If your goal is to walk away because you are not making profit in the current market then I would suggest rethinking your situation and does it make sense to walk away. Good luck to you!
Chris Gorno (619)788-4345
I do have one more comment on this. Since this is an investment property keep in mind that if you are planning on collecting the rent and not paying your mortgage, this could be constrewed as skimming. You should look into this as it has legal ramifications, depending whether your loan was a purchase money loan or if you have refinanced.
My answer might not be popular, and I know you bought this property to make money. But, you're also an investor, so you must have known that markets change. Many, many investors bought their rentals with 0% down - no financial risk whatsoever to themselves, and their tenants paid their mortgage. And your tenant is STILL paying your mortgage, so you're in a very good place. So far, your property is doing what it's supposed to do. The problem is, you don't have a ton of equity like you thought you would, so you're thinking you'll just take the rent - that should be going to your lender - per the contract you signed with them - for yourself. You can afford this property, and eventually, you will have equity. Is the huge hit you'll take on your credit worth $12,000? What are you going to do with $12,000 if you can't buy another property because your credit took a huge dive?
Also, you might be on the hook for the deficiency because the property is an investment and not your primary residence. Check into this. I'd just keep it and look forward. You're actually in a much better place than many in this market.
So, you re admitting that you would collect rent from the tenant and keep that money for yourself rather than make your payments to the bank that holds the mortgage? And you are doing this so that YOU will have money? What about your commitment to the bank when they loaned you the money when you purchased the property?
There are a couple of lenders out there who are willing to let you short sale in your situation. Message me with the name of your Lender and who it was originally when you signed your loan documents...and I will let you know if your Lender is on that list. If so, they may also pay you $3,000 -30,000 to do a short sale on the property with no out of pocket expense to you. It is worth checking! Let's check all of your options...
Keller Williams Carlsbad
If you have renters and they are covering your nut you may want to consider keeping it and waiting it out for a few years as it will eventually turn into an assets vs a liability. You will be paying down the mortgage while appreciation begins to tick up.
You may not see the dramatic and unrealistic appreciation we've recently experienced but this is certainly a great way to start rebuilding your estate and most importantly your credit. If you just walk away (strategic default) you will look all the more flakey and no one will want to touch you. It's your choice but I'd certainly think long and hard about this.
$50k upside down in the San Diego market is not that bad in the overall scheme of things. Now if you were in the Salten Sea or Needles area I'd be a little more concerned but the San Diego market is reviving and still remains one of the worlds most desirable areas to live in.
If you are insistent about bailing get in touch with us. We specialize in distressed property acquisitions and would be happy to take a look at your situation.
Sorry to hear about the situation, but you have a lot of really good advice in the answers already given here. Remember if you are an investor you need to think like an investor, real estate is a long term situation, particularly in this market. I would suggest going back to your original goals of the purchase. If the goal was to spec the condo and make a quick profit, that option is gone. So now you may want to consider a more long term goal of buying, holding and having someone else make the payment, then eventually selling for a profit or better yet, do a 1031 exchange to another property, avoiding capital gains and maybe having a property with the potential to supplement your active income with a passive rental income!
If this is a break even now, let the tenant make your payments and build equity for you. If it turns out later to be a negative monthly situation, then reconsider your position. Only then try for the the loan modifications and short sales before the strategic default, which can affect your credit for 5-7 years!
Good Luck, I hope this has helped.
I would not walk away from the property if it is not costing you money to keep it. You have stayed with it through hopefully the majority of it's depreciation, so walking away now doesn't seem like a good idea. Due to all the foreclosures and short sales, the rental market is very strong and will most likely stay strong for the forseeable future.
No one can tell you when or how much the market will come back, but I would hang in there.
Thanks & Good Luck,
I am not sure why you are considering walking away, as doing so is an intentional foreclosure. It will have an effect on your credit score and could cause tax consequences as well, as your property is not your primary residence. Since you have renters in the property and are breaking even, it may be prudent for you to wait until the market improves or until you are losing money, and then to weigh other options first.
Before making any decisions, I highly advise you to consult your tax professional and/or financial advisor. Walking away should be used as a last resort, when other options are not possible.
Best of luck,
Rachel LaMar, J.D.
LaMar Real Estate, Inc.
If you are breaking even on the mortgage why would you even consider walking away from it.? You should really explore all other options first to make sure this is the only way. A short sale is much better for your credit than a foreclosure and it hardly seems worth it for only $7000. Besides what if your tenant stops paying rent when they receive the forclosure notice? Also verify with an accountant that you wont have any tax liability since this is not your primary residence.
That's a great question, and one many homeowners are asking themselves in today's real estate market.
Here's a few things to consider before making your final decision.
I would first approach your lender/servicer about a loan modification, although it is less common to receive a loan modification on a investment property it is possible. Due to increased legislative pressure lenders have become more aggressive in approving loan modifications. A successful loan modification could mean lower payments which would increase your cash flow and ROI.
If Loan modification doesn't work out next try a short sale. Contrary to popular belief you can qualify for a short sale and benefit from one after a bankruptcy and on a rental property. Lenders have beefed up their short sale offerings and are now helping homeowners with relocation and cash for cooperation. We have helped homeowners who have received as much as $30,000 to cooperate with a short sale. You can learn more by reading this article at http://www.shortsaleexpertsinc.com/blog/big-banks-offer-big-
If the lender does not approve the loan modification or short sale you still have increased your cash follow because of the additional time it will take the lender to qualify and approve/denied you.
The bottom line is to exhaust your options. When used effectively the programs do have benefits that could make a big difference in your decision making.
If you have questions about Loan modification our short sale you can visit our site at http://www.shortsaleexpertsinc.com. Want to know how to get your short sale started? Download our free short sale EBook and you will get all the help you need to get started and keep you going. Or call us today for a consultation â€“ itâ€™s always free and there is never any obligation. 888-746-7820.