What would you do?

[Callahan]

There are some pretty smart drivers on the highway, so I would like to hear what y'all think....

We own a house in Hiram, which is rented. I am a landlord by default. The lease is up in June and my renters look like they would like to renew for another year, which is fine. Once they are gone, we are thinking of selling the house. All indications are that we are 15 to 20K underwater. We have three mortgages (hers, mine and ours).

This would not be a short sale. We would cover the difference to unload the mortgage. We don't want to take the loss, but it looks like the market won't recover for years. The Chief wants to sell it, but I'm not so sure. She doesn't want to put our renters out, but there would be a time limit, eventually.

Do we double down and pay it off, where it will truly an investment property. We would still have an under valued house we don't really want.

This is driving me a little crazy, as mei lan can tell you. Being OCD is somewhat of a curse and I can't get my brain turned off until I have a game plan.

 

[unionmom]

If I didn't have to sell, no way would I.

 

[Callahan]

If I didn't have to sell, no way would I.

We don't have to sell it. Why wouldn't you?

 

[LisaC]

I would double down and get the mortgages paid off or down as much as possible and hold on to the property to see if the market turns. You aren't in a position where you can sell it and pay off the mortgages and the mortgage companies aren't going to just write off the difference, so I say keep it and pay it down as much as you can.

 

[unionmom]

If I didn't have to sell, no way would I.

We don't have to sell it. Why wouldn't you?

Well let me ask this ... if you have the costs covered with the rental income why would you take the financial hit to sell it? And though it won't happen tomorrow, there will eventually be a recovery. The value, or a good percentage of it, will return.

 

[Callahan]

If I didn't have to sell, no way would I.

We don't have to sell it. Why wouldn't you?

Well let me ask this ... if you have the costs covered with the rental income why would you take the financial hit to sell it? And though it won't happen tomorrow, there will eventually be a recovery. The value, or a good percentage of it, will return.

That is along the lines of what I've been thinking. I don't know that the value would ever recover and I wanted to unload the mortgage. It might be better to just pay it off, which we can do in around three years. We would just have to throw a boat load of money at it. It may be smarter in the long haul. I was thinking it would be better to owe 20K than 135K. It's basically a numbers game. I bought it new in the fall of 2008 so I've only had it for 3 1/2 years.

 

[newsjunky]

If I didn't have to sell, no way would I.

We don't have to sell it. Why wouldn't you?

Well let me ask this ... if you have the costs covered with the rental income why would you take the financial hit to sell it? And though it won't happen tomorrow, there will eventually be a recovery. The value, or a good percentage of it, will return.

That is along the lines of what I've been thinking. I don't know that the value would ever recover and I wanted to unload the mortgage. It might be better to just pay it off, which we can do in around three years. We would just have to throw a boat load of money at it. It may be smarter in the long haul. I was thinking it would be better to owe 20K than 135K. It's basically a numbers game. I bought it new in the fall of 2008 so I've only had it for 3 1/2 years.

I would hold onto it. I believe the economy will improve if we get a new guy in the White House. If we don't my view of this might change.

 

[Callahan]

If I didn't have to sell, no way would I.

We don't have to sell it. Why wouldn't you?

Well let me ask this ... if you have the costs covered with the rental income why would you take the financial hit to sell it? And though it won't happen tomorrow, there will eventually be a recovery. The value, or a good percentage of it, will return.

That is along the lines of what I've been thinking. I don't know that the value would ever recover and I wanted to unload the mortgage. It might be better to just pay it off, which we can do in around three years. We would just have to throw a boat load of money at it. It may be smarter in the long haul. I was thinking it would be better to owe 20K than 135K. It's basically a numbers game. I bought it new in the fall of 2008 so I've only had it for 3 1/2 years.

I would hold onto it. I believe the economy will improve if we get a new guy in the White House. If we don't my view of this might change.

We seriously considered that aspect of it. If the government continues on it current course, we (and everybody else) could lose even more. We are trying to clear out debt as quickly as possible. I always said that the people without debt will be the survivors in this economy. That is what caused the discussion for us to begin with.

 

[mei lan]

We seriously considered that aspect of it. If the government continues on it current course, we (and everybody else) could lose even more. We are trying to clear out debt as quickly as possible. I always said that the people without debt will be the survivors in this economy. That is what caused the discussion for us to begin with.

I see the advantage of holding onto it as long as you have renters, BUT I totally agree with the above. I think I'd talk to a realtor you trust and see what they recommend re: listing. I'm sure Winchester on here could give you some pointers.

