How to Calculate the True Cash Flow of a Rental Property

Brandan Fisher (00:00)
we can work backwards and then basically do the math and tell you, hey, if you put two hundred dollars aside each month from that amount that I’m collecting in rent, again, these it it it shows less that we’re actually bringing in, but the thing is we’re being proactive, right? Most I would say most people are reactive. If you if you have a rental property

You’re just waiting to get that call from either the tenant or from the property management ⁓ the manager that something happened. And then you gotta figure out like, do I have the reserve to cover that expense? Or am ⁓ do I need to pull out a HELOC? Like what are we doing to ’cause I mean a roof, that’s a that’s I think probably one of the major feature ⁓ major expenses of the house. And to be able to for sure to be able to try to finance that to get that replaced.

Cody Crabb (02:20)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I am your host, Cody Crabb, and today I’ve got Brandan Fisher with me. Brandan is the founder of allproperly.com, a new software platform helping landlords understand the true cost of owning their properties. It’s not just rent minus mortgage. We’re going to talk about maintenance, keeping a reserve, and the stuff that will quietly eat away into your profit.

Thank you so much for joining today, Brandan. I’m I’m excited for this. I I’m excited to see ⁓ how this works because this sounds like something a pe l thing a lot of people well, let me just say it again. That was that was a mess. I’m excited to get into this because I feel like a lot of people need something like this. So ⁓ very excited to get into it. And thanks for joining us today.

Brandan Fisher (03:03)
Thanks, Cody, for having me.

Cody Crabb (03:04)
so for people who haven’t heard of you yet, let’s kind of get into this get into your story. You called yourself an accidental landlord as we were talking in the kind of before the podcast. Walk us through that story ⁓ and tell me how you kind of went from owning a house to like, wait, am I actually making any money as I’m renting this out?

Brandan Fisher (03:24)
Sure. Now I’m a little hesitant to tell this story because most I think real estate professionals would have told me, Don’t pay off your house, you should, you know, pull the equity and and and keep buying up more real estate.

Cody Crabb (03:35)
Accidental is accidental. Yeah. Yeah.

Brandan Fisher (03:38)
So ⁓ basically me and my wife we paid off our house ⁓ really early. it took us only seven years to pay off our house. ⁓ and then from that we were looking after after COVID hit, I think a lot of people were trying to realize like, should I get into a different property than our current one? And so anyway, we were looking at the time and ⁓ we were gonna sell our house ⁓ and then buy another house.

But before I did that, my my brother was like, Hey, have you have you ran the numbers? And so he’s like, Did you you know, have you seen like what you could be getting in rent and then take that amount and put it towards, you know, the mortgage payment on the new one? I was like, No, I hadn’t even thought about it. So spent some time ⁓ unpacking that and then decided to keep the house as a rental and then we ended up buying this other house instead. And so ⁓ that’s why I say I’m an accidental landlord ’cause I wasn’t

I didn’t have any intention of investing in real estate other than having my current primary residence. And then ⁓ but yeah, he basically said, you know, you can get a property management company, they can kind of take care of everything for you. I ’cause I was like hesitant of going and knocking on the door to collect rent. And so it’s nice it’s nice to be able to have somebody else do that for me. So it’s great.

Cody Crabb (04:53)
For sure. And and I love I love the angle that you’re coming at this from because literally anyone that has ever done this i is it completely relates to this. Like I don’t know like the first moments of like I don’t maybe I could do this. I don’t know. How do I even do that? Is that allowed? Yeah. So that I think that’s interesting. ⁓ so so we go from this ⁓ you you find yourself as a as a ⁓ a landlord, you like an accidental landlord, and you

You find yourself wondering, Am I even actually making money on this? Kinda tell me about how you kinda discovered that and that thought process.

Brandan Fisher (05:27)
You bet. So the nice thing is when you fully own a house and you’re renting it out, you have a lot higher profitability on the house. ⁓ and so in my mind I was like, well, I’m gonna throw out a hypothetical number here. If we’re getting two thousand dollars in rent, sweet. You know, I can take that and throw that at our current mortgage. Yeah. But the problem is we’ve got ⁓ let’s see, property management dues come out of that amount. We’ve got

Let’s see, HOA dues that come out of that. ⁓ we’ve got thankfully I don’t have PMI, but there’s a like all I’m trying to say is that there’s a lot of other expenses that go into the property. ⁓ insurance and ⁓ property taxes. So by the time you factor in all of those things, then the amount that I can actually take home from that is a lot less than the amount that we’re getting in rent. And so ⁓ I would say like I don’t know.

I wasn’t keeping track of that n necessarily. We were just getting the amount coming in. I would s hold it in a bank account and just wait to to see what happens after some time. ⁓ but I actually wanted to know my true number of what that profitability was. I think a lot of people use spreadsheets and things like that. ⁓ I just wanted a way so I could visually see it ⁓ in the software to be able to show what my profitability is on that property.

