After two years in the game I had come to the point where, instead of the banks having control and telling me what to do, I had control of them and could tell them what to do. Believe me, that’s a good feeling!
Renegotiate with all banks and move business to keep investing
In a nutshell it works like this.You see, if you owe the bank $1 million, you have a problem, but by the time you owe $5 million, the bank is the one with the problem! No one knows this better than Donald Trump; at one stage he owed so much that it would have sent the bank under if they had foreclosed on him.
In November 2005 the manager of a large trading bank approached me. Knowing I was a big investor, they wanted to take over the financing of my portfolio. Maureen and I spent eight weeks negotiating with them and I ended up giving them 90% of my portfolio. Normally, I wouldn’t recommend putting all your eggs in one basket, but the way I structured it I am the one in control, not the bank.
Treat property 100% as a business. Add value to good tenants’ properties and put up rent
Just as I deal with the bank in a professional manner, I approach all other aspects of my property investing in the same way. I ensure that I look after my cashflow as well as my customers (i.e. tenants), because both are vital to the success of any business. I really want to stress the importance of this because it is definitely a major factor in my success.
Through my property manager I advise my tenants that if they look after a property and pay their rent on time, every six to 12 months I will look at adding some value from their perspective. Letting tenants know that you respect them and will look after them goes a long way to retaining them long term.
After I have owned a property for a few years, my property manager will often remind me that the tenant in a particular property is a good one, and has been there for a couple of years. Maybe the shower – or some other aspect of the house – is starting to look a bit shoddy so why don’t I tidy it up? She’ll tell me that it will cost me, say, $3000 but I will then be able to put the rent up from $250 to $260 a week.While it may only be a $10 increase, it ensures continuity of tenancy with reliable tenants.
I still use my mortgage broker because although the trading bank finances the bulk of my properties, it does not have all of them. My broker keeps on top of what is happening in the marketplace and with my portfolio, and will renegotiate with the banks on my behalf if necessary.
The above post is based on the book “The 15 Million Dollar Man” by Sean Wood, to read more click Property Investment and download 2 free chapters.