Knowing when to cut your losses?

[Greg Fend]

When do you know it's time to call it quits on a property?

I have a SFH in MD that I purchased as a primary residence while living in MD from 2008-2010. I held onto it because I was (and still am) upside down and wouldn't be able to sell it for what I owe. I've had little/no issues keeping it continually rented through a property manager. I did a re-fi to get my mortgage payment down, but still get less in rental income than my mortgage payment.

This was tolerable when I didn't have any other properties, and I could use the tax benefits. I didn't really consider it an "investment property" as I had it for my primary and have just been trying to minimize the cost of ownership. Now, however, I've become a partner on three MFHs, and I would lump this into my portfolio as an "investment property."

Should I take the big hit now and get out of it ASAP, or keep the ~$200/month loss for a while longer and see if I can maybe at least break even later on down the road?

Any thoughts/insights?

Greg

[Bill Gulley]

Originally posted by Ryan Logsdon:

Don't worry, this is impossible. Entering an option contract is a private event. Plus, an option plainly isn't ownership.

Tell the lender that and listen to them laugh. An option conveys an equitable interest.

Tenants can cut grass, clean, do you really want them changing a HVAC filter and putting it in backwards? TENANTS CAN NOT DO THE MAINTENANCE of any significance! It's a great way for them to make claims as having an interest in your property when you try to evict. It's also a great way to have a judge knock off what they might owe you or hand you a bill.

Other issues, you can get lucky, using rents, but tossing it in as a credit building arrangement can't be further from being applicable, you don't "establish" credit for a buyer, you can't even report it and the amount makes no credit impact but is an underwriting consideration for a future lender. In fact, the higher a person's obligations are the less credit worthy they are seen to be.

To the OP, go see an attorney, there are some really foolish statements made in this thread. Ben was correct, the idea of keeping it might be better too.

:(