This month, Brian and I received the news that our tenants (of almost three years!) were giving notice to move out at the end of April. We kind of thought that this might happen. We knew they eventually wanted a bigger place and they both make more than enough money to do so. But it still sucks to get the news. However, we have planned ahead! As a result, we’re not too worried.
Our contingency plan spans several months. For month 1, we are planning on using our condo maintenance fund to pay the mortgage and fees. This is a fund that we’ve been contributing $20-$40 a month towards for the past few years. We used it for minor repairs and as a condo-specific emergency fund. There’s enough money in it to cover the mortgage and fees for May.
Meanwhile, we will look into renting or selling the condo. We’ve already contacted our realtor and we hope to hear back from her this week. Once we get an idea of our potential selling price, we’ll decide whether we want to sell it immediately or hold on to it as a rental for another year or two.
Assuming we do not manage to sell or rent the unit by the end of May, our month 2 contingency plan is to use our TD “skip a payment” feature to (duh) skip a mortgage payment. This gives us another month to sell or rent the unit, and we keep our cash flow free in case we need to stage the unit or make minor improvements. Hopefully it won’t come to this, but if it does, we have this option available!
And finally – what if things go WRONG?
In the 3rd-to-worst case scenario, Brian and I would be unable to sell OR rent the condo. Well, then we’d have to move back into the condo and rent out our current condo! I’ve done some (slightly unethical) market testing and we would be able to rent our current unit for the cost of the mortgage.
In the 2nd-to-worst case scenario, Brian and I would be unable to sell OR rent the condo AND we would be unable or unwilling to move back into it while renting out the current condo. Could happen – we love our current location, after all. In this case, we are able to cover the cost of the mortgage indefinitely simply by readjusting our budget. True, it is not ideal because we’d have to reduce our savings and spending, but it is still do-able.
And last but not least, my worst-case-scenario has either me or Brian losing our job and being without income indefinitely. It is not likely to happen and I imagine that even if it did, both Brian and I are sensible enough to pick up ANY work in order to make money for bills. However, if it did happen, we each make enough on our own to pay for both mortgages and the bills, provided we cut all unnecessary expenses and spending. It would suck monkey balls, but again, still do-able.
Any other landlords out there with emergency-emergency plans? Anyone looking for a Vancouver condo??? :)