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Agreed - rent it out. Rentals (in my area anyway) are hard to find and you can have your choice of tenants. Prices seem to be going up. Make sure your property management company is strong, does a good check on the applicants, and have a process in place to evict if necessary. Good luck!
Some people will say to do it yourself and save the property management fee - I would never do that long distance.
Make sure you use a reputable management company, too many are useless and greedy - they side with the tenants because it makes their jobs easier and they have contractor/laborer that they use who give kick-backs.
One management company that my parents used pressured us to lower the rent because the tenant told them he'd move if the rent wasn't lowered and the management company didn't want to spend time finding a new tenant.
When the garbage disposal was stuck, they came to us with a $300 bill for replacement and labor. Eh? You don't replace a garbage disposal when it's stuck, you take a Husky wrench and turns the knob to help unstuck it. It'd have taken all of 10 mins.
My friend's tenant wanted some minor repairs around the house and he got a $50,000 renovation proposal from his management company.
Mind you, this is not just one company, this is a spectrum across the board. Every month, they come to us with something. One time they even said the stove is not heating up fast enough, why not put a new one in? And while we're putting in a new stove might as well kill to birds with one stone and put in a new hood. And might as well put in a new cabinet....
Bottom line, don't just hire any old management company. Get reference.
.
Underwater by about 50% on one residential property.
Don't want to ruin great credit score.
Will need to move to different metro area within 24 months.
Mortgage payments not a problem.
Would like to keep property instead of taking the six figure hit.
What would you do?
The best idea I've heard so far is long-distance land-lording with professional property management handling the day-by-day stuff.
One thing to consider is this
With Real estate values down almost everywhere.
If you sell your Home at a loss and turn around and Buy another Home at an equally depressed price,
Your overall situation has not really changed.
Just your Address.
Get it?
If you were to sell into the bottom of the market and not Buy again you would have a point. Your money would be lost.
And all this assumes you have the financial resources to put money down on another home.
What I hear you say is you want to take part in the rising tide of real estate prices when this Mess is finally straightened out.
If you can buy another home you will.
Just at a different address like I said before.
One thing to consider is this
With Real estate values down almost everywhere.
If you sell your Home at a loss and turn around and Buy another Home at an equally depressed price,
Your overall situation has not really changed.
Just your Address.
Get it?
You are missing a big point here. Cash. To sell underwater is going to take a check. On the buying side you aren't getting that cash back. Just a smaller mortgage.
There are companies who can negotiate a settlement on your second mortgage (or HELOC) for substantially less than what you owe, if your house is underwater more than the value of your second loan.
It would require you to have enough cash on hand to buy out the loan for the settled amount plus fees, but I personally know of two people who satisfactorily rid themselves of their second mortgages entirely. To the point it was removed from the lien on county records so the second mortgage company agreed to accept this reduced amount as payment in full. In many (not all) cases this can even be done without hurting your credit at all.
There were fees involved but well worth it to be able to settle your debt for a fraction of what you owe.
In a nut shell, the second mortgage companies have no leverage if the house is seriously underwater and would rather get something than nothing.
It's not a scam and it's not "gaming" the system, either. It is a legitimate settlement with second mortgage companies who are in a bad spot so long as housing prices are lower than the value of the first mortgage.
I think they only work with people who have sizable second mortgage debt (> $50K) since they do not charge any upfront fees and work solely on a percentage of how much they save you.
I'm happy to share what I know with anyone who wants to know. I don't work for any of these companies but I did do some contract work for one which is how I know about it.
There is plenty of cash to write a five figure check if the property is sold at a loss but, obviously, that is to be avoided.
No matter what the owners are going to rent at their next residence so another purchase isn't in the picture (yet).
So long distance landlording it is.
Now how did you find a GOOD management company?
Craigslist?
Yellow Pages?
Random Internet Search?
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