cash flow. Today is all about cash flow. Many people talk about cash flow, but very few actually explain it and how to get it. And that's what today is going to be on because if you can't define something, you can't have that something. So you you need to be able to define cash flow so you can have it. That's what we're going to talk about today. So what I want you to do is to imagine your apartment building as a living, breathing human body. Okay. And the rental income is the blood of the property. Okay. Follow me so far. And then the expenses and the mortgage are the organs that uh uh that consume all the resources and the uh cash flow is the oxygen. Okay? And a body, a human body without oxygen will die. A property, an apartment building without cash flow will die. Got it? So today is about maximizing the cash flow so that the body your apartment building can thrive. So in today's master class I'm going to share with you how to calculate cash flow so you can have it. And number two I'm going to share with you this is really important. Very few people talk about what affects cash flow. You think you know but I don't think you do know. And lastly I'm going to share with you how to keep your properties breathing strong. not just surviving but thriving. All right, let's get started. All right, before I get started, take a look at this car right here. Right, this is or this was my dream car in my 20s. I always had a dream of of buying this car, right? I couldn't see it when I was an engineer because I wasn't making enough. But after I started buying cash flowing property, this dream came true. And the dream was to, and I was a single father at the time, was to purchase a convertible yellow Corvette, 1969, and drive it down the Pacific Coast Highway, just my son and I for several days, just enjoy the coast, right? That was a dream of mine. Well, fast forward in my 30s, I bought one property and that one property cashed enough for me to buy this Corvette and then cruise down Highway One. All right. So, dream come true because of cash flow. So, that's what cash flow can do for you. So, my question to you is, what dream do you have? Right? As I mentioned before a few minutes ago, if you can't define it, you can't have it. So today, we're going to I'm going to help you define cash flow so you can have it. So you can have your dreams come true as well. Got questions? Simply text the word Peter to 833-9424516 and we'll help you. All right, let's start off with what is cash flow. Okay, oxygen equals cash flow. Okay. Now, just like a human body cannot survive without oxygen, an apartment building cannot survive without cash flow. Got it? So, here's my very simple definition. Cash flow is the money, okay? Money in your pocket so you can buy a Corvette or pursue your dreams. Money left over after all the bills, okay? All the expenses and the mortgage are paid. Okay, that's the definition. is what keeps your property breathing. Got it? All right. So, next, what I want to do is give you uh an example of how this works. All right. Before I jump into my example, I'm going to define for you uh the importance of rental income. It's it's a main component of cash flow. Okay. I'm going to use my human body example still. All right. So, rental income is the blood to the human body. Okay? So imagine the blood delivers nutrients to the human body to keep the body well, right? Well, rental income is the money that keeps your apartment building well, right? It needs to circulate like this. So the the blood, okay? Uh uh or the rent must be clean, right? So if the blood is dirty, the human body will have all sorts of problems. Same thing with your apartment building. the rent the money must be clean. What I mean by that is um the your rental income must be collected, okay, on time. And guess what? You need to have steady occupancy. That's how you keep the money healthy in your apartment building. And the other thing is if the blood or the rent stops flowing, okay, stops flowing, then the body weakens, okay? And if cash flow if the cash flow stops and then the property will start to die financially. I hope you understand that. Okay. So I think I've done enough here. What I want to do next is give you a full breakdown, a formula for calculating cash flow. Let's do that next. All right. Let's jump into the fun stuff. Here's a simple calculation on on cash flow. So I call the cash flow calculation the heartbeat for the human body. Okay. All right. Here it is right here. I'm going to use a 12 unit property as an example. Okay. So you can relate to it. All right. So let's say um we we for the monthly rent we have 12 units, right? Each at $1,000. So that's $12,000 a month. Okay. I multiply that by 12 months to get a year and uh it comes out to be $144,000 per year. That's my gross rent. Okay. So, I put that here. $144,000 in gross rent. Okay. That remember that's the blood of the property. Okay. To keep everything going. Okay. And then I have expenses of $56,000 a year. Uh the expenses um I call that taxes, insurance, maintenance, management, etc. Okay. And then uh if I do uh gross income minus expenses, that gives me $88,000 which is my net operating income called NOI. I will do another master class on the NOI because the NOI will either have you thriving or barely surviving. Okay, that will be next. Okay, so uh so income minus expenses equal NOI and then from there I'm going to subtract the mortgage. Okay. And then once I subtract the mortgage, guess what's left over? The cash flow. Okay. So, I have $144,000 in rental income. I subtract my expenses from it. I get my net operating income. And from my net revenue income, I subtract my yearly mortgage. And then I get my annual cash flow of $28,000 per year. Or we can call this 2,3 $3323 per month. Okay. So this this $28,000 uh and this calculation I call this this is the heartbeat that keeps the property surviving and not only surviving but thriving and able you for you to save up and buy another property to have your portfolio grow. Okay. All right. Got it? All right. So that is how you calculate cash flow. The cash flow calculation is the heartbeat of your analysis on your property. Don't forget that. All right, let's move on. The best time to invest in real estate is always 5 years ago. The next best time is today. Let us mentor you so you can get started investing right now. Click the top corner. Hopefully, by now you can see how important cash flow is. There's a saying that cash flow is king. I'm going to add to that and say cash flow is king even while you sleep because when you buy a cash flowing property and I defined it for you now so now you know how to cash flow um you want to you want to buy a property where it pays you monthly okay so you can not only uh survive but thrive even when there's a downturn. So when when cash flow is king this cash flow will protect you in downturns. downturns could be a recession or if you have a personal recession like losing your job. Okay. And thirdly, uh cash flow will fund your growth. Okay. You can save the money that um you cash flow from and continue to build your portfolio. So it funds growth. Uh uh Warren Buffett has a quote and I this is where I got this