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In this Episode Emil, Tom a Michael cut through the noise and explain how to calculate cash flow properly.    --- Transcript   Emil: Hey everyone, welcome back for this week's episode of The Remote Real Estate Investor. My name is Emil Shour. And I'm joined by my co host,   Tom: Tom Schneider.   Michael: Michael Albaum.   Emil: And today we're going to be talking about how should you actually calculate cash flow. There's a lot of different formulas out there. And we want to clear the air and give you a we believe is the best way to calculate what your projected cash flow should be as you're analyzing a property. So let's get into this episode.   Theme Song   Emil: Alright, guys, so this was actually a topic that I thought would be interesting to cover, because I feel like there's a lot of misinformation out there. And I feel like it's really easy to read case studies and blogs and go on YouTube or on social media. And you'll see people talking about their cash flow. And the numbers seem outrageous, right? It's like a property renting for 1100 dollars. And they're talking about $400 of cash flow a month. And obviously, it seems like there's a lot of things missing from the way their, their expected cash flow should actually look like. And so I thought it'd be good for us to dive into this on this episode. Have you guys seen the same thing? Like a lot of people?   Michael: Yeah, I have a property that rents for 1100 cash flows 400 bucks a month, so this is gonna be interesting.   Emil: Oh, do you   Michael: No just kidding.   Emil: Do you guys see this a lot? Do you guys like get this kind of feeling like being prevalent out there that a lot of people maybe aren't calculating cash flow the right way?   Tom: Or they just inflate it a little bit to feel good about yourself.   Emil: Sound cool?   Michael: Yeah, he's a bit of an ego thing.   Tom: Yeah, the thing with returns and what I like about this episode is man assumptions are just so important. And two people can be looking at the same deal, analyzing it and come up with completely different returns based on the way that they're calculating these, you know, what's in the sausage factory of those calculations is just so critical.   Emil: Yep.   Michael: I agree. I think that's kind of where deals often get made or broken is in the assumptions. And if you make a bad assumption, you can very easily buy a bad deal. And you could just as easily lose out on a good deal. So getting good at making assumptions is huge. But I totally see this regularly, where people aren't including the things that I would include in their cash flow calculation to determine what it is, I think it's it's too often to light.   Emil: Yeah, I agree. I've actually seen examples of this of properties that I've analyzed, like someone posted on Twitter, a property they just purchased. And I remember that exact property, and I had underwrote it as well. And my cash on cash was like half of what, you know, they said their cash on cash was going to be so I've seen it on like, on property, like specific properties, I've underwritten, too. So hopefully, it's a good episode for people to just have like a little bit more of like realistic expectations of what their cash flow could look like after they really account for everything and peanut butter spread all the expenses that come up throughout the year, right, Tom?   Tom: Jiffy, that Oh, yeah.   Michael: Jiffy on the spot?   Emil: All right, let's start out by talking about like, what is the formula? What expenses should you be considering as you're calculating this number?   Michael: The PITI is an acronym for your principal, interest, taxes and insurance. So the principal and interest is just determined by whatever the mortgage looks like, whatever the interest rate, whatever the amortization period is, and then your property taxes, if you are escrowing, these, the lender will often pay them for you. And so you pay monthly into this account. And you don't have to have this big property tax bill once or twice a year. And so I would always call the county assessor to determine what the after sale property tax looks like for an investor, and then obviously, divide that number by 12, to get a monthly cash flow amount.   And then your insurance, I use a very ballpark estimate of point eight 1.2% of the purchase price for properties under 150 K. And for properties over 150 K, you're probably looking closer to one half - .8% of the purchase price, one half percent to .8% of the purchase price. And so I'll use that number divided by 12. And again, apply that to my monthly cash flow. So you've got your principal interest, taxes and insurance, and then your property management on top of that, Tom, what are some other expenses that I want to hog the mic here that you would include in your monthly cash flow?   