Cody Crabb (07:36)
Yeah. Man after my own heart. I totally get that. ⁓ and and so I feel like so y you’re solving a problem that I think a lot of people are like familiar with and like especially starting out, but our more experienced listeners are probably thinking, big deal. Like I know what to expect. I’ve been doing this for a long time. I know you know I know all the details. I know all the you know, like you said, the sometimes you have to deal with PMI and you have the taxes and you have all kinds of things d it going on here. But there are

are other things, other factors that go into this besides just like what you technically owe now. tell me about like, you know, how repairs and future maintenance and kind of keeping a reserve heck tell me about that side of it, ’cause that’s the side that really catches my attention.

Brandan Fisher (08:18)
You bet. So once we’ve now focused on the numbers, the other thing we like to do is we track your roof, your HVAC system, and your water heater. I would say most ho most ⁓ homes have those things. You might have different variations based off of what your property is that you have. Yep.

Cody Crabb (08:34)
I’d

say most homes have a roof. I would go I would go out on a live and say that. Yeah.

Brandan Fisher (08:38)
For sure on the roof, yes. ⁓ different water heaters maybe or ⁓ yeah. HVAC system, you might have ⁓ baseboard heating in your home or some other type of boiler or who knows what, right? So but the goal is if we track those three things, what we do is we we figured out what inflation has been and we track like, you know, based off of where like when I’ll give you the roof is the perfect example. So

when we moved, in my mind I was like, we had just replaced the roof. It’s brand new. Well then when I actually looked at the year we replaced it, it’s already been fifteen years. And so if it’s a 30 year roof, I’m like, okay, we haven’t been putting any money aside yet for this. Like, what’s the new roof going to cost? What date will that potentially be? And again, these are all estimates, right? But it’s still nice to be able to see that if I’m ⁓ th through that calculation of with inflation.

⁓ the amount of the roof, ⁓ the year it’s gonna be replaced, then we can work backwards and then basically do the math and tell you, hey, if you put two hundred dollars aside each month from that amount that I’m collecting in rent, again, these it it it shows less that we’re actually bringing in, but the thing is we’re being proactive, right? Most I would say most people are reactive. If you if you have a rental property

You’re just waiting to get that call from either the tenant or from the property management ⁓ the manager that something happened. And then you gotta figure out like, do I have the reserve to cover that expense? Or am ⁓ do I need to pull out a HELOC? Like what are we doing to ’cause I mean a roof, that’s a that’s I think probably one of the major feature ⁓ major expenses of the house. And to be able to for sure to be able to try to finance that to get that replaced.

And then what happens is then you just what wait another thirty or twenty years to get it replaced again, you know? So

Cody Crabb (10:30)
Well and so th ⁓ the reason I love this is because I’m a very like in my I I d I don’t want to r risk more than I have to, right? So I I love the idea that so i if I look at a cash flow of a thousand dollars a month, that’s great. That’s swell. But what I would really love the feeling of is a cash flow of five hundred dollars a month or two hundred dollars a month, but that is like the most solid protected

two hundred dollars ever because I’ve got all this other stuff taken care of. I know in my mind I’m saving up for the new roof. Five or so years I’m gonna have to get a new water heater. I’m literally already paying for that as as part of this cash flow. Like that is such a I can’t imagine the peace of mind that that would bring you because then you know like you your number might be a lot smaller, but you are way more confident in that number. And I bet that would allow you to make much better decisions in your future investments as well.

Brandan Fisher (11:21)
Absolutely. Cause again, if you know your numbers, then you’ll also know like what you can afford to potentially put down on the next place or you know, keep doing that. So the worst part is one of those goes out and then all of a sudden your whole your whole plan goes out the window because now you’re trying to figure out like how you’re gonna get the cash to to get these things fixed. Yeah.

Cody Crabb (11:40)
It’s like a number you can trust. Well, and I love the other thing I like about this is the timing would is so important. I mean, if you I’m I’m picturing a world where, you know, you’re you’re like, okay, now next year I’m really gonna double down on investing, and you have, I don’t know, a couple of different doors, right? And both of the roofs are due for maintenance, and then now what? Like there goes your hold down payment. So, like I I love the idea that you can kind of time things a little bit better too.

This is something that you spend a lot of time thinking about, every possible thing that could go wrong. ⁓ so I would love to hear like if someone has a small portfolio, what is or they maybe haven’t been keeping as good of track of things as they should be, what’s something they should go check on like right now, like r as soon as they’re done listening to this that they are probably forgetting r about?

