Seeking creative solution - new investor & upside down
Hello! I’m a fairly new BP member and have been looking to diversify my investments and get into buying and holding single families and multi-families for quite some time. I’ve been attending my local REIAs, reading a ton of books over the years, and listen to podcasts, especially BP. I’m in a bit of a situation and seeking some creative ideas that will prevent me from losing a ton of money. I’ve spoken with many people over the years and haven’t yet come up with a comprehensive strategy.
My scenario:
I purchased a 2/2 condo in Delray at the height of the market in 2007 for $170,500 after obtaining a first time home buyer grant from the county using the SHIP program. The grant went toward the down payment and was for $45,000, interest free. For the extent of the grant (which the county now calls a 2nd mortgage), I must live there and cannot rent it out. By doing either, I’d need to repay the full amount. The only exception to this is in the case of a short sale where they’d take $3k as long as I make no money on the sale. I have spoken with the county on this and they say they make no exceptions. They audit me by sending a form every year seeking a copy of my driver’s license and a utility bill that goes to my address.
I owe:
Freddie Mac loan: $112,337
SHIP Grant (mortgage): $45,000
Total: $157,337
In my community recent sales have been as high as $124k (for a flip that was fully upgraded) and average around $105k. There hasn’t been a sale in many weeks in this community and about 5 units have been on the market for quite some time. I know the S. Florida market may have cooled down a little and I’m sure people are waiting to see what will happen with the election as well.
I hesitate doing a short sale as I have excellent credit and would like to use that to my advantage as an investor, so I’ve essentially felt stuck in this condo for almost 10 years now. I am not behind on any payments.
My condo fees are astronomically high each month ($569) due to the community not funding the reserves and being a neglected 36 year old community with many needed repairs. I have been extremely instrumental in helping to turn the community’s financial situation around in the past 2 years as I joined the board as the president and have initiated several upcoming and impactful capital improvement projects.
I am now simply wanting out. I want to focus all the time I normally spend working on this community to my investment goals. I’m super ambitious and don’t let anything hold me back, but this situation has been the biggest perceived obstacle for quite a while now as I’ve waited and waited for the market to turn around.
I’ve made some upgrades to my unit: new AC, hurricane shutters, bamboo flooring, as examples over the years, but haven’t upgraded the cabinets, countertops, or tile in the kitchen or bathrooms.
If I bite the bullet and pay the $45k to the county, I would be able to rent the unit out for the time being although it is not likely to cash flow. Rents are around $1,300 right now and with the cost of my mortgage and condo fees, I would be negative.
What would you do to get yourself into a situation where you can move on from this property and begin investing in a different community (for low money down) without going too far into the red?
Looking forward to any advice you may share!
Brittany