Good businesses are defined by a history of consistent cash flow generation, clean balance sheets, and quality promoters.

“Now what are good businesses according to us? They have a history of cash flows. So they have generated cash flows through and throughout. Okay. So it is possible that the profits are depressed but cash flows are still happening.”

Investors must account for variable expenses by averaging them over time rather than looking at best-case monthly performance.

“I think that's just an important mindset for people to have that it's not cash flow just because one month you had positive number in your bank account. What you need to do is average it out over time. Like you have to spread those costs, the capex, the vacancy over every month”

A five percent vacancy rate should be considered the minimum baseline for cash flow underwriting when the specific market conditions are unknown.

“I think 5% should be the bare minimum. If you don't have any vacancy, great. that's just a bonus that you're getting more rental income back in your pocket. But I think 5% should be the bare minimum”