All Forum Posts by: Paul Sweetman

 Thanks this is a great viewpoint.

I don't go to Bigger pockets forums very often for the following reason. 1) it'd difficult to know how to find what I want to find. I know the info's out there this is the smarted group of people in the investing world. 2) If I have to post a question I don't know how.  3) OMG friging Tag,#, blah, blah blah  I'm an old fart. I still call and talk to people I love to shake hands and have a drink at a bar with a like wise investor.  K.I.S.S.

I love to read some of the forums and of all the social media I've used this is with out a doubt the greatest.

I don't know how to create a search engine, program, function or thing a ma jig but I do know it needs to be simple for first time users (you get new members daily) an constant we come and go to BiggerPockets and don't want to spend an hour to just relearn something to get an answer which is why we come hear, to learn, to share, to assist those who need assistance. Sorry for my rant.

What I truly don't understand is how do you stay alive if you aren't making enough money from cash flow to stay in business? Depreciation and appreciation are great but cash flow pays the bills.   

I've been an investor for 30 years. I own and manage 60+ units. Best life ever. I've always said I'm an investor not a speculator. Properties are being priced at levels I don't understand and if I bought them they would sit empty because my rental market couldn't afford the rent I'd have to charge. BUT these over priced properties are flying off the market in 4 to 5 days. I'd like to think I know what I'm doing but I will not buy a property and not have positive cash flow immediately or at least know what I have to do to get to positive cash flow quickly.  Can somebody explain to me what I'm missing? Depreciation and appreciation are great but I can't pay a mortgage payment or water bill with it.

Remember to ask your lenders for help

I've been developing a working relationship with several Banks over my investing career and it’s important to develop multiple relationships.

When you owe a bank several million dollars they like to know you. I am lucky enough to like to play golf and I'm invited out several times a year by either the president of the bank or the vice president of commercial lending.

Now I very nicely remind them that in order to make this round of golf tax deductible we need to talk a little business; I chuckle smile and enjoy the golf.

I always managed to get a little conversation about loans my current ones and projects in the pipeline. Over this past summer as interest rates have declined ,I would make little comments about how I will need to start looking around at refinancing early because my +/-5%, 5/5 arms we're starting to look kind of pricey and with loans out there in the mid-3% range it would be worth my time and money to refinance.

Now I have already been talking with other lenders, you need to know what’s truly available in the market before you go and talk about anything.

So to my surprise while driving back from a property my bank rep the VP of commercial lending gave me a call and asked me how I would like to have all 7 of my loans reconfigured or adjusted to a lovely 3.99%, I asked him what's the catch?

He politely said “Paul run the numbers see what you think”.

So I did I went back and looked at the following items for each of 7 loans.

• 5-year TCMR (the Fed number my loans are linked to.)
• I looked at when our loans were to adjust.
• I looked at what our current interest rates were.
• how many monthly payments we have made
• how many we still had to make before adjustment date
• what our current payments are
• what the estimated new payment was going to be
• what will our savings be
• I also looked at the new terms how were they going to adversely or positively affect us.

After reviewing all of these items I picked up my phone, called my VP at the bank and I said “let's do this”.

Here are the results for a $4,236 processing fee.

Payments go down by $606.04/mo. taking just a little under 7 months to repay the processing fee.

The gross savings on our renegotiated loans is $19,399.11 subtracting the processing fee of $4,236 that generates a net savings of $15,163.11.

When you look into buying a property you need to know why and how you’re investing. Our strategy is buy and hold. It must generate cash flow from day one. I don’t take any kind of wind fall profits into account or profit if we sell. We are hoping to build a business to pass down to our 4 children to generate long lasting income for many years to come.

Now with these unexpected savings of $606.04/mo. we now have the situation of what do with this money. Money setting idle is not our friend, it has to earn its keep. We could keep paying the same amount every month and accelerate the mortgages or we could apply it to our capital improvement budget and move a few repairs forward.

