Short Sale - Easy Way Out? (condo, banks, percentage, property)

[erider2011]

My girlfriend currently has a townhouse that is worth less than what she owes. If we sell with a Realtor, we end up owing the bank $30-40k after the sale. We both need to move out of the area to make more money and slowly pay off debt. Moving to a more metropolitan area will also help my business grow. Also, only 4 out of the 22 townhouses here have homeowners living in the townhouses - all the rest are renters. Which means...the community is drastically worse than 3 years ago when 75% of homeowners lived here - and we been threatened by renters who think they own the community. Am i crazy or is doing a short sale our only way out? I don't want to feel like I'm taking the easy way out, but I don't see any alternative.

[2bindenver]

It could also hinge on whether a new buyer can get financing. It may be worth looking into a deed in lieu of foreclosure.

[garth]

Originally Posted by erider2011

only 4 out of the 22 townhouses here have homeowners living in the townhouses - all the rest are renters.

Doesn't this also make it nearly impossible for any buyer to get a purchase loan? I recall reading that banks won't loan on condo projects with rentals above a certain percentage. Is it the same with the OP's townhouse? I really don't know, but I thought I'd bring it up in case it might be an issue, which would limit his market to only cash buyers.

[middle-aged mom]

This sounds like a strategic short sale because it is no longer convenient. Sounds like you have it all figured out and plan to secure a rental before the short sale causes the credit score to nose dive.

Good luck convincing the lender that they should forgive the difference between what they lent and how much the place will sell for in the open market.

[chicagojlo]

To me it is the easy way out. We were upside down in a property overseas for 8 years after the bubble burst there and we had to turn down many amazing opportunities because we couldn't sell our home. You got yourself into this, you are the one who should face the consequences.

[erider2011]

Thanks for all the input. My girlfriend did get herself into this 5 years ago when the market was good. But, now we have crack dealers next door, shootings, neighbors that threaten us when we ask them to clean up their property and the police are here 4 times a month. It's the typical scenario of Section 8 moving into what is supposed to be medium to upper medium areas.
The townhouse was purchased for 200k, the Realtor said we are lucky to get 135k + paying Realtor fee. The townhouse next door is on the market for 115k. I made a mistake...24 of the total 28 townhouses are now rentals - sheesh. I think we will just bight the bullet and do the HAFA/short sale. I already did a short sale on my house in July 2010 after my Realtor told me to just walk away - took only 2 weeks to settle and I was done - besides the hit to my credit. Now I have money in the bank and paying off other existing debt to rebuild credit.