I'd recommend either holding onto it and continuing to rent - assuming you can absorb the shortfall - or pursuing a short sale and getting out from under it. No good options here, and unfortunately, you're not alone in your predicament...
I would highly recommend in addition to retaining a real estate short sale specialist, work with an agent that has an association with an attorney to negotiate with your lender. Also you want to work with an agent that can recommend a CPA to work with you because there are some serious tax implications since this is investment property rather than owner-occupied, if you decide to sale for less than what is owed. In this market you don't have a choice but to sale less than your outstanding balance. And if you have more than one mortgage its becomes more complicated. If my team can be of assistant, let me know.
Exit Right Realty
240 554 4093
Cornerstone Properties and Financial Services LLC
From my exprience it sounds like if you sold now, more than likely it would need to be sold as a short sale (when you owe more than the market value). If this is the case, since this is an investment property, the bank would need to be included in the sale as the 3rd party and agree to an accepted contract by you if you found a buyer.
You need to weigh the cost and the amount of money lost in a year's time, against how long will it take to make up that amount of money of lost income until the market turns around. You must also weigh the fact that if you can no longer carry the property and go forward with a short sale, how that will effect you.
Short sale; no more out of pocket money lost
Short sale; bank reports to IRS the loss amount between mortgage owed and mortgage pay off
Short sale; Bank files with IRS a 1099.. you are responsible for taxes on unpaid amount on investment
Short Sale; will effect your credit for min 2 years
Keep the property; out of pocket loss $14,400 yr @ $1,200mo or possibly more if the property is vacant for a couple of months and you pay the entire mortgage.
Keep the property; How long will it take for the market to turn around?
Keep Th Property; How long until you recover your out of pocket expenses?
As a Realtor who is Certified in Short Sales, I have had many recent clients in the same situation you are in and have had very sucessful transactions.This is not the answer for everyone. If you would like to discuss ths further I'd be happy to talk with you about your options.
It is a difficult decision to make and is not the same for everyone. Each person's situation is different from the other. You should also speak with a bankruptcy attorney and an accountant/tax preparer to see ow it would effect you personally.
If you are able to continue paying the difference without a hardship then of course that is best for you, your credit, and the bank. If this is a long term investment, it will eventually turn around.
The best of luck to you
Kathy Dawson, GRI,CDRS,CSSA
Certified Default Resolution Specialist
Cerified Short Sale Advisor
That is only a question you can answer. I would have an Realtor complete a CMA or get an Appraiser to see what the market conditions hold for you in selling the condo. Every month you are losing a min. $1200.00 a month and that's not counting repairs. Getting the numbers together will help you make an educated decision on what to do. If you can't hold out until your market improves then maybe selling it for a small profit or even a small loss may be an avenue you should explore. if you have any other questions please free to give me a call.