I posted this elsewhere but thought it would be appropriate here as well:
I purchased a 2900 sq ft. rental home in a planned Vegas golf course community in 2005. I went 50/50 with a friend and we formed an LLC but the title and loans are all in my name. He thinks it is time to walk. I am worried about the risk of a huge deficiency judgement as well as other possible consequences. He tells me that deficiency judgements are highly unusual right now in Nevada and that I'm worrying too much.
Paid 494K. Still owe 450K. Foreclosures and short sales are going for around 220K right now.
First is with Wells Fargo (serviced by B of A) for 380K adjustable. Second is with B of A for 70K adjustable. Although it is rented, negative cash flow is ~1500 per month.
The problem is, I have other assets (>100K savings, >100K stable income, >200K equity in my primary home in California). He has better income than I do but is upside down on multiple other properties.
My questions are concerning the consequences of walking away:
- What is the risk of a deficiency judgement?
- What are the other costs involved such as lawyers, court fees, penalties etc?
- What are the chances for a short sale?
- What are the chances for a loan modification?
- Should I just hang on and look 5-10 years or more down the road? (My partner and I can afford to make payments and know we will continue to negative cash flow and eventually take a loss, but it seems like it might be better than risking a huge deficiency judgment/fees/penalties etc. based on a below market auction price.)
This is all causing such stress and anxiety!! I appreciate any help I can get from this forum. Thanks.