When you need help (or advice) in managing money, who do you turn to?

In 3 weeks, I have a $5,000.00 rental house insurance bill that comes due and I have several options on how to pay it, but each option is complicated and has risks with it.

Again, when you have a financial cash flow dilemma and need some good advice, where or whom do you turn to?

I've found vetting the situation anonymously on a relevant website works. Maybe not here ... we know where you live ;)

My accountant or my RE mentor/other members of our RE group.

Razorback AR

My last rehab was finished last October. That rehab went horribly over budget and I ended up with some Credit Card debt that I am currently paying down each month. Then I get hit with income taxes in April and a big insurance bill due June 25th. It is one thing after another.

My only source of income comes from rents. I bring in well over $8K a month and even with free and clear properties, I still find it a struggle to pay all of the bills that come due.

Roy,

I'm thinking monthly payments. I seem to think - no idea why - that flood insurance is the only type policy you can't make payments on ... they may want a slightly higher premium and automatic withdrawals from your account but it should get you over the hump.

After you are back on track, if you have separate policies for each property, is it possible to stagger your renewals?

WMH

Yes, I have a very good CPA, however, like most CPA's, mine is an expert at 'crunching numbers'. I do not need a number cruncher right now,...I need someone who has borrowed a ton of money and has repaid those debts with rental income only,...not money taken from a $150K day job or family inheritance.

My ultimate goal is to be debt free (think Dave Ramsey) in 5 years but I will never get there unless I quit digging my debt hole deeper every time a big expense bill comes due.

My situation here is not desperate by any means. I could sell 2 of my free and clear houses and rid myself of all my short term debt issues,...but then I would lose over $1,200/month in income and a reduction in Equity. This is an option but is it a smart option? I don't think so.

I used a home equity loan to buy some of my houses and could pay this off but I hold on to it for an emergency fund back up.

I'm lucky that the insurance bill is due in the spring (just forked over 6K) and the taxes aren't due until the fall so I'm not hit will both at the same time (a good thing since next week I'm paying for a new HVAC unit).

Do you have access to a credit union? They tend to offer lower cost loans if needed and will sometimes offer financial advice.

If you are having such a money crunch with all your properties free and clear, you are clearly doing something wrong.

My suggestion would be to slow down the buying (no matter how cheap the property)and increase your savings.

You need to have a much bigger cushion for the unexpected!

I'd go on a crash "diet" of buying NOTHING for a while.

Make it a game to see how quickly you can increase your emergency fund.

(And yes, our only income is our rentals)-has been for 10 years.

Cash management is tough, and I think that we are all susceptible to running short of cash at times...just as Roy says, these problems travel in groups, we prepare for one problem at a time and have it covered, but the problems won't wait their turn.

I don't know the best remedy for your immediate need, but I do know that taxes, insurance and yes refurb jobs will continue, as will emergency repairs.

I suggest that you get enough cash to repay yourself for this latest remodel job, and that you get all the money that you will need to complete the job on hand, before you begin another.

I don't use rental income to pay the bills but one thing that has helped me a lot is putting all bills in a spread sheet and try to anticipate something like a bill due once a year and then budget a certain amount for that bill every month so when it comes due I can pay it and not even think about it.

Then prioritize what is the most important bill to pay and if there are unexpected cashflow issues I know what to worry about last.

When I purchased my first property back in 1978, it had a negative $100 a month cash flow. In order to qualify for the loan, I needed to earn money on a job, pay taxes, support myself and have a net monthly savings of about $1,000 per month. Other wise I had no business buying a rental property for $72,000.

Now a days the cost of real estate is too high in Southern California. Without a 50% down payment, there will be no cash flow! Not an ideal situation for investors, no leverage.

If you have a high $5,000 rental insurance bill and the rent doesn't cover this cost, something is wrong. Maybe the house needs upgrading to lower you premium? Or maybe you need to shop for a new insurance carrier...

