Latest / Short Term Rental Problems and Solutions / How to Build the Best STR (2/2)
Transcript
- Jeremiah: Today we're joined by Scott, who we are continuing our conversation with about how to build the perfect short-term rental. We go through how to underwrite the deal, what he can expect as far as expenses go, snow plowing, cable internet, and so on. And also a conversation he had with a builder. Jeremiah Noll: Scott, you were here recently, like last weekend, and did you actually meet with the builder? Scott: So we did. So we've talked with signature builders, but only on the phone. They're not local, right? Cause they're modular builders. So they kind of bring it out there. But we did meet with a ⁓ named Rocco. His company is called Calabree Builders ⁓ ⁓ he has built ⁓ least a handful of homes, if not more in Towamensing Trails. He was really nice guy. ⁓ The craftsmanship of his builds was really good. Jeremiah Noll: Admit it, you expected your guests and your contractors to act reasonably. Now you've realized it's not all sunshine and five star reviews. That means you're in the right place. That's because is the community where we talk about the gross, the awkward, and the operational messes. as well as the real strategies that help you keep going instead of taking the loss. Welcome to short-term rental problems and solutions. Let's get into today's question. Scott: And he has ⁓ a property listing for just kind of an all in build on one of the lots in Towamensing Trails. So ⁓ the thing we really liked about Rocco is we could ⁓ the build. Like he showed us one that had just been finished. It was ⁓ similar to like the footprint we're looking for. It was a two bedroom. It was a one bath, but could easily have a second bath ⁓ in there. ⁓ you know, The chalet look, high ceilings, good amount of windows. I would say it looked more traditional chalet than like know fancy upscale Airbnb with giant windows and really, really modern kind of looking, but really nice ⁓ And I think the thing that we really find attractive about this builder is it's just like, this is the price. I'm going to do all the site work. I'm going to do everything. I know that I can sell you this house on this lot for this price and everything's included except for like landscaping. Right. So that takes some of the guesswork out of it, because that is one of the more daunting parts for us is finding a piece of property and knowing that it's going to work. You know, some properties have perc tests already done, but some don't or they fail it. Some properties have, ⁓ you know, Jeremiah Noll: Nice. Mm. Scott: have a survey some some don't a lot of them nobody's done any of that yet, so I don't know and maybe you can help guide me on this Can you is it customary to ask some person who's selling a lot or their realtor? Can you can you do a survey? Can you do a perk test? We don't want to put any money into this lot that we know nothing about Jeremiah Noll: Mm-hmm. Some of those sellers are motivated enough that they're going to do those things for you without a guaranteed sale. You can make an offer continged upon pretty much anything. That's one of the things I love about real estate is that everything is negotiable. But every seller has their limits, what they're willing to put in there. Something that you can offer to make them feel more comfortable with it is a non-refundable deposit. A typical survey is going to be $1,200 for a basic building lot. And you can have them do that where there's stakes and there's a map. And that'll also help your builder because they're going to need a survey done before they can start building things too. Your perc tests are in a similar vein. a lot more common to make an offer contingent upon a perc test passing. So a lot of things to consider there. ⁓ Have you ⁓ discussed that builder potentially just doing the site work and then ⁓ all finish work with the Signature Homes build? Scott: We have not, we have not. That's a good idea. Jeremiah Noll: I would highly recommend exploring that because as a builder, he's only missing out on a couple of things, right? It's a lot of, there's still a lot of finish work, still a lot of electrical to do. And there's all that site work still with the landscaping and the foundation. So your builder that you met with, you already trust, you already like them. They could probably do something like this. And then you still get that build quality from the Amish and the cost savings from the Amish, ⁓ which is I see. like a really big value here. So Scott, I want to kind of wrap things up and ask if you have any final questions because we've gone over a lot of things today. You've got still the decision to make between Towamensing Trails and Camelot Forest. I think you're probably going to end up with a really good property either way. The key to take from this is that you can think about which one of these locations is going to work better for your guest avatar. Like if you're really diving into that two couples at a like at a awesome getaway, then you can also think about which one's closer to things that those couples are going to want to be near. Which one's closer to skiing, hiking, snowboarding, ⁓ even nightclubs, you know, not just closer, but are they going to want to go to the pool in the summertime? Because