Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
A - Invest $100, add value to $120, market corrects to $100 in year 1, but you achieve an 8% return from cash flow and principal reduction.
B - Invest $100, add value to $120, market remains as-is (or it takes longer to correct), you achieve target returns of 15-20%
C - Invest $0, earn $0.
Substitute appropriate figures...just trying to generate dialogue.
It's hard to model things like a market correction or rising cap rates, get excited about lower returns, and make a purchase but idle cash and the war chest strategy (scenario C) can be costly relative to scenario A (except with an appreciation only/market timing strategy...let's ignore that one for simplicity).
Many of us have analyzed and turned down a ridiculous number of deals and we see a lot of posts about waiting for a correction but the math seems to suggest otherwise if investors are adding enough value (and generating cash flow, using long-term debt, buying in solid locations, or investing for the very long-term). Please share your thoughts.
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
8y
I have no answer. That's my honest answer. Last year I thought "well, I'll just slow down and wait for prices to get better", but because I'm buying so low already I might just be unrealistic. The tough thing about investment is getting past the psychology of past investment. If I bought a house at $25k, I think *all* houses should be able to be had at $25k, or thereabouts - so I tell myself I just need to 'wait for the right deal', or 'work the margins harder', or something similar. It may just be that I have to recalibrate to reality, and not the other way around. Of course, you never know for sure except in the rear view mirror.
As an investor, you almost by definition have to believe that you're smarter than the other guy. And I say that not in arrogance, but just in the very nature of what we are doing. Anything you buy as an investment - if we define investment as increasing your overall financial stores, i.e. getting more money out than you put in - has to gain more value than its present day value, meaning that we have to believe that what we are buying is being sold at some kind of discount relative to its potential. If you believed the absolute ceiling on Apple was $500/share, it would make no financial sense to buy it for $501/share. That goes for everything - whether you think it's just undervalued in the first place or has lots of headroom to expand based on inputs. So we think things like "Oh, the market's overheated, I'll buy when it comes down", when in fact it may never come down.
All of our guesses - and that's all they really are, educated or not - are based on our own experiences, values, financial position, abilities, etc. I may think a house that was $25k 2 years ago is a ripoff at $50k. Someone from another market might think they hit the lottery. If enough of them do, then my reality was wrong. Further, we are much better at remembering how right we were than how wrong we were. Everyone remembers how smart they were to get in just before everything took off. No one remembers all the stuff they were thinking about buying that tanked.
Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
8y
It is a bit mind blowing that we can now access such a vast resevoir of wisdom here, kinda makes up for all the time wasted on nonproductive internet crap:)
The warchest therory has another downside; similiar to folks endorsing gold to hedge against catastrophe, what happens when the storm passes and you and everyone else now has to turn their gold into cash at the same time? Exactly,...the price will fall if everyone is a seller at the same time.
So everyone has some attechment to the "hold on to cash for the crash" theory, but if the world is full of investors trying to deploy capital during the next recession, prices WON'T GO DOWN!
Now that might be different for sfh if all the people looking for shelter stop buying, but commercial stuff not so much, unless credit shuts down.
Ian ippolito's website has amazing info on the re cycle!
Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
8y
@Mike Dymski I'll vote for taking (strategic) action, Invest $100.
I'd probably rather be in the game than on the sidelines as long as it's done with a value add. Obviously, there is a lot of nuance to to each situation but all else equal I'll invest. You may also want to factor in the education from investing versus not.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Mike Dymski I think what someone does with their free cash flow is symptom of an overall investing philosophy and not stand alone decision.
I look at things through a value investing lens so that colors a lot of my decisions and views. The concepts of Mr. Market, Circle of Competency, and Margin of Safety guide what type of investments I look at and thus how to deploy capital.
The riskiest scenario above makes $0 and this brings out a good point about risk and our perception of it. To paraphrase Jason Zweig answers to what is risk, you'll get different answers depending on who, when, and where you ask. In 2006 risk was not making as much money as the other guys and gals at the REIA on your last flip. In 2009 risk was the banks taking our primary residence. We have little control over the act of making a mistake; it will happen, but we can control the consequences of being wrong.
