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"The" masheenist
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Discussion Starter · #1 · (Edited)
I doubt I am the only one.

It seems lately all I do is complain. I hate that.

I made so many mistakes buying this house, I can't even get over how many I made.

We are up-side down, like alot of peeps, probably 60-70K, significant and still dropping. We want out of this neighborhood in the worst way and to back where we came from. I don't think I would be wrong to say we are about ready to do anything to accomplish that goal as well.

Current lending laws dictate we need 30% equity or we need to be able to carry both mortgages, and have debt to income at 50%?. Something like that, which I figure to be 8-9K a month. Being self employed, it is very hard to show that kind of coin, my wife works and that is good, but at nowhere near that income.

Unfortunately, I am not able to get alot of advice from my family. I don't know who else to ask.

We can rent/lease this house for a negative and we planned on doing that, but it will not help as far as getting a loan goes.

Business is really slow, but at this point, on paper, we can still afford to buy another house. I "hope" the business stays either stays flat, or I could venture to say, pick up a little and the last couple weeks it seems to have. So that is good.

One problem I have is the lack of an end, we are so far upside down that I just don't see when our situation will change, I mean the way the lending laws are now, it will be YEARS before the value picks up, if it ever does.

We are so desparate that we are considering renting this house out and renting another house where we want to live.

I know some of you in the past have come down on people asking serious questions here, but in my opinion, this board has a good collective intelligence.

How about some advice, via PM if you choose, is this something I can see a financial planner about? I just don't know where to start or who to ask and I am getting desperate.

Brian
 
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Really sucks doesn't it??

Being a business owner you probably have your personal credit tied to the business. So a short sale or deed in lieu are not really options as they will affect your credit. I've researched just about everything, I'm way way more negative than you and it is all purchase money. I'm trying not to think about it. In fact, I'm trying to pay down my loan so I can get close to zero equity lol.

The irony is I bought and sold a couple house a few years back and did very well. Pay back I guess :)st

We have a couple houses in the area where people have walked.

I'm not sure who is smarter. :)sphss
 

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"The" masheenist
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5,381 Posts
Discussion Starter · #3 ·
Yes sir,

I know many have it worse for sure, the 70 I am upside down is 200 to some people.

It is not even about the equity really, I just don't want to live here anymore. If it were a house I wanted to live in the equity wouldn't even bother me, the market is cyclical. This was supposed to be our first house, a stepping stone if you will, rent it out and buy another.

It was a cheap house that we could afford at the time.

I have two houses that are vacant in my direct neightborhood.

Yes, at this point I may be the dumb one, trying to figure out the right way to do it.

Our credit scores are in the upper 7's low 8's, at this point, the only thing going for us.

Brian

Really sucks doesn't it??


Being a business owner you probably have your personal credit tied to the business. So a short sale or deed in lieu are not really options as they will affect your credit. I've researched just about everything, I'm way way more negative than you and it is all purchase money. I'm trying not to think about it. In fact, I'm trying to pay down my loan so I can get close to zero equity lol.

The irony is I bought and sold a couple house a few years back and did very well. Pay back I guess :)st

We have a couple houses in the area where people have walked.

I'm not sure who is smarter. :)sphss
 

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Temporarily Pacified!
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5,449 Posts
Didn't some of the Barry supporters say that he was going to pay their mortgage and put gas in their car? Hold out, there is hope.........


Sorry for your pain.....hopefully 2010 will bring a reversal of this downward spiral and bring some prosperity and growth for us all, even the hated Barry supporters.
 

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As far as sleeping goes I cant sleep unless I drink at least a 6 pack. Went in as a partner-builder and we are sitting on 5 houses on 1 street all R2 lots each one is upside down by $200K. Work as a General Contractor is slower than ever....
 

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You may want to consider renting your house out for Section 8. Many don't like that path, but for some it works fairly well, especially if your talking about a home that is at the lower scale as far as price. Its pretty much a guaranteed payment every month, seeing as its coming from the government. I've known several friends that have done this in situations like yours. They used the income for a couple of years to maintain there mortgages, and when the market turned around for them they simply sold the property. They did at the end of leasing to Section 8 have to go back in and repaint and put down new carpet.
 

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Desert Racing Widow
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You know, Brian, I think renting it out and renting something else is about your best option. That way, you still own a house, even though it's not the best location for you. You can still hold your head high that you didn't walk away from it, and live in the neighborhood where you want. It's not like you'll be renting forever. Maybe after a couple of years, the market will pick up and you can buy another house and keep that one. That's what I'd do. I know you hate your neighbors, and they don't like you, so you get to get out of there and still hold on to it. Good luck with your decision, it's not an easy one.

P.S. one glass of red wine and I sleep like a baby :)
 

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I doubt I am the only one.

It seems lately all I do is complain. I hate that.

