Great news came to our household this week when we heard that a lease-purchase contract was finalized on one of our properties that hadn't generated income since February 2008. This particular property was previously occupied by a lease-purchase tenant who had fell three months behind in their payments and had to be kicked out. Fortunately, the occupants didn't resist when we told them that we were initiating eviction procedures and moved out within two weeks of being notified.
The house was built in 1999. I bought the house from my sister and brother-in-law in 2005 and immediately had a tenant under contract the same day I closed on it. The tenant lived in the house for just over three years. When we came in behind our prior tenant we discovered alot of work that was required to get the property marketable again. We spent about $13k to get it up to standards and waited about 5 weeks before we had a signed lease-purchase contract.
News of the signed lease-purchase contract comes a few weeks after my wife was hired into a federal civil service job. Whenever our household does a military move, we always take a hit in our income because my wife inevitably has to quit working to relocate to where my new assignment is.
Our household has actually gone:
(1.) Since May 15, 2008 with a 33% reduction in household income due to wife's relocation without continued employment
(2.) Since February 1, 2008 with a 7.2% reduction in household income since one investment property was without tenant
(3.) Since April 1, 2008 with a net 10.4% reduction in household income due to diverting of income to rehab our empty investment property.
In total, we were operating with about a 51% reduction in our household income. I cut my TSP (401K) contributions down from about $1290 per month down to $61 per month to help offset the income reduction. We also cut out our contributions to our ROTH IRAs for 2007 and 2008.
This week we were finally able to restart my TSP contributions. Initially, i'm setting it at $621 per month and will ratchet it up over time as our household establishes an emergency fund.