I bough a house two years ago as an investment. The house was purchased for $310,000. I gave a $35,000 down payment. Now two years later I owe $290,000 (neg amortized loan) and the current market value of the house is about $275,000. I refinanced to an interest only loan so at least the property is no longer being negatively amortized.
What are my best options in reducing my loss?
Thank you for your time and advice.
2007-09-19 15:19:28 · 14 answers · asked by ANyone but you 2 in Business & Finance ➔ Renting & Real Estate
The market has just begun to drop, so you have a long ride in this falling market. You said you are losing money right now. If you can afford to hang in there for at least 5 years to ride this out, remember there's no guarantee that you will breakeven in 5 years, this is an assumption that the market will stabilize in 5 years and then the market will become stagnate for years before it goes back up again, if you can afford that, then keep your investment. Otherwise, dump it now, it looks like that market is going to drop at least minimum 30% from the high, no one can tell you how low it's going to go. History showed that the last market run up was from the late 1980s to around 1990 and the drop bottomed out around 1996, then it stagnated to around 1999 or 2000 before the market turnaround.
2007-09-19 15:39:21 · answer #1 · answered by Claudio 2 · 1⤊ 1⤋
If you can actually rent it out & still pay the piti on it then time is on your side, except for the balloon that im sure the int only loan has. i would think you can do a lease option or contract for deed. both are similar. i just did a lease option & got the tenant to take care of any & all repairs, pay for taxes, insurance & im profiting about $90.00 a month after the mortgage is paid. i just put an ad in the paper & called it "100% owner financing with nothing down". however i know a lot of people who get something down, at the most usually 10% sometimes a flat fee of 5k or something. i did nothing down cause i had some bad tenants & went a few months without rent costing me several thousand so i was motivated to get someone in there & just be happy with that. so when they call just casually tell them this means they are contracting to buy it, you will owner finance for blank amount of years, whatever you choose. i did 2 but you can do 10 if you want. explain to them that they are agreeing to purchase the house & have to pay the balloon off with a conventional mortgage when the time comes & that they are to treat it as if it were theyre house now, in other words they are responsible for all maintenance & try for taxes & insurance. this is all negotiable & when i did this the house was in decent shape so its just a common sense thing in the sense of what you can agree on with them, i would say be reasonable but if you can get more then go for it. if people object to the rent / payment, explain to them that they will have this payment when they pay off the balloon in several years so if they cant handle it then you dont want them. wish you the best, i know that can suck.
2007-09-19 16:01:16 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Hi, I would say hang in there if you are living in the house, we may have seen the worst of the real estate market , accept foreclosures, so you need to give the market time to gain steam. You may never get what you thought for a profit but if it is a great area the values could come back .
2007-09-20 04:05:44 · answer #3 · answered by grifter 1 · 0⤊ 0⤋
I'm living in my investment. But I didn't screw up as bad as you. I refinanced and took out 100K. I plan on selling in the spring with out losing any money. I won't make as much as I thought. I've already spent my profit. If the market don't drop anymore I'll be OK. Are you living in it or renting it out? Can you afford to cut your losses and sell it. If you're paying a monthly mortgage you'll only keep on bleeding. Live in it or rent it but don't let it sit idol.
2007-09-19 15:32:44 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Remember, your house is only worth what someone is willing to pay for it. I think you over thought the situation and panicked. Wait and see what the market does within 3 years. With the Fed reducing rates, and lenders' creative options you will be fine. Just ride it out and enjoy the tax benefits of depreciated assets.
2007-09-19 19:20:21 · answer #5 · answered by stu_art_27 2 · 0⤊ 1⤋
Attend open properties. additionally, p.c.. up the community real components books that they provide out for loose. discover some properties you like and contact the itemizing agent and ask to work out the domicile. that provides you with a great gamble to fulfill some community brokers and notice if there is every physique you mesh nicely with. We used Remax with our final purchase/and sell. notwithstanding, i does no longer base my determination on a particular company call....each and each realtor is diverse and unique. attempt to adhere with a company that has a greater nicely nicely-known call (none of those discounted expenditures places or tiny agencies) so which you be attentive to you have become the main precise counsel attainable. If attainable, it would be severe-high quality if the agent grew to become into on the factor of your age, so as that they might relate to why you're searching for specific valuable aspects or places, and can greater advantageous foresee different residences which would be ideal for you that consistent with probability you're overlooking as being quite unfamiliar with the section. sturdy success! look at numerous properties before making any gives you!
2016-10-05 01:05:48 · answer #6 · answered by ? 4 · 0⤊ 0⤋
Hold tight and ride the market, you dont say which property the countrys in, if its the USA i expect the market to increase again next year, property prices will always rise and fall over periods of time (in every country).
But look at history, over the long term your capital will always increase.
2007-09-20 01:46:15 · answer #7 · answered by Anonymous · 1⤊ 0⤋
If you refinanced with an interest only loan, guess what you are even farther in the negative. and in fact increased your loss
2007-09-20 11:13:33 · answer #8 · answered by Pengy 7 · 0⤊ 0⤋
Who lives in it? Do you live in it our rent it out? If it's a single family home, I would do a lease option. Assuming it's rented to good tenants approach them about buying the property on a lease/option basis and finance the mortgage.
2007-09-19 17:02:33 · answer #9 · answered by Anonymous · 0⤊ 0⤋
pray..
short of that, bring in a roommate and use the rent income to help offset the prior negative amortization when you get back to even..dump it
keep in mind it will cost you about 18k to pay realtor to sell it so you arent jsut 15k upside down but 33k
2007-09-19 15:25:10 · answer #10 · answered by goobar121 2 · 1⤊ 0⤋