This is where Margin of Safety, or buying an asset for a percentage of its intrinsic value, helps defray risk by admitting to ourselves that the analysis we performed may not be correct and even though we think we have gotten a great deal, Mr. Market fooled us.
What does this all have to do with cash? When you only invest in assets you truly understand with a margin of safety any excess of optimism in a market makes it challenging to find deals. That leads to "hoarding cash" either in a checking account or in equity, because rule #1 of investing is don't lose capital.
So I propose an Option D: Invest $100 in something you think is worth $120, but was worth $100 and it corrects to $75; you still get a 6% return, but now you need to pay to add value, which gets you to $100.
@Will G. in your example I wouldn't have a lot cash left since during the storm I would have used it to buy assets when most likely their market price feel below intrinsic value. Also, unless the investors hoard cash/gold in their mattress, the capital is in the economy in one form or another so it has an impact.
Now if you have a dollar cost averaging style, flipping/ turn around model, trend following, momentum, or any of a countless number of other philosophies you may not have the same feelings about cash and that's fine.
I'm always open to learn abut how others think about investing, so let the conversation begin!
Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
8y
So does this conversation circle back to the intrinsic "value" of money? Certainly a moving target thanks to the fed. If the thread is about timing the market as opposed to just getting in and staying in, then that is totally personal based on time horizons etc.
Being in the trenches and attempting to make a purchase now is uncomfortable at best, and I have come to grips with the fact that I will have to pay more than I "should" to get invested. I think it may be useful to look at it based on how much future income i am going to have to give the owner to purchase.
For instance say my city has had historic cap rates on multi fam in the 7-8% range, but I am going to have to go down @6% to get it done, so that is say $166k on a hypothetical $70k net property, or 2.3 years of noi i will have to give the back to the owner.
Would you take this deal or stay un-invested?
It is hard to imagine conditions 2 years from now, will they be better or worse for buyers?
Reference back to Ian's website with a statement that "when owners are charging what a property is worth, plus what it will be worth in the future, that is evidence of a bubble".
And I know the only way to mitigate future conditions is with value add, but I have not seen any unicorns around here lately have you?
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
8y
@Mike Dymski, Totally agree that a professional investor is an investor in all weather whether they're buying umbrellas or sun screen. No matter the market there will always be buying and selling opportunities. It's the amount of leverage that will kill. And that's why you hoard cash. Because the best buying opportunities will come when you cannot sell your portfolio for best and highest and they will come when the banks are the least eager to lend to you.
So absolutely invest $100. Every time. Just don't invest $100 to buy $500 every time. Save cash to buy that $500 for $250.
Paying more isn't going to kill you @Will G. It's paying more by borrowing too much. You'll have a difficult time finding an investor who went belly up while owning property in cash.
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
8y
I have no answer. That's my honest answer. Last year I thought "well, I'll just slow down and wait for prices to get better", but because I'm buying so low already I might just be unrealistic. The tough thing about investment is getting past the psychology of past investment. If I bought a house at $25k, I think *all* houses should be able to be had at $25k, or thereabouts - so I tell myself I just need to 'wait for the right deal', or 'work the margins harder', or something similar. It may just be that I have to recalibrate to reality, and not the other way around. Of course, you never know for sure except in the rear view mirror.
As an investor, you almost by definition have to believe that you're smarter than the other guy. And I say that not in arrogance, but just in the very nature of what we are doing. Anything you buy as an investment - if we define investment as increasing your overall financial stores, i.e. getting more money out than you put in - has to gain more value than its present day value, meaning that we have to believe that what we are buying is being sold at some kind of discount relative to its potential. If you believed the absolute ceiling on Apple was $500/share, it would make no financial sense to buy it for $501/share. That goes for everything - whether you think it's just undervalued in the first place or has lots of headroom to expand based on inputs. So we think things like "Oh, the market's overheated, I'll buy when it comes down", when in fact it may never come down.
