Duplex Underwater

I have a duplex on which I owe 128k that is now worth about 78k and dropping. (Bad area). I’m breaking even more or less, and the loan is current but I really just want OUT. I feel like I’m just managing the property for the bank (for free).

The stress from this is taking a toll on my health and my marriage.
I have 2 other properties (houses) and they are doing fine. It’s just this one that’s in the toilet. :flush

Whats the best strategy? What kind of professional should I talk to?


The problem your going to have is this is investment property, you have other properties and I take it a job and income and it is unlikely your lender would approve a short sale under these circumstances! 

You should however talk to your lender about the ability to modify your loan, they may be able to give you a better interest rate, and potentially extend the terms to reduce your payment!

Hopefully you only have a 1st TD on your property as it can make it easier and more advantageous to your lender to deal with you!

Other than that you could stop making payments and let it go to foreclosure, but it will certainly ruin your credit and if your in a state where the shortfall can be collected after the case of foreclosure you could end up paying off the shortfall for years to come! (Or having your wages garnished!)


Thanks for the response. I tried the loan mod route but after tons of calls to CitiMorgage’s boiler rooms (never the same person twice), i finally got to the point of submitting paperwork for a loan modification which, of course, was rejected. The loan is current so I have zero leverage. I’m told the only way to get them to notice is to miss a few payments. But then i’m not keen on trashing my credit or endangering my other assets.

At this point, I’m looking for something ‘creative’ or outside the box. I know there must be a solution out there. For example, could i make it my principle residence somehow (sure, I’d move in if i thought it would help)! Could ownership be transferred to an LLC? I don’t know… something unorhtodox but legal (even if it’s in a gray area in that regard)


Your not entirely managing it for free as I believe you recieve $2600 to $2800 per year in tax benefits.

You could set up an equity share and exchange say $1200 dollars a year in financial support in exchange for the tax benefits however that probable ends up costing you if you have a job!

However you might want to talk to your tax adviser about what options you have to write down the losses in value against your payment of mortgage and old value!


Does the property cash flow?

If it was a good deal before the value dropped it should still be ok until the market turns around. Just maintain it and keep it rented.

If you have to sell it at a loss, accept it as tuition to real estate school.

Good luck.

Your best bet is to find an investor who buys and resells short sales in my opinion


I have never known a mortgage lender who was willing to allow a short sale to an investor who has good credit, is not behind in payments and has no intention of trashing there credit and has a home and other properties!

Out of the hundreds of investors I know, not one of them has ever been successful in convincing there lender to allow / approve a short sale when there not in a financially destitute situation!