Foreclosure in San Diego>Question Details

Alond, Home Owner in San Diego, CA

I have a rental condo which is "under water" and generates a negative cash flow - what should I do ?

Asked by Alond, San Diego, CA Tue Apr 24, 2012

I used to leave in this one and bought a bigger house when market declined. I have a good tenant that pays on time , but rent doesn't cover HOA and taxes . I bought the condo for $330K and market value today is less than $200K . My monthly loss is about $400 . (after tax reduction).

what are my best options ?


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Glen Etherington’s answer
I would suggest checking in with your CPA and then consult with an experienced real estate broker to go over your situation and options. Good luck and please let me know if I can help in any way

Glen S Etherington, Principal Broker, REALTOR, Paralegal
Web Reference:
2 votes Thank Flag Link Tue Apr 24, 2012
If you have an FHA loan and have not missed a payment you may be able to refinance to a lower interest rate, which will save you a lot of money. Secondly, have you petitioned for a change in you tax assessment? again you will save a lot of money.
Third, are you getting the highest rent you can? Rents have risen substantially and you may be able to increase your rent.
Fourth, you may be able to short sale the property.
Janet McCarthy
Connect Realty
0 votes Thank Flag Link Sat Jun 2, 2012
You should consider Short-Sale.


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0 votes Thank Flag Link Fri Apr 27, 2012
You really need to contact, "Melissa Zavala" , before you make any decision. Don't even think about a foreclosure. that will haunt you for a long time.
0 votes Thank Flag Link Thu Apr 26, 2012
This situation is very common right now.

There are different options available to you:
1) Switching properties - making this your principal residence, renting out your current one. Principal residences have many more options for homeowners - HARP (refi short), DIL (Deed in Lieu), HAFA short sale or regular short sale. Foreclosure and Bankruptcy are the worst - you will always disclose this on any financial application, or employment application, and you won't be able to have any type of clearance

2) Short sale this investment property. Short sales are approved, if the homeowner has a hardship and the offer price is supported by comps during bpo (broker price opinion), ordered by the bank. This might be a good time to talk to a CPA familiar with short sales.
Even you think that you are fine, based on accounting principals you might be insolvent (with the house upside down, and $499 loss per month).
Working short sale is best with an experienced CDPE (Certified Distressed Property Expert), which could be found on

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
0 votes Thank Flag Link Thu Apr 26, 2012
Hey Alond,
I think every conceivable option has been discussed below. Which one you should follow, is really dependant on your personal financial situation and the property we are talking about. If you need specific advice as to market trends and the projected value of this home, feel free to contact me directly.

Sinead McAllister
McAllister Homes Real Estate
0 votes Thank Flag Link Wed Apr 25, 2012
Hello Alond~

If you are interested in finding out if you qualify for a loan modification, rate reduction or principal reduction, I do have a contact with a Law Firm who will check with your Lender to see if you qualify and give you an answer within 2-3 days, for free. Even though less than 25% of all homeowners qualify, it is worth checking! Let me know if you are interested!

Chris Gorno
0 votes Thank Flag Link Wed Apr 25, 2012
Hi Bob,

Your best options will depend on your financial situation as well as your life goals.

If the monthly loss is too hard to bear, then your choices are three: 1) sell at a loss 2) try to short sale 3) walk away and let the property go to foreclosure

If in fact you can hold on awhile longer and can financially afford to do so....I would suggest evaluating whether you are charging enougbh for rent and if there is any way to nudge that up a bit.

Please let me knwo if I can do anything to assist you.

0 votes Thank Flag Link Wed Apr 25, 2012
Would your tenant like to buy the home? What if I could show you a way to cut your negative cash flow in half or more. Call or e-mail me and let's talk. 818-352-7290
0 votes Thank Flag Link Wed Apr 25, 2012

Glen's first answer below is the best advice. ALL of your options need to be reviewed based on your individual circumstances by at least a CPA and optimally a tax lawyer.

DO NOT spend your time on Trulia trying to piece together a solution to your individual issues - you need to speak with a CPA and/or a lawyer immediately to discuss your best options! Involve a Realtor®, if applicable, once you have a plan identified.

Unfortunately, by converting your primary residence to a rental you have introduced a new variable that changes both your options and their ramifications.

