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General Landlording & Rental Properties

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A.K. Ahuja
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Upside down on Rental, seeking guidance

A.K. Ahuja
Posted Jul 1 2020, 00:12

Hey guys - let me start by saying I'm not proud of this one, but faced with the reality and seeking guidance on how to navigate..

I bought a brand new 1BR condo in Baton Rouge, LA as an investment property back in 2006 for $120K. At that time (as many of you probably know) it was easy to purchase a home with a 1st+2nd mortgage and zero-to-minimal down payment without PMI...so that's what I did. Unfortunately over the years with market downturn, hurricanes, etc. property values dropped and many other owners/investors with neighboring units either foreclosed or did short sales on their condo units...further driving value down to half of what I originally bought it for. Currently it's valued around $55K-$60K, and I still owe $105K (due to prior int. only loans). I have it rented and fortunately it's been rented majority of the time I've owned it, but I'm still in the red each month and wondering what to do. I'd love to just get rid of this property and wipe my hands clean, but I really don't want to come up with an add'l $50K out of pocket. I've thought about short sale as well, and although don't want a credit hit wondering if it's a viable solution. Here are all details:

-Orig. purchase price = $120K

-Current value = $55K-$60K

-Balance owed (1st & 2nd mtg) = $105K

-1st mtg pmt = $685

-2nd mtg pmt = $180

-Monthly HOA = $400 (I know, this is freakin ridiculous)

-Monthly rental income = $747 (net), [after 6% prop mgmt. fee on $795 gross rent]

-Net monthly cash flow = -$518  (I haven't been paying the HOA for many months now, so I'm currently operating at a -$118/mo loss, although the overdue HOA dues are just piling up)

Goes without saying this is a bad situation...what should I do and what are my options?

Would you guys consider a short sale? (If the bank needs to verify income levels, I'm not sure I'd qualify as we can technically pay it off...I just don't want to)

Any help/feedback is greatly appreciated...thanks in advance!!

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