I dont know what I would do, but it is admirable that you are asking the questions that you are. A person I admire spoke on this topic and advised to make additional investments to offset losses. For some it may work but maybe not for others. Please let us know what decision you end up going with. Im sure you did something right in your day if you are able to continue paying the mrtg when the difference is substantial between rental rate and mortgage payment. Good luck
Like many other investors, I too bought in this area of Florida. I purchased a duplex back in 2003 and regrettably held on to it, watching it peak and then come crashing down. I purchased it for 220k, watched it go up to about 300k and now it’s worth about 70k. Actually, I’ve seen some of these duplexes go for 35- 50k. I use to rent each half for $950 and now it’s a struggle to find a tenant that will rent it for $400. Every single duplex on the street is in foreclosure and they are all abandoned, my property is the last one standing. Many of the duplexes have been taken over by squatters and those that haven’t, have been stripped of their appliances and other various items. I’ve been told that the police don’t even touch this area anymore.
My last tenant just skipped out because they found the same unit on a different street with no security deposit and $200 a month rent. It’s cost prohibitive to rent the place â?? advertising, utilities and management fees run around $300 a month. It takes about 5 months to find a tenant and then I have to choose between the prospective tenant with 2 felonies or the other one with 3 felonies. After all that, the tenant usually skips for cheaper rent and then I have to make it rent ready for a cost of around $600.
I ran my numbers and it cost me more to rent it last year then if I had boarded it up and let it sit â?? the monthly PITI is 2k. So what do you do with it? Should I walk like the rest of the investors that left the street dark or keep crossing my fingers that it doesn’t get stripped of every appliance in the middle of the night. If I’m lucky it might return to $220k in 15 â?? 20 years and in the meantime I’ll burn through a few hundred thousand keeping it going until then.
What would you do:
No bank will short this from 220k to 70k â?? I’ll at least call but I’m also realistic
I’ve heard no one say they’ve had luck with a Deed in Lieu or Principal Reduction
L/O is out of the question â?? no renters, no buyers
It will take at least 10 years to get back to a rental rate of $950 a side
I will never be able to compete rent wise against any investor that picks up one of these for dirt cheap
I could hedge my loss by picking up a couple of these dirt cheap â?? but in an area that is turning into a war zone, I can’t stomach it.
Should I stand my ground, keep throwing 2k a month at it until it turns profitable in 20 years? Or do what the rest of the investors in the area did, chalk it up to a bad asset and walk from it. I know it’s my responsibility and obligation to keep paying for this, but again, what would YOU do?
Thats a tough one…If your an investor the last thing you want is to
destroy your credit…if you can avoid it. If it was me and I didnt want
to file chapter 7 and become a sideline observer in the investment
game, I would probably try to hedge my risk buy more investments to
offset this loss and ride it out. You can build up alot of wealth in 10
years if you can just hang on. Or lose all your current wealth and not
be able to borrow any money to buy any investments for the next 7-
10 years. It sounds like you have some good current properties.
Maybe try to get the bank to do a short with you but this could
potentially damage your credit. Good luck