GREETING FROM VEGAS - GROUND ZERO FOR DISTRESSED PROPERTY - lots to share & questions!

[vegasunderwater]

Hello, there.

This forum is just what I was looking for, but couldn't find only a couple months back - the last time I did a search under "loan modification, investment property".

Seems like there are quite a few of us in the same boat.

Does anyone know, are there similar forums or sites geared for investors with troubled property out there?

Anyway, lots to talk about on my end and this is just the initial post!

Some latest facts about Vegas:
- approx. 70% of all homes are underwater
- unemployment just increased to 12.3%
- vacancy rate @ 90.5%
- rental rates decrease 25% in a year
- gaming revenue down
- record # of business and personal BKs

Despite the dismal figures above - LOTS of smart investors (NOT speculators; comprise of 30% of all purchases and many foreign) are now taking advantage of the long-term cash flow opportunities for the first time in years while I sit here typing this , mired up to my eyeballs with 7 properties with negative equity and negative cash flow that make absolutely no sense to hold unless a miracle happens with some type of debt re-structuring (i.e. short pay refi, loan mod)! What is wrong with this picture?

I need to move beyond all this and get back to what I do - MAKE $$$$ (passive income) again - and not keep LOSING it every month!

My goal, therefore, is to try like hell to restore cash flow (all my units are 100% leased out now) by getting the banks to re-structure the debt. If I can do that, then even if the equity remains negative for a few more years, that's okay. I can always DCA (dollar-cost-average) by investing in new buys in today's lower asset value offerings, so the net effect will eventually be a winners-pay-losers scenario - that is, unless all my stash is sucked dry if I keep current on the notes as-is! Therefore, I must act ASAP.

I have 3 main questions for the opener:

My main opening question: HAS ANYONE ON THIS FORUM SUCCESSFULLY OBTAINED & SUSTAINED A LOAN MOD OF ANY KIND for INVESTMENT PROPERTY(S)?

My second main question: HAS ANYONE EXPLORED, ATTEMPTED, or OBTAINED A *SHORT-PAY REFINANCE OF THEIR INVESTMENT PROPERTY(S)?

*similar to short sale, but loan refi'd @ mkt value and you keep the property

And #3: HAS ANYONE ENGAGED AN ATTORNEY (OR LOAN MOD FIRM) WHO SPECIALIZES IN LOAN MODS, SHORT SALES, ETC. TO HELP ASSIST IN RE-NEGOTIATING DEBT ON THEIR INVESTMENT PROPERTY(S)?

If the answer is yes on any of the above questions, kindly elaborate!

I'm not trying to market anything to anyone, by the way. Since real estate investment and property management is my profession, I am just focused 110% on making the absolute best and informed decision I can in order to get results that will benefit me the most - NOT the banks! No matter what, they will not stand in my way. Just because we all have notes that give them rights to the collateral does not mean they can and will be able to go any further. And, if they do wind up owning one or more properties, they will be worth considerably less than what is owed and they will have to deal with the loss. They will all pound sand at the end of the day if they fail to give me what I need to restore positive cash flow!

Like it or not, that is my bull-dog attitude and preamble. I look at it as preparing for a masterful fight. What our lending institutions have engaged in and continue to do has been and is terrible to our economy. I also largely blame them for this fiasco in the first place!

To top it off, the banks care less about you and your unfortunate situation. They hear the sob stories a million times a day. All they want is as much money as they can get from you. And all we want is to give them as little as possible and leave them with the short end of the stick. It's war.

You'd think there'd be a happy medium in there, but, for investors, it appears especially one-sided. And the stimulus or whatever plan you want to call it - I'll believe it when I see it when it comes to to helping us investors. Until then, it is survival of the fittest, or should I say, smartest. The banks have gotten all the aces in their favor with the bases loaded against the consumer from the get go - and especially against the independent investor. So, why not put into place strategies which enable you, the investor, to be in the most advantageous position regardless of whether you keep your property or not?

This is a true game of chess, people. Every move you make is crucial, and therefore needs to be pre-meditated, otherwise you give the upper hand to your opponent, in this case, the lender(s)!

You don't think there's a reason Trump NEVER puts his own money into his projects? He puts himself into the most protected and advantageous position well in advance, so if the chips are down, the lenders and investors (OPM) take the hit, and never him (and the irony is that they still can't wait to lend him more $$$ on his future projects)!