Homer,

I am waving my success flag just for you. If there are any others here who have paid off mega debt with rental income only,..I hope they will come forward too.

Years ago, I tried out the Zero percent / $5K transfer and bought a $5K fixer-upper with it. Brother, you ain't kidding,... talk about 'dancing with the devil'. Like Brad20K said once,..."Your banker is not your friend in this business,..he is only a Pimp that leads people down the road to the brothel". How true this is.

Eat it in small bites. Pay down monthly on your insurance and tax bills.

Roy,

I had a big insurance bill this month also. For the first time, I asked my agent to divide the annual bill into monthly payments. They did so, and with no extra charge.

Nobody. I can't think of anyone who could actually understand the goals, risks, and motivating factors. Not to mention anyone who could stomach the surprises and failings of people.

However, I don't pay insurance in one lump sum. I have policies that renew on different dates.

Insurance is a tough one since they can (and will) cancel your policy if not paid. Is there any way that you can go "month to month" with them? I have done that with a few of my rentals when I ended up with "oh man, I can't afford this right now" and my agent said "so put it on the monthly plan"...

For State Farm (in my area anyway, I know not all states will or can do this so maybe yours is one that can't) - I think you pay 2 months up front and then you just get a monthly bill.

I do like this post.......and I can say that I am guilty of screwing this up as much as the next person.

Two months ago we had our local tax bills come up - bam $48,000 there. In another couple of months the schools taxes creep up - another 70 there. The job is feast or famine......this month I am feasting with a five figure net surplus.

Taxes and insurances are big ticket items that jump up at you. You know they are coming, but the issue is always balancing the cash flow issues of the business.

I am luck enough to have an excellent bank to work with. I have a few LOC that I tap into so that I am able to buy a bargain when I find them and have cash available to pay these know creeping bills.

Seems like the problem began with the fix-up that went over budget. I'm sure you learned a bunch on that but definitely after the smoke clears do a thorough evaluation to see where things went wrong and develop a check list or something to keep you from repeating the situation again.

In times of short cash flow I have gone to a credit union I belong to for an unsecured signature loan. It's cheaper than credit card interest. You have to jump through some hoops. The thing is, the first one required all kinds of paperwork and took about 4 weeks to get done. It was fairly small amount. The next time I asked for more and got it really with minimal paperwork and quicker. The next time more, easier and faster. 5K on your income shouldn't be a problem for them. Do a short term like 5 years. Sometimes they will do a "business" loan and secure it with a free and clear property. Ask for a little more than you need and site the reason being to pay down the CC debt. Your credit score is probably pretty high. You are making payments and reducing your debt so they really like that.

Finally you could go back to your CC and do a cash advance for what you need. It's moving you in the wrong direction (with your CC balance) but would allow you to meet your obligations. While the interest rates are high, the actual $ amount on a $5K is not that much.

BillS (CO)

Yes, it was that rehab from hell last October that cleaned out my emergency cash fund and then added another $10K to my 11% credit card. Since last October, I have had 4 vacancies which all needed repairs, so it has been one major expense after another. I was tempted to go find a day job but who would hire an old fart like me at 58? LOL. Yes, you just have to laugh about it at times,..crying does not do any good.

My first priority is to rebuild the emergency cash fund and then work on paying off the 11% CC. However, I still have that $5K insurance bill facing me which I can pay in installments or just pay it with a 3% Heloc. Money management is all about making decisions on who gets paid now and who gets paid later.

Honestly Ray you are doing something wrong. My guess is expanding too quickly. And or a spending problem in your personal or biz life as well? Go ahead and sell one of the houses if there is time to do so, but search yourself as to why you get yourself into this situation and make changes. Also are you living below your means or are you someone who needs a new car or truck, and stuff that you could do without.

Roy, it's hard to do but Mike Butler said it the best. Sometimes you have to sell one to "feed the machine"

' Honestly Ray',...please don't call me Ray,...my name is Roy and that is my real name too.

Plus, I am not in dire straits as everyone here thinks I am.