Tom: Ohh, vacancy, so an often assumption used is half of a percent of the annual rent or perhaps a month, depending on what that term time is, like, like a more conservative would be doing it a month, but hopefully that would be shorter than that. Another one is within that property management fee, or I guess this would be separate but they would be managing that process. If you're using professional property management would be turned costs would be repairs and maintenance costs and to define the term cost. That's the cost You're paying after your tenant moves out, and you have to get the property rent ready again. So that's typically more static stuff, some paints and carpet, perhaps if there's some older deferred maintenance that was there when the tenant was living there that kicked down a line that would be addressing any of those issues. So turn costs, what do you typically budget for your? I'd love to hear what you guys typically budget around turn costs.   Michael: 1 million dollars. I've seen this inverse relationship between monthly rent, amount of the property and turn costs. So if I've got a $2500 a month rental, my turn reserved that I'm escrowing is going to be a lot less than a $500 a month apartment. So can I have a bigger security?   Emil: Do you guys have a separate turn reserve? Yes, don't just leave it as a repair and maintenance and it kind of just gets lumped in there.   Michael: I mean, it can, I just am mentally bucketing money for when the turn comes, that's totally independent of the regular repair and maintenance and the regular capex that I'm anticipating and also reserving for a page back the roof, exterior paint that kind of stuff.   Tom: You have a mental escrow account.   Michael: Yeah, mental escrow account, but also I put it into my calculator, it is a separate line item. But yeah, mentally, I'm thinking about like, Okay, this money is going towards the eventual turn inevitable term for kind of middle of the road rental, I put a couple hundred bucks. Yeah, on it, depending on when the last time that the unit was turned. If you did a big turn at the beginning, your subsequent turns are probably going to be a lot less. And you can also do things on the front end, like tenant proof properties, put in vinyl flooring, laminate flooring, as opposed to carpet, you never have to worry about that, again, you know, maybe tougher cabinets, builder grade cabinets, you can put into the getting into get less banged up. So there are things you can do on the front end to make your turn reserves down the road, your turns less expensive.   Tom: I’m going through a turn right now on one of the properties. And thankfully, the property manager which just did their move out inspection in the properties in great shape. So this is going to be a fairly inexpensive turn, it's like 400 bucks or something like that just to do kind of a deep cleaning. But in my experience, turn costs have ranged anywhere from 400 to like 10,000 bucks if there's a lot of deferred maintenance. And where you see those big deferred maintenance is oftentimes if you have a tenant that's been living in the property for a super long time, then stuff builds up over time. Sneaky stuff sneaks up like fences and any kind of like loose decks and stuff like that is the one that always surprised me that I'm like, dang, that's expensive. So in budgeting, kind of depending on the condition of the home, my kind of down the middle of the line, say we're talking about a 1700 square foot three bedroom, two bath, I typically budget around 2000 bucks or something like that for the turn if it's occupied. And it's, you know, been so for 12 months.   Michael: Wow. $2,000 you budget for the return? I mean, for the for the turn,   Tom: I'd say anywhere between 1000 and 2000 bucks. I mean, I don't know you don't necessarily and be overly cautious, but then optimistic.   Emil: So how, at this point, how are you even making any money on these with all those assumptions? I'm kidding, we don't have to get into that. But I think the only other one we're missing is utilities. So if you're buying a single family home, most of the time, water and electric are going to be even lawn service, all that stuff is going to be covered by the tenant. So you don't have a ton of utilities to pay for. If you're buying multifamily. A lot of times you as the owner, you're on the hook for water heat, sometimes depending on where you're buying a couple other different things. So I've noticed with multifamily, you have to account for a lot more utility versus single family, the tenant is covering a lot of those.   Michael: And also depending on how the property is metered, you may not be able to push utilities onto the tenant for multifamily and a lot of multifamily also have what's called a house meter, which is a common area usually just electric meter. That's good for common area lights, exterior lights, that kind of thing. So you'll as the owner will likely be responsible for that. Let's say again, just check how the property is metered. And that'll give you some indication of whether or not you as the owner are going to be paying utilities whether or not you're going to submeter it or check some of that expense back to the tenants in the form of a utility bill back or just included on the rent. Again, check how it's metered.   