All Forum Posts by: Rich Lee

"Maybe I missed it but what is your interest rate?? Is it variable??"
6.25% fixed

"Have you contacted the lender to see if you could change the interest rate of the loan to a lower fixed rate??"
I didn't know this was even an option aside from refinancing. Will it hurt my credit? Credit preservation is a top priority.

"This would decrease debt service and that combined with fighting to get property taxes reduced would help your losses."
the whole town just did a reassessment and my property value is pretty accurate. not sure if trying to reduce it more will work.

"Some people might say to break your promise to pay. I think they call it strategic default to make themselves feel better. Anyway, I get your logic and commend your character. Try to cut expenses by protesting taxes, modifying your insurance coverage, etc. If this is your only rental, consider buying another one that cash flows to help balance things out."

[b]
thx for the advice. do u think refinancing would be worth it? i've already cut down costs on the property to a bare minimum.[/b]

"I think you have this a little backwards. You can't sell for more than $190K because values have fallen. So, your neighbors are doing short sales to escape their underwater properties. The short sales are a symptom, not a cause."

definitely right. short sale is a symptom. the cause is easy borrowing and people buying houses that they can no longer afford, which results in massive selling regardless of what they owe on it.

"Was this purchased as an investment property? Do you have assets and income to cover your monthly loss? If so, you may have a difficult time doing a short sale. And doing a short sale will certainly hurt your credit"

it was purchased as my first home and i moved out last yr because i needed more space for the family. i have income to cover the loss.

"Now, if you could hold on for 20 years, your loan balance will be reduced to the point where you could sell without bring cash to the table."

i was actually thinking of paying it off in a few years but the roi is so small i don't think it'll even beat inflation in the long run. any tax benefits?

"This is a very strong statment when coming from a HML. I totally agree. The same people who would say you have a duty to be moral and meet your financial obligations will accept, all day long, that "businsses" default on their bad investements as a matter of cutting losses and that's OK. I see my finances (both personal and investment) as business. I look at benefit/cost ratio for any decision I make with money."

in my case, the benefits of cutting losses via short sale or default would not outweigh the costs of credit deterioration. i plan on making investments in the future and i need to maintain my credit standing. more importantly, i dug myself into this mess and i want to get out in a respectable way. i'm wondering if i do sell, will i be able to benefit from capital loss to offset future gains.

thx for the responses all!

Thx Mitch! yea i'm in a crappy situation. Goal is to lose the least amount of money. If i sell now i take a $80k hit before fees. If I keep paying $1k difference, it's the same as holding onto the property for over 6yrs not taking into account opportunity loss, inflation etc.. Realistically, i'm hoping i can just get out somewhere in the middle. Maybe continue paying the difference for 3yrs and let the market pick up a bit. In that case, i'll only lose ~$40k(haha fml).

First of all, I want to mention how great this site is. I just spent the last 4hours reading posts.

Now here's my problem... I bought a studio in 2006 with 0 down for $250k and put in roughly $20k to fix up the place. Mortgage+taxes+PMI is $2000 and Maintenance+utilities is $650. PMI ends early next yr so knock of $200/month. Total monthly cost will go from $2650 to $2450.

I'm renting out the place for $1600 and paying the rest out of pocket. The reason? I can't sell the place for more that $190k because of all the shortsales. So I figure I lose about $1k per month until the market picks up. At least a little bit.

My tenant is very good and I can continue to pay the difference. I think I'm screwed either way. Any suggestions?