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I have several homes in Northern VA and MD. I have been struggling to keep my homes and stay afloat. They all have tenants at the moment, but I get so depressed when a home I paid $345k is now worth about $100k less. And on my larger homes, I don't even break even on the rent. Afraid to do any short sales, because I bought one of the homes via owner financing, and have to refinance in 2 yrs, so don't want to reduce my FICO. My question: How do I keep this real estate thing going? I'm willing to sell a couple of them, but market is so bad. I thought about selling via owner-financing to get a decent sales price hopefully, but not too sure about that (none of the homes are paid off yet). I also met someone who is about to loose her home, and is thinking about selling to me (using owner-financing for 5 yrs) for a GREAT price, but not sure if I should take on anymore debt. I know I'm not alone, and alot of other investors are going through the same thing. Has anyone been able to find a way to keep things going in this market, and even make a few purchases while home prices are low?
Positive cash flow is king in the house rental business.
If you bought at "great" price points which are not cash flowing, then it's time to reduce your overhead to levels where you can sustain some properties for now with the rental income and supplement that with your other income.
If that doesn't work for you, then it's time to sell out for what you can and take your losses now. Unless you can reasonably forsee an improving cash flow situation in your marketplace (higher rents?), you'll not do better by holding on to all of your properties. You wouldn't be the first to have to make this decision ... and I've seen multi-million dollar portfolios shrink even when lending was flexible/affordable, and the economy was still showing rising home prices everywhere. In this current marketplace, the odds aren't so good to stay invested in losing situations.
Thanks for the responses so far. To answer one of the qts. I can offer owner-financing for a period of time, say 2 yrs, at which time the buyer must refinance. i have bought a property this way as well.
The reason I don't want to just dump the properties is because I have one property that I need to refinance in 2 yrs, so I'm trying to keep my credit clean until then at least. That property was bought recently for a "steal" so it's the one that I want to keep!
I do not think a short sale is an option unless all your properties are underwater and you have no other assets.
Since you are struggling to keep your family afloat ( whatever that means to you) I am inclined to suggest that you resist the urge to take on even more debt because this sounds like you have the potential risk of losing everything.
Why not seek/pay for the advice of a qualified financial planner and lay all your cards on the table and determine the best long term plan.
You need to seek out some equity partners. Some people say it is not good to personally ask for help from others, but I think that in the current climate those who have the honesty to lay it on the line to some one that you know has CASH and is getting a very poor return is your best option.
If you cannot find such partners you need to restructure and/ or sell.
As part of the restructuring you could approach the tenants with the idea of raising their rents BUT crediting some or all of the increase to "lease option" or "rent to own" agreement. There are lots of articles /books about why this might be a good option.
Selling is NOT the worst thing in the world -- far better to get some loser off your balance sheet that to have it eat your alive and take down everything else.
Yeah, I agree. If you can cut some losses, do so now. If you are juggling multiple properties, and you are depending on every tenant to pay on time or your in trouble, or if you find yourself eating away at your savings to just keep things in order, you are close to toppling over.
If you can, I would purchase the newer house for the cheap price (why your credit still looks good), and dump the more expensive ones where your underwater. Its a tough business, I have been taking some losses this year myself, so trust me that it is no pretty sight to just walk away on your investment, but it is what it is
How can you use owner financing if the house has a mortage (e.g. selling your own or the lady who is going to sell to you)?
Title companies won't do these, but you could in theory not use a title company at all. It legally triggers the due-on-sale clause that is in the mortgage deed, but I am guessing the OP and the seller he purchased from were willing to take the risk of triggering the due-on-sale clause.
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Real Estate
