With the help of an extra paycheck in January, I managed to reach my goal of saving $1500 in my Rental Property savings account. Since I'd fully funded that account, I had planned to use the money I had been contributing to this account to help reach my goal of $5000 in my Freedom Savings account.
Apparently fate had other plans.....
When I picked up my rent check from my tenant yesterday, she told me it had been raining inside the front door and that the door frame appeared to be rotten. I took a look at it and sure enough, a lot of it was rotted and there were water spots from where water had leaked inside.
I called the contractor I'd used in the past for home improvements and had him come out and look at the damage. The door frame, the outer molding and the door would all need to be replaced. Apparently, the builder did not put a flashing above the door to stop water from coming inside the door frame. The grand total to repair the damages.....$1900.00 for materials and labor.
Just to be sure I wasn't getting ripped off, I had two more estimates done and they all were within $100 of each other. I decided to go with the contractor I'd used in the past since I already knew the quality of his work.
By the end of the week, the Rental Property savings account will be empty and I will need to pull $400 from my Freedom Account. I hate that I will be emptying out the Rental Property account but the most important thing is I can pay for the repairs in cash and not add on any additional debt.
It sucks to be a landlord when things like this happen.
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I have a friend who bought several houses to rent at the top of the housing bubble, when prices were pretty high, and there were a lot of renters. Then the bottom dropped out, he's had nothing but deadbeat renters (people who live there for a month or two, never pay, then leave a big mess and no forwarding address), and he's been foreclosed on because of all the problems. I'm not sure i'd ever want to be a landlord. Sounds like more trouble than its worth.
*Pete: This is my first rental property and I have been lucky to have great tenants. They always pay the rent on time and don't call me about small repairs. They have been with me for 2 years now and I am trying to keep them for as long as I can.
I think it's great that you had the money to deal with it. You turned a crisis into an inconvenience (to borrow from Dave Ramsey).
While it does suck, it's great that you have the cash to pay for it. Also (I'm sure you already know), be sure to keep all the documentation/receipts because the repairs should be tax-deductible.
Question: Is the purpose of the Rental Property savings account to pay for repairs? Because it sounds to me like it worked perfectly! (Unless I'm misunderstanding the situation.)
I think you should be happy that your foresight worked out the way it did (sucks that you had to use the money and use extra, true, but at least you didn't go into debt on this!)
@simplicity with sarah: Yeah, I'm happy I was able to deal with the problem without relying on credit.
@savvy: yep, I make sure I save all the receipts for tax time.
@the impecunious investor: Yeah, that was the account to pay for rental property repairs. Don't get me wrong, I am so glad I had the money already saved up.
this is the kind of stuff that inspires me and the day that i look forward to.....to have something that needs to be fixed and have the money in my savings account to cover. not put it on credit or take away from my every day spending. i'm glad that you had the money and could pay cash...great job!
I'm with getoutofdebt08, I dream of the day I have the money set aside for emergencies or urgent repairs. I loved the line about turning 'a crisis into an inconvenience' too.
I'm constantly inspired by your posts and your focus on improving your complete financial picture.
@getoutofdebt08: Thanks and hang in there. The debt will be gone before you know it.
@debt dieter: I am so glad that you can find inspiration from my blog. Thanks so much for reading.
I hate owning a condo, though I have excellent tenants too. And so glad you had the money to pay for the repairs!