Emil: Yep. So okay, so I think those are all the different line items It was interesting to do because you guys have a couple more line items than I do so that may be some homework for me to start being a little more conservative. I thought I was being conservative here I am looking at you guys like dang   Tom: Looking back at my bottle I I estimate typically like 1000 bucks not 2000 bucks in that like catbacks turn costs but a lot of that is dependent on what I'm seeing like within the inspection if it's like in pretty good shape your point to Tom How do you ever cash flow on your on your property with that turning cost is is right and so yes, a little bit less overzealous with my Yeah, not 2000 roughly you know 750 to 1000 bucks is is more where I target that turn costs the once a tenant moves out. So within that cash flow assumptions,   Michael: And is that inclusive of like cap x reserves to for HVAC roof? Or is that a separate line item?   Tom Two separate line items. So one of them would be for RaM for costs that I'm incurring? Well, the tenant is in the property. So roughly 75 bucks a month, maybe 100 bucks a month, and hopefully a lot of the months that doesn't happen, and you don't do that, but then a separate line item for reserve for capital expenditures.   Michael: And so is your turn reserve considered cap x?   Tom: Yes, that is that. Am I thinking about this the same way that you are? What? Go ahead, Michael.   Michael: Yeah, I mean, I just have a separate, I break it out, separate I call it, you know, turn reserve versus capex. My turn reserve I expect to spend every year or every tenant turn versus the cap x is more, I think 10. Instead of that a little going into this bucket, that's going to be a piggy bank to draw on when I need to replace the roof replace the fat. But at the end of the day, I mean, the money is going into the account anyhow. So I just mentally earmark it for certain purposes.   Tom: I like it. So just to paraphrase the three buckets that you have within these type of costs is RaM tenant occupied, right. Yeah. And then one would be turned costs just bread and butter, cleaning paint. And then the third one would be more specific for like, roof or like, you know, major property system? Ah, back. Yeah, Michael: Big ticket systems.Yeah, exactly.   Tom: I like it. Nice. Nice.   Emil: You got a lot of very detailed Michael, I like it.   Michael: I'm a reformed engineer. I don't have a choice.   Emil: All right. So we've gone over, like, what's the formula world of things we consider, we've kind of like sprinkled in some of our assumptions, but maybe we should just go through each line item and give what we think maybe are some good assumptions for people. Would that be helpful?   Michael: Totally. Let's do it.   Emil: Okay. All right. So mortgage, I don't think we need to get into how you can go online, use a mortgage calculator, figure out your mortgage payment. That one's pretty, pretty simple. Insurance. Michael, I really liked your, your kind of formula, I use something pretty close. Can you describe that again?   Michael: Yeah, so I like to use and this holds fairly true for properties. 150,000 purchase price or less. So I like using point eight to 1.2% of the purchase price. So let's just take an example a property's 100,000. on the low end, we're talking $800 a year on the high end, probably around 1200. And what's going to make the difference on that sliding scale is one, how conservative how much insurance? Are you looking to get? What type of policies that are replacement cost versus actual cash value? Is it really a comprehensive policy? Or is it named peril? So I am a very conservative person, I come from the insurance industry, I grew up in the insurance industry, so I get a more expensive policy than is available for that same hundred thousand dollar property, you know, my guess is you could go get insurance for 400 500 bucks annually, it is available is out there.   But it's probably not going to be the type of coverage that I'm comfortable with. And so to help me sleep at night, I'm going to up the coverages, I'm going to add some additional layers to it probably get some additional liability coverage. And so the additional coverages just have additional cost. So for the extra $300 a year, or $600, or whatever it is, that's often worth it to me. So I've just over the years and purchasing properties and helping other people purchase properties, that point eight to 1.2% of the purchase price tends to be fairly reasonable. And I'm confident that getting that type of coverage, you shouldn't be paying much more than that, that's going to be on the high end, being very conservative.   