I had lost my job and found another job in another state. We found renters for our house but have had to use their rent for the last couple months to live off of because we depleted our savings trying to stay up on the mortgage. Their rent is about $100 short of the payment, when you factor in property taxes about $450 short. We have eliminated expenses and lowered our monthly bills over the last several months. The thought is refinancing our now investment property to try and get a positive cash flow. The alternative will more than likely be us ending up foreclosing on it or a short sell, because of our current financial situation. We are currently 3 months behind.
Or does it make more sense to cut our losses and take the hit on our credit? We are currently renting and would like at some point get into another mortgage so we don’t feel like we are throwing away our money to someone else. But we can stay renters in our current house for as long as we may need to.
Spock (rhp)
April 2, 2010 at 7:48 am
difficult call.
what are your advancement prospects where you are now? does that mean increases in income?
what are the prospects for rent increases where the property is? and what are the downside risks? if the economy gets worse, will rents go lower? will property taxes go up or down in the future and why? how about insurance? [tenant properties frequently have higher insurance costs, not lower].
do more research on these issues and I think the decision will become clearer.
Judy
April 2, 2010 at 8:43 am
I don’t know where to begin to help you.
But keep in mind that Bobama might extend that 8K tax credit.
It might be 15K for everyone, not just first time home buyers.
This may pass as soon as January.
Hopefully you’ll be able to sell your old house.
Myself: I would never take money out of a 401K.
If you do, set aside 40% for tax time in April – you’ll have to write a big fat check to the IRS for that 10% penalty and whatever your tax bracket is.
/
Jeff T
April 2, 2010 at 9:24 am
No.
If it was your primary residence, I’d say yes, but you can let an investment property go into foreclosure without putting yourself on the street.
Sell the investment property.
And from now on, only “invest” with excess cash.
If you own the investment property free-and-clear, and the renter skips a payment, then it’s his problem.
If you’re mortgaged up to your eyeballs, and the renter skips a payment, then it becomes your problem.
sassy25
April 2, 2010 at 9:33 am
You cannot refinance since that property is no longer your primary residence. You either sell it or let it go to foreclosure. The hit on your credit will haunt you for 7 years.