All of our guesses - and that's all they really are, educated or not - are based on our own experiences, values, financial position, abilities, etc. I may think a house that was $25k 2 years ago is a ripoff at $50k. Someone from another market might think they hit the lottery. If enough of them do, then my reality was wrong. Further, we are much better at remembering how right we were than how wrong we were. Everyone remembers how smart they were to get in just before everything took off. No one remembers all the stuff they were thinking about buying that tanked.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Will G. when I referred to intrinsic value I meant the intrinsic value of the asset and not the dollars you use to purchase it. Warren Buffet defines it as "the discounted value of the cash that can be taken out of a business (or property for our discussion) during its remaining life" Not very helpful, I know, but its a jumping off point.
In your example, I'd have to ask the question 'has something fundamental changed about your city to merit the lower 100 basis point drop?' Is this Charleston with Boeing moving in and Mercedes expanding? In that case I'd say the drop justifies itself. If you can't point to a reason for the drop other than 'people are willing to pay it' I'd say its baseless optimism. On the flip side of the coin, if you plan on holding this property for 15, 25, 30 years and its a solid core asset, that $166K becomes less and less important.
But, price is only half the equation. The quality of the property plays a role too. Because quality is what determines your current and future NOI. When you combine that with what @Dave Foster said about leverage the premium becomes a rounding error.
I'll round out my diatribe with anther Buffet quote:
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price"
I believe the idea holds true for Real Estate as well.
Rental Property Investor · Maryville, TN · Member since 2009 · 529 posts · 414 votes
8y
@Bill F. my example was somewhat hypothetical but a reality I am currently facing, and no, there were no major shifts in the dynamics, simply baseless optimism and this has been the case across the board in my area. So back to mikes intent(i think), waiting for some possible conditions to exist some point in the future, can be very expensive, and risky.
one concrete example I can give, on why I think re prices cant correct much, was 2010, port st lucie fl, arguably ground zero for the mortgage crisis. I spent my days going through houses (10 a day) to evaluate for purchase or auction. Now this situation was "new" in the collective conscience, people had no idea how long this "crisis" was going to last or what it meant long term, but still there was intense competition for sf assets, which absolutely provided a price floor. Now if next month a major crisis occurs and regular folks stop buying shelter, there will be a large amount of capital chasing "deals" and therefore imo keep prices up. Can you imagine, these giant equity funds who won big from the last crisis, will probably be super aggressive if any opportunities arise in the market.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8y
@Will G. Some would suggest the need to normalize interest rates in the $166k scenario as they are the primary driver of the lower cap rate.
I routinely see value add syndication opportunities. That was the catalyst for this post. And it's also the reason why I am investing more with others...they have mature deal flow pipelines.
"Hold onto cash for the crash" - Investing $100 after the crash is the same as scenario A above. Except the extra 8% return... I know you get it...I'm highlighting here because it's the headline.
@Bill F.I like the reference to risk and $0 being the highest risk scenario presented here.
@JD Martin I like the reference to psychology...the OP is all math but it's the psychology that makes it hard to pull the trigger right now.
@Dave Foster I have been lathered in sunblock and am testing sunscreen instead.
@Will Gaston Right on...invest $100, add $0 value, market corrects to $80...is ugly.
Great replies. This is much better than discussing how to charge a late fee or what holiday gift to get residents.
@Mike Dymski It's hard to actually take those less than ideal deals, even when the numbers suggest you should sometimes.
Hey Grant. These are good deals as modeled (scenario B)...that just don't perform as modeled if the market corrects and values decline (scenario A).
Duh. So deals that match your criteria but the market corrects, got it (slow sometimes).
There are some people out there saying they won't be buying until the market corrects. They argue that right now we're near the top (no one really knows) and that a great deal now will be a bad deal once the correction happens. Valid point I suppose, but that is assuming they are right about us being at the top right now.