So if that ends up being your biggest expense on the property, you know, of course, we might want to go back and take a second look at things and say, oh, maybe we were too conservative. But I find that typically the $300 that we might be too overly conservative isn't going to push something from a no go into a go category. There are typically going to be other expenses that are significantly larger as a percentage of the income that we want to take a second look at and see if we can't refine those a little bit more. So that was a super long winded rant. Hope that answers the question Emil.   Emil: No, that was good. That was great. Okay, so that's insurance. Tom, anything you want to add there anything you kind of like to use for an assumption that's made different from what Michael mentioned,   Tom If you look at the Roofstock calculator, really helpful tool, you log in to Roofstock and look at an individual listing. And then you click on financials. Just below that financials tab, you can click on cashflow, you can see kind of a rundown of all these different costs. The Roofstock calculator is pretty handy in that you can see all these assumptions. One thing I like about Michael's example for insurance is he does it as a percentage of the purchase price. It's just kind of general guidance. And a lot of values in the risk calculator does it a percentage of income. So I think in some cases, a percentage of income makes sense. And in some cases, a percentage of the value makes sense. So just as kind of like an FYI, you can see these assumptions in here and looking at a property that's $110,000 we can see this insurance value is pretty close to Michael's assumption of point zero Point 8% point oh 8%.   Michael: Yeah, yeah,   Tom Where that would be $800. This example is a little bit less than that at $110,000. Home is around $600. But within rootstocks calculation for insurance, they'll actually get a value that a insurance company will, will bind again. So part of the Roofstock’s operations team, they'll go out and work with one of our insurance partners, insurance costs can change based on what kind of deductible you have. So depending on what value you have, it could either the price go up or down. But that's my two cents is I'll just touch on Roofstock as a platform and their calculator, the value they have and where it comes from.   Emil: Cool. So next one is property tax. I don't think you should estimate anything for this one, I think Michael mentioned called the property assessor, some cities, they have a like part of their website, you can literally just go put in the value that you're going to be buying at you and put in the address, and it'll spit out what the new property tax will be. So this one's probably no one you kind of estimate based on percentages or whatever. This is something, it varies from state to state, city to city, you should probably just go figure out what it is for your market. So you can accurately estimate it.     Tom: There's a lot of landmines and trying to calculate property taxes, one of them being if you're looking at last year's taxes, the current owner might be an owner occupied, so they get a homeowner's exemption. So I would be conservative in that property tax assumption.   Emil: Cool. Alright, so next one is property management, property management. This one's usually pretty easy to figure out, you know, as you're interviewing different property managers, you find out what their property management fee is, whether it's flat fee or percentage of monthly rents, like Tom and Michael were talking about, and this isn't something I should I do but I should be doing in that property management or you can have it as a different line item, adding it make sure you add in whatever you think for lease or releasing fee, right, so releasing fee will usually be a smaller percentage than a completely new lease, but factoring in every year that the property manager is going to charge either a release fee or if it's a new tenant, a leasing fee. So adding that up there, Tom, you want to add something   Tom: Yeah, just specific to roof stocks calculator that it has or any calculator that you're building perhaps in Excel with rootstocks calculator, It defaults at 8%, I remember something that we wanted to do on the product side was make it like updated dynamically based on picking a property manager if you use one of Rootstock’s preferred property managers to automatically update, but whatever the case is, when you know what that property manager fee is going to be for rent collection, you should update your calculator accordingly, within rootstocks calculator, it defaulted. 8%, but you should keep that updated.   