I made so many mistakes buying this house, I can't even get over how many I made.

We are up-side down, like alot of peeps, probably 60-70K, significant and still dropping. We want out of this neighborhood in the worst way and to back where we came from. I don't think I would be wrong to say we are about ready to do anything to accomplish that goal as well.

Current lending laws dictate we need 30% equity or we need to be able to carry both mortgages, and have debt to income at 50%?. Something like that, which I figure to be 8-9K a month. Being self employed, it is very hard to show that kind of coin, my wife works and that is good, but at nowhere near that income.

Unfortunately, I am not able to get alot of advice from my family. I don't know who else to ask.

We can rent/lease this house for a negative and we planned on doing that, but it will not help as far as getting a loan goes.

Business is really slow, but at this point, on paper, we can still afford to buy another house. I "hope" the business stays either stays flat, or I could venture to say, pick up a little and the last couple weeks it seems to have. So that is good.

One problem I have is the lack of an end, we are so far upside down that I just don't see when our situation will change, I mean the way the lending laws are now, it will be YEARS before the value picks up, if it ever does.

We are so desparate that we are considering renting this house out and renting another house where we want to live.

I know some of you in the past have come down on people asking serious questions here, but in my opinion, this board has a good collective intelligence.

How about some advice, via PM if you choose, is this something I can see a financial planner about? I just don't know where to start or who to ask and I am getting desperate.

Brian
I don't have any answers for you but hope it all works out for the best.:)
 

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I think renting it out (even sub letting rooms) and then renting elsewhere is not a bad idea.

If possible, buying Real Estate right now *might* not be a bad idea except as far as I am concerned this economy is still in a death spiral with no end in sight. I for one do not see "things" coming back in a couple of years, this is a permanent shift due largely to globalization not to mention massive fraud in the RE/Bankster industries.

The stimulus package was the largest heist in world history on top of all that.

If my personal economic situation deteriorated (ie I lost my job) enough I would not feel bad walking away from my house. If you went to Las Vegas placed a bet and lost, and then learned that the game was fixed would you want your money back? I suspect so...that's what has happened with Real Estate - massive fraud across the board.

I for one am trying to figure a way out of this rat race - I have been considering buying some land and putting a manufactured home on it paid for with cash (my life savings).
 

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Your idea of renting out your house and renting in another city that makes you happier sounds like a good plan to me. I purchased a townhouse in a not so desirable city back in the late eighties about a year after I graduated High School for the same reason you did a (starter home). Well a couple years later the economy started to slow down and I was about $20,000 upside down in the place. When you’re upside down in a piece of property it really makes you fill that you’re married to the property in this case an unpleasant marriage. However, I tried to look at the positives like building my credit, the tax right offs and the learning experience.

I ended up renting the townhouse out and moved to a place where I was happier. The funny thing about it is that I rented in a much nicer area with about 500 more square feet for only $200 more than I was renting my place out for. In my case I had a monthly expense of about $400 more per month between the negative in rental income and the increase in rental costs. I was young and on my own so I made up the difference renting one of the bedrooms out. After all was said and done I lived where I wanted, owned a home, had a great tax right off, made some great decisions and some not so great decisions. But best of all the starter home allowed me to purchase the home that I currently live in and I am not upside down in this home.

If I were you I would try to start making a long term plan for this house. If you rent it out do you want to make it a rental for the rest of its useful life or is the sale of this house at some time going to springboard you into your dream house. You also need to be somewhat flexible with your plan. For example, I originally thought that my townhouse would be a rental forever, however; at the perfect time (for me) some tax laws changed and I was able to turn my townhouse back into my residence for two years and sell it using the section 121 exclusion without having to pay any capital gains tax. If you are going to sell the house down the road be aware of section 1250 (unrecaptured gains). Section 1250 deals with the depreciation claimed while the house was rented. I am not a CPA so I am not trying to give you tax advice but I am trying to give you a place to start your research and that is the IRS publication 523 http://www.irs.gov/pub/irs-pdf/p523.pdf

Other suggestions that I have is to treat the rental house like a business. You can rent it yourself or have a realtor rent it for you. If you rent it yourself at least get a credit check with the first, last month’s rent and security deposit up front. It’s hard not to get emotionally connected to your renters especially when they have children. I have been screwed over by renters because I felt sorry for them. If they’re late with the rent you need to follow through with a three day notice to pay or quit and if they don’t pay or give up possession of the house get a lawyer and serve them quickly. Also, if you rent the house to a section 8 participant (which is a program offering rental subsidies) just remember that HUD has limits on what they will pay in your area therefore, it may be hard to get the rental price you want or increase the rent in the future. I hope my ramble helps you.
 

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"The" masheenist
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Discussion Starter · #13 ·
Yes sir it does, thank you for the advice.