that's a key differentiator between these two neighborhoods. But then also Is Towamensing worth the extra effort of, ⁓ know, hosting a property with no fires allowed? Hopefully that changes, but right now it's still in effect. ⁓ Is worth the extra work involved with registration of guests? You know, so that's all going to inform your decision and you've got a great realtor that you're working with to help you ⁓ navigate the pros and cons of that. ⁓ a potential property manager for you, I'm to help. and give you some more input if you're ever unclear on those things. like, I think, ⁓ think the one that you've chosen the build and the location that you're choosing, ⁓ you're probably looking at four to $6,000 a month in just rent coming in probably better. I've seen two bedroom houses earn $119,000 a year without being lakefront properties. ⁓ Now is gross. That's before paying the cleaners and the registration fees, ⁓ but still a very high limit on your potential. So you build this right, decorate it right, get everything done and focus on that guest the whole way. And I feel like you've made a really good investment, Scott. Scott: Cool. I do have one more question ⁓ that I just thought of, which is probably the thing that I know least about. And honestly, the reason that I would consider property management above anything else. And that question is, how in the world do you decide how much to charge people? Jeremiah Noll: Absolutely. It's dynamic pricing. It's not really actually that bad. You could learn it from a course. ⁓ You could also get dynamic pricing through a property management software. You can get dynamic pricing from Price Labs. That's a third party tool. ⁓ Don't make every day of the week the same price. It's got to fluctuate with demand. Your higher priced weekends are going to... There's a NASCAR race in the neighborhood. So there's things like that that's going to cause it to fluctuate up and down. Scott: Okay. Okay. Jeremiah Noll: You definitely don't want to be undercharging by too much, and you don't want to be overcharging either. getting the pricing dialed in is a process that takes some time. ⁓ Property managers don't know either. ⁓ Scott: Okay. And so it sounds like, okay. So it sounds, but it sounds like there is a, a curve, still a little bit of a learning curve because these softwares, they give you the dynamic pricing and then it just interfaces with the tool or are you going in there each week and they give you suggestions? I just don't know the first thing about it, but Jeremiah Noll: So the way I think of a dynamic pricing tool is that it's like the throttle on your vehicle. The more you press down, the faster you're going to go. But you let up on it, and the same thing happens. So ⁓ Price Labs, you control your base rate. And in most dynamic pricing tools, that's exactly case. ⁓ Think that as your average price over the next 24 months or over the next 12 months. ⁓ So if put that lower, that increases your throttle, you should see an escalation in your reservations and the number of reservations you get. If you put that higher, then you can expect things to quiet down a little bit. So it's just a matter of, in my experience, pressing on the throttle real hard in the beginning so that you can get that airplane up to cruising altitude. And then you let off the throttle and raise the prices so that you can cruise, you know, a lot more efficiently at that 30,000 feet level. Whereas what some people do wrong is they don't push on the throttle enough in the beginning, and now they're cruising at 600 feet, where the air is thick and there's a lot of things for them to avoid and they have to go around mountains instead of going over them because they never got up to that elevation. It's a lot easier, I think, if you really press on that throttle right in the beginning to pick up your speed and then after that you're your cruising altitude and your pricing is higher and it's kind of dialed in. Scott: Thank you, that really helps. Jeremiah Noll: So that's kind of the way I look at those dynamic pricing tools. And I mean, even your property manager is not gonna know exactly what price this property at. They're gonna compare it to other ones, but it's not going to start there. It should be a part of a strategy where you do up some momentum and then you'll allow that momentum to keep you going, you know? So if today's episode sounds familiar, you're not alone. These are the challenges that no one talks about when they sell the dream of easy passive income. Scott: Okay, thanks. Jeremiah Noll: but they're exactly the problems that make or break your operation. If you've got a situation you want to share or some questions like Scott, then please email me your question reach out if you'd be willing to come on the air like he did. ⁓ problem might be the next one that we break down and chances are you're going to help a lot of other hosts in the process too. If this episode helped you share it with another host who's in the trenches. That's how we make this industry better. I'd also love to see you follow us on TikTok at Galvanized Investments. and Facebook and YouTube at Galvanized Management. Until next time, stay steady, keep learning, keep building something real. Scott: This is Short-Term Rental Problems and Solutions. Jeremiah