor costs, as opposed to just getting the building fully vacant, and going in and being able to occupy or get access rather to all the units at a moment's notice and work more freely. And so again, if I could do that project all over again, yeah, I would give up the $2,000 a month or whatever that was coming in and rent to be able to just move more quickly and efficiently. Assuming all leases would allow for that assuming everybody was month to month. Tom: I love the fun flow like aspect of this. So like with this other one was it did you buy with debt, and then later refi after the rehab was done? Michael: Yeah. So that one I bought with cash as well, I was in a really strong cash position at that time, and then refight out immediately 75% of the purchase price, it was the same lender that did the prior one. So that was super easy. And then I knew it needed a ton of rehab. So I use that refi money to then go do the rehab, I was able to buy cash, get the purchase price down where I wanted it to be, let it sit for 30 days, then refied out 75% of my cash and then use that capital to go then improve the building and then haven't since refinanced out of it. I totally could. There's a ton of equity in the building. Now, most of its purchased because of the rehab dollars that I spent, but I could definitely tap into that. But the cash flow right now is so good on it. And the debt I have is so cheap. I'm a little bit hesitant to to refinance and change the structure. But I'm definitely going to investigate that as you know, probably actually get my tax return. Yeah, Emil? Tom: Question in the back from Emil. What do you got? Michael: The peanut gallery? Emil: I'm raising my hand for people who can only hear us and can't see us. I'm curious having done both of these. I think I've asked you this offline. But having done both these a light rehab where you you know, $6,000 per unit that's super light versus a full gut where you're changing electrical, plumbing, new appliances, all this stuff? Which one would you rather do going forward? Michael: Oh, the light all day, the light. I mean, the light is so much easier, and so much less stressful and less headache, and less opportunity for things to go really sideways. Tom: I think you're already leading on the counter argument, the like, you know, opportunity for sweat equity. Michael: Yes. So I'm going to circle back to that to the sweat equity comment, Tom. But what I was gonna say is that now on that eight unit, everything is brand spanking new. So I have a new roof, I have new plumbing, new electric, I mean, everything, it's, for all intents purposes, a brand new build. And so I'm not going to have to touch anything. So my repair and maintenance costs and capex costs on that building are so much less than on that original five unit that I was talking about. Because we didn't replace the roof. We didn't replace a lot of this stuff. So you know, it could go either way, depending on your bandwidth and your appetite for risk and for growth. And so I would say that Yeah, the value add is significantly higher on that eight unit. But that being said, Because five units of commercial property and value based on cap rate and performance, because of The fact that we increase the performance so much on that five unit, the value has pretty much doubled. I got a broker opinion of value on it a couple of weeks ago. And they're like, yeah, like you did a really good job, increasing the performance of this property, such that pretty much doubled. So there's multiple ways to add value. If you can take the cheaper approach, it's changing that financial optics most of the time. But if you have to go the physical route, there's a lot of delayed gratification and down the road benefits that you'll see as well. Emil: I'm super curious, in five to 10 years, if you still have these buildings, to be able to look back and say, okay, you know, here's what I thought would happen, less catbacks, less Rnm, less repair maintenance, Michael: What actually happened? Emil: Yeah, that's what would be super, super interesting. And then, you know, you're just learning from your own portfolio, and you can make those decisions going forward. Like the full guides were great. I'm going to keep doing full guides, or like these light rehabs have proven better for me. Michael: Yeah, hopefully, the podcast is still running. But I can call in from somewhere and say, Hey, remember that? That's killer? Emil: That's right. Tom: I'm guessing a lot of people underestimate like the cost of the repairs. So if you're buying a real estate that needs work to be done, you're probably thinking that it costs less than it actually does costs. I think this you know, rosie glasses are sometimes be a challenge for real estate investors. in evaluating these kind of deals, would you did you did you have rosy tinted glasses on there? Michael: I had the rosiest thickest glasses you could imagine. And part of it was in part not to throw them under the bus. He's an awesome, awesome agent. But my agent was like, Yeah, I don't think it'll be very expensive. We can do this and everything. And he was he was helping steer the ship to a certain degree. And then we went and got quotes. And it was a lot worse than anticipated. And some of that was rosy colors, Rose tinted goggles of affection. And other stuff it is you just learn more as the walls start to come down and the drywall starts to come off. So a lot of this stuff you can't know about until you are in