Unwillingly Entered REI, Some Advice Needed

[Joseph Lieberman]

My topic is a bit misleading so I will start with a brief story :)

I lost the house in our divorce, but my ex was unable to get approved to refinance it, and after she missed a couple payments I took her to court and won it (with several months of back rent and a major ding on both our credit scores). That was over a year ago.

Since then I've been unable to sell the property and 7 months ago began renting it out and thus begins my foray into REI of sorts. It was a great house to live in (I can't move back in for several reasons), but it is the WRONG kind of property for investing, I'm renting it a slight cash loss after taxes, but with 7 years into the mortgage there's at least some equity gain going on in the black.

Personally speaking I am 30, own two different businesses (both successful) and since I have taken the time to find a good property manager and learn quite a bit about real estate investing I figure it may be time to throw my hat into the arena for real, but I have several odd challenges facing me. I'm very well educated in business, so don't pull any punches or technical terms - even though this is the getting started area :)

#1: I have the option of HARP refinancing this SFR, which would lower my monthly payments by about 200/month and make the above property actually cash positive, though not by much. To me this would sorta lock in my attachment to this property. We're also planning on attempting to raise rent for the current tenants by making them cover some of the utilities (about 60-90/month, or a 6-9% hike).

#2: I could attempt to sell it at a wash (it was underwater for years since we purchased it in 2005) and clear it off my credit record. This would mean leaving the property vacant and it was on the market for 6 months last time with no luck.

#3: I've got 30k in easily liquidable assets and 30-36k in non-liquid assets that I'm thinking of selling to go into REI. The PROBLEM is the above story's ding on my credit score (I think its about a 630 or 640) caused by the late payment on a mortgage. I'd like some options, if there are any, to keep the interest rates under control and/or be able to actually leverage debt to make this work best. My 30-36k tied up is in extremely high risk ventures, divesting myself of that risk and placing it into less income (but safer) real estate is appealing to me, but only if I can leverage the total cash to produce decent cash flow.

#4: At the moment, unless the world of realesate suddenly calls to me (it may, I've enjoyed learning the ins and outs so far) I am far too busy for a super active role in real estate at this stage. My income will likely be much better focused on my businesses and, hopefully a few years down the road, can simply retire on the real estate investments (or some mix of investments).

Last but not least, my local area (Corvallis, OR) seems decent enough for investing with two major colleges nearby (UO and OSU) and a generally growing housing market/land value. Plus I have a local property manager that I trust already and could keep an eye on things directly if needs be... but is there a good index to see how much better "somewhere else" could be?

So to sum it up:

Coming up I have a meeting with my banker (Wells Fargo) to discuss the HARP refinance and I intend to ask him what kind of pre-approved loan I could get, but I am worried it won't be enough to leverage 60k into enough cash flow to make it worth selling my other ventures. Load me up with info I may not already know to talk with him / find a loan that will fit my needs. My DTI is currently 14% or so.

What can I do to get more involved. My risk tolerance is higher than most (currently ultra high and wanting to move it to 'high')