The individuals that rent our property in Oregon have been relatively consistent pre-COVID. They have only had one late payment, and keep the management updated about repair needs, which we greatly appreciate. In March of 2020, they paid full rent. When my management company learned about local shut-downs, they reached out to tenants to make arrangements, etc. Unfortunately, despite an agreement to pay, they were not able to pay April's rent. They were also not able to pay May's rent. In June, they made a partial payment. Finally, in July, we received a full rent payment again.
During this time, my mortgage payment was still due each month on the first. So, what did I do?
I paid it.
That's it. Nothing fancy; no magic wand. I just paid it...and the truth of the matter is that I wasn't particularly stressed out about it. Why? Because we've chosen to live off one full-time income rather than two. Since we're both working, we just paid it. Of course, we would have preferred to save that money or invest it, but it was fine.
There are some really important takeaways when evaluating this situation:
- Real Estate is not for the faint of heart. Don't get into it before you're ready. It can be an absolute blessing, but only if you have positioned yourself to weather any possible storms.
- Budget to one income. I know this can be difficult, but if you are a two-income household, and you can whittle down your expenses so that it can be covered by one income, a disaster such as this one isn't nearly as stressful. If you are a one-income household, consider, what percentage of that money do you really need to use to meet your expenses? Can you trim expenses so that you are capable of living on a smaller percentage of it?
- The property needs it's own emergency savings account! We didn't even need to dip into it, but we had it. Our strategy is to allow the direct deposit from the rent to come into a savings account specifically set up for the rental property. The mortgage can be automatically pulled from there, and the remainder used to build it's only emergency savings (for us it's about 6 months of the mortgage payment). Once an appropriate amount is stacked up, use the funds in another way.
The Law of Attraction Perspective: