Foreclosure or Short sale on 2nd property with 2 loans?
I own two properties -- my condo and my house. I live in my condo and it is a very manageable mortgage with Chase. After everything shakes out, I only want my condo.
I also own a house in Hawaii which is listed for sale with a realtor. The mortgage and HELOC on the house are totally unaffordable and have drained every penny out of me. The mortgage and HELOC on the house are both with Wells Fargo. Even if I was to rent out the house, I'm still losing -$1000 a month which I have to cover out of pocket. Without rental income, I'm out -$3500 a month (max rent for the house is $2500).
Selling the house for market price (which is getting lower by the day as sellers are dumping their homes) and after paying the realtor commission, I'm short -$30K out of pocket at closing, which I don't have. I don't have savings, no 401K, no IRA. I'm also facing an out-of-work scenario in July, since my job contract hasn't been renewed.
So, I'm trying to figure out what to do. I learned from before when I did a short sale on another property in 2012 that it's a bad idea to throw good money after bad, waiting for the market value to rise. I do not want to throw good money at this house.
Possible Options
1. Somehow get $5K to pay for the repairs to get it rental-ready, and rent it out. Hawaii law does not allow you to terminate a lease when a house is sold, so renting it out will limit the field of potential buyers. Even with rental income, I'm out-of-pocket -$1000 per month. For the months without a renter, I'm out -$3500 a month.
2. Don't rent it. Don't make payments on the mortgage or HELOC either. Continue to try and sell it for an above-market price that covers the mortgage note, HELOC, and realtor commissions. Eventually (2 months probably), the bank will start threatening foreclosure. I can talk with them about foreclosure or short sale possibilities, maybe delay it for a few months, meanwhile the house is still listed for sale. Best case: the house is sold and I walk away free-and-clear. Worst case: the house is short-sold or foreclosed.
3. Something I haven't thought of?
My questions
1. What would you do? I'm leaning to option #2, but am open to ideas.
2. Will Wells Fargo who holds both the mortgage note and the HELOC on the house be likely to agree to a short sale and forgive the balances of both the mortgage and the HELOC?
3. With a foreclosure or short-sale on the house, what happens to my condo that I live in?
Thanks.