I will check into the tax liabilities you mentioned as well.

I appreciate it.

Brian


Your idea of renting out your house and renting in another city that makes you happier sounds like a good plan to me. I purchased a townhouse in a not so desirable city back in the late eighties about a year after I graduated High School for the same reason you did a (starter home). Well a couple years later the economy started to slow down and I was about $20,000 upside down in the place. When you’re upside down in a piece of property it really makes you fill that you’re married to the property in this case an unpleasant marriage. However, I tried to look at the positives like building my credit, the tax right offs and the learning experience.

I ended up renting the townhouse out and moved to a place where I was happier. The funny thing about it is that I rented in a much nicer area with about 500 more square feet for only $200 more than I was renting my place out for. In my case I had a monthly expense of about $400 more per month between the negative in rental income and the increase in rental costs. I was young and on my own so I made up the difference renting one of the bedrooms out. After all was said and done I lived where I wanted, owned a home, had a great tax right off, made some great decisions and some not so great decisions. But best of all the starter home allowed me to purchase the home that I currently live in and I am not upside down in this home.

If I were you I would try to start making a long term plan for this house. If you rent it out do you want to make it a rental for the rest of its useful life or is the sale of this house at some time going to springboard you into your dream house. You also need to be somewhat flexible with your plan. For example, I originally thought that my townhouse would be a rental forever, however; at the perfect time (for me) some tax laws changed and I was able to turn my townhouse back into my residence for two years and sell it using the section 121 exclusion without having to pay any capital gains tax. If you are going to sell the house down the road be aware of section 1250 (unrecaptured gains). Section 1250 deals with the depreciation claimed while the house was rented. I am not a CPA so I am not trying to give you tax advice but I am trying to give you a place to start your research and that is the IRS publication 523 http://www.irs.gov/pub/irs-pdf/p523.pdf

Other suggestions that I have is to treat the rental house like a business. You can rent it yourself or have a realtor rent it for you. If you rent it yourself at least get a credit check with the first, last month’s rent and security deposit up front. It’s hard not to get emotionally connected to your renters especially when they have children. I have been screwed over by renters because I felt sorry for them. If they’re late with the rent you need to follow through with a three day notice to pay or quit and if they don’t pay or give up possession of the house get a lawyer and serve them quickly. Also, if you rent the house to a section 8 participant (which is a program offering rental subsidies) just remember that HUD has limits on what they will pay in your area therefore, it may be hard to get the rental price you want or increase the rent in the future. I hope my ramble helps you.
 

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I can attest to the neighborhood, I live literally down the street. I am upside down 200k. I would love to move as well, No one takes care of their property around here and the city could care less. we bought here becaues it was what we could afford and it was Quiet, now it is the complete opposite. Hey brian just lease it out to the county for section 8, The rest of our neighbors did it why cant we? I have checked on this and what they pay would suprise you. hope things get better.:)
Yes sir,

I know many have it worse for sure, the 70 I am upside down is 200 to some people.

It is not even about the equity really, I just don't want to live here anymore. If it were a house I wanted to live in the equity wouldn't even bother me, the market is cyclical. This was supposed to be our first house, a stepping stone if you will, rent it out and buy another.

It was a cheap house that we could afford at the time.

I have two houses that are vacant in my direct neightborhood.

Yes, at this point I may be the dumb one, trying to figure out the right way to do it.

Our credit scores are in the upper 7's low 8's, at this point, the only thing going for us.

Brian
 

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"The" masheenist
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5,381 Posts
Discussion Starter · #17 ·
Howdy neighbor, I never see you guys out much.

Yea, plenty of vacant houses. The one that lit on fire across the street from you and the one to the north of you is a dump for sure.

The city is coming down on me hard for my backyard, shit you can't even see from the street. It is amazing how other people's front yards look like shit and they treat me like a damn criminal.

I am going to check on the section 8 deal tommorrow. That will teach that bitch to my north to phuck with me. What did you find out about the section 8 deal?

Brian

I can attest to the neighborhood, I live literally down the street. I am upside down 200k. I would love to move as well, No one takes care of their property around here and the city could care less. we bought here becaues it was what we could afford and it was Quiet, now it is the complete opposite. Hey brian just lease it out to the county for section 8, The rest of our neighbors did it why cant we? I have checked on this and what they pay would suprise you. hope things get better.:)
 

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I would just suck it up and live there until the situation changes and you can get out. Yes it sucks, but sometimes you have to pay for mistakes. That is how we learn from them and hopefully do not repeat them.
 

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"The" masheenist
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Discussion Starter · #20 ·
I would just suck it up and live there until the situation changes and you can get out. Yes it sucks, but sometimes you have to pay for mistakes. That is how we learn from them and hopefully do not repeat them.
Thanks,

I have already paid for them, tenfold. Trust me.

Brian
 
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