I think if a deal matches your criteria and you know you'll be safe in a correction, buy it. I don't speculate for appreciation, I'm not gonna do the opposite either.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Will G. I agree that waiting around for waiting's sake serves no purpose. It comes down to having a disciplined approach to investing and maintaining that discipline no matter the market fluctuations. Kinda like an absolute vs relative return thing.
Great points about the psychological aspect of investing. I too tend to think about investing in terms of pure numbers without any regard for my own cognitive biases.
At the risk of become the guy who only quotes other people; your post made me think of a Set Klarman interview I watched a few weeks ago:
"Investing is the intersection of economics and psychology. The economics, the valuation of the business, is not hard. The psychology -- How much do you buy? Do you buy it at this price? Do you wait for a lower price? What do you do when it looks like the world might end? Those are the harder things."
"When you buy anything it's an arrogant act. You're saying to markets are gyrating and somebody wants to sell this to me and I know more than everyone else so I'm going to stand here and buy it. That's arrogant, you need humility to say 'I might be wrong."
@Mike Dymski excellent point about normalization of interest rates. Hopefully they get high enough to draw capital back to the bond market. I also think that value add is a margin of safety play that is unique to real estate that works in any market condition. You and I can't stop Wells Fargo from screwing over their customers at every turn, but we can kick the meth dealers out of our apartment building.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
8y
If you invest the $100k into a $400k property with some value add, you now hopefully add some equity. You also have a mortgage that has principal pay down. Assume that the market corrects 25%, but you are still able to cash flow at 5%. In 5 years your property is likely back to the same value and you paid off $35,000 (25 year am). In this case the investment did not go well, but if you then keep it for another 5 years, you pay off an additional $45,000 and likely the value increases by 3-5%/year. This is not the best scenario, but it beats $0 and a lot of what if's.
As long as you set yourself up to weather the storm and buy for cash flow, I would continue to purchase. There is never a perfect time to buy, until there was a perfect time to buy.
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Mike i get this for those that have a single strategy IE rentals.. by either buying or value adding to them.
now i was over in Hawaii last week and my host has been buying tax free state of Hawaii bonds which according to him have been yielding 4 to 5%
so seems that could be an option have your broker search muni bonds other than sitting there doing nothing.
for me personally I like to have a few arrows in the quiver that way the thought is if one thing is not working something else could be.
I just dont see a crash coming anytime soon.. at least in my markets. However I fully realize that markets are highly regional.
One thing I see these days at least as it relates to Multi.. is that there is a huge heard factor going on.. which has really driven cap rates down in many markets.. and you have at least it appears on BP all these how to become a syndicator .. which their targets i am sure are multi.. so now you have this big swath of beginner syndicators doing their first deals and they could since they spent the money to learn how to do it and spent the money on the PPM and raised the funds they will be under some urgency to get a deal and therefor may pay more than you would for the same asset.. ( not sure if that makes sense) but thats kind of what i see or am thinking these days.
Investor · San Francisco, CA · Member since 2015 · 306 posts · 211 votes
8y
Been racking my brain on this topic.
I try to keep these thoughts in my mind, often conflicting because today, this very moment, things look crazy: "The best time to was 20 years ago, the second best is today." (easy to think)
"Don't get emotional, invest in projects where the numbers make sense." (not so easy to do)
"Cash is king, cash flow queen"
**** "Adding value" is certainly something I've been looking into. Acquiring atm for residential seems to be ludicrous in many locations in the Bay and now even, other locations in the country I invest in.
I keep digging, but it's been tricky to try to invest my few hard-earned dollars wisely when it feels like most of the deals are gambles.
Then I see highly-leveraged projects / development-plays from some aggressive investors -- also more intense and scary than I'd like.
Eg: San Francisco / Oakland flippers. Maybe I'm just a giant chicken. Actually, no, I am. (ha)
BUT, like you said, I still want to, and I'd prefer to do it now than 20 years from now (assuming no natural disasters / other things one cannot predict).
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8y
@Alice K. Well said and I can certainly relate. Great quotes and very accurate assessments of them. And, in this market, deal flow is king...not cash.
