Underwater Condo —Short Sale or Keep Renting

[Ben P.]

I have a condo purchased in 2006 as principal residence and began renting it out in 2009 (underwater and could't sell). I have an interest-only loan and the 10 year interest-only period just ended, so my payment has increased significantly. The property is no longer cash flowing with the higher mortgage payment, but I am finally paying down what I owe. I'm still renting it, and was hoping values would come back eventually. Does not qualify for HARP, so I have limited options. 

My question is, should I be trying to short sale this property? I think it would be hard for me to prove a hardship as I have saved cash and other assets, but I feel like I am throwing good money after bad at this point. Here are the numbers:

Purchased in 2006 for $286,000

Current value $196,000

Mortgage 1: $1442 (2.75% ARM)

Mortgage 2: $372 (8.5%)

HOA: $209/mo.

Monthly Rent: $1700

Monthly principal paid: $790