Confused and Overwhelmed
Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes
Confused and Overwhelmed
Most Popular Reply
Investor · Portland, OR · Member since 2015 · 119 posts · 78 votes
10ySounds like you should sell a home (or homes) and pay off your mortgages. Less expense = less income needed. Get a job that you can do or go on disability if you qualify. Homes that are in disrepair will bring you more and more problems and less and less when you do finally sell.
39 Replies
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes10y
Originally posted by @Brenda Whittaker:
Looking for guidance. I have done some investing, but am a miserable failure. Banging my head against walls (literally), I still cant figure out what to do. Nothing works. I am in financial distress, but have some equities and cash I dont know what to do with for the best outcome. Looking for guidance here.
We are going to need more information to be able to help.... what specifically are you having problems with?
Second City Real Estate4.821 Reviews - Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Oh thank you for your reply! Specifically, I love rehab real estate. I managed to buy three properties a few years ago, partly by borrowing against my home. My home is under water now. I love my home, been loving it for 25 years and intend to live out my life in it. The three rentals I have held for 7 years, but I do not make enough to buy insurance on them, or maintain them. They are also wide open for danger, in my own name and not in any entity - no legal protection. All of my income comes from them, I depend on every penny of those rents just to make ends meet. I am maintaining, but not thriving. I dont' work, due to age and injury and the legal system. Now, in March I have a balloon due on my home of $89,000. If I cant cough it up, I will have a payment of $777 month, which I cannot afford. I have been trying to pay it down, but since the feds raised interest, the payment only increased, even with my putting in every extra dollar I can come up with. It's like a giant monster that is never satisfied. I just keep feeding it. Now, if I sell a rental to pay it off, I will lose money because the rent I get is more than the mortgage increased payment. Plus, if I sell a rental, Im sure it would be a good idea to use the cash to invest, maybe flip and earn the $89K that way, instead of using it all for mortgage payoff. (its a 2nd mortgage. I still have a 1st.) I also just got hit with a $25,000 lawsuit that I lost, for a debt I already paid but a nasty judge refused to hear my case. So that creditor can steal my rental homes to pay that off. I cannot pay the lawsuit, the new $777 2nd mortgage payment (actually a HELOC), and survive. I already cant maintain the rentals. I would really be happy if I could hang on to the rentals, but one is in pretty bad shape, needs about 10K in repairs. I have been such a failure before, lost at least a million, so Im terrified to make a move, and the time is ticking away. I have failed every money making endeavor I have ever tried. Everything is on line, and I cant learn anything without humans to ask questions of, and I seem to be growing more and more foggy with overwhelm. Thanks for listening.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brie Schmidt Brie did you get all that ?
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brenda Whittaker Brenda go see a competent CPA and lay it out for him or her.. they will help you
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Well I have a good cpa but she does not seem real estate minded, I mean she knows taxes but she's not an investor. I can run it by her but Im sure she wont have any answers as to how to make the most out of my equities. She does not invest in real estate. I was hoping to talk to other investors.
- Investor · Portland, OR · Member since 2015 · 119 posts · 78 votes10ySounds like you should sell a home (or homes) and pay off your mortgages. Less expense = less income needed. Get a job that you can do or go on disability if you qualify. Homes that are in disrepair will bring you more and more problems and less and less when you do finally sell.
- Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes10y
@Brenda Whittaker
Welcome to Bigger Pockets. It is a good community to network and learn about all aspects of real-estate investing.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes10y
Sounds like it might be time to batten down the hatches for the storm you are in. I would put further investing on pause and address my current situation. I empathize with your circumstances. Need to look at this methodically and leave emotion out of it best you can.
I would sell my least favorite properties creatively (like on sub-to's or something) and maybe plan to short-sale my house. I know you love the house, but it sounds like it's eating you up. Sounds like you can demonstrate financial hardship, so if you decide to go that route, stop making payments. HELOC's and 2nd's can and do settle for less than owed.
There is a lot of blaming going on in your post. The federal reserve, the legal system, the judge, etc. Dangerous language. Just my coin. Good luck and best wishes whatever you decide to do @Brenda Whittaker!
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Thanks Steve Vaughn. Well, true on battening down the hatches. It's complicated though, first, as for selling my least favorite, that one needs about $10K in repairs in order to sell to an end buyer. It's a very small \ poor Texas rural town and no investors have shown any interest, so I have not been able to sell as-is. It's harder to sell while occupied, but I cant kick out the tenants because I need the income, and they've been good tenants and dont want to move. As for my own house, there is no way I would ever move. It would kill me. I did stop making payments once and was hoping the lender would reduce interest or that I could get into one of those programs you hear about like hamp, but they refused me for everything. They did restructure by adding years onto the end and jacked up the principle to include fees, costs, legal expenses, more fees and more costs, so I now owe more than I did before, erasing about 10 years of progress in paying it down. What I need is to pay off those mortgages, or at least one of them, and stabilize. Im trying to find a way to reduce expenses and reduce the bleeding, a way to turn the assets I have into a stabilization plan. Thats what I need help with. How do I juggle three rentals and an underwater home, without selling the rentals to pay off the mortgage. What is the best way to use the assets to stabilize my situation. I dont need to leave my home. I have to live somewhere! What good is three rentals if Im living in my car?
