This article was posted on Thursday, Jan 31, 2013

If you discover you have negative cash flow, you must take action now to turn it around.  Correcting negative cash flow involves doing things NOW to stop the bleeding. It might conflict with a conservative long-term investment game plan, but remember, if you go belly up from negative cash flow, you won’t need a long term plan.

Evaluate Your Liabilities

Review your list of mortgages and monthly debt service.  Do you have some 15 year loans?  Changing them to 30 year loans increases cash flow NOW.  Also, review your interest rates.

Have you played ostrich and ignored the terms of your existing notes and mortgages?  Money is cheap now.  You should not have any loans higher than 6%.  Do you have any seller-financed properties or private lenders?  Refinance them with the cheap money available, but before doing so, contact these seller financers or private lenders and ask for discounts if paid in full now.  (I recently got an $18,000 discount).

Contact each of your seller-financed lenders and be creative. Ask to pay 10 monthly payments now for 12 months of no payments.  This gives you two extra months of no payments more cash flow.  Ask them to coordinate to the second position on their properties.  This will free up a property to refinance and pay off other debt.

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Carefully study your liabilities. Ask yourself questions like, “If I can refinance one house and take the money and pay off x number of houses with smaller balances, can one new loan pay off three old loans?”  I am not encouraging you to create a boatload of more debt.  The objective of this article is to stop the bleeding.

Review Your Insurance

Approximately four or five years ago, my insurance was increasing at a rate of 30% per year.  Although I had a good relationship with my insurance agent, to stop the bleeding I had to shop my insurance.  With a few phone calls, I quickly learned I could get better coverage and reduce my insurance premiums by $3,000 a month and instantly increased cash flow.  [Call 800-827-4262 and get a quote from AOA’s Group Insurance Plan – many members are saving thousands!]

Since then, almost the same thing has happened again last year.  Insurance started going up again and with a few phone calls, received as good of coverage with an annual savings of almost $20,000.00.

My experience with insurance companies has been the following – in order to get your business, you will be quoted wonderful initial rates.  Then they start creeping up.  I have seen this pattern with multiple insurance companies over the last 10 years.  Now I expect in the next two or three years to switch again.


I reviewed an annual report of dollar amounts paid to vendors.  It was surprising to learn how much was paid to my HVAC company in 12 months.  I take care of my vendors and they like doing business with me.  I believe I get good service because I pay my invoices/bills as soon as the bill hits my mailbox.

I contacted my HVAC contractor and asked him if he had about 10 minutes to talk (if he was in a hurry, he’ll become frustrated).  I asked him if I was a good customer and his reply was “One of my best.”  I then informed him of how tough our business has been lately and that we’re struggling (my objective was to reduce the “service run charge by 50%).  After he acknowledged that I am a great customer, I asked for his help for the next 12 months by “waiving” the $50 service run charge.  Of course, he balked and talked about his increased gasoline cost, etc.  But then I asked him if he could meet me half way and he agreed.  Now, service run charges are only $25 for the next 12 months. Repeat this scenario with your regular contractors and service providers as needed.

Mike Butler is the author of Landlording on AutoPilot – available at or 800-950-2250 – $25.  Reprinted with permission of the Wisconsin Apartment Association News.

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