Development plays will largely not fit the scenarios above because they do not cash flow out of the gate and won't have long-term debt in many cases. There are separate ways to mitigate risk with development and that is a topic for another post. You're not chicken...you're prudent.
@Todd Dexheimer I was hoping you would chime in. You essentially described scenario A with a different set of numbers.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
@JD Martin great response. I especially love the line
"The tough thing about investment is getting past the psychology of past investment."
Prices I thought were high last year, seem like they would have been a bargain this year. My mind is slowly adjusting to raising prices, but not fast enough to pull the trigger.
In theory I agree that investing in high and low markets is the best strategy, but I also think there is nothing wrong with moving slower in a high market. In a down market, there were so many deals, it was hard to make a mistake. I am way more cautious today and although my cash may seem dead to some of you, it is also safe and ready whenever I want it.
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
8y
@Mike Dymski people say we can’t predict the future but I believe we can. We just can’t predict it with exactness. In other words we can predict market corrections and market downturns because that’s what markets do, but we can’t predict the exact time or the degree of correction.
So in my opinion, if I can’t predict the timing or the severity of market corrections, the next best thing would be to hedge for them. So rather than flipping in an expensive market, I may buy properties that cash flow in just below the market average where there is still high demand regardless of fluctuations in the market.
My partner and I are still buying properties that make sense number wise, that cash flow, and that have a likelihood of appreciation. But because we don’t depend on our real estate investing income for survival, if there is a market correction that causes a decrease in home values more than 20% and rents to drop 15-20% also, then our cash flow may temporarily go down to zero. But it won’t stay that way forever. Even people who bought in my market at the top of the market in 2006 and 2007, if they bought it to where they were able to cash flow even a little, and were able to hold on to the property, then today they have an asset worth about the same as when they purchased it but the mortgage has been paid down over the past 10 years and they have a good chunck of equity in it now.
If you wait to only swing at pitches that look like they will be home runs then you will strike out a lot more than necessary. If you look for more singles and doubles and occasionally are able to hit a home run, then, in my opinion, you will win a lot more games (have more success with investing).
@Mike Dymski people say we can’t predict the future but I believe we can. We just can’t predict it with exactness. In other words we can predict market corrections and market downturns because that’s what markets do, but we can’t predict the exact time or the degree of correction.
So in my opinion, if I can’t predict the timing or the severity of market corrections, the next best thing would be to hedge for them. So rather than flipping in an expensive market, I may buy properties that cash flow in just below the market average where there is still high demand regardless of fluctuations in the market.
My partner and I are still buying properties that make sense number wise, that cash flow, and that have a likelihood of appreciation. But because we don’t depend on our real estate investing income for survival, if there is a market correction that causes a decrease in home values more than 20% and rents to drop 15-20% also, then our cash flow may temporarily go down to zero. But it won’t stay that way forever. Even people who bought in my market at the top of the market in 2006 and 2007, if they bought it to where they were able to cash flow even a little, and were able to hold on to the property, then today they have an asset worth about the same as when they purchased it but the mortgage has been paid down over the past 10 years and they have a good chunck of equity in it now.
If you wait to only swing at pitches that look like they will be home runs then you will strike out a lot more than necessary. If you look for more singles and doubles and occasionally are able to hit a home run, then, in my opinion, you will win a lot more games (have more success with investing).
Shiloh keep in mind in the PHX market many investors cash flow did not drop 20% it dropped 100% and stayed that way for an extended time.. now not predicting another 08 meltdown but it happened to many of my personal clients that I sold Multi to up here in PDX they also bought PHX and lost their properties altogether..
in my mind doomsday you need some pretty good reserves... but I am uber cautious these days after living through that one and 2 before it..
@Mike Dymski people say we can’t predict the future but I believe we can. We just can’t predict it with exactness. In other words we can predict market corrections and market downturns because that’s what markets do, but we can’t predict the exact time or the degree of correction.
So in my opinion, if I can’t predict the timing or the severity of market corrections, the next best thing would be to hedge for them. So rather than flipping in an expensive market, I may buy properties that cash flow in just below the market average where there is still high demand regardless of fluctuations in the market.
