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Homes with many small bedrooms are hotly desired today. Why? In an economic rough patch, people need roommates. Secondly, home offices are more popular than ever. Residents increasingly want yards today too. Gardening is popular as a hedge against disruptions in the food supply chain. This all makes single-family homes more popular than apartments. *The entire episode transcript is below.* The debt-to-income ratio requirement is positioned to be removed from qualified mortgages. Three listener questions are answered:  1) What about CapEx expenses?  2) What about all these property notices I get in the mail?  3) What happened to the coffee and cacao providers? I give you four reasons about why money is a taboo topic.  Learn the least likely money topic that people are willing to discuss. The most I ever made at my day job was $108,000. People must stop equating net worth with self-worth.  Resources mentioned: April Home Prices Grew 5.5%: https://www.housingwire.com/articles/u-s-home-prices-grew-5-5-in-april-despite-pandemic/ Why Money Is A Taboo Topic - Ally Bank survey: https://media.ally.com/2015-11-24-Holiday-Tip-Most-Americans-Say-Social-Conversations-About-Money-are-Taboo-According-to-Ally-Banks-Money-Talks-Study The Atlantic: Why Americans Don’t Talk About Money Mortgage Loans: RidgeLendingGroup.com QRPs: text “QRP” in ALL CAPS to 72000 or: eQRP.co By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Construction Turnkey Property: NewConstructionTurnkey.com Best Financial Education: GetRichEducation.com Top Properties & Providers: GREturnkey.com Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Welcome to Get Rich Education. I’m your host, Keith Weinhold.   Talking about today’s hottest rental type, then my favorite guest is here on milestone Episode 300 - because that guest is you - as I help with your listener questions about your rental property operations, then “Why Money Is A Taboo Topic” (why DO people hide their salary?), and finally a little Episode 300 bonus. All today, on Get Rich Education. _____________________ Hey, you’re inside GRE. From Phoenix, AZ to Phoenixville, PA and across 188 nations worldwide. I’m Keith Weinhold.    This IS that show that’s created more financial freedom than nearly any show in the world.   You’re listening to milestone Episode 300 of Get Rich Education. More on that later.   The hottest INCOME PROPERTY housing type today could very well be single-family rental (SFR) homes that have many small bedrooms.    Four bedrooms is often better than three. Three is better than two.   Yeah, today, a high number of small bedrooms is being favored over fewer large bedrooms.   For one thing, this is because as the economy is in a rough patch, more people seek roommates to share housing costs.   Also, with more people working from home now, they want the extra bedroom for quiet office privacy.   You probably already understand that more residents prefer SFRs over apartments to avoid common areas like laundry rooms and hallways and even elevators.   Another reason boosting SFR demand today is something that you might be overlooking when it comes to rental property … because often, you’re thinking about things INSIDE the property like amenities, and square footage, and layout.    But another reason renters increasingly want single-family rentals are yards. Now sometimes, duplexes might have a fenced yard for each side too, of course.   But … why are yards more desired today?   Well, there are a few reasons. In the pandemic, people have discovered gardening like the hunter-gatherers did.   Yeah, gardening as a hedge against these disruptions in the food supply chain.   In fact, Burpee Seed Company recently had the highest sales in its 144-year history.   People are gardening. In fact, the homeowner’s association in my own neighborhood recently put it to a vote among residents about “OK’ing” having a second detached building in your backyard (only 1 maximum is allowed now) and that’s because more people want to have a greenhouse today.   Gardens and greenhouses - these are most conducive to single-family rentals.   People are even buying egg-laying chickens like never before. It’s kind of a back-to-basics subculture that’s emerging.   Yes, humans are mammals and mammals need sustenance! Haha.   You need food and you need real estate.   In the midst of The Great Shutdown, people want to do more with their lawns.    Lowe’s & Home Depot are doing really well - and they’re selling home-dwellers a lot of things like Inflatable pools, patio furniture, and trampolines.   Then back indoors, yeah, you may very well want to tilt your new property buys into SFRs with more small bedrooms.   Sometimes, older SFHs can have four or even five bedrooms. One reason for that is that families had more children generations ago.   Family sizes are smaller now. So if you still have a 4-5 bedroom place, it can work well for either roommates or home offices.   