Noll: Thank you very much, Scott. Thanks for coming on. Scott: Thanks. Yeah, so, Jeremiah, what do you think that I can earn with a place like this? Like, we just don't know what to expect. Jeremiah Noll: Yes, absolutely. There's a couple of ways that you can research this. One is by going through AirDNA. As a property manager, you called me so that you can get like that personal perspective. can tell you, I don't have anything ⁓ our portfolio that we manage right now that would be focused on just two guests, like two couples, you know? ⁓ That would be like what you're describing, but I do have some small homes that are like close to a thousand square feet that are doing really well. And each one of them has one bath. So I could talk about Lovers Lodge. which was purchased at $290,000. They added about $30,000 of furniture and decor. And that place rents really consistently. In any given month, we've got maybe five days that are vacant. And it's usually just that there's not two days in a row that somebody could actually book because the minimum stay in that neighborhood is two nights. That house is located in Albrightsville and it's constantly rented. Clearing around $5,000 a month. Last July, we brought in $10,500 just in the month of July for that one cabin. So they can be incredibly successful. One of the limiting factors on what somebody will and can pay for a cabin, and that's a log cabin, so it's another comparable for what you're looking at. But one of the limiting factors on what somebody can pay is their budget alone. But if you have two couples, now you've got the combined earning potential, right? Of four people. And so what they might spend as just a, you know, a romantic getaway might be $700, $800. What they spend for that cabin is closer to $1,200. But if you put two couples together and give them an amazing experience like that, now you're talking maybe $1,800 to $2,000 that you can bring in for So these numbers that I'm comparing to, you're going to expect to do better with your current plan, especially starting with like new construction, right? There's an A-frame that I manage, the market value for that's around $340,000. That house is also booking up the same exact way. It's one of those go small, high occupancy kind of cabins. And that one's doing around $4,500 a month. This is just its second month that it's in operation. Um, another one is actually a ranch also focused on, you know, one couple at a time. That one's 600 square feet and people do call it cozy. So do I. it's a high end and nice, but it's small and compact, right? So that house is doing consistently around $4,500 a month in just rents. so like these numbers that I'm giving you, that's after taking out the cleaning fee and the registration fees for the HOA. So you're going to cashflow if your mortgage is based on, you know, $350,000 purchase. should be able to cashflow on something like that. And then ⁓ over time, you know, you reinvest some of that money into better landscaping, maybe budget for replacement at the hot tub at some point, adding in a sauna. Like there's like that that you'll recognize over time. that guests would like or that they're asking for that you'll decide that you're gonna start putting into it. you make money like that, a great idea is to add value that the guests were not expecting. One of the ways that I'm doing that ⁓ I stock the fridge with sodas and waters. So there's two diet cokes, two regular cokes, two sprites and two bottles of water. And so we put these into all of our houses. I buy them at Sam's Club, ⁓ them real nice and cheap. This not a... This is not a promotion for Sam's Club, just saying when you buy in bulk, you can get a good deal and you can offer these kinds of amenities, these value adds at scale. And that's a really good way to just get consistent five-star reviews is to make the guests feel like they're getting a better value out of their stay than what they paid for it. Now, even with all those things, you're still going to have the guests that, you know, they came here so they could go ski or snowboard and they ended up, you know, getting rained out. And so. Scott: Yeah. Jeremiah Noll: They're really upset. They didn't have a good experience and it has absolutely nothing to do with you. So be prepared for that. I'm not wishing it on you, but it's part of our industry and you'll get used to it. You'll know how to deal with it when it comes up. But, I a one time get really upset because there was wild animals ⁓ here in the woods. Did you come here to see wild animals? ⁓ Scott: Yeah. Jeremiah Noll: Like, what do want me to do? Send over an exterminator to get rid of the squirrels? Like they're not in the house. They're outside the house. But in that situation, there was a deer munching on some trash across the street and they just really felt like somebody should come over and shoo it away and clean up the neighbor's trash. So what do you do in that situation? Right? So Scott, mean, you'll get there. You'll see what it's like to work with these guests. And they're not all bad like that, but sometimes you... Scott: Right. Yeah, yeah. Jeremiah Noll: You've got ones that are, that are like that, but I feel like I'm getting a little off topic here. feel like what you're describing, like this Amish build that you're