I’ve written recently about changes that I’ve had to make to my financial strategy, and while making small operational changes on the fly is reasonable action, I’ve also had cause to hold even more firmly to some of the long term stuff. With the costs around the rental properties and tenanting difficulties making me a bit crazy, I was sorely tempted to adios our newest addition. Thankfully I have stuck the course and things are now back on track – insofar as they are going forward in a better way than I anticipated.
When I lost a tenant unexpectedly (due to their own personal issues), it coincided with the majority of the quarterly costs hitting the bottom line. What little rent did come in was sucked away for that and I was left feeling high and dry. Funnily enough I had cause to read some of Warren Buffet’s writing and his removal of emotion from the process prompted me to rethink things just a little. Yes I was disappointed that I’d lost a tenant and yes I was stressed that costs had come in that were unexpected. But this is a long term game – with a long term outcome that will be very beneficial to my family and I. So rather than punch the property onto the market and cut my losses I hunkered down, covered the mortgage with my own cash and hung on. This tenacity has been rewarded! Not only did I receive the balance of the deposit, but I also received (unexpectedly) the first part of my tenant’s break lease payments. He has made good on his commitment and while unable to pay the full amount up front is at least making regular smaller payments to cover his debt.
So the payment from last month was better than I expected and not only did it cover all the council rate costs but there is enough left over to cover three weeks of mortgage repayments! Happy days indeed. Looking forward, I have both sites tenanted and no major costs on the horizon (at least for another 2 months). A small bump in the road and now it’s back on track. This is great because now I can start to rebuild the cash reserves that are depleted. I was a bit sad about those reserves getting belted, however they served their purpose – keeping the finances going when needed and covering the hole. These reserves are already rebuilding and will be there for the next problem. In an ideal world, the rental money will start to become it’s own cash reserve (and I can see this starting to happen) and that will be very nice indeed.
So the outcome of the last couple of stressful months was as follows: review and reapportion where applicable, but keep the end financial goals in mind and as much as possible leave emotion out of it. It’s fair to say, I think, that emotion has never really helped a financial situation improve. Emotion has definitely caused things to get worse though. All the best with your own financial situation!