Real estate gone wrong.

[Rudy Varo]

Hello everyone. Maybe i feel like everything that l do is wrong because when something goes wrong is kind of hard to face the problems. One of my only two properies that l have recently went vacant,they left one month earlier do to Harvye,l have a property managment and he said that it was going to clean the house and have it ready. WELL,for some reason l forgot to pay my insurance on the property tinking it was due later this year,,so gess what...wrong. so now the house needs around 5k in repairs don't have the money haven't pay the mortgage need to buy the insurance and the manager bearly put it in the market for rent. Ican't get a loan from the bank for low credit score,so if anybody have any sugestions please let me know.

[Mike H.]

Thats a recipe for disaster right there. As a rule, you should never buy a house if you don't have at least 10k for repairs. I'm not suggesting you need 10k for each house. But you should have at least 10k. Doesn't even have to be 10k. Can be a credit card or something.

But there's nothing you can do about that now. You own a house that you probably can't rent because it needs 5k in rehab. Without rent, you can't afford to pay the mortgage, taxes or repairs.  

So that leads to one thing. You'll continue missing payments and the bank will foreclose.

To me, you need to find a partner on that house. How much do you owe on the house and how much is it worth? Thats going to determine whether you can go down that path.

But lets say its worth 100k and you owe 70k. And lets say when a renter is paying, you're making 300/mo.  Find a partner that is willing to put up the 6 or 7k you'll need to make the repairs and pay the insurance and bring the mortgage current.  Make them 50-50 partners.

Then start saving some of those rental profits for at least the next 6 months until you have something in the bank to cover future repairs and turnover/vacancy.

Provided you have some equity in that house and you're getting decent rental profits every month, I think you can find someone that would throw in 6 or 7k to be a 50-50 partner.

While that may sound like a lot to give up, the reality is that at this point, if you don't get that money, you're going to continue missing mortgage payments and eventually lose the house completely. Not to mention destroy your credit and any chance to continue investing in any more houses for quite some time.

50% of something is way better than 100% of nothing......

A couple of other quick alternatives I'd throw out there:
1) Sell the house as an investor special. There isn't much inventory out there. And I'm guessing everybody is looking to guy what few houses there are on the market there in houston - no matter what condition they're in.

2) Put an ad up for a renter that says handyman discount. Discount the rent a couple hundred dollars a month in return for him providing free labor to repair the house. You'll still need to pay for the materials but that buys you some time over the next year to hopefully stay current with the mortgage and insurance and get the thing fixed up a bit - maybe with the help of the other investment property's rental income?