showing me from Signature Homes, a lot that's Towamensing Trails ⁓ and, the cost, all seems like it's an incredible deal ⁓ and should make plenty of money. you've got put a value on the self management. So that would be replacement value. So when you're underwriting this deal, you know, you're already going to look at all the normal things like utilities and HOA fees, but think about like the rent that comes in and put a value on that rent. So you managing it yourself is worth about 20 to 25%. That's what another manager would charge for it. So when you handle it yourself, remember that 75 % of what comes in, that's your profit for making a good investment. The other 25%, that's... the pay that you're actually getting for managing this place yourself. You know, so if you at some point decide that it's not worth your time, that's what you're giving up. It's just something else to consider. Scott: Yeah, I feel that if we if we were clearing a good profit, we would probably use management such as yourself or your company because, you know, we we both have full time jobs. Our our goal is to have more free time. And that's why we want to invest in stuff, not to have less free time or to feel like we have a second job. ⁓ We'd rather pay someone else for that second job who who that's that's what they do for a living. So it's Jeremiah Noll: Mm-hmm. Scott: know, or even partially managed. ⁓ have ⁓ the ability to, I think, interact online and do a lot of the virtual stuff myself. ⁓ I don't have the ability to, you in Towam ensing Trails, ⁓ we this firsthand, right? You ⁓ come and they had to have, this packet for when we the trash at the end and when we take it to the trash area. ⁓ We had to have things hang on our car. They had to have those filled out already. I physically can't do We live two hours away. So we'd have to have some level of management. ⁓ OK, OK. Good to know. ⁓ Jeremiah Noll: Most cleaners do that. Yeah, not trying to talk myself out of the job. I'd love to work with you. ⁓ Just saying, like, there's ways to navigate this in order to make it manageable. Even just having somebody nearby that's on your side that's gonna inspect the house every now and then. I feel like a lot of operators write off the idea of inspections. ⁓ And it's because they want their cleaner to think that they just trust them blindly, but there's no value. and your cleaner thinking that you trust them blindly, or at least not in my experience. So you're probably wondering about some of the expenses, some things that you've got to, yeah. So a cleaner for a typical two bedroom house is you're charge anywhere between $90 for that clean, and I would say $250 on the high end. And that depends on a lot of things, linens included or not included. Scott: Yeah, I don't want to miss anything. Jeremiah Noll: amount of labor that's involved and taking care of it. ⁓ they're including the ⁓ like I was talking about sodas and waters, ⁓ they're including ⁓ soaps and conditioners all these different of things that your home is going to consume, I think it's really good to let your cleaners take care of the logistics because they can take care of it across the board and they just include that in their cleaning fee. ⁓ And then that fee gets passed along to your guests. Right? The guest is going to pay a fixed amount plus a nightly rate. so cleaners are going to charge based on the clean. The more occupancy you have, the happier they're going to be about that. Cause there's highs and lows in this area. And in the slow season, like the spring, those cleaners really appreciate their homeowners that keep them busy in the spring. but that's just the cleaners. You've got HOA fees. ⁓ in Towa mensing Trails, they charge the HOA fees to everybody. I think that's around $600 a year. And then they also charge for you to have the privilege of renting. That's like another $600 a year. And then per reservation, they're charging. So, um, they changed this up recently and I don't, I signed the checks, but I don't like do the registrations and come up with the total anymore. It used to be $25 plus $5 per vehicle. Now it's something different because I'm signing checks for like $21 and $27 and things like that. So they adjusted the pricing, but it's not extraordinarily high. It is per reservation. the way we handle it is that we actually write them a check after they tell us the total. You can also have your cleaners handle this. They'll cash with them. They'll pay, they'll get a receipt. They'll add it to their invoices. That's very common with cleaners who service the Towamensing Trails neighborhood. that's your fees practically. You've also got the cost of management. So if you're going self-manage or if you're going to find a property manager, ⁓ expect that to be Actually, there's really cheap ones at 15. And there's also like a hybrid model where it's marketed by somebody else and they handle some of the communications like Evolve I've heard a lot of complaints with that. Also, you are familiar with AI and you can't really involve AI if you're having them manage it. So there's pros and cons to management, but you would expect full service property management between 20 and 25 % of the net rent. So with that, full service management means that they're gonna find the cleaners, they're gonna find