from. He says that if you don't find a way to make money while you sleep, you will work until you die. All right, that's a harsh truth, but it is the truth. Okay. All right. So, what I want to do next is share with you what affects uh this cash flow. Okay. So, what can we learn from what can affect cash flow so we can optimize u this cash flow that we're seeking? Let's do that next. Next is what affects cash flow. I want you to think about in my human body example uh what does uh what do bones your bones and your muscles how does it affect your body and how good you feel right so we're going to use that same example okay so what affects cash flow is I'm going to correlate it to your body's bones and muscles over here okay so think of your your bones okay your bones as the deal structure how the deal is structured how how the uh uh how what type of financing you work out on your deal like interest rate things like that and the market right where the rents are. Okay. And then for the muscles think of it think of the muscles for your deal um example as the rent and the expenses. Okay. They can go up or they can go down. All right. And then here are the five factors that will impact or it affect your your cash flow greatly. Okay, you need to understand this. If you can control these as much you can, you can control your cash flow. If you can optimize all of this here, you can optimize your cash flow. This is something people rarely talk about. Okay. All right. Number one is what the the greatest factor in cash flow. It's your rents. Okay. Uh, are the rents strong or are they weak? Got it? That's number one. Number two is vacancy. This can be a killer. People don't talk about this. You won't find videos on how to cure vacancies, but that is probably the number one killer of cash flows, having vacancies. So, vacancies are like broken bones. They really, really hurt cash flow. Okay. All right. Next is um operating expenses. I abbreviated it as OPEX. Okay. operating expenses. You can either tighten them up, okay? Get control of your expenses or you can loosen them like muscles. And if you loosen your expenses, guess what? Your expenses go up and your cash flow goes down. So, we want to be especially today with high interest rates, we want to be in a tightening mindset for tightening our expenses, okay? Nothing loose. All right. And then the fourth one is your finance term. That is the fourth major factor. It is huge. Okay. So, uh the probably the most important thing today are interest rates. Interest rates are like fat on your body. Okay. So, the more fat you have, the more weigh down you are. If you can come into the deal with with less fat or lose fat, guess what? You're going to have more cash flow. Okay. Last one is, and this is really important, is your is your property management quality. Whether you are managing or you have a third party manager or someone living on a property, the management quality quality is like the body's nervous system where everything gets directed. Right? If this is weak, if your management quality is weak, guess what? Your operations are weak and then uh ultimately your cash flow is weak. Okay? So these are the five factors. Uh rents, vacancy, operating expenses, finance, and management quality. Don't forget that. All right. So next, what I want to do is share with you how to boost your cash flow and what impact that does to your deal. Ever wondered how proinves investors find and analyze deals for maximum profit? How to secure financing even if you're a beginner? Or attract and keep tenants for steady passive income? Commercial real estate for beginners delivers simple, actionable steps to master it all. Tap the link on the top corner for your free copy today. All right, here's the last part I'm going to share with you. This is all about boosting the cash flow or gaining muscle on your property. Okay, so I call this boosting cash flow uh fitness training. Uh did you know that uh as you get older the more you lift weights and do resistance training the longer you will live. That is a fact. That is even a Harvard study. The same applies to our properties. Okay? So the more we can work out are not properties uh i.e. increasing the rents. Guess what? You're going to have a property that has more blood, more cash flow. It's going to be healthier longer term. Okay. All right. So, here's my drawing of this uh lady here who represents the apartment building with her muscles. Okay. All right. So, I'm going to use a 12-unit apartment building as an example. I'm going to do something very simple and you can see the profound effect. Okay. So, I'm going to raise the rents um $50 per unit. Okay. Who can't absorb a $50 a month uh increase in rents? Okay. And I'm going to do this over the 12 units. So, $50 uh per month, right? for 12 units for the whole year. That's an additional $7,200 per year. Okay, just by raising the rents $50. Okay, and then I'm going to cut the expenses 5% some way somehow. Okay, it's going to save me uh $2,800. So, if I add these two, that's $10,000 per year boost in my cash flow. Incredible by doing these little tiny things. Okay. Who can't raise or rent $50 a month? Who can't save 5%. Okay. All right. So, this is what it does. I'm going to give you a quick bonus of the beauty of commercial real estate. Okay. Here's the bonus. It's called forced appreciation. Right? In commercial real estate, uh you can force the appreciation upward by raising the rents, by raising the net operating income. You can't do that on a single family home. only on commercial property which is defined as five units and greater for uh multifamily. Okay. So here's the formula uh if you uh it's the income increase divided by the market cap rate. I have a video on the on cap rates explained it will appear on the screen. So I'm not going to go over here. So watch that uh video. It's very important. It explains cap rate from the top to the bottom. Okay. So income increase divided by the market cap rate. $10,000 increase per year divided by a 6% market cap rate. I just forced the appreciation the value upward of my property by $166,000 by handing out 12 notices and tightening my expenses. Wonderful, right? That is the power of commercial real estate, the power of multifamily if you do it right. Got it? All right. Today was all about cash flow. I hope you enjoyed it. What I want you to do now is go out and find a uh an apartment building, a multif family property that you can do the same the cash flow calculation I did and discover if the property is healthy or if it's not healthy. If it's not healthy, look for ways that you can increase the oxygen. Okay? put in more muscles and that way you can uh uh train yourself to locate and find good properties that you want to add to your portfolio so that you can create fire breathing properties that will that will change your life and allow you to achieve uh the dreams, okay? Life dreams that you always wanted. All right. Okay. Thank you everyone for hanging out with me this long. I appreciate you so much and I'll see you at the next video. Would you like to work with me? Every successful commercial real estate investor has a mentor. Learn more about my protege program right here.