BiggerPockets

In July 2004 I bought a beach condo with the aim of keeping the property for a year and making a small profit.
I paid $230K and financed 205K. Intertest only variable rate.
One month after I bought the property it was damaged by Hurricane Ivan. We the owners then proceeded to get into lawsuits. Each owner received 30K from insurance. I used this money to make my $1500 a month payment.

One year after buying the property all the owners were offered contracts by a developer. I was offered a contract for $379K under the condition all owners signed their contract.
4 owners would not sign so the deal fell through.

Finally a ruling was made to repair the units and each owner was assesed $40k for repairs. Repair of the units was completed in June of 2008.

After borrowing $40K for repairs and due to the fact that I am retiring this spring I no longer have the funds to keep making the payments. The property at this time will only appraise for 140K and I owe 205K. I currently have the property on the market but no offers. Any advice will be appreciated. Thanks

Drop the price until you get a buyer and cough up the difference. As you say, it was a bad investment.

Yeah - very possible. Why don't you short sell the house?

He's in Florida (Hurricane Ivan). He's lucky if he gets 140K. My dad's house in FLA appraised for around 440K in 2005, and he'd be thrilled to get 250K now. And his area didn't get hit by a hurricane.

Its not a short sale if you pay the difference. That's just a normal sale, with you bringing cash to the table. I had to do that to sell a car about six months back. You can certainly always do that.

Do you have other assets? Its my understanding that short sales are difficult to get approved if you're not under distress and have assets. Short sales usually require a hardship letter to the lender explaining your hardship (job loss, death in the family, forced relocation, divorce, medical bills), your lack of assets and your lack of income. But, its certainly worth a try. It was all this crazy lending that was ultimately the cause of the huge and phony run up in prices. They might at least accept something less than is owed.

Maybe other members will comment on their success or lack thereof in getting short sales on investor properties.

Very sorry to hear about your situation Lots of folks who were hoping to retire soon are looking at their nest eggs in despair. Its a sad situation.

Can you rent out the property to cover the mortgage or most of the mortgage at this point? If not, could you sell half your upside to an investor for half the monthly PITI? Does your condo association allow you to rent it short term and can you find a property management company that can do vacation rentals which are typically a better return than yearly.

It will be a good five years before values start coming back in Florida but you have a great location. Unfortunately, you have a number of factors working against you even as a short sale. Currently, financing for ANYTHING is tight. Cash or FHA are the only deals that are closing. Also, in Florida, lenders have a closet moratorium on funding condos. Condo associations/developments have to pass a background check for financial stability before they will lend and the check can take up to a year. By then your buyer is long gone.

Since you are retiring, you may want to move in and make it your primary residence. As such, you may qualify for the HOPE re-fi program. If you can't do that, short sale is the way to go. If you can find a buyer, you will either have to bring cash to the table, work out a payment plan with Countrywide or get slapped with a deficiency judgment.

One of the things we are seeing is that lenders won't even talk to you about loan mods until you are three months late. So people stop paying, trash their credit and then have to go countless rounds trying to get a loan mod. Tell them that you can no longer pay (don't stop paying on the mortgage without consulting a lawyer) and you need to get that adjustable rate loan down to a manageable fixed rate.

If the place is empty and you are willing to gamble, offer to send them the keys back with a deed in lieu of foreclosure. They don't really need another condo. That may get their attention. Or at least get your case kicked up to a supervisor. The customer service reps you talk to when you call in are temps or just barely better than temps.

The old-time nvestors won't go near an adjustable rate mortgage. A whole new generation of investors just found out why.

Chin up.

Barbara

Do you care about your credit or have any other assets?