As I have posted before, I have a property that is bringing me down to the ground. I bought it November 2005 for $125,000; it was originally appraised for $130,000. Without going into detail I have had nothing but nightmares, tenants threatening me and destroying the property. I also have the state inspection department harping on me because my tenants invited 10 people to live with them and the rest is history. I have to deal with a historic district whenever I make repairs and it just makes things to expensive to maintain. Gutter replacement was quoted at 17,000 because of historic restrictions, I wont even get started on windows and mortar.
I have had the property listed for 6 months, not a sole was interested; I have gone through two realtors who tell me the place is not sellable and that I should just auction it off. When I tell them how much I owe on it they gasp…
I finally got in tough with another investor who originally mentioned he would give me $60,000 after his own walkthrough. I spoke with my mortgage company and they told me to get an official offer letter from him and wanted bank statements, pay stubs and a hardship letter (which I have yet to write). I went back to the investor and told him I was going to do a short sale and to write his offer accordingly (I wanted to make sure there were no suprises). He came back with an offer for $34,000; I am about to fax this offer letter in the morning but I have no idea what to expect.
A part of me knows that my lender will panic but regain their senses when they see the property itself but I also am leary of the investor throwing a low ball offer after finding out about the short sale.
I also understand that I have a 1099 filed against the covered amount which means I will be responsible for an additional $110,000 of income. I am about to miss my first month of payments so time is not on my side; am I better off requesting a deed in lieu or just outright foreclosing? I assume I would not be able to obtain ANY type of credit for 10 years (which I am going to assume I can manage as long as I pay cash for my next car).
Any suggestions? I need to get rid of this place asap (within the next month).
is this the absolute best you can do with this situation?
what have you done to rectify situation with tenants - destroying your property? are they still living there?
have you considered any legal action against the tenants? what have you done with them? is the property vacant? if these people are still living there - that’s definitely not good. first and foremost - if you haven’t already - get rid of those scumbags. also, you might seek damages - file claims against them.
i’m assuming the property is in a poorly kept neighbhorhood overall. is this true?
This is my fourth set of tenants; better background checks are really not an option because anyone who doesn’t commit crime wouldn’t live here. This is a poorly kept neighborhood full of drugs and thugs. I have evicted the tenants and boarded the place up currently; everytime I drive by the boards are removed and I find cots and sleeping backs inside with empty cans of food and drug needles.
It’s a shame because three blocks down are nice $350,000 houses…
Just a side note that this will stay on your record for 10 years, but it doesn’t destroy any chances of getting credit. If you’re clean for two years, no lates or anything, you should be able to get a loan depending on where you are on your fico score. Of course if this drags your score down below 620, you’re still talking about a subprime loan with higher than normal rates. Say 8-10 percent instead of the 6% that someone with a good score would get today. Plus high downpayment requirements. Forget about any ideas of doing 100% financing. Depending on the score, at least 10 or 20 or 30 percent may be required depending on the situation.
So don’t give up hope, just don’t incur any lates and don’t lose any more properties.
I would have a face to fact talk with your lender. If they will accept a deed in lieu of foreclosure, that would probably be the better way to go. What are the rents on this place? If the other properties nearby are rentals, there is probably a landlord that would take it for more than $60,000. Depending on the rents and current condition, I think that $34,000 is pretty cheap for a property that was appraised for $130,000, although I bought an $85,000 duplex for $11,000 (it was a crackhouse).
I would also suggest getting the addresses of the neighboring rental properties. If you can find someone who owns a bunch of them, contact him as see if he would buy your property. He might offer more than $34,000!
Well I finally managed to get a full walk-through of the place with the police; my tenants have been arrested for drug dealing. I can see why the appraisal came back so low; they have completley destroyed the place. They tried to repair the walls, they stole my furnace and replaced it with a non-working stolen furnace thinking I wouldn’t notice. They broke all the windows, broke the doors, stole the sinks, bathroom tile has been ripped out and sold, the floors are torn up, I think they sold the original walls and replaced them with stolen drywall and shoved stucko all over the place to hide the fact that the drywall is clearly not measured and cut to fit.
At this point, I wonder if I should involve my insurance company. There are well over $80,000 in damages to this place; how this can happen in a 2 month span is beyond me.
Tenants will be out soon, have court date on March 7th for eviction. I have not finalized on Deed in Lieu or SS yet, I am just unsure of how that will turn out. I am talking to a lawyer tomorrow morning and will act after hearing my options from him.
I don’t feel good about doing a SS at the moment because I currently have a 6 figure income (although the job is fairly new) and I have about 10k sitting in my bank account. The property has drained my savings though…