If you're the "hands-on" type, building a wall to divide a large bedroom has rarely been more lucrative than it’s been lately.   Now, one 300 sf bedroom is pretty big. Dividing it into two bedrooms of 150sf each is paying off more than it has in the past.   They are some housing trends in the pandemic - demand for SFR with more small bedrooms and a yard for a garden.   In the pandemic, the broader economy is getting "bailed out" more often than a bank behaving badly.   It's not just quantitative easing, dropping interest rates on every loan type, or loosening bank reserve requirements or putting free checks into unemployed people’s hands.   Many real estate investors are getting support … almost like they had opened their own GoFundMe account.      Low supply keeps housing prices buoyant. Low mortgage rates keep demand high. Forbearance keeps borrowers from defaulting - so that further supports prices.   Now, the debt-to-income ratio (DTI) requirement is positioned to be removed from qualified mortgages.   This means borrowers that have higher existing monthly debt payments on everyday things like their car or their credit cards could now qualify for new mortgage loans - when they couldn't previously.   Well, what this does is that it creates a larger buyer pool. More people have the capacity to qualify and buy property.   This larger buyer pool serves to further push up real estate prices - and that’s both investment property and primary residences.    Well, eliminating the DTI is great news if you want to lock up more property at these historically low interest rates.   But there can be too much of a good thing. It's a call-to-vigilance to be sure we don't return to those loosey-goosey days of, say, 2005.   That's when virtually anyone with a name and a signature could get a loan. Borrowers lied about their income on loan applications and the income wasn't checked - it wasn’t even confirmed in underwriting.   So then, people with historically low-paying jobs like movie theater ushers & dishwashers & pedicurists could sometimes own a fairly lavish home back then.   When appreciation stopped in 2007, liar-borrowers had no equity to remove for servicing the payments … and that whole thing didn't end well.    We're nowhere near that point. But watch that pendulum swing.    If you’re buying for resilient cash flow, you’re not so price sensitive anyway.   -----   The first one of your listener questions today comes from Chad in Saline, Michigan.   Keith, I like your easy-to-remember VIMTUM explanation of expenses but why are you excluding CapEx expenses from the cash flow calculation?   OK, thanks, Chad.   Let me translate if you, the listener, are uninitiated on this.    The easy way to remember how to calculate your monthly cash flow is to take your rental income and subtract out your mortgage (that’s principal & interest) and your operating expenses, which I call your VIMTUM. V-I-M-T-U-M.    That’s just an acronym I use for your regularly, recurring operating expenses and VIMTUM stands for Vacancy, Insurance, Maint., Taxes, Utilities, and Mgmt. V-I-M-T-U-M   What Chad is asking about are CapEx - which a shorthand way of saying Capital Expenditures.   CapEx means large, IRregular expenses that an investor or even a homeowner - often incurs with their property over longer periods of time.   An example is, what happens when your roof needs to be replaced? A lot of roofs have a 25-year life expectancy.   Now, your property’s water heater has more like a 10-year life expectancy.   Chad is basically asking me how I’m accounting for that when figuring cash flow. I think I addressed this on a prior episode, but it’s been a long time so I’ll bring a fresh angle to the answer.   First of all, I’ve mentioned previously that it's prudent to keep 3-5% of the TOTAL value of your property portfolio in a liquid side fund.    So if all your properties are worth $1M, you’d have $30K - $50K in cash or cash equivalents.   If you’ve just got your, say first turnkey at $100K - have $3 to $5K set aside.   Note that when you qualify for a mortgage in the first place, mortgage loan underwriting typically requires that you have reserves already.   And, by the way, this liquid side fund should be in addition to any overall liquid emergency fund that you have in your life.   But, Chad, on your CapEx question, you might still be thinking ...   Yes, I want to take some of those dollars that you’ve felt compelled to put in a liquid side fund account monthly and factor THAT in to your property ROI. I get that. Here’s the thing.   If you follow … really … the entire wealth formula espoused here on the show, your CapEx expense should be limited. You’re going to pay less in CapEx expenses than other investors.   Why is that? It’s because at the 8-to-10 year mark, which is before a lot of major CapEx items need attention, you’re going to sell