Losing 2K a month on one house

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Losing 2K a month on one house

Jay Hova
Member since 2008 · 7 posts · 0 votes

I helped my parents buy a house few years ago. Everything was going well until my father took ill. Now they can no longer afford the house. I have been paying the mortgage, however for the last 15 months I have been losing 2K per month (with it rented). I put the house on the market (Tampa, Fl) but it just sat for a year. I ended up dropping the price to just what is owed, and it still sat. Not 1 single offer. The house is showing against my credit, and with my parents unable to pay (and the rent I get leaving a big gap), I am no longer able to prove to banks they pay for the house (which means my DTI shot through the roof). Not only that but losing this kind of money, has made me SERIOUSLY slow down on new investments. If I can't sell the house should foreclosure be an option? How bad would that hurt my credit, if all other mortgages were in perfect standings? Any other ideas?

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  • Account Closed
    Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
    18y

    Being late will be the damage. A foreclosure later will make it worse. It will stick for years.

    If you can sell for a loss or other ways to avoid late payments and foreclosure then go for it.

    See if the lender can work with you on a loan modification so that they do not have to foreclose. I am not talking about a short sale. If that will not work see if they can work on a short sale with you.

    John Corey

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  • Jay Hova
    OP
    Member since 2008 · 7 posts · 0 votes
    18y

    I've decided to sell one of my rentals in order to pay off half of the house, this way I will at least break even on the house every month. Any idea of the tax implications of doing this? I know I will get hit with capital gains because I have never lived in the home, any other "unforseen" hits I might take?

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  • Account Closed
    Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
    18y

    This might be the best solution to a bad situation.

    Note that you are not breaking even. You are over capitalizing the property you will continue to own until you can do something else. Hence you are reducing your returns. Compared to losing the property the idea to throw capital at it is not a bad one. A defensive strategy.

    John Corey

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  • Jay Hova
    OP
    Member since 2008 · 7 posts · 0 votes
    18y

    What about a Deed in Lieu of Foreclosure? Do you think this might be a better move?

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  • Anthony B.
    Real Estate Investor · San Diego, CA · Member since 2008 · 42 posts · 0 votes
    18y

    I've heard of similiar situations. Regarding selling one rental to pay down half of the house in florida, some people would say its throwing money into the already bad investment.

    I dont know what the situation is, but maybe try lease optioning the house out? You aren't going to have that many buyers right now with the market due to credit crunches, and lease optioning your house might work.

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  • Josh Gibbons
    Real Estate Investor · Bethlehem, PA · Member since 2008 · 48 posts · 1 vote
    18y

    Why isn't the house selling? Owe too much on it? Need work? What? Thats the first question that came to my mind

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  • Jay Hova
    OP
    Member since 2008 · 7 posts · 0 votes
    18y

    I think the biggest reason was the flood of houses on the market that are similar, coupled with the tightening of lending. I am going to put it on the market 1 more time, at a giveaway price even if I have to come to the table with money. If it still doesn't sell, then I will go the other route of paying down the mortgage and refi-ing it.

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  • Josh Gibbons
    Real Estate Investor · Bethlehem, PA · Member since 2008 · 48 posts · 1 vote
    18y

    Whats does it comp at? What is owed on it?

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  • N/A N/A
    Member since 2008 · 14 posts · 0 votes
    18y

    This doesn't sound good at all. I sincerely hope you can sell the house without having to resort to foreclosure. Banks like liquidity so they would try their best to get rid of the house to recoup their losses as soon as possible........and this means a potentially lower selling price.

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