My mortgaged property is in distress

[Jim Dunn]

Hello I need some help,

I currently own a mortgaged property that has lost approximately $16,000 over the last three years in total from lost rents, legal fees, maintenance and other general and property management fees. I have been paying the monthly mortgage payment faithfully including all taxes and insurance. As a result, any savings that I have are now very close to being wiped out. The current tenants have vacated the property and have left $7,100 in damages. I owe $44,000 on the mortgage and is worth approx. $17,000.

My question is since I cannot continue to suffer any more monthly losses, cant' sell it as-is, and I cannot pay the management company for the repairs to make it re-rentable, What does a smarter person than I do in this case? 

[Jay Hinrichs]

@Jim Dunn 

 Short sale is your only option since you do not have the funds to pay off the mortgage and the only buyer will be a rehabber wholesaler.  Far to common occurrence unfortunately in low value homes and those renter demographics.

Now one outside the box thing you may want to do and I did this semi successfully in Detroit with one of my OREO's and I don't know were this is I just suspect MI somewhere.

Is to sell it on contract with sweat equity... 1k down carry the contract and let the buyer do the fix up over time.  I suspect your monthly payment is very small.. so if you make it attractive to the contract buyer IE easy to get in and payment lower than rent you stand a 50/50 chance they will keep making payments for 5 years and since they are going to owner occ they will pay more for the home ITs the what will it cost me a month mentality. Now before anyone flames me on Dodd Frank I would not worry to much about that in these asset class's.

Now I did this with probably 10 or 15 of my mid west OREO and none of them went farther than 5 years but generally when they failed I got the property back in somewhat better shape.. Not always I just sold one I sweat equitied and I got about 25k out of them for 4 years they paid payments once a year when they got their tax return.. this year they just left the house its trashed I just signed the HUD my net proceeds are 1400 dollars and I loaned 38k on this in the day.. But its 30k to put it back together and its only worth 38k to a buy and holder as the market crashed as we know in many of these mid west markets and really has not rebounded. And since I am in the business I can take the full deduction for my loss and offset my gains in other areas.

Your not unique in anyway there are thousands of land lords in your exact position virtually every month they just don't post about it they just walk away.