the building doing the rehab. And so there's no one's fault to that. But you just need to have a big contingency built in for that kind of stuff. But yes, Tom, I think you're super accurate. And one thing that caught me off guard, we were doing this a lot of these rehabs during COVID time, it's just the cost of materials has nearly doubled, like cost, lumber, wood has gone a roof. So like who could have predicted that and you can't just stop the rehab and go, Oh, my God, cost just doubled. I bet. I'm going to press pause until those come back down in line to where they need to be. So stuff happens. And I think with real estate investing in general, you need to be able to bob and weave and be flexible and have a plan B, C and D contingencies so that when and if things do go awry, you're not up a creek without a paddle. I feel like I just use so many like colloquialisms. Tom: I love it. I love it. I love. Emil: It takes two to tango. Tom: The henhouse house. Fox chicken. Michael: Yeah. And a couple of canaries. Tom: Yeah, I love the tangents that we get on just because like all this stuff is so interesting. So back to the original topic. So you have the 25,000 you're making sure that it's in the bank. Michael: Yes. So I'm going to go rehab some units like Emil was saying, I've got some units in a building that I rehabbed. And now I'm waiting for those to get rented out and start cash flowing to then fund the rehabs on the other ones. And kind of countering myself, at my own words, I was saying previously, that if I could do it all over again, I would get an entire building vacant and do all the rehabs. This one, the physical layout was a little bit different. So that wasn't necessary. So I was able to do half the building at once. And then the other half is what I'm waiting on. So I would go do the other half with that 25,000 today. All right, Tom? Emil: You're in the hot seat, the hottest of hot seats. Tom: All right, Bring it on. Michael: It's about to boil over 25,000 in the account Tom: 25,000 in the account. So I'm assuming you know, the check cleared, and I'm assuming there's just zero taxes on this mythical $25,000. So not needing to think about whatever kind of tax, whatever rate this is coming in. So as a single family, primarily a single family rental investor, I'm going to use this for a new acquisition. And if it doesn't get me all the way to the new acquisition, it's going to get me pretty darn close looking at just common financials on this type of investment. Let's say I'm spending $100,000, I'm going to put 20% down. So there's my $25,000, I'm going to look for something that's fairly turnkey, so not requiring a ton of construction, I'll use a debt in the very beginning and the acquisition, either putting him into my wife's name, so she can, you know, within real estate investing, using conventional lending, you can have 10 loans in your name using Fannie backed financing. And once you get over that you can perhaps your wife or a second or other whatever, husband, whatever can put them in their name. So I'm using the traditional conventional financing, you know, for these $100,000 properties. There's an important question investing is like, Where are you investing at? I think of them as kind of three like tiers of market. There's like tier one, which is the bigger cities, the Dallas, Atlanta, maybe Atlanta is definitely a little maybe a little bit cheaper, Denver, these are these more expensive, and it's going to be really difficult to find something for $100,000 for these type of properties. But then there's this Secondary tier of cities, Indianapolis, Birmingham, there's maybe like slightly smaller, smaller populations, but a little bit less competitive on the real estate side. So probably deploying that capital in a second tier city, like a slightly smaller one to be able to get, you know, better school score whatnot. And that's what I'm gonna be doing. I'm gonna be adding another property in my little SFR portfolio with that $25,000. All right, you guys want to grill me on some stuff? Michael: I've got a question for you. And I'm kind of cheating because I have a little bit of insider knowledge on you as an individual and your background. So I know that you have a HELOC on your primary residence as well. Tom: Yep. Michael: Would you ever consider coupling that $20,000 cash with the HELOC to go buy something all cash and then refinance out of it? You know, six months down the road? Tom: Yeah, I could see that. You know, there there is advantages to buying all cash, it's a stronger offer. There's a little bit of like extra overhead that you have. So if I felt that it was like a really competitive property that I was making an offer on, and that would help me out I would consider doing that and then refi back out and put that money back in my keylock. I love that, that type of a strategy. And that's you know, keylock is just such a cool instrument of debt. For those who you are not familiar of a home equity line of credit, or a HELOC is what it is, is basically a credit card. That is a really cheap rate. And the balance of that credit card is the difference between the amount of the loan that you have on the property and the value of the property. And usually it's up to 80%, or in some cases up to 90% of the value of the property. And it's just wicked, low rates. And I think it's Gosh, what is it like three and a half percent 3%, something like that. And it's a really significant amount. Like I think the one that