contractors when there's an issue, it's their name that's on the line. And nobody's even gonna know that Scott owns his house. It's just gonna be something that your managers are handling. Scott: So when you say 20 to 25 percent of net rent ⁓ is what the management would would take. I feel like this is a silly question, but I know what net means. But when it comes to like the cleaning fees, like what's paid to the cleaner, they coordinate all of that and they just explain it, if you will. Jeremiah Noll: Mm-hmm. Absolutely. So in the most basic terms, because there's definitely nuances, your property manager is going to take the total that the guest paid, call it $1,200, subtract off the cleaning fee, $200, subtract off the registration fee, maybe another 30 bucks. And what's left is what they're going to call net rent. So it's net of pass through. that might be depending on who you're talking to, that might be the number that was on the calendar, like $293 for this night, $212 for that night, $115 for this night. All of that together is what they're calling their rent and they're calling it their net rent, which doesn't account for platform fees. And they're splitting that with you. So that's their commission. They're getting 20 or 25%, you know, whatever that number happens to be. ⁓ want them to have the incentive to get your rent up, which is why their compensation is based on the rent. If it's a really important weekend, you want them to take it really seriously because that's the really high, high weekends. If it's a really inexpensive weekends, you still want them to take that seriously. But you know, when they can get you extra rent, that's the money that you actually make the pass throughs, the community and the cleaners. You're not really making anything from that. so that's, that's how you calculate net rent. you've also got maintenance and a lot of people ⁓ don't how to calculate that for the Poconos. ⁓ And, I could go on for a while because ⁓ obviously my world, right? It's what I live in. But something that's always overestimated is the cost of lawn care. Like getting a regular lawn out here cut is like $50 to $100, depending on how big it is and how challenging it is. If you're buying a lot in Towamensing Trails, you're probably talking like $65 bucks each time. But because of our elevation and because of the cover of trees, that grass doesn't grow very fast. So it's like every two weeks that actually gets cut and it's just starting to grow today. and this is April So like first cut is going to be at the end of April. And then every two weeks after that, until like the end of September ⁓ means you're actually cutting your grass, maybe 10 times. like estimate around $650 on average for an average lawn for yearly ⁓ maintenance, you actually spend more money on plowing. ⁓ So average Scott: Okay. Jeremiah Noll: driveway that's just, you know, straight and they're able to push it instead of having the back drag it from a garage. That's usually like 50 to $85, depending on the service. So that typically happens four to eight times per winter. So the numbers can go up significantly, but I prefer that the pricing is based on per occurrence. Other places, they'll charge you like by the season. And I just feel like there's a lot of opportunity for them to just not go when there's only three inches and they're like, well, it's supposed to be three and a half before I come and take care of it. you're kind of like fighting to get them to do services where otherwise, you know, it's, per occurrence. know they're going to get paid if they go out and do it. but typically I think they estimate that it's going to be like seven times a year. And if it's four to eight, then you save money. If you don't go seasonal pricing, there's it's nice to not have to worry about it, but Anyway, so that's how you underwrite some of those things. is gonna depend heavily on ⁓ the because heat is one of the biggest expenses ⁓ out for utilities. ⁓ So going propane or going with like mini splits is gonna be kind of close to each other. Obviously markets fluctuate with the value of propane. I've got for how to negotiate the price of propane down. You can usually get it around $1.50 per gallon, but that's not where they start. They start like giving you a tank and filling it for $4.20 a gallon. And that's ridiculous when you can get them down to $1.50. So don't trust the propane companies any further than you could throw them. They are all like the same way. It's kind of ridiculous, but they are very negotiable just so that you know. got, not to brag, but one time I got 200 gallons for free. Scott: Wow. Jeremiah Noll: and I got another 200 gallons for a dollar per gallon. And then I was fixed after that, because I buy a lot of propane ⁓ and I threatened to leave them. But yeah, so you're able to get deals like that. Like there's huge profit margins in the propane delivery services. And it's ridiculous, but you got to know look for it and how to play them off against each other. Because at the end of the day, gas is gas. It's all the same quality and it's probably coming from the same place. Anyway, so with utilities, you would want to estimate for a thousand square foot house, like maybe $800 in your coldest months ⁓ as like a maximum. And that's if it's electricity and that's