Modify w/o Tenant?

[purenergy]

I haven't posted in a while. We DID get our primary modified -- very good terms (Central Mortgage -- on the success page).

We have been trying to short-sale the investment property since about October. Had buyers twice -- and fell through twice, 2nd one last week.

Now I am re-thinking it and contemplating trying to get the load modified. Problem is, there is no tenant in there right now. But I am confident that I could get a tenant. As I understand it, it would be ILLEGAL to get a tenant until I get the loan modified, correct?

Who has experience with this? We had a number of reasons for going the s. sale route, not to mention that I was quite focused on just getting our primary modified. But now that I can see a bit more clearly, I am thinking it is possible to ride this thing out with a modification and a tenant.

For any who have submitted hardship letters/financials, did you include your Tenant's rent as part of income? Would it be wise to show "projected" income on the property (rent)?

Thanks for any feedback, sample letters for investment mod requests, etc.

This is a quiet forum! Guess not too many investors are trying to hang on? I understand that. As I mentioned, our primary was my primary concern, too.

[classicgk]

I've been told one in three short sales goes through.

Maybe you could put in a tenant on a month to month lease.

The loan mod people will count your rent the way they do it. They have their formulas.

You may want to look at what market value is and what your mortgage balance is. If you are WAY upside down and have been trying so long with a short sale maybe your bank will let you do a deed in lieu of foreclosure without recourse.

[purenergy]

As I understand it, if you are in default, you can NOT enter into any type of contract on the property. That is known as "rent skimming."

[mrbarker]

Agree with classic. Month to month. But be straight with your tenant. Let them know you are attempting to modify your loan and you believe you will be successful but it's a crapshoot. Maybe even give them a lower rent because of the uncertainty. The economy is so bad there are plenty of people who will take a cheaper longshot over a more expensive certainty.

You don't have to present their actual rental agreement to your lender (hint, hint). If you need to show their rent at a certain level then give your lender what he needs to qualify you but do the right thing by your tenant. There is legal and then there is ethical.

You can probably craft a legal and ethical solution to your problem with some creativity.

Lenders hate rental properties. If it is far enough away from your primary residence - you can try to call it a second home.

[classicgk]

Check with your lawyer about renting out; the banker I met with yesterday said I could rent out a condo coming vacant and when they foreclosed the lender would take over the lease. Surprised me.

Rent skimming is a special term; from what I understand it does apply in the FIRST year of ownership.

I think laws differ from state to state as well.

There is nothing wrong with month to month leases in this environment; some of the renters I know are afraid they are going to lose their jobs and so do not want to sign a year lease.