My partner and I are still buying properties that make sense number wise, that cash flow, and that have a likelihood of appreciation. But because we don’t depend on our real estate investing income for survival, if there is a market correction that causes a decrease in home values more than 20% and rents to drop 15-20% also, then our cash flow may temporarily go down to zero. But it won’t stay that way forever. Even people who bought in my market at the top of the market in 2006 and 2007, if they bought it to where they were able to cash flow even a little, and were able to hold on to the property, then today they have an asset worth about the same as when they purchased it but the mortgage has been paid down over the past 10 years and they have a good chunck of equity in it now.
If you wait to only swing at pitches that look like they will be home runs then you will strike out a lot more than necessary. If you look for more singles and doubles and occasionally are able to hit a home run, then, in my opinion, you will win a lot more games (have more success with investing).
Shiloh keep in mind in the PHX market many investors cash flow did not drop 20% it dropped 100% and stayed that way for an extended time.. now not predicting another 08 meltdown but it happened to many of my personal clients that I sold Multi to up here in PDX they also bought PHX and lost their properties altogether..
in my mind doomsday you need some pretty good reserves... but I am uber cautious these days after living through that one and 2 before it..
That is the killer situation for an investor, when values drop 100% and there is no tenants to rent to. I had a tenant that was a landlord in Michigan prior to the crash. He owned two single family homes and his primary residence and lost them all to foreclosure. The crash happened and his tenants stopped paying rent after loosing jobs. Then one of the properties was trashed by a big dog that did $8000 damage. I know people will say, well that was Michigan, it would never happen in my market. I suspect if you had warned people in Michigan two years before the crash, they wouldn't believe it could have gotten that bad. Human nature is to not believe the worst will happen.
I challenge people to look closely at the markets they invest in. Look at the underlying economy. Things like medical and universities are stabilizing forces. Military bases, major manufacturers or markets dominated by a single employer present risk. I believe if you pick your markets carefully, that over time you can weather anything.
@Alice K. Well said and I can certainly relate. Great quotes and very accurate assessments of them. And, in this market, deal flow is king...not cash.
Development plays will largely not fit the scenarios above because they do not cash flow out of the gate and won't have long-term debt in many cases. There are separate ways to mitigate risk with development and that is a topic for another post. You're not chicken...you're prudent.
@Todd Dexheimer I was hoping you would chime in. You essentially described scenario A with a different set of numbers.
I like scenario A, I just couldn’t picture putting $100 into a real estate transaction, So I had to add some zeros. I also like having some idle cash as I think it’s important to have ample reserves, just not the fear mongering Amount of cash.
Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
8y
@Mike Dymski You are right, this conversation is far better than talking about late fees and where to keep security deposits.
It looks like the topic has morphed from cash vs not holding cash to a kind of absolute return vs relative return.
Folks who tend toward absolute returns have looked at their 'why' for investing and compared that to their available capital and investing options to set a hurdle rate that every investment must meet. Once it clears that they know that they are moving toward their goals so waiting around for a "better" deal doesn't make a lot of sense. They market only plays a role in their investing as far as it provides deals that meet their hurdle rate.
The relative camp compares their returns against some benchmark; whether that be the S&P, the posts on BP saying "10 units in 10 months with 55% CoC!!!!!!!!!!", the deals they got last year, or the deals they THINK they can get in the future. What the market is doing and what it will do drive a lot of their decisions. And don't think I underestimate this style. Opportunity funds have make absolute killings and I have bought stocks this way myself.
We haven't seen a lot of the latter camp in this thread, but a few proponents raise the idea of a hybrid, that doesn't try and time the market per se, but always keeps some capital around in the event that a great opportunity pops up. That opportunity could be a another 2008 like event (which for the record I don't think will happen. RE will feel the localized impacts of a correction somewhere else in the economy, but I'm just some guy on the internet so...) or their neighbor selling an inherited fixer-upper.
That leads to the question, how much capital is enough? How much is to much?