adding in your hot tub and the use of a sauna. So that's like the top line. That's about as high as it can go. the summertime, I'm looking at like, $200 bucks maybe with AC. Take out the AC and ⁓ talk about September. ⁓ seen ⁓ bills as low as a hundred bucks. ⁓ you can really find ⁓ lot of variability in it. Another thing to know is most of this area is serviced by PP&L and PP&L will allow you to do budget billing, which fixes expense the same amount every month. So when those highs and lows come in, you're still paying the same amount. So that's just another thing to know about utilities. There's not really other utilities. We can talk about wifi. ⁓ Internet sucks completely terrible. There's only one option out here and the house that I'm sitting in right now, I'm not even sure if I'm gonna have enough internet to last the end of the call, right? It goes off all the time and they're no good. And I used to think that Comcast was bad, but you have not dealt with Atlantic broadband. And now they call themselves by a different name. because they had such a bad reputation as Atlantic Broadband and before that it was Metrocast and now they're Breeze Line, Breezeway, Breeze Line, whatever they are, it's a Breeze something. And a software in this industry that I refuse to talk to because it's a similar name ⁓ my terrible cable company. ⁓ they know that you don't have any other options when it comes to high speed internet. Scott: Yeah. Jeremiah Noll: You can do high-speed DSL, you can do Starlink, you can do like a T-Mobile hotspot. But ⁓ overall, it really depends on where you're located, what kind of ⁓ speeds you're looking for to see if any of those other options exist. But in the high-speed cable, you know, digital internet, you can get like a gigabyte per second for like hundred bucks a month. But you're gonna have to deal with the worst operators, the worst customer service and... When your internet's off for a week and you just can't get there to unplug it and plug it back in, they're still charging you for a week of service. It's, nevermind. Scott: But that sounds like that's wherever you... it's just the Poconos, right? Jeremiah Noll: So there's Blue Ridge Communications, which is significantly better than Breeze Line. ⁓ And there's like Comcast or Xfinity, which is better still. So where you end up being, it's just like, you know, that kind of sucks, right? you buy Towamensing Trails, you're probably gonna get Blue Ridge Communications, which is better than what I'm dealing with. But across three of my five accounts, I've got to deal with Breezeline* and it's... the worst customer service you could experience. So you really have to kind of keep on top of them because they know they're the only game in town. Now, even when you're with Blue Ridge, they know they're the only game, but they don't seem to take advantage of it nearly as much. They've got their own quirks, but anyway. Home insurance rates have been going up. So if this surprises you, that might also just because of inflation. that house is probably going to be insured for around $2,000 a year. that because of your taxes is probably gonna be wrapped into your mortgage. It's gonna be escrowed by factor like maybe $400 a month onto your payment when you're calculating that out. Your taxes on a house that's around $400,000 you can expect in Carbon County to be spending four to $6,000 a year in taxes, in real estate taxes. Now that probably seems really palatable for somebody from New Jersey. Scott: Right. Jeremiah Noll: And I know because people are moving to Pennsylvania all the time to escape the high taxes ⁓ your state. But guys do have better roads ⁓ in places. I don't mean to poke, just saying. ⁓ Scott: No, no, no. I, I, but no, that is good. But the insurance was surprising because, uh, I would have probably guessed $1,200 a year, $100 a month. But yeah. Jeremiah Noll: Mm. Yeah. Well, I used to get $1,200 a year, like three or four years ago, and I just shopped a rate recently and it was $2,000 a year. So, you know, the prices have gone up for sure, but I shopped around to find that. And even the rate that I haven't had to shop recently has been going up every year by like 15 % since 2019, right? So insurance rates have been going up. So that's another thing to factor in ⁓ house that you're looking to buy to build that is, ⁓ gonna have that new ⁓ smell to it. It's also gonna have that new house insurance, right? The replacement costs that depreciation are not gonna be in your favor at that point. ⁓ thing with the taxes. They're gonna assess it based on what you're saying it costs to build that has to do with your permits and their cost per square foot and whatever else. Scott: Yeah. ⁓ Jeremiah Noll: You go with 1600 square feet, your tax is gonna be higher. Also, the closer you get to the Delaware Water Gap, that's like New Jersey, the higher your taxes go. It's almost like concentric rings, because the school districts get more expensive, things like that. So your mortgage payments are obviously a function of your taxes and your insurance on top of the cost of the house that you're purchasing. I'm hoping that you can get all of that below $2,700 a month. And that would make the income that you're expecting, like a five or $6,000 a month, to be a really comfortable margin for you.