I have a rental condo in an area of decreasing value. I owe 68K, sales are running 55-60K. The last tenants messed up the place bad, about $750 to fix up, I owe $1650 to the bank, due to lost rent, and the HOA just hit with a $1000 acessment. I’m tired of the money drain. I know if I let it go to forclosure my credit is shot.
My question is, if I have foreclosure on my record, can I still get a loan on a new property. I can get a 25K loan on my 401K for a large downpayment, but could I get financing?
I have another property, available in 3-4 weeks, that I want to buy to rehab and flip. Will this be possible with that foreclosure?
DON’T Let it go to foreclosure. If you are trying to buy another place with financing you will probably be turned down for the loan (by most lenders) if you have hefty late payments to your current lender. The new lender for your new rehab project will see the late payments on your credit report (not a good thing for you unless you are getting the rehab as a subject-to or owner financing or any other method where your credit is not checked).
Your best bet to keep foreclosure off of your record and to sell without having to come to the closing table with money is probably to sell it as a lease-option or with owner financing. You’ll get a higher sales price and higher than market rents payments than a rental (make sure to know how to do a lease-option first tho’).
Better move quickly, because if your area is continuing to decline, you will become overpriced even for the lease-option and owner-finance market.
You won’t be able to get a loan with a foreclosure unless you re-establish new credit and get your score up. If you have access to 25k, why don’t you just sell…I know you will have to bring money to close. Saving your credit will save you that money you had to bring to close when you sell. This way, if you still have good credit, you can put less as a down payment b/c you have good credit. Or, try renting it out maybe?
You do realize that some home owner insurance polices have a lost rent claim in them. Contact them and see if you can file a claim with them to pay up back rents. Start there if that does not work I would start a forbearance. Are there renters in there now?
I want to thank everyone for the advice, everyone I have spoken to has said the same thing. I’m going to take care of the back payments and try to find a creative way to sell it. I have just got it rented to a friend of the next door neighbor, so that helps alot.