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Question, can you guys tell me what kind of business entity people usually set up for real estate? LLC? Can an LLC be one person only, because I dont have any partners.
- Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes10y
I do a lot in some rural Texas areas. What town are they located in and I can try to point you in the right direction ?
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Hi Greg H. The house that is my least favorite is in Bonham. It's 20 minutes east of Sherman, near the OK border. It's a 3 bed. 1 bath occupied, needs siding as the old aspetesos is falling off, and may need foundation stabilization. In good shape its worth about $60K. It's nice inside and gets $650 mo. income. To get it in tip top shape, needs about $5K - $10K in repairs. If I could sell Bonham as-is, I could pay down the second HELOC on my own house before the balloon comes due in March, making the payments more affordable. But it's not going down $650 so that doesnt make sense. The other 2 are in Adkins, near San Antonio, an area I love. 2 manufactured homes each on an acre. Those are in good shape, occupied, and worth just over $100,000. I wanted to keep those, however, if I sold one I could pay off one of my own home mortgages and have some to fix up the one in Bonham. But if I sold one of the Adkins properties, what makes sense is to use the cash to do enough fix and flips to pay off the mortgage and still have the capital. Thats what I really should do. Im looking for a way to use the equity I have in those rentals to create enough cash to pay off the home mortgages without using/losing the cash.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
@Brenda Whittaker you need to find some professionals to lend a hand. Find a good lawyer and CPA or financial planner. We understand you are distressed and anyone would be. Take a look at your assets and liabilities and find out if they can be restructured. As far as your personal home, don't be attached. Can you lease it for more than the payments? How far underwater are you? As another poster stated, a short sale might be in your best interest. Let go of emotions, clarify what actions need to be taken, and ask for help to get those done. DON"T GIVE UP!
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Like if I could borrow money out of a rental to buy a few fixer projects (I love rehab), that would be the ultimate solution as far as I can see. But without a W-2 job I cant get conventional financing. I know I could just sell a rental and pay off one of my home mortgages. But I would be getting rid of a $777 mortgage or a $679 (mo.) mortgage (I have 2) but losing $800 month. See the dilemma? I would not be better off by selling a rental and paying off a mortgage. Except for the risk. That would improve greatly.
- West Palm Beach, FL · Member since 2015 · 1 post · 0 votes10yI would sell the home I'm living and rent a small place. I guess it has to be a short sale if it's under water... Then save some money and buy something smaller cash. Or With a large down payment... Or live one of the rentals when available... You say it would kill you to move out of your house. Imagine how would you feel if you were forced to leave your home... I would also recommend you to talk. To your CPA... He or she can help you understand your situation... You are saying your CPA is not an investor... sorry to tell you but apparently you are not one either... Stay positive finance today can answer many of our needs but you need to now when you got to make sacrifices... The home I short sold 3 years ago still didn't make a penny... I sacrificed 2 years living in a small apartment but now 6 months ago bought a better home with a large down payment... My mortgage is half what I used to pay... And I live in a newer better home... Don't be afraid of making changes... Good luck..!
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Thank you John Thedford. Ok, maybe a financial planner. I do need professional advice. As for my home, it makes no sense to leave it, I have to live somewhere. Like I mentioned earlier, Im not willing to live in my car! With both loans against it, I owe about $20K more than it's worth. But its worth everything to me. I dont need to be homeless! I need to find a way to pay off the mortgages! No I cant lease it for the amount of payments, plus I already do lease out 2 bedrooms which pay for one of the mortgages. Sure I could just walk away from it all and live in a ditch without a mortgage, but I would lose my will to live.
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Mr. Turker why do you feel the need to insult me? I may be stuck and may not be very professional but I have been investing in real estate for 20 years and that's how I make my living. So dont tell me Im not an investor, that was rude and uncalled for. Im not leaving my god damned home! Your advice is no advice at all.
- Investor · Houston, TX · Member since 2015 · 4 posts · 3 votes10y
Hello Ms.Brenda Whittaker,
I am very sorry for your situation and I can strongly empathize (because of our experiences trying to recover from 2008 -2012 - in Tampa). The one thing I found was that in most of these financial situations it seems "the Devil's in the details." Three years ago we moved to Houston and regardless of our location I have the same experience with CPAs and attorneys to which you alluded - they may be good at finances and legal documents, respectively, but many (very competent ones) do not have a good eye for the best solutions in RE investing.
My initial advice is to find an experienced real estate investor you think you can trust, but since you are on this forum you probably have not found someone like that. Most of the good investors are problem solvers, because that is a key ingredient. I don't know how much you are willing to share, but solving this type of puzzle is what many folks on this forum do as a major component of their success - which is another reason why you are probably turning to this group as one of your resources. The problem is, who can you trust...you don't know any of us, nor do most of us know each other, very well.