Brandan Fisher (12:58)
Sure. ⁓ I think what’s interesting for me is since I went the property manager route, I think the hard part is I’m ho a hundred percent reliant on them to tell me what needs to be done on my property. But depending on your property manager, they might not be doing those things. And I I’m not saying that mine’s doing a bad job or anything like that. I just want to make sure that as the landlord, I am being proactive about these things.

So what we also did in our software is we went through and we figured out like what are the what’s the maintenance that needs to be done on each property, you know? And it depending on where you’re at and where you live, you might need to add custom things to your own. But we have like 30 pre built out ⁓ maintenance things that need to be done on your house. ⁓ things like making sure the gutters are cleaned out so that you don’t have ice damming depending on where you live.

there’s things that you might need to do as far as winterizing sprinklers. ⁓ you have to blow them out if you have things that you need to do it depending on where geographically you live, right? Yeah.

Cody Crabb (14:01)
Well that’s another question that I had for you. sorry to kinda cut you off there, but I I I would be curious to know, like, I mean, buying a property in Arizona versus, you know, Minnesota, or they it could not be more different. ⁓ how customizable is this? Like there’s there’s places where you need to go, I need to go check the such and such for lizards every you know, so is it is it have that kind of feature too?

Brandan Fisher (14:22)
Absolutely. So what you do is you just go in there and create a create a task and and then it you can say the frequency that you want it done at, reminders, things like that. It’ll send you an email or we notify you directly inside the inside the software. ⁓ what’s nice too is that I can assign things to my property manager so that then they’re notified of things that I’ve added for them. ⁓ it’s just a it’s just a great way to communicate inside the software, but also just making sure that

You’re protecting your asset. At the end of the day, that’s what we’re all trying to focus on is like how can we make sure that we have a well-maintained property? And by doing that, you’re actually protecting your asset. So one I’ll if you don’t mind, I’m gonna jump in real quick because one thing that I did on my rental property, we have like a special sprinkler timer that’s different. We have irrigation valves that need to be on open and closed. I was going over there every year and doing that, but I was like,

There’s a way that I can automate this. So I just pulled out my phone, recorded a quick video, and then I created a task and then I assign that to my property manager. And so every time she then goes over to do it, she can ref ref refer to those videos, know exactly what needs to be done, and then she can complete the task when it’s done and then it lets me know the task has been done, which is

Cody Crabb (15:37)
That’s even better because this having the little like, good, okay. Now I don’t have to even think about it. That’s that’s really nice. I think ⁓ this is really awesome. I especially like that you can kind of use this as almost like a task management software too. Like this can be something where you, you know, are able to I mean it it also sounds like something you could you could scale too. So that was another question that I had for you was like, ⁓

Is this something that you can kinda add property after property after property to? ’cause this this sounds like this would be amazing for somebody with a full portfolio. And does it kinda aggregate the numbers for you at any at all, or is that something you still need to do on your own?

Brandan Fisher (16:12)
Absolutely. Yeah. ⁓ that’s that’s exactly what we wanted to do is you put in your property and all of your data on it. And then it there’s different buckets. ⁓ it’s hard to maybe explain this other than yes, it shows you what your actual monthly costs are ⁓ as a whole from all of your properties. So it takes all the profit versus what your actual ⁓ expenses are, and then it gives you what your actual number is. And then what else is cool is ⁓

For me, what I really liked, ⁓ there was a software I used years ago called mint dot com. It’s it’s sold. It’s no longer or they closed it down. But what I loved about it was to be able to track your net worth. ⁓ because we don’t do all investments and all the things, we just call it your net wealth score. ⁓ but it just takes all of your properties minus what you owe and it tells you actually what your what your net what your net wealth is. And to me that’s what excites me is to be able to see what my portfolio is actually doing.

Cody Crabb (17:50)
Yeah, I love that. I think th this is really interesting to me because I feel like this is real this is like you know, we we talk to a lot of people that do some kind of software for the real estate industry, right? And usually it’s something like, you know, investors can find a property in Mongolia to invest in. And I’m like, Okay, but like your average person is not gonna do that, right? You’re not gonna go visit Mongolia to s but I do love the I love the the the basicness of this.

But also how complex this could get. I mean, th for someone that wants to get into real estate, like you said, maybe they’re an accidental landlord. Maybe they inherited grandma’s house on accident but decided to rent it out. And they just have kinda are kind of new to whole this whole thing. I loved how simple how this simplifies things. I mean, I’m imagining a dashboard you could bring to your bank and say, Here, look, here are my numbers and here’s th that would be so much better than just saying like

D trust me bro, like a you know, I got I got this. Yeah. But you can actually have data to back it up when you’re talking to banks or other private, you know, funding sources and things. So this this sounds like a it’s very much needed in the industry for sure.

