Underwater rental in California, best way to exit?
I bought a rental property in Clearlake Ca in 2004 for about $125,000 ( A house and studio)
I now owe $95,000 on a 1st at 6.25%. Citimortgage
If the house was all fixed up I might get the $95,000, but it is in need of ALOT of repair,
and the neighborhood is horrible. In it's current condition I might get 65,000 for it??? Hard to say.
I bought this property as a flip, and the market crashed while I had it listed, so I've been renting it and waiting for the market to come back for about 9 years.I have had to deal with evictions, drug dealers, city code enforcement closing down, and now a mice infestation from the neighbor letting garbage pile up in their yard.
I want out.
After evicting a tenant from the house years ago, the place was trashed and I rented it to someone "as is" in exchange for lower rent. I turn the other cheek as to what "business" he does there....I have been collecting rent from the house and the studio, and break about even money wise, but I do not want this property in my life anymore, and I worry about the liability.
The options I am considering are
Finding a buyer and paying off the difference out of pocket...ouch!
Doing a short sale
Foreclosure
I am not horrified at the thought of ruining my credit...the thought of trying to list it for sale and have the tenants cooperate with showing it sounds daunting.
Advice?
I am not confident I understand the law in California for deficiency protection . I don't think I am protected since it was an investment property, and is it a real risk that they would sue?
What is my best bet at convincing them to do a short sale since I don't have financial hardship?
Cancellation of debt income? Will I be given a 1099 in a short and a foreclosure, and would the loss on the investment offset it? (My adjusted basis is about $98,000 right now)
Thanks for any help!