All Forum Posts by: Tracy Sharpe

Hello, my wife and I moved from California to Texas after a bankruptcy and a foreclosure on our primary residence in California in 2010. We still have a rental in California that we are trying to get the loan Re-modified through OCWEN. The previous modification was a 5 year but we are submitting for another modification because that modification is up on 1 May 2016. Without the modification, the loan will increase by more than $1400 a month on the 1st. The HELOC will remain the same at $429. Because of the prior bankruptcy and forecloseure, we are not sure what to do other than submitting another request for remodification. We have no intention of selling the house because even with balances of $399,987 on the 1st and $75,812 on the HELOC, the value has almost equaled the debt owed but still short by $33,000. We are renting it but with the increased mortgage we will need to increase the rent to try and make up for the new payment increase. Nevertheless, I will do what I need to do in order to keep the house. I will not sell it. Maybe I am hardheaded. At this point, we just need to try and keep the monthly mortgage down at least close to where the previous modification was set which was $1354.41. The HELOC is $429 but will not change. We are currently renting the house for $1950 but will get more when the lease renews in Oct 2016. The current value according to Zillow is $442,723. Does anyone have any advice?

Situation:

My wife and I currently have 6 houses. One of the houses was purchased in California in 1995. In 2002, we moved from our smaller, first house to purchase a larger and more expensive house in California, which was a mistake. While living in our larger and more expensive home that we couldn't really afford (interest only loan), we purchased 5 new rental houses in 2005/2006 in Texas. In 2010, we filed bankruptcy and had a foreclosure on our larger and more expensive residence. After our bankruptcy in 2010, we moved from California to one of the rentals in Texas where we currently live. We kept the smaller house we purchased in 1995 in California but are having difficulty refinancing it, along with the others in Texas because of our bankruptcy and foreclosure. 

Predicament:

We are in the process of trying to get the loan of our first house in California modified for a second time through the lender so that we can keep it. It is cashflowing but if we don't get the loan modified again, we will have to raise the rent, possibly use personal funds to keep it, or lose it. 

Firstly, the value of the house in California is continuing to increase which is why we want to keep the house. Secondly, we do not want the house in California to go into foreclosure which would reimpact our credit. Thirdly, we are still wanting to increase our passive income by purchasing more property in Texas and we are also trying to refinance our properties but the previous bankruptcy and foreclosure are making it difficult. Lastly, all the houses in Texas do have a positive cashflow and equity. 

Action:

What would anyone advise?

Hello Louis, I am a beginner whom has made some mistakes. I am retired military. I have used my VA but sold the property so I now have it available. In any case, my biggest mistake was when I took equity out of my residence to buy a bigger and more expensive house. At the time, I didn't need to because I didn't have to move. I was just wanting something bigger, better and something to say to myself that I was moving up. Although I was moving up, a wiser move would have been for me to stay in that house rather than renting it, take equity out of the house, buy a rental house and rent it for passive income. All I did was buy a bigger house with a higher mortgage and payment which resulted in more debt. Unfortunately, the housing bubble popped and I found myself upside down in a loan. At the time, I was living in Northern California. Depending on your situation, your goals, and your reasoning for buying a new house consider your alternatives wisely. I hope that sharing my mistake will help you in making your decision. Nice to know that you are doing well. God bless, Tracy Sharpe

Hello Robrert, we only conducted a little research in identifying the area we purchased our rentals. I once lived in San Antonio as a youngster but not in the Dallas/Fort Worth area so I didn't know much about this particular area.

But during the housing bubble, I remember reading and hearing that Texas was going to be the next California.  After conducting a little research, I learned that the housing prices were lower, although the property taxes were higher. Additionally, we knew of a friend who sold their home in California and purchased 10 to 20 rentals near Dallas/Fort Worth. After hearing about his actions, we decided to investigate for ourselves. 

Just so happens we ended up in the Dallas/Fort Worth area. A Realtor took us around an eventually led us to the specific area in the Alliance Corridor where we purchased 5 rentals. Nothing was really in the area at the time. In fact, I remember asking the Realtor, "who would want to come way out here to rent a house?" She said many people would because of the future buildup plans plus there wasn't a lot of traffic to deal with compared to the Dallas/Ft Worth area.

Looking back, I would have still chosen the Alliance Corridor to purchase my rentals. If I had a better understanding of what was going on throughout the world economy, I would have waited until the bubble popped to buy them at a discount. Nevertheless, I am happy to have taken action. In 2010, we moved from California into one of the rentals in Texas so that we could manage them ourselves. We have been renting our house in Northern California since 2010. We have 4 rentals in Texas, 1 owner occupied house in Texas and 1 rental in California. We have equity in the 5 Texas houses. We are still holding on the rental in California. Refinancing is our biggest challenge not the tenants.