Since the Texas RE market is somewhat familiar to me, I would be glad to take a look at the financials and documentation of your situation to offer a recommendation. Please understand I cannot promise anything, but it sounds similar to some of my past experience and I may be able to offer some possible insights.
If you feel okay with this, please email your best detailed description of the properties and the financial challenges (specific timeframes and amounts) to me ([email protected]). I hate to see someone starting a New Year in such desperate circumstances as possibly losing home or livelihood.
Very Best Wishes...whatever you choose to do...Don't give up!
- Investor · NOVA, VA · Member since 2014 · 99 posts · 101 votes10y
Sell the rentals with owner financing to another investor. You have the income stream without the maintenance risk. Use the down payments in the best way you can think of to better your situation (not clear what that would be). Best wishes to you in this challenging period.
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
David Toler, that's a fantastic idea.
- Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes10y
Brenda- Based on the information given, here are my 2 cents
You need to get moving an liquidate your rentals now before the judgment attaches to any of your rentals ! If/when the creditor files the abstract in the counties that the properties are located, you will not be able to sell or refinance without satisfying the judgment. Can it be negotiated down ?
Bonham- I am assuming this is an older property in need of repairs ? This is a town where many older properties sell for less than 20K and take a while to move so make sure you are priced right
Adkins- You need to ascertain if the mobile homes have ever been moved or are otherwise not eligible for FHA financing. Not being qualified for FHA can severely effect the value and timetable to sell
Owner financing would be the best option to get the highest price in the quickest time. But again, get moving before the creditor does !
- Investor · Cottonwood, AZ · Member since 2015 · 287 posts · 57 votes10y
Thank you Greg. The judgement can maybe be negotiated, though they are pretty evil, but it would have to be for a cash lump sum. Though Id rather sell Bonham, I probably need to sell one of Adkins instead, where the market is better, the houses are better and worth more. The manufactured homes in Adkins have not been moved, it's manufactured home community, very well kept, nice area of homes each on at least 1 acre. Yes, Bonham was built in the 1950's, and has some structural issues. Thats the one Id like to sell,, but would be more difficult. Im not sure if FHA can be done on the Adkins properties, but I think it can, however, the owner financing option sounds pretty good because Id still get income, Id get rid of the judgement, and could pay down a little of that balloon on my HELOC that comes due in March, if I can get a decent down payment. Now i just have to get the tenant to cooperate - they are not setting up a time for the realtor to do a walk-through, they probably dont want to cooperate in fear of having to leave. Its hard to manage from 2 states away, but I know I have to do something. I am in a very very high risk situation, so I know I have to get rid of some of that risk first before doing anything else, I can see that now. I've been going at it very unprofessionally. Thanks so much.
- Houston, TX · Member since 2015 · 5 posts · 0 votes10y
I am a newbie so take that with a grain of salt..but isn't there a solution that doesn't involve any of the existing properties. What if you focused your efforts on getting a capital infusion by wholesaling a few properties and flipping a few. You may be able to find a private/hard money lender to finance the flips. I know you said the balloon payment is for $89000 but I would start by calling that creditor and negotiating a reasonable amount. Then I would sit down and determine how many properties I need to move each month to accomplish this. Then I would assemble a team of realtor, cpa, contractor, inspector, etc and get them onboard with your aggressive plan and deadlines. Then get to work. If you have to go before the judge you want to have all or most of the money and evidence you're working a workable plan for the rest. You can do this! Stop telling yourself you're a failure. That will manifest. You're allowed a few minutes to break down but that's it, only a few minutes, then kick that pity party to the curb girlfriend. 😊
God bless you. Z
- Real Estate Professional · Dayton, OH · Member since 2015 · 423 posts · 187 votes10y
Okay, Brenda. First of all, don't spend any more money on real estate and ESPECIALLY, real estate "training". Recognize those "free" podcasts, webinars, and ebooks for what they are...a "sales letter". They tell you enough to familiarize you with the topic and get you excited about it, but they really don't tell you enough to become competent at it. They are "come-ons" to motivate you to BUY whatever program they have.
One way or another, you are going to pay for training. You are going to pay as you already have, by spending money and making mistakes, or by getting training from someone who is a professional and will work with you in the field. But wait, there is a third way:
Find the "heavy hitter" in your market - the investor who is doing a lot of deals - and offer to "bird dog" for that investor. You will learn about investing successfully and earn while you do.
I can tell you that as a successful investor myself who has done hundreds of deals, I am always looking for good bird dogs. My experience is that they are few and far between. Most have the "get rich quick" mentality from listening to "free" podcasts, webinars, and reading ebooks. When they find out you have to do more than show up, they lose interest.
Humble yourself. Be willing to do what you are asked, when you are asked and have the mentality that you are learning and getting paid while you do - have an attitude of gratitude - and you will be on your way.
- 10yBill CriderPro MemberLender · Georgetown, TX · Member since 2015 · 23 posts · 33 votes
rule # one when you find yourself in a hole: stop digging!
You have not made good investments so far, it is unlikely your "luck" will change.
First, find a way to live on 90% of your income. Then use the 10% to payoff your debt. When you are out of debt, Find a form of investing more suited to your temperament.
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