Need advice on getting rid of rental.
Question: I purchased a rental property as primary residence at the advice of the lender for the lower int rates, apparently quite common.
I lived in it for 2 months, then rented it out for 6 months (hated being a landlord). It has been on the market for 1yr, no takers and vacant.
Its priced below what it was appraised at by ~15000. It is nice (no damage) but is a basement unit. I think when appraised lender just did a search/drive by and found most condos in area going for X at that size in that area and called it that. Again, nice but for what I paid no one wants to live in a basement unit.
I can no longer afford it, I obviously live in my “other” home. I want it GONE. It has a first and second mortgage (both up to date). I can afford to pay off the second equity line (~17000) and that wipes out all my cash (if I sold it today that is how much I would have to bring to table). Every month that amount dwindles.
Pay off the equity loan and let bank foreclose? Just let them Foreclose? Deed in Lieu? etc.
They won’t talk to me about a problem Iam having until I am behind in payments. My credit score will be trashed I know, it is 800 right now (it goes against every fiber of my being to go behind on payments) but this is killing me.
Answer: I know you didn’t like “being a landlord” — but realistically, that’s your best option. Get the thing rented, ASAP, so it’s not eating a hole in your pocket. Then you’ve got some breathing room to try to sell without taking a bath. You get take time to sell, you’ll likely get a better deal on sale if you aren’t so desperate, and you’ll save your current (really good) credit rating.
Is landlording so bad that you can’t do it for another year, and you’d rather trash your credit score and start talking to lawyers? Get over it. It ain’t that bad. Before you let it go back to the bank, you can sell it subject to the existing loan, which means you give title to the buyer who takes over payments. He’ll set up a trust so that the whole thing in nearly invisible to the lender to avoid triggering the “due on sale” clause. He’ll then try to lease option it to another.
That is a terrible way to sell a house, but it beats letting it go back. That will ruin your credit. Selling it subject to might run your credit if the guy you sell to doesn’t honor his obligation. If you choose this, just call one of the numbers you see on the “I buy houses” signs everywhere in your area.
You could lease option the house to a buyer yourself, but you’d have to learn how to do that….not so hard, really.
Your best bet is to learn how to find good tenants. There are tricks to doing that, credit and criminal history checks, important rules that protect you. If you hate being a landlord it is probably because you got some bad renters. A bad renter can destroy you r home in a short while……….and never pay rent.
A good renter will pay off your mortgage and never give you any trouble. You could probably have $100 or $200 dollars a month positive cash flow and in thirty years you’d have a house worth a couple of hundred thousand (who knows in thirty years).
Pay a few bucks for a property management course and give it another chance. Rent smart….not quick!
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