Emil: All right, give me on. Okay, so after property management, we have utilities. And so for utilities for anything, two units, plus, I use $1,000 per year per unit. So if I'm looking at, let's say, a four unit building, and I want to figure it out monthly, it's just $1,000 times forums 4000, divided by 12, to find the monthly for single family, I don't have a more cookie cutter approach. Again, it's it's a lot of the times utilities are going to be covered by the tenant. But sometimes depending on some cities, like I own a property in St. Louis, a single family home in St. Louis, the water bill and the sewer bill are separate. Whereas most other cities, it's all on one bill. And so the tenant pays the water bill. But the sewer bill comes to me as the owner. So that's something I have to factor in as part of my utilities. Are you guys any kind of formula you use to estimate utilities?   Tom: I think on every lease that I have the tenant pays for utilities, I don't even have that in my, in my model, I guess it's more common with multifamily and bigger stuff. But utility isn't even something that we'll have. Perhaps during the turn, you know, I might spend like $10, or whatnot, just during the turn time where the utilities will be on me as the landlord, but for the most part, yeah, I don't consider that. In my cash flow.   Michael: I was gonna say for me for multifamily, it's, it's similar, I think 1000 bucks a year per unit is fairly reasonable, depending on what utilities are being paid by the owner. And usually the listing will say on or paid heat, water or whatever. And that can give get pretty good insight into all tenant paid utilities. Okay, that's gonna be a whole lot less than a grand a unit a year,   Emil: Like 12 months of expense, prior expenses from the seller. And so you can kind of see like, how much are they paying for all these different expenses and see if it lines up with what you have and if you need to adjust up or down but as I have no information, I just put $1,000 a year per unit.   Michael: Yeah. And I would say don't hope that you get those t twelves. Go demand those in the due diligence. I would say that's something that you really need to get a handle on before you close the property because you could find out that you were way off on your estimate and really buy yourself an alligator.   Emil: As our good friend Michael Zuber likes to call it absolutely. Next one is repair and maintenance and capex some people separate those out. Most people separate them out. I have them as one line item now and for multifamily, I'm using hundred dollars a month per unit is what I do for repair, maintenance and capex just kind of all together. for single family I've usually used 120 550 per month on single family is the amount I've used for repair and maintenance and capex as one line item. How about you guys?   Michael: like Tom for my repair and maintenance, I break it out into those three that we talked about. So for repair and maintenance, I'll use 75 $200 a month depending on the property size, and location and tenant class. So in a milder climate with a good tenant, that's not a massive property, I'll use 75 bucks a month, all the way up to the size of 100 bucks a month. And then for capex, I really let the inspection report dictate what that looks like. So if you've got that in advance, like on a roof stock property, you can get a decent handle on what that might look like. versus just looking at the photos or plugging something in for a run of the mill single family home that seems to be in decent shape 750 bucks a year, between 750 to 1000 bucks a year for capex usually should do it, that's, you know, in three years time, you'll have 2000 plus dollars set aside.   And also, depending on if I'm going to get a home warranty or not, for that property is going to also determine what type of capex budget I'm looking at. And capex is kind of one of those tough ones too, because it's a bit of a living, breathing, moving target. If I just replaced the H fac this year, well, now I'm going to put less money set aside for that each of that going forward because I know I got another 10 to 15 years out of it. So depending on the life of the systems, I call it the property will dictate what that budget what that number should be.   Tom: Ditto to Michael and I like that concept of kind of trade off, you know, you might not what you might be spending more on one year on the turn or or catbacks you know, major property systems that's going to take away for future costs related to to RaM. So similar to Michael and structuring that and if you really wanted to geek out and get really sophisticated on building a crystal ball to estimate some variables that we used when I was working on one of the REIT the vintage of the property was the size of the property just because oftentimes these costs, especially on the turn are directly related to how big the property is and square footage, and perhaps certain vintage, you might expect more or less on those turn costs. Those are some important variables to consider.   