Rental Underwater

[Wes Eaves]

When my wife and I bought a new house, we turned her house into a rental. I negative cash flow about $150/month because the house is underwater by about $80k (value $100k, owe $180k). She took out a first mortgage and a HELOC for the 20% down in 2006.

I have another rental that has a positive cash flow and between the two, I still maintain a positive cash flow every month.

I wanted to get some advice from the seasoned pros as to what their advice would be on the underwater property. Should I try to get rid of it and focus on acquiring a property that has a positive cash flow?

[Jay C.]

Wes,

Some really good repliers here. Like one pointed out the end price only matters when you sell it. Like ij the stock market you have a paper loss since you have not sold and if the market comes back you can recoup it. You said you were $150 off each month.....thats not much. Raise the rent over time and you will be glad you kept it.

One other piece of advice. One poster mentioned he cursed the gov/banks for this. Well let me say it was also the fools who took out these loans and wanted more more more. Its all over this forum BP more more more and no doubt many of these cats are going to have the same demise as many in the downturn. The "I want more" mentality and too much leverage sunk many in the downturn. The banks just enabled those idiots. I on the other hand watched those fools implode and picked up properties for pennies. Back to you....be patient. Time is on your side from your information.