Weathering the Storm and Dealing with the Unexpected
Just when I thought we had devised a clear path to financial freedom, the unexpected happened. We were undoubtedly blessed in that there was always calm before this storm. Everything for the past few years has been fairly predictable and manageable.
Perhaps it is strange that just weeks after we resolved to be more intentional about our financial plan, we needed to revisit the plan. However, I am sure this test will make us even more financially strong. I realize that this unexpected event is just one example of the importance of staying nimble and disciplined as we work towards financial freedom.
So long, farewell
When it comes to renting out our investment property, I am a believer that all “good” things must come to an end. In September, the tenant decided to move out. The move was not a complete shock. The tenant had been in the property for just over five years. Five years looks like an eternity in my rental property experience. I have been renting out the property since 2008. The longest standing tenant before the most recent tenant had been there for 3 years. While this tenant was in good standing, I still was not sure how many people actually lived there. It was a mystery to me every time I visited, and I could never get a straight answer. But I digress…
Due to the challenges related to COVID, this tenant left at one of the most inopportune times for landlords. And more directly related to me, the wear and tear that the tenant (and all the other folks living there) inflicted on the property, racked up quite the repair estimate.
The real estate market in NY/NJ is competitive because vacancies have increased due to a myriad of macroeconomic factors. Therefore, to get the property in rentable shape to compete with all the other properties currently on the market, I have to make the necessary updates. The real estate agent will not even list the property until all the work is done.
Get it rented, please
I appreciate the agent’s thoroughness and pickiness, but I am ready to get this show on the road. Also, the contractor that I have hired to make all of the updates in the the property has been busy and moving on a slow timeline. At this rate, I am estimating that we’ll have a new tenant in place before winter sets in. Here’s to hoping!
The Game Plan
In the midst of this storm, we are staying calm, adjusting as necessary, and revisiting our financial plan while we ride out the unexpected. I am not complaining, but so far we’ve been carrying two mortgages for two months. I realize that this is longest stint of going without a tenant since I started to rent out the property in 2008. What a year 2020 has been?!
The game plan is simple from here.
- Try not to hit savings.
- Reduce spending on all the random Amazon pantry items.
- Divert funds that were going to go to the “aggressive” debt reduction plan toward the property to cover the mortgage.
- Enjoy life. Stay positive.
While I was not expecting to have to rework the game plan so soon, I am happy that we had at least started on the game plan to position us better to deal with the unexpected. It’s not ideal, but we’re still on the right path.
What adjustments have you made to your financial game plan lately?
