First Investment .....Turning into disaster...HELP!!!Need advise please

June 05 in made my first real estate investment on a pre-construstion,it was right across the street from my primary home so it was convenient. It seemed like a no brainer, hold for a yr and flip was the plan. These units at the time were appreciating 10k per month. I would make around 100k in a year minus what it took to hold for that time. Well, a few months after closing the market crashed and now, almost a year and a half later I have about exhausted my reserve to hold house and can’t sell for what I have in it.Here’s the numbers june 05 Pd:402k
Put 10k down and financed 391k. I have two mortgages 312k and 79k.
Payments last yr were 3300per month, this year, thanks to taxes, is up to 3800 per month. I have had negitive cash flow on this home since the beginning so I have racked up about 70k of my own money,which is equity in my own home. I have had it rented for the past 7 months which has helped but my tenants will be moving in about 2 months. I have not tried to sell this because there is about 80 homes for sale in same subdivision.Most priced below what I need to break even and very few are moving at all.I don’t know wether to refi to maybe 1 or 2%mortgage to try to hold on till market picks up or foreclose, bankruptcy,
or try to sell for what ever I can get out of it, but , a broker I know is telling me maybe at 360k it would probably go. I cannot afford to take that kind of a hit.I need sugestions…Thanks :flush :banghead :help

Have you thought of seller financing? Buyers who need it usually will pay a little more. Just take them to the lender first and make sure they’ll qualify in 12-24 months. If that’s not an option, sell. Painful, yes, but it’s costing you money every month. Put an end to it.

Thanks, I haven’t thought of seller financing. Can you please explain how this works?


You took a huge gamble with pre-construction and unfortunately have lost. Pre-construction is VERY Risky expecially at the top of a market. There are several problems here:

  1. Most importantly, you don’t have the money to continue to hold the property.
  2. No-one knows how much lower the market will go and how long it will be before it recovers.
  3. There are over-hanging factors pushing the price down: the sub-prime fiasco; the pending
    avalanche of foreclosures; the high inventory levels that must be brought down, etc.

So, the question becomes how to get out of this with the minimum loss. To determine that, you need to look at the numbers. How much have you lost so far? What is your monthly loss if you rent it? Do you have the money or credit to be able to sell this at a $40,000 loss if you could sell it in the near future? I agree with the other poster that a lease-option or land contract might be a possibility, if you can afford the monthly loss. You might also explain the situation to the bank and see if they would let you pay interest only on the loan until things turn around (although this could be VERY RISKY if prices take a long time to recover).

Without knowing the specific numbers, I would be inclined to sell it before the loss gets any bigger.

Good Luck,


You REALLY need to talk to a GOOD lawyer. You don’t have to pay to talk, just know your options.

Definitely get this sucker on the market NOW!!! But you need to have a plan in the event it doesn’t sell. There are legal ways to protect yourself and your family and you absolutley have to do that. I’ve never been one to throw in the towel, but this market is literally on the edge RIGHT NOW. Don’t wait.

Even a retreat can be an offensive action.

Where’s the guy in Japan who writes in every week all hot to buy pre-construction homes??


Where's the guy in Japan who writes in every week all hot to buy pre-construction homes??


I’ll send him a link. LOL

This is awful, unfortunately its happening to more and more people in areas with a down market. Good luck to you.

Sell and take a loss.


Don’t wait and hold on like all the other speculators that keep holding on to their Nortel stocks wishing for a miracle to happen.

If you don’t take the loss now, you will take a bigger loss later.

If I were in this situation and I didn’t have the money to sell it and pay the difference(which at this point you probably don’t) I would call the lenders. Tell the lenders your going to lose the property in foreclosure if we can’t work something out. My Dad said a Realtor was on TV last week, the Realtor said 50% of the homes on the market were in preforeclosure or foreclosure in his area (probably not true, but still). I don’t know if lenders have began creating any options for all these foreclosures, but I have to imagine with all these foreclosures the lenders must have some ways out other then just foreclosure. This is just my opinion, not facts. Hopefully a lender on this site can suggest some ways lenders are creating to minimize the huge list of foreclosures.

You need to be in a survive or die mode. Have zero pride, call the lenders and spill your guts. Call a Realtor and get it list today. If the lender won’t help, and you can’t sell it then let her go. You aren’t the only one to lose their butt in Real Estate. Good Luck!

Thanks for all you suggestions, I know its a bad situation, I should have joined this site alot sooner and done alot more homework before diving in the deep end. I live in Fla and the market just tanked almost as soon as I purchased this property. I would have never imagined this would have turned out this bad…Thanks again… :flush

Get rid of it ASAP!!!. I am in similar situation right now, I purchased a 4-unit rental property 5 years ago in TX and was making losses from the 6th month after purchase. Emotions and speculations made me held on to it and keep making losses each month. You can only take so much loss, I have lost $60,000 (in 5 years). At a point I said to myself “enough is enough”, it is on market right now, no profit is expected and I considered this as a bitter lesson. My lender said there is nothing they can do untill I miss 2 months of mortgage and this will dent my 760 FICO score. It is unfortunate, you have to bear all the loss alone. I will share the same advice I got with you, get rid of it ASAP and learn from it and move on, then I was advised to get education before I get back in the game, without an education about investing it is similar to flying a plane with training!

Who else should bear the loss for you? Noone made you do it right?


If I get out of this mess, I’ve been thinking I will never invest in real estate again but then I believe that investing again, the right way, is going to be the only way I can make up this huge loss. Is there a way to make back what I’ve lost through investing again?I’m a little gun shy now but what would be the best way to start recovering?Any suggestions? :banghead

In my opinion, the first thing to do is fix the problem at hand. Only after that’s settled and after getting a LOT more education should you consider investing again. Yes, you certainly could make up your losses with real estate investing, but that’s what every losing gambler in Vegas thinks also (just one more spin of the wheel). The difference is that the information is available to allow you to run a successful real estate business. Study hard, write a plan that will ensure success, join your local REIA, learn the business, and then think about investing again.

Your previous attempt at REI was speculation. Next time, make it a sure thing!

Good Luck,