For example, the Federal Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their PRINCIPAL RESIDENCE. Therefore, should you Short Sale/Foreclose this property any debt relief amount would be treated as income to you ($130K by rough estimate using your numbers above). CA’s “tax bite” is in line with the Federal law. There is discussion of a Federal extension of the Debt Relief Act of 2007 to 2015; however, I personally would not bet my next tax bill on it.

Again, seek professional tax and/or legal advice.

P.S., you should also look into the feasibility of raising the rent on the condo after performing a rent survey of similar property in the area. Distressed property foreclosures/Short Sales have put upward pressure on rents as displaced owners find new housing.

0 votes Thank Flag Link Wed Apr 25, 2012
Please check out the new programs being offered that allow owners who are underwater to refinance at current lower rates. It may mean the difference of several hundred dollars a month in your mortgage payments. These new programs do not require an appraisal and are specifically geared to help people like you! Of course you could short sell your property but you will take a hit to your credit score.
Check out my blog on this topic at…

Joanne Bernardini
Sales Associate
Certified Short Sale Agent
Keller Williams Realty
One Atlantic Ave.
Ocean City, NJ 08226
0 votes Thank Flag Link Wed Apr 25, 2012
Hi. It depends. You can short sell the property. This could take a year or more. But you would have to qualify and have some kind of hardship. If your credit is bad it's worth it. If you don't want to ruin your credit, I have an investor who can buy it outright. There are lots of options that I could tell you about. Call me. Sher Slavin Masterpiece Realty. 619-993-5722
0 votes Thank Flag Link Tue Apr 24, 2012

The easy answer is to short sale it. It looks like 2012 is the last year the government is going to forgive you and not get 1099'd on the loan amount that is forgiven when you short sell.

If you believe in the real estate market, and think that long term this condo is going to appreciate, keep it. Can you handle the -400 monthly cash flow? How long ago did you buy this condo? and how before it is paid off?

Over the long run, the balance on the loans is going to go down and the value of the condo (and rents) will appreciate. You should have this condo paid off by the time you are ready to retire. If you short sell right now, you get rid of an asset that is costing you but that point of view is somewhat short sided. Will you have enough money in a few years to buy a rental? if so, will you have enough for it to generate a positive cashflow/

Say you bought it 6 years ago= 24 left on your loan. Maybe the next 8 years you go from -400 to -100, then the next 8 years from -100 to +200 and the rest of the 8 years you are +500. Over the long run this asset is going to recover the value, and so will the cash flow, worst case scenario with repairs, you are breaking even. You basically had a tenant pay for your retirement. who cares what the value is now? It will be paid off...

Are you one of those that looks at the 401k balance daily? Hope this analysis helps

Hector R. Gastelum
Realty Executives Dillon
REALTOR #01382940
efax 619-270-2516
0 votes Thank Flag Link Tue Apr 24, 2012
You can short sale your home. Also, their is this special program. Call me to discuss more about the program and see if you qualify for it. 858-603-8225.
0 votes Thank Flag Link Tue Apr 24, 2012
Hello Alond,

I specialize in helping people that are in your situation to look at their options.
I am not sure how much you know about short sales, but you might be a perfect candidate.
To give you some advice, it would help to know the following:

1. Who are your loans with?
2. How many loans do you have?
3. Are you willing to miss a mortgage payment if your lender requires it to complete a short sale?
4. Are you having trouble paying your bills every month, or not?
5.What are your future financial goals?

If you want a detailed answer immediately, you can email me the answers to I would be happy to advise you in further detail.

For the most party, you really only have 2 options:
1. Look into the option of a short sale
2. Just keep paying that mortgage and wait until the numbers get better many many years down the road.

Kevin Sanderlin
Keller Williams Realty
Cell 858-212-4702
"Helping Hundreds of Families Avoid Foreclosure"
0 votes Thank Flag Link Tue Apr 24, 2012
I can assist to do a short sale. All we need to do is show some hardship so that the short sale gets approved. Contact me at your earliest convenience so we can discuss and plan the sale of the property. My number is (619)778-8963 and my email is My office is Coldwell Banker, and we have a team of short sale negotiators. Thank you for your consideration.
0 votes Thank Flag Link Tue Apr 24, 2012
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