While the Presidential election is one factor, another is that inflation is slated to rear its ugly head again in the not-too-distant future (esp. if PBO is re-elected), in which case the value of the house will go up. HOWEVER, that's something you may not be willing to bet your money on (I doubt I would). I lean towards the conservative route.

Sorry - I've been no help with my thoughts being all over the map. But yes, we Type A/OCD types MUST HAVE A SOLUTION!

 

[lotstodo]

If you are only $20 grand underwater, I'd try to hold on as long as the mortgages are not high interest. Personally, I think that you could possibly be back in the black within 6 years. I'd hold onto the renters as long a possible.

The flip side is that not paying 7% is the same as making it. In the current market there is little that can pay that, and nothing that can guarantee that. You won't get your $20 grand back, but it is some comfort. There is also that comfort that comes with lower debt. You could, as a third alternative, even look into the possibility of refinancing at less than 4% with no closing costs to lower the payments some as an alternative to selling outright in a lousy market.

 

[Callahan]

We seriously considered that aspect of it. If the government continues on it current course, we (and everybody else) could lose even more. We are trying to clear out debt as quickly as possible. I always said that the people without debt will be the survivors in this economy. That is what caused the discussion for us to begin with.

we Type A/OCD types MUST HAVE A SOLUTION!

You know they make medication for that. It doesn't work either. It isn't that we're crazy. We just drive everybody around us crazy. We do have superior organizational skills, so there is that.

 

[Callahan]

If you are only $20 grand underwater, I'd try to hold on as long as the mortgages are not high interest. Personally, I think that you could possibly be back in the black within 6 years. I'd hold onto the renters as long a possible.

The flip side is that not paying 7% is the same as making it. In the current market there is little that can pay that, and nothing that can guarantee that. You won't get your $20 grand back, but it is some comfort. There is also that comfort that comes with lower debt. You could, as a third alternative, even look into the possibility of refinancing at less than 4% with no closing costs to lower the payments some as an alternative to selling outright in a lousy market.

I said the same thing, because the Chief wants to put money in investments and I want to pay off debt. She agrees with me, but isn't her first choice, especially with the mortgage. A no closing cost refinance is an option we haven't considered. That might be the way to go. Thanks for the idea!

 

[mei lan]

We seriously considered that aspect of it. If the government continues on it current course, we (and everybody else) could lose even more. We are trying to clear out debt as quickly as possible. I always said that the people without debt will be the survivors in this economy. That is what caused the discussion for us to begin with.

we Type A/OCD types MUST HAVE A SOLUTION!

You know they make medication for that. It doesn't work either. It isn't that we're crazy. We just drive everybody around us crazy. We do have superior organizational skills, so there is that.

 

[mei lan]

Thanks for the idea!

LTD knows things. :Ninja

 

[naturegirl]

See how nice it is to throw things around to a group of smart folks!! Personally I'd hold on to it if the rent is covering the mortgage costs. As long as it's not costing you anything, I wouldn't take the loss.

I have a favorite saying I use often............None of us are as smart as all of us.

 

[ShoeDiva]

See how nice it is to throw things around to a group of smart folks!! Personally I'd hold on to it if the rent is covering the mortgage costs. As long as it's not costing you anything, I wouldn't take the loss.

I have a favorite saying I use often............None of us are as smart as all of us.

I love that!

 

[lotstodo]

Another consideration is how long you have had the loan. The more actual interest you are paying in dollars every month, such as in a new loan, the more attractive refinancing is. If there are less than 7 or so years left on the loan, it may not be worthwhile for a couple of percent better rate. Have someone run your numbers for you.

The way I would look at it is that if I sell now, I eat 20 grand. There will be no equity to invest if I get out now. That's a tough pill to swallow if there is no emergency reason to sell soon. That's why I would look at the timeline necessary to break even ( I'm guessing six or so years, but who really knows) and try to lower my total net costs over that period of time. Renting and refinancing are two possibilities to get you through the downturn relatively unscathed. There are a lot of reluctant landlords out there for that very reason right now.

 

[mei lan]

See how nice it is to throw things around to a group of smart folks!! Personally I'd hold on to it if the rent is covering the mortgage costs. As long as it's not costing you anything, I wouldn't take the loss.

I have a favorite saying I use often............None of us are as smart as all of us.

I love that!

:thumbsup

 

[lotstodo]

See how nice it is to throw things around to a group of smart folks!! Personally I'd hold on to it if the rent is covering the mortgage costs. As long as it's not costing you anything, I wouldn't take the loss.

I have a favorite saying I use often............None of us are as smart as all of us.

Amen to that!

 

[unionmom]

If you can find ways to reduce your costs (lower interest/refinanced mortgage is a good one), all the better. Be sure to make the most of your deductions on the rental property, too.