1) go and get as much credit as you can, then cash out (cash advances on all your cards)
2) stop paying your mortgage
3) get roommates and collect the rent
4) stop making your car payment
5) stop paying your utilities
6) in general just stop doing everything you've been doing
* after about a year or so, the utilities, banks, etc ... will start to react with liens, collections, etc ... at this point you appease by saying you will pay, payment plan, blah blah blah.
* you should be up at least 20 - 50k at this point which will cover the 30k you put out of pocket into the property.
* if the bank takes your car, let them, it probably wasn't worth what you paid for it, go buy a cheap affordable car using some of the cash you have saved up.
* just keep living your life without paying a single bill and don't freak out, it's part of the plan
* eventually you will be evicted, but the courts are so overwhelmed, it may take up to 2 years after you stop paying your mortgage.
* once you see the eviction posting on your door (or getting close to it) go and file for bankruptcy.
* when the sheriff comes to your door, show him the bankruptcy papers and you can now live for another few months rent free and hopefully collecting rent.
so by now it's probably 2012 and you are starting from scratch. your home is maybe worth 165k and you have saved close to 100k by not paying any bills and driving a cheap car that you paid for in cash. It will take 7 years to come out of bankruptcy.
by 2019 your home may or may not be worth the 260k you paid for it, but you will have come away at least 100k better off.
Besides, the loss in value is only on paper for now. As long as you don't sell now--or anytime soon--and are able to ride out this downturn, then you'll see the prices rise again. None of this matters if you plan to live where you are permanently. The losses would only become real if you were to sell your place in this market.
So, you have some options.
The market is in free fall with property values dropping daily.
The best you can hope for is the prices to stabilize.
Then after a few years or remaining stable they will slowly climb back up from the bottom.
Would you pay $260,000 for a property when you know three doors down just sold for $125,000???
If you are one of those overnight buy and sell type of investor I would have to say be wise and make adjustments to your current situation and continue with your search of better and more profitable investment in this current real estate market, there is plenty out there. Good luck.