I would say well worth playing golf. Getting to know your lenders building relationships with people will help you build your business and do great things over time I wish you all God speed in your business and I look forward to talking with you.

Thank you. I hope it helps you and many others

An additional thought. When we evict tenants locally here the courts won't award you late fees just standard rent, so my discounted rent isn't seen as a late fee by the courts either, so they award me the standard higher rent amount. 

First and foremost this is your livelihood and at this time I'm self managing 64 doors.

How I got into real estate is a totally different story but one probably not unlike many others.

I made a very bad business agreement with a couple of very smart talking business types and we started a remodeling company (siding ,windows ,kitchens and baths). Well I caught them skimming the books and they fled the state leaving me holding the bag. I came home to find the Feds had put locks on my doors.

So with no business and no place to live I found a boarded up 3 family in a less than awesome neighborhood. Worked out a land contract deal with the owner and I was a real estate mogul. I lived in the front an old grocery store I converted into a loft style 2 bedroom apartment. I then started a small remodeling business to make money to live week to week. I then met my soon to be wife. So where I lived is now rentable and we now have a 3 family totally rentable in a less than awesome neighborhood. We then bought another property a single family in a better neighborhood but declining not growing in value. (what did we know?) all along working our regular 8-5 jobs. 

When a tenant was late on their rent or had a situation we felt compelled to help them after all they were struggling. so we took money from our jobs to pay what was necessary to keep these houses going after all we had mortgages, taxes, and insurance bills. but very erratic income. We struggled like this for years and even bought 3 single family homes a hour and a half away from where we lived needless to say we bought 3 more headaches.

THEN we had kids and they brought added expenses and we just couldn't keep subsidizing these other families lives. So out of pure embarrassment I started to learn what it meant to run a real estate business.

These thing are the best things I learned. 

1. 1) I'm doing this to improve my life and the lives of others
2. 2) These people are my clients not my family or my friends
3. 3) If I don't quit loosing money get out and leave it to others.
4. 4) This is way too easy to be hard.

My first situation was rent collection. driving hours every month to collect rent, sometime 2 and 3 times just to find no one home. My answer just quite picking up rent. I made my lease state they had to get the money to me. This has evolved over the years and this is now. Direct deposit into 1 of a couple checking accounts or google pay. No cash and I don't want to hear the checks in the mail, it never was.

My lease does not have a late fee, I give everyone a discount for paying on time. Regular rent $850 discounted to $800 if paid on or before the 5th, people will jump through hoops to get a discount but argue like heck about paying a late fee. This fixed it flat out. 2ndly I prepare a 3 day notice in advance so on the 6th I deliver it via a photo in a text and then to their door. In most cases I get the non- discounted rent that day with an apology. 

Never leave your office without a blank 3 day notice you just need to let your non-respectful tenants know you don't need them, there are plenty of great people who want a great place to live. (Be kind)

I keep all my places as if I or someone I loved would be living there. Be on top of your maintenance if your tenants know you care about your property they tend to care to and vise versa.   

Always be kind but not soft be firm. If you are angry sit in your car until you've come to grips with your emotions and can be kind but firm. Remember, how would you like to be treated if the rolls were reversed.

Have all your paperwork ready and organized for immediate use. With computers this is so easy you just have to do it once. Make as many PDF forms or use BP forms as you can but have them filled out and in a folder for each tenant so you are ready to act. You see if you are ready to act you will if not you will procrastinate and that will cost you dearly. 

Take photos and video of your uncomfortable situation, your phone is always with you.  

WORK ON WHATS GOING WELL/RIGHT compliment your tenants a healthy dose of appreciation sure makes problems go away.  Don't let things start to go wrong.

You must work your business so you can enjoy the fruits of your labor. 

When and how did they have the house tested for radon if they didn't let the inspector in?

Just turn on your cell phone camera. You'd be surprised how quickly people tone it down, when they're being filmed. And your landlord can then use the evidence to evict when the courts reopen for evictions...