Upside Down on Rental

[Lisa Henrich]

I had someone reach out to me this morning with a question regarding their rental property.  Currently, there is negative cash flow by a few hundred each month if you also include maintenance and vacancies into the list below.  This is a distant property so they are paying a property manager $50/mo.  Bottom line is that they obtained their mortgage at the height of the housing boom for $120K and now it is only worth $40K.  They currently owe $83K.  If they sell they will owe taxes on the difference.  Is there a solution that makes sense either way?  If they short sale they will be financially penalized and it will hurt their credit.   Please advise.  Thank you, Lisa

Rent:  1100/mo

Manager:  50/mo

Mortgage:  405/mo

Taxes:  383/mo

HOA: 165/mo

Trash:  25/mo

Water/Sewer:  150-200/mo