Here's my problem and I'm not sure how to handle it. We moved to San Diego a year ago.

Asked by Ron, San Diego, CA Mon Mar 10, 2008

We were not able to sell our home in central California, so now it is rented for half of what we pay for the mortgage because we weren't able to get more than that. We are renting a home in San Diego now. So we have double mortgage. If we sell the house, then we won't make anything out of it. We would just be getting rid of it. No equity for us to get a sizable down payment for a home here in S.D. Any suggestions.

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Hi, , Virginia
Wed Mar 26, 2008
first be realistic

things will probably not turn around by 2010

there is a reason that the rent is 1/2 the mortgage

you paid too much for the central Cali house

you are bleeding money

you need to stop the bleeding

the only good thing is that you are renting in SD

which is probably 1/2 the cost of owning

you are worried about equity

that doesn't exist

and may never exist


good luck
1 vote
Don Tepper, Agent, Burke, VA
Tue Mar 11, 2008
As Keith says, check with a CPA, a Realtor, and a mortgage broker just to figure out exactly what your status is.

Although the accurate, correct answer depends on the negative cash flow, your tax bracket, your income, and some unknowns (how long it'll take for the housing market to recover), I think you should seriously examine the possibility of selling the central California house, breaking even if you can, staunching the cash drain and the hassle, and moving on.

Good luck.
1 vote
Keith Sorem, Agent, Glendale, CA
Tue Mar 11, 2008
Welcome to the world of being an accidential real estate investor. This is exactly how I get involved in real estate.
First, talk with a CPA that understands investment property. You need to run some scenarios tax-wise. You have some major write-offs now that now will appear as schedule C.
So far as equity goes, I am sorry. The market shifted and your home in central California is not going to provide that to you.

I strongly encourage you to evaluate your LONG TERM situation. We went through the same thing back in 1984. Ended up renting our home, moving to LA, rented there. The most important thing I learned is the value of having investment property.

You might also talk with a mortgage lender and a Realtor in the San Diego area that have experience with rental property, they can probably give you some insight.
1 vote
Marilia Cath…, , 92101
Wed Mar 26, 2008
Can you wait for the market to turn around?
If you can that is the best solution for you to have some equity so that you can buy in San Diego.
Your situation is not unusual. Lots of people are losing their homes.
I have seen a lot of peaks and valleys in my 34 years as a realtor in San Diego. In my opinion you should see some appreciation by 2010. If I can ever be of assistance to you please call me at 619 300-5008.,
0 votes
Neil Fjelles…, Other Pro, San Diego, CA
Sun Mar 16, 2008
The answers on this one are all excellent. On the rental side make sure you're getting best value for your rent because you are probably going to be doing it for a while. Check out rental comps on our website from time to time. We have one of the largest portfolios of individual rental homes in San Diego.
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0 votes
fredeckert, Agent, San Diego, CA
Tue Mar 11, 2008
Great advice from all the other professionals responding.
I would recommend you evaluating not just your financial picture and how much negative cash flow you can tolerate, but also, your emotional tolerance level. If you are stressed by the situation, the stress can be bad for your health and your marriage,relationships etc.. No amount of money is worth that.
On the positive side, a negative cash flow now, if it can be tolerated, could be like a built in savings account, when the market turns better and you can sell or get higher rents. You might also approach the renters of your property, to see if they would be interested in leasing with the option to buy. You could get an upfromt option fee that could help your current financial situation and allow the renters to buy the home at a fixed price later.
Carefully compare your balance sheet, your financial/emotional tolerance, tax and capital gain/loss consequences and the risk versus rewards of different strategies, and you should find one that works best for you. the link below has some useful information regarding market conditions/statistics and buyer & seller information. Good Luck.
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