Michael: The one thing I would say on vintage is just look to find out what's been done on the property. I've got a 4-Plex that was built in like 1892. And we did a total gut rehab on it down to the studs, we put in brand new electrical brand new plumbing, brand new roof. I mean, everything is brand new. So the year of construction is at 92. So if someone attacks record, that's what they would see. But as far as the insurance is concerned, the effective year of construction in 2019. So I would say you know, with a take it with a grain of salt look just a little bit beyond the year of construction to determine Okay, what was done? Absolutely, if something was built in the 50s it's going to have more maintenance and something that was built in 2000s. But if that 1950s has all new electrical plumbing, I would say they might be comparable or that might could even be more updated.   Tom: before we run out of time. I'd love to hear your guys's thoughts, more multifamily dudes on like in ciliary and silivri income like perhaps having a laundry machine or having like storage sales. How do you guys underwrite that when you're thinking about cash flow on your multifamily? Because there's also the costs of like up keeping those type of amenities?   Michael: Absolutely. So for me, I'll just jump in here Emil for I gotta hop off. It's something that I think about, and we'll calculate if it's like a reasonable assumption. And so for me, I just have laundry, the vast majority of multifamily on site coin laundry, it's not a big moneymaker by any means. I mean, 15 to 20 bucks a month, maybe. But there's cost associated. so there's costs associated with that T rex and paying the water and electric bill for those machines because those are on house meters. So the big ones that I like that I use is storage, digital storage or parking. I know pretty darn sure what I can get for those on a monthly basis is for rent comps talking to property managers and also it has zero expense. So those are ones that I really like adding into the pro forma or using to drive value and increase the NOI.   Emil: For me I am newer to multifamily so I don't have like the confidence Michael does and knowing Okay, we have a garage we have some spaces how much we can get for it. So I don't even account for any of that and laundry. Even if you have a bigger building maybe you account for it, but I haven't been when I'm looking at stuff I just those to me are are extras, but I haven't really been accounting for those is that extra income because like Michael mentioned, they do come with some extra expense as well. So unless it's parking, parking and storage, that's that's on the property, but laundry, it's you know, you're paying for that as a landlord potentially. Okay, so you guys had mentioned turn that you guys actually have it as a separate line item. I think we already were to talk about kind of what you guys set aside for that. So Tom, you mentioned like $1,000 every year every other year, how do you set that term budget aside?   Tom: Yeah, I would set it as an annual You will amount 750 to 1000 bucks. And again, if the property's been occupied for a long period of time, I would expect that eventually be a little bit north of that value. But you know, be happily surprised when you get back in your turn cost is 400 bucks, 300 bucks, and that that you can roll around in that extra money.   Emil: Yeah. And you know, it also, I think it depends on property type, right, with multifamily, you're just gonna typically see higher turnover. So you're gonna have more turns where a single family I don't know about you, Tom. But like, single family, a lot of my tenants stay really long term like I've had of the four single family homes I've owned over the last couple years, I've had one turn, the rest of them have stayed even with rent increases, like single family tenants just seem to stay a lot longer.   Tom: I totally agree. I mean, I was saying I had a turn right now, but it's like, it's pretty far and few between. I think you're right, though. And there are studies around SFR having longer duration. And it makes sense. I don't modify my cash flow assumptions. I'll still assume you know, based on whatever is on the lease like expect, the worse that they're going to move out. But generally speaking, like you said, oftentimes be surprised. happily surprised. Roll around that extra dough.   Emil: Awesome. All right. So then the last one, I think we should cover here that we mentioned in the different expenses, you should be considering his vacancy. What's funny is for single family, I always do 5%. I feel like that's like the industry standard. But again, if I'm looking at my actual vacancy across my portfolio, it is way below that I think it's just good to be conservative, because I don't know, maybe you're in a city or an area where your tenant does leave once a year, whatever that may be. And it kind of equates to 5%. But honestly, I've heard so many people who have seen my family and they're like, you know, they're good landlords, they have the same tenants for five to 10 years. So your vacancy becomes real tiny.   Tom Especially Emil, I think if you are getting in really nice school districts, it's a hassle. Like if you have a rental in a nice school district, and you have good tenants with kids, like no reason to move out, you know, I think it's an upside to including that in your acquisition strategy a little bit.   