We own our primary residence and a small rental property. Can we short sale the 2nd prop. and not our primary?
We have a 1st & 2nd on both properties, all with the same company. I have been in real estate sales for 3 years and worked with short sales successfully, but never encountered a situation like my own. I know how they work, but not how it might work for us in my current situation. We have tremendous credit card debt due to my partner and I both being laid off last year, the job market, and the real estate market. We have been paying all of our mortgages, but the rest of our bills go unpaid or get paid every other month. I'm thinking of applying for short sale on the 2nd house to relieve some of the pressure. We have tenants in the rental who are paying $675 & the mortgages total $740/mo. I'm tempted to stop paying the mortgages, apply for short sale, and use the rent to pay other debts. I know that sounds horrible. Things are getting desperate, and I hate to even think about this option, but I may be out of options. Thank you for your help.
Angie, you are definitely allowed to short sale the second property, as long as you can prove to the lender that you can no longer afford it. With a tenant in there paying almost the entire payment, it will be more difficult though. From a taxation perspective, check with your tax advisor, as I'm almost positive that you will be taxed on the deficiency amount, since it is not your primary residence.
Angie,
You can try a short sale on your second property and keep the primary residence. It is ultimately up to the bank. I've seen investors doing this all over the valley and getting them approved.
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