It goes without saying that we all need expert advice before entering these unchartered waters, otherwise, we will get eaten alive.

I apologize for rambling or sounding like I'm pitching a service or something.
Mind you, I'm not trying to market anything to anyone.

In my case - and, for that matter, anyone else's, whose properties are so far underwater (over 50%), again, it makes zero economic sense to keep throwing good money after bad into FEEDING THESE NOTES UNMODIFIED (which is why they are called "alligators").

Now, I'd like to hear from all the rest of you investors.

I hope we can help each other and move ahead to what we do best - invest!

I have lots more to share later in terms of loss mitigation strategies and income "salvage" options - as well as more questions, so stay tuned!

STOP FEEDING THE ALLIGATORS!

[heidi79]

What's up Vegas, have you had any luck modifying any of your rental properties?

[Moe Bedard]

Yeah and I am so sorry we missed this post!!!

Please let us know if you still have questions. I have a lot of experience with investment props, as well as my son who worked on them with Countrywide for quite some time.

[vegasunderwater]

I thought I would've gotten an email notifying of pending replies, but didn't get it. Good thing I check in periodically.

Haven't started down the mod path yet. The reason being: Need to re-position some assets as best as possible so as to avoid the "enemy" getting their greedy little hands on anything if they succeed in getting a deficiency judgement down the road - just in case. Even though most lenders I hear aren't pursuing them, doesn't mean they don't have the right to if they so choose, so why leave yourself open?

Once I'm ready, I am not sure whether to try contacting the lenders directly - or to retain an attorney to handle it. There are pros and cons to both. Obviously, for most, it becomes a cost issue, and when you're ALREADY TOO FAR IN THE HOLE ON THESE DOGS as it is, does it really make sense to throw more good money after bad using a lawyer especially when he can guarantee you NOTHING? I got a quote from one @ about $2500 per property x 7 properties = $17,500. That's still a bundle no matter how you slice it. Perhaps if I split up the workload and let him handle the tough lenders and I handle the "easy" ones? 4 of the properties them have one underlying lender/investor which is Silver State Mortgage who are a bunch of crooks! If there are any violations and predatory lending issues, I would point the stick at them! They were all sold off 3-4 times to different servicing cos. (Saxon, CitiMortage, GMAC, Litton) who are also idiots.

Countrywide is now BofA and the HELOC from CW/BofA went to another lowlife servicer called CCO Mortgage.

The big problem white elephant property has its loan with America's Servicing Co. which is the servicer for Wells Fargo Bank. That one's the most likely to fall into short sale, deed in lieu, or foreclosure because the property is just a bad investment for years to come and there is no resale market, but I'll still try to mod if they cut their rate 80%.

All the other lenders will need to cut their payments by 60% in order for it to make sense to hold, otherwise will be forced to short sell or DIL.

Suggestions???

Moe - tell me what happened w/ the CW mod. Was that on rental property also?

[vegasunderwater]

I would caution your friend about buying up what looks like distressed here in Vegas, as I also think we've got a long ways before hitting bottom what with the unemployment and commercial vacancies getting much worse by the minute. What looks like a bargain today could be a disaster in a year. The bottom the so-called analysts are preaching about is a FALSE one. There are many other strategies to make money in RE, but the buy-rent-hold business model I think is way too volatile right now and for the next couple years. Rents will continue to soften into next year.

I thought about playing the owner-occ game with the lenders by living in the properties, but the problem is that the loans are in the name of a family member, not me. I put up the cash and make the payment, they put up their credit. So, that won't work. Plus I've got tenants in all but one - and that one I'm residing in.

I applaud you for getting a principal redux on non o/o. Now, that's amazing! Every lawyer has told me that's impossible, the lenders won't do it. That's fine, then I'll just stiff the lender with a short sale or deed in lieu if they won't play ball. I've already reached the limit on my losses; the lender will be the one to take the lion's share of the loss if they won't play ball.

[kate166]

They probably will take your short sale or deed in lieu. Lenders don't care. They will write it off their books as loses and get government bail out money.
Do more research on short sale.
In any case, if you what ever you do hurt your payments, don’t do payments. Collect rent, make up some money and give your property back to lender.
Check out this link:
Re: Any one has any experience with short sales?????? - Mortgage Loans - FICO® Forums