I have is like roughly $200,000 available, just to go do some stuff. There's no HELOC police I can use that money wherever I want to spend it. So that's a good point, Michael, possibly using a HELOC and then refinancing back out to it. Michael: How much rehab? Are you comfortable taking on if a property, you know has is relatively turnkey? I mean, do you want to literally have a tenant walk in the door? Do you want to buy something with a tenant already in place? Do you want to buy something with under market rents? I mean, talk to us about what this ideal property $100,000 property looks like? And why you're thinking about some of these different factors? Tom: Yeah, good question, Michael. So I think on the the property condition side, buying properties, and doing big rehab projects is a little bit out of my wheelhouse. I'm okay, paying a little bit, you know, not getting a massive steel, just because I find that when you do those construction properties, just like we were talking before, it's difficult to estimate the construction costs. If you're right next to the house, it's extra difficult if you're, you know, a remote investor. So, in doing the diligence process of buying this house, I'm gonna look for a property where, you know, perhaps there's some aesthetic stuff that needs to be done. But as long as like structurally, the roof, the foundation, all that kind of stuff is in good shape, I'm fine, you know, new carpets, new paint, all that stuff, you know, shouldn't exceed whatever $3000- $5,000 on getting the property what they call rent ready, but I'm going to look for a property that is in more or less in good shape, I think it's important to try and get a little bit of value and a little bit of a discount to the current price that can be extra hard these days, because it's just so competitive. But I find that going into some of these smaller cities, it's a little bit less competitive, versus trying to buy something in, you know, Los Angeles or whatever. I'm in Northern California. So some of these smaller cities, it's a little bit less competitive, but you know, me wrong, like it's tough to find, you know, to get that little bit of a discount to market. But I think that's important to have a little bit of equity built in when you do your acquisition. Let's see what else occupancy, you can. One thing that's cool with roofstock is you can buy these occupied, or you can buy them vacant, I'm not too particular, if I'm buying them occupied or vacant, wherever I'm doing my acquisition at just because I plan to hold these long term and through the lifecycle of these properties, sometimes they're going to be occupied, sometimes they're gonna be vacant. And my evaluation of the property shouldn't be on that just because it's kind of a transient thing. Now the value to buying it occupied is you're getting cash flow day one, but the value to buying it vacant is you can have more input with who you select as your property manager, or if you're self managing to set the tenanting guidelines and rules. So I'd say that's my sort of down the middle of the fairway strategy using getting back using more isms. like Michael, but I'm not a construction guru. That's not in my wheelhouse. So as part of my strategy of evaluating is finding properties where I decrease that risk by the inspection that's completed, it's identified that foundation structure whatnot is in good shape. Michael: So Tom, I think those are all great points. As a follow up, we know what the goal is, we know what the criteria look like. So what are you going to go do today? Now that you see the 25,000 to me reaching out to agents are you getting on the MLS? Are you on Zillow? What are you doing right now to make this happen? Tom: I have a pretty good idea on what my next markets are going to be in. I'm pretty heavy and throughout the southeast, so probably continue to build that portfolio out. There's a PM that I worked with for a while that I think is pretty great. So me We just continue to to lob more properties over the fence for them to manage for me. So I would start just put in an alert of new listings coming up within the different markets that I am looking at. Also, you know, monitor set up alerts on Roofstock on the MLS on all these different acquisition channels to just start seeing what's available. I like to look, sometimes there's opportunity for properties that they've been listed on the market for a while, sometimes they should be careful those just because there's probably could be a reason why they're listed on the market for a while. But my acquisition processes begin by setting up the appropriate alerts and notifications of new listings coming on in that particular neighborhood. So those would be my steps is getting the awareness part of the funnel on listings in that target market and where I'm acquiring. And if I didn't have a property manager already in the region, I would start to talk to those local property managers, and get their feedback on certain sub markets or as properties come up. A great tip for people with remote real estate investing is when you identify a local property manager, don't wait till you like have done the acquisition, but include them in the acquisition process. So as you're evaluating properties, get their feedback on sub neighborhoods, whatnot, and… Michael: Send them inspection reports. See if they can't walk the properties. Tom: Yeah, exactly. They're your boots on the ground. Michael: All right. So Tom, I think a lot