I really could use your advice. I see a few threads related but not exactly my situation. I am unable to sell or refi a former primary residence that was converted into a investment property.
- Purchased 2005, converted to rental 2011
- Currently owe $415K on 2 mortgages, both with BOA
- 1st mortgage @ 6.5% interest-only; 2nd mortgage @ 4.99% interest-only
- 1st mortgage has always qualified for HARP but has not been able to go thru the system to be approved due to technicalities of the loan
- No comps for this unit and best guesstimates of sales would be ~10-15% less than owed
- Negative cashflow is really hurting, ~80-90% occupancy
I cannot spend the cash required (~$100K) to refi given it is far underwater - also it generally does not meet owner occupancy requirements even for a conventional investment property refi. IF I can find a buyer, I would need about ~$70K to bring to the table.
- What other options should I (re)consider?
- How can I finance all or part of the $70K if a seller wants to buy?
I feel like I've maxed out on ideas and really could use some help.
By "No comps" - I mean there are no comps for 2-1 units in this condo building. It is in a pocket of South Rosslyn in Arlington VA that just does not sell like the rest of North Arlington. The best we have done for CMA is use $/SF for units in more desirable pockets nearby or $/SF from smaller 1BR units in the same building.
Account Closed If you want to shoot me the address I can check out the comps for you.
Have you had an appraisal done? Often appraisal prices are not reflective of the actual market value...sometimes for the better sometimes for the worse. But the bank will do a refi based off the appraisal value as opposed to the market value. I would be very surprised that you purchased in 2005 and would still be underwater with the combination of the bounce back of the prices and with 10 years of paying down the mortgage.
@Russell Brazil Thanks for chiming in. Unfortunately both loans are on interest-only so there is no progress on paying down principal. This specific pocket has been anemic relative to the rest of the immediate area due to supply increasing rapidly.
I have not had an appraisal done recently and will look into it. Thanks.
Account Closed If you are unable to refinance it, then a short sale may be your best option. It is a little harder to get them to go through these days, but it is always worth a shot.
Have you considered selling with seller financing. Usually in seller financing deals the seller can ask for a little more than market price due to the financing. When will your interest only loans reset? And what will be your new payments? Consider those when you are setting up the new loan for the purchaser. Also be aware of the new regulations taking effect Oct. 1
Does anyone know if a portfolio lender would be open to discussing this situation? I'd assume a cash-in situation.