The following is a question from an anonymous comment. Some of you out there ought to have some good advice to help this person out.
I guess I don't know why I'm commenting other than out of pure frustration. I own a home in a major metro area, a townhome, bought 5 years ago with a regular fixed rate mortgage, money down, did everything the right way. Pay all bills on time, good credit. Had to move out of state for a job and now looking to lose 40k on the house, we had an offer and the guy backed out two weeks before closing (I know, awesome). I want some "expert" to tell me what we're supposed to do, foreclose like everyone else or pay off 40k for the next 30 years on a house we don't live in? Seriously, we bought a house because rates we're good, and normally houses are investments, every payment we make on it now we may as well be burning for heat. It's losing value every day. Anyone have any ideas, and things we could have done in the past are not helpful. Thanks.
4 comments:
Here's the choices:
1) Leave it on the market and pray.
2) Resign yourself to paying the darn thing off, and to the idea that you have a swell vacation home in former-hometown.
3) Drop the price to attract buyers, talking to the bank about a short sale if necessary.
4) Send the keys to the bank and plan on not needing additional credit for the next 7 years.
5) Rent the place out. Your agent should be able to refer you to someone in her office who does property management.
If your agent has not already discussed some of these ideas with you, it might be time for a new Realtor.
Just rent the place out. The same thing happened to lots of people like me in the previous cycle. I bought an 80K condo in 1990 at the top of the market with an 8% mortgage, 10% down. In 1994, the place was worth 55K in a dead market and I needed to move. I wound up renting it out with a $50 monthly negative cash flow. Mortgage rates plummeted but I couldn't refi with no equity - I was stuck with an 8% loan. I couldn't afford a property manager - I had to deal with all the tenant hassles myself. I didn't or couldn't get another mortgage so I became a renter in my new neighborhood. In 2001 the value finally recovered and I sold it for the same 80K I paid. Today it would sell for around 150K. Yes it sucks to be trapped. Yes it sucks to be a landlord and tenant at the same time. Yes it sucks if your tenant moves out and you have no rental income for a month or two while you search for a new tenant. Yes it takes a long time to get out of the mess. But it can be done.
I would try the rent route. Granted the place is worth less that what you paid, but will a rent payment cover most of the nut? If so, at least the pain will not be as bad, even considering that some will call this death by a thousand sticks.
Another plus if it is a loser, you can take the decution on you personal income tax return, assuming you fall under the passive activity income limits and it does generate a loss.
Talk to your accountant, if you don't have one, get one. He/she should be able to help you in the decision making process.
Best of luck to you in your new endeavors.
Nothing is worst than being a long distance land lord.
Cut your losses now. I've been in the industry for 10 years and I suggest you consult an attorney, and let the home go. The alternative it to slowly bleed to death over a long period.
Housing prices will NEVER come back since jobs in the US are service jobs that pay shit. Face it, high paid folks don't buy town homes.
A foreclosure will hurt your credit for 2-4 years max, especially if you reestablish your credit right away.
There are record number of rentals, and the quality of renters is very poor in most cases.
Chalk it up as a lesson, walk away. Justify it like this. Monthly payment x 12 months + upkeep = Annual Loss x 2 yrs x 5 years = your retirement/kids college= you are bleeding to death.
These are words of wisdom. I've been there.
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