Emil: Totally. So that 5% for single family for multifamily, I do seven and a half 8%, usually just depending on where I'm investing in. But I feel like that's a solid level, like seven and a half percent. A lot of these things also, especially as you're learning a new market, every market I think is different. And you're estimating these expenses, but I imagine in five to 10 years, I'm going to be much better at like being able to look back at all my expenses for five years and say, Okay, here's what it actually averaged out to be. And here's how my pro forma should change. So you know, I think right now, it's like, especially in the early goings, you're kind of just taking some different assumptions, either talking to people who are in that market, or figuring it out. And then I think over time, you're just gonna get really good at knowing, alright, my expenses are basically this amount every single year per unit. This is my vacancy over the last five years. So I think, just with time, you'll get really, really good at these pro forma. Yeah,   Tom: Yeah. And when you're setting that budget, and thinking about your cash flow, that's goal setting, right? And to be successful, and to make money as a real estate investor is to, you know, spend less and make more. And once you identify those numbers, those are specific values that you're working against. So when you get to the end of the year, it's like, Okay, how do we do against these values, and hopefully beat them. And if you don't, you know, reasons why and how to improve upon it. And if you don't beat those value goals, hopefully you put enough of a cushion, that you can still be fine. And then get back at it next year and work with your property manager if you're working with a property manager. So it's fun.   One other line item for you Emil is HOA fees. So if you're buying a property, and there's a homeowner's association fee, and those can be super high in some areas, especially if you're buying like condos, or they can be really, really low. So that's a really important consideration because that's money in money out.   Emil: Yeah. And like you mentioned, some of them are high and some of them are low. Like I have one property, I only have one property that's in an HOA, and it's $21 a month so as I was looking at it, everything else I really didn't want a property with an HOA but at $21 it wasn't really affecting my monthly cash flow. And so yeah, I went with that. But yeah, be careful sometimes it can be $100 plus, so that can really really you know, mess with your cash flow number. So good call Tom.   Tom: And kind of back to that exercise of comparing your pro forma assumptions for cash flow to actual you have some actions that you can do to try to improve them specifically around shopping. for insurance costs, that's something that I need to do right now, to revamp the insurance costs, looking at mortgage rates, interest rates have never been lower. So you can beat those values. And then looking at that trade off between taking care of items on the turn or just repair replace. So there's a lot of places that you as an investor, in working with your property manager and some of your other partners that you have, there's actionable item, actionable items to improve on those values.   Emil: Yep. You know, there's other small things, right? Like if you are again, buying, let's say, a four unit building, and you're on the hook for water, installing low flow toilets, right, not expensive, but over the course of a year, it can add up to some decent savings that probably more than paid for the toilet in the first year. So like there's, you know, little things you can do to also try to decrease your expenses along the way.   Tom: Yeah. And rent growth versus vacancy. You know,   Emil: There you go.   Tom: Have we done a debate on that rent growth versus vacancy?   Emil: We haven't we should   Tom: That's coming up in the pipeline, for sure.   Emil: Yeah.   Tom: I like the question of you know, do you are raising rates at the risks of vacancy? Right, I got a feeling I think I know where we're gonna land. But it'll be fun to just switch back and forth in that debate.   Emil: Yeah. I also think it's depending on what you invest in, I think dictates how you do it. Right? If you're investing in something that's valued on cap rate makes a lot more sense. Because it's all based on income versus a home or up to four units based on sales comps. You know, you're less incentivized   Tom: Very astute point, Emil makes a lot of sense.   Emil: But we can get into all that in a debate.   Tom: Yeah, it'll be a good episode.   Emil: With that. I think it's probably a good spot for us and this episode. Thank you again, everyone for lending us your ears, and we will check you out in next week's episode. Happy investing.   Tom: Happy investing.