Brandan Fisher (18:52)
Right. And I I hesitate to even tell you something future that we’re working on, but we want

Cody Crabb (18:57)
I’m

ask you anyway, so I’m glad you’re just coming out with it yourself.

Brandan Fisher (19:00)
So ⁓ like I said, we we just kinda launched this not too long ago and that’s why we’re just excited to talk about it and get get this out there. ⁓ the second thing we’re doing though is we’re gonna hopefully be able to have ⁓ an easy reporting button for tax prep for the end of the year. ⁓ nice basically ⁓ my accountant always asks me for my numbers at the end of the year and then I have to go and try to figure out, you know, what did I spend in these different categories for taxes, but we’re

because we’re already gonna know because we’re already gonna know what those what they’re looking for, we’ll be able to generate a report. So you can easily just send that off and then should save you a ton of hassle and headache when it comes to tax prep for your rental properties.

Cody Crabb (19:41)
I’m getting the vibe that you just are like, this is my this software is just made for me and if other people like it, then that’s great. You’re just like, I just hate just the taxes. Like I t I feel that way too. I totally understand that. And frankly, some I think some of the best products have come from that kind of feeling is like I just need this to exist and I I’m glad other people want it too, but like I just need this. So

Brandan Fisher (19:49)
Hundred percent.

Absolutely. That’s ⁓ I’m solving my own problem first, you know. But I know that other people are gonna also want this.

Cody Crabb (20:12)
For sure. ⁓ so okay, let’s say let’s talk about scaling just for a second here as we’re winding down. ⁓ for an investor who wants to go from like one rental to like five, ⁓ I’d be curious for you what what’s your ⁓ what’s your read on like the danger of that? Like what are the things that start to break down first? I think probab part of the things that start to break down are tracking things like you have been tracking. ⁓ but I was curious if you had any other insights on that.

‘Cause it seems like that’s your kind of main user base is people that are starting to scale.

Brandan Fisher (20:43)
Absolutely. So I would say if you have one to five properties, the nice thing is ⁓ our software handles that. Right now we have a limitation of ten properties. but basically being able to see you know, blocking out the time that you actually want to spend doing the maintenance on your properties, right? ⁓ to being able to see all of your numbers in one place. I to be able to be able to make informed decisions of like,

You know, are you ready to get another rental property? Because once you actually know what your numbers are on all of these and it kicks you out like what your actual monthly expenses are for the whole entire portfolio. but as far as task management, again, you can have multiple different property managers managing this. You just share with them the you can add them to a property. they get to see their numbers of how much money they’re making from your real estate.

But they’re not sure. But they’re also not we have different share

Cody Crabb (21:38)
I appreciate that as well, yeah. For sure.

Brandan Fisher (21:43)
⁓ Shared access privacy settings. Yeah. Correct. So that they’re not seeing all the numbers that you see. They see their own numbers that they get a focus on, which is great. But just to be able to have everything in in one place, i it’s just it’s really cool.

Cody Crabb (21:56)
Seems

very satisfying, certainly. well I think this is awesome. ⁓ we’re coming up on time here. So I what are you hoping people do with AllProperly right now? Are you looking for just kind of more users, feedback? You want people to just go check it out? Like what what is it that you’re hoping people do?

Brandan Fisher (22:10)
Absolutely. Yeah. So ⁓ we’ve kind of gone through round one of beta users. We think we’re ready to hit hit the ground running. we would love ⁓ feedback. if anyone here has just a single home, like the software’s free. ⁓ if you have multiple properties, that’s when like because at that point you’re running it as a business, that’s when we ch that’s when we kick in and start ⁓ charging for the software. So again, our first tier is basically from that.

two to five properties and then from six to ten. ⁓ if you if for some reason you have a larger portfolio than that, right now we only support up to ten ⁓ because I think there are other more enterprise software solutions out there. But depending on the feedback we get, we might end up going that route. ⁓ but yeah, that’s what we’re thank you for having me on the show today. And that’s what we’re trying to do is to get people to know about this and and to jump in and use it and start tracking their own properties.

Cody Crabb (23:05)
For sure. So how where can people go to to find out more?

Brandan Fisher (23:08)
You bet. So it’s allproperly.com is is the ⁓ the URL. And so again, know your numbers, protect your assets and everything in proper order.

Cody Crabb (23:20)
Cover your assets. I love it. That’s a good tagline. so well they thank you so much for for all this. I think this has been this has been really informative and helpful. I think that this kind of mindset of the confront your actual number and don’t just assume that you know it. I I love that. So thank you so much for sharing this. ⁓ everyone go to allproperly.com check it out, see if that works for you. ⁓ and until next time, we’ll we’ll catch you on the next episode. Brandan, thank you.

Thank you so much for for joining us today.

Brandan Fisher (23:50)
You bet. Thanks Cody for having me.