Hello Michael, I just wanted to reply to your questions.

We are originally from California. We purchased these homes in Texas because they were cheaper than California, the mortgages were lower, and we found that we would have the cash flow to pay the mortgages. Moreover, we believed the values would eventually go up if we ever decided to sell in the future.

We purchased 5 properties in Texas over a 2 year period, 2005/2006.  I was an insurance agent so it was real easy to get a loan back then.

During the economic downturn, we were able to hold on ONLY because we put 20% down which lowered our payments to where we could still charge enough rent to pay the mortgages. I am not brilliant, it just happened that way.

When we purchased the homes in 2005/2006, we didn't have a hard time renting the properties out because so many people loss their homes through foreclosure that we were able to rent them very easily.

Furthermore, even though many renters had bad credit, they were responsible people so credit wasn't a criteria that we used to rent to people. We looked at prior rental history and a spiritual gut check to determine our selection. We have never had to evict a tenant since we have been renting the properties. 

I didn't do anything significant to research the area in Texas as I should have done. We did calculate the potential rents versus the mortgage payments to make sure that the rents would cover the mortgages. We also believed that the prices of Texas property would eventually increase because so many people were leaving California due to the high property costs to come to Texas.

In any case, as long as the mortgages were covered by the renters, we had no intention to give up. Even when our equity dropped significantly during the downturn, it didn't matter as long as the houses were rented. It was a tough period if we just looked at equity alone but our goal was to have passive income.

At this point in time, we are dealing with refinancing challenges. If we can lower our interest rates on a few of the properties, the more we can keep in our pocket. Thanks for your encouragement.

Thanks for your positive comments. We are continuing to strive. We still have hurdles to jump but with God's grace we will be victorious. My goal is to encourage people to do their best at whatever they are doing. Again, thanks for the encouragement.

Thanks Mac, I also agree. Even if there is a downturn in the housing market, I am able to collect rent to pay the mortgage. Of course, it does come with challenges but since I wanted to be in the game, I am not letting anything discourage me from moving forward. At this point. I am just trying to educate myself to see how I can move forward. 

You're welcome. Again, we still have challenges that we are facing. Refinancing some of these loans is our biggest challenge. Thanks for your comment and encouragement.

Our most successful real estate triumph has not completely manifested. We purchased 5 houses in Fort Worth, Texas (Sendera Ranch, Haslet, Texas) in 2005/2006. In each case, we used conventional financing, 20% down. After we purchased these homes, we rented them. The challenge was to be patient. Even though we put 20% down, we still had to make the monthly mortgage payments which also included paying the equity loan that we used to finance 5 rental properties located in a community that was new and had few or no amenities. In fact, there was no Walmart, McDonalds, Pizza Hut, Burger King, or any medical facilities close by. 

Before our purchase, the Realtor whom we were working with stated that the Alliance Corridor will one day be a hot area and that many people would be moving into the area because of future developments. Unfortunately, several years after purchasing our rentals, the economy took a downturn and the equity in our rental homes was gone and there was still very little development in the area. The economic situation caused many people to lose their homes throughout the United States because they purchased them with little or nothing down using an interest only loan. 

Furthermore, because so many people lost their home to foreclosure, we were able to rent our homes through the economic downturn without a problem--even though the area was not fully developed. Moreover, despite the drop in value of our rentals, our renters were paying the mortgage so we held on. 

Because we took action to buy, hold during a downturn, use the passive income to make our mortgage payments and maintain patience during a chaotic time, now, in 2016, we have an Amazon Distribution Center, a Walmart, McDonalds, Pizza Hut, Burger King, dental offices and an emergency medical clinic within 3 miles of our rentals. Additionally, we gained all of our equity back and more. We also have increased the rents by over $200 in several of our homes, and if we sold today, we would sell at a profit. Although we continue to have challenges, our triumph has been a result of taking action in buying, holding, using passive income to pay our mortgages and being patience during an economic downturn.

I have 4 rentals in Haslet, North Fort Worth. I have no problems renting my houses. I just rented one of my houses with no lag time between tenants. The outgoing tenant cleaned it so well that it was ready to rent the next day. One lease ended on 31 March 2016 and the new tenant moved in on 1 Apr 2016. The previous tenants left because they purchased their own home.