of people throw shade at buying turnkey properties or saying oh, you make your money. When you buy, you have to buy with some equity. If you know, let's say you can't get a discount to market right now. But the numbers still make sense for you. And you're comfortable with the acquisition. What do you say to those people, who say, yeah, turnkey is for suckers? Tom: I would say, oftentimes, like boring wins, like, you know, if I want to throw some money in like, you know, Penny stocks, or like, really high volatile stuff, I think that's really similar to buying a huge construction project, like you might be right. Some of the times, like, you might, oh, I accurately estimated how much it costs to fix it, I did it it uh, but if you are a more conservative investor, who just wants to take advantage of the kind of the tail winds of real estate without taking on a lot of the risk, your upside might be slightly smaller. But you know what, like that upside is still very high, even buying turnkey, you shouldn't buy a property where you're buying it for more than it's worth. Like, I think that's a mistake. But you don't have to swing for the fences and buy these properties that need like new foundation, new gut, new, whatever. And I think that's silly. Michel: Yeah, sure. Tom: You don't want to buy a property that the value is worth less than what you're buying it for. But you don't need to try to hit these homerun Grand Slams like just get a bunch of singles and doubles. Like that's building wealth, in what, you know, in a really pragmatic, prudent way. Michael: Yeah, I think just to piggyback off that my very first deal was totally turnkey, before I even really knew what turnkey was, or maybe even before it was a thing. And I'm so glad that it was because I could barely fathom the idea of spending all this money on the down payment, let alone additional money on any kind of rehab or innovation to make rent ready costs. And I was so overwhelmed with just owning the property and doing all the things that that took going through the closing and setting up property management, and all the things that are involved with owning a rental property. And so to then be thinking about, oh, well, what kind of how do we get a contractor in there, and all of the things that come along with doing value add or doing a renovation or return, it would have just been too much. And I think that probably would have left a pretty sour taste in my mouth with real estate investing as a whole. So as a toe dip exercise as a way to wade into this water as opposed to jumping into the deep end. I think turnkey can be a really great way to go and just, you know, understand what's involved with owning and operating rental property in its easiest form, and then move on from there. Emil: I want to bring in something from our good friend of the podcast, Michael Zuber, who has been investing for 15-20 years, and he's really transparent about he's been investing 15-20 years, he's very transparent about where he made mistakes. And he often talks about in the early runnings, he would buy these cheap properties, that same deal, right, you're getting them at a good price, but then he has to go put 10-20K in. And when you look at his cash on cash return, oftentimes had he just gone turnkey, his cash on cash return would have been better, because he didn't have to think that extra 10-20K, basically, someone else goes and makes the rehab. Yes, they sell it to you for a profit, but then you get to use leverage to bake those into your loan. And then your tenant is basically paying for those renovations in a way so you're not coming out of pocket. Anyway, he talks about all the time how he wishes in the beginning, he had bought less of these like cheap but needing 10-20 K and repair single family homes, and just scooping up more turnkey. And again, he's done this for 15-20 years. So he's got a pretty long time horizon to be able to look back and say, these are some of the things I wish I had done differently early on. Michael: Yeah, it's great point. Tom: I think a great analogy is value stocks versus growth stocks, where a growth stock would be, you know, high beta like it could go either direction. I think that's the equivalent of buying some fixer upper. And as a remote investor, like that's extra hardware value stocks, you know, Warren Buffett whatnot like those are buying tried and true properties where there's just less risk, you could say, in that you're not needing to open up walls and find all kinds of potential issues. So value investing. Cool, guys, so love this topic and a lot of great tangents. I think what we're gonna do is in our next episode, we're gonna do the similar exercise but bump up the value. So what would we as investors do, woke up and there was $200,000 in your bank account? How would you deploy them? Michael: Oo, la,la I know my answer is gonna be different. Emil, are you gonna have similar or different strategies? Emil: I'm putting it all in Bitcoin. Yeah, so you'll get for Bitcoin, hey, I'm getting for Bitcoin. But bitcoins gonna be worth a million dollars in the next month. So that's not a big deal. Michael: You heard it here first, folks. Emil: Everyone who's into bitcoin is going to hate me now. So I'm sorry. Tom: Thank you so much for listening. I hope you enjoyed the episode. If you did, please rate us Subscribe. All that good stuff wherever you listen to your podcasts and as always, happy investing. Michael: Happy investing. Emil: Happy Investing