Fight or Foreclose?

[Nash17]

I have 17 Single family residences in Nashville TN, although I live in CA. I purchased 3 years ago in TN wanting to get into real estate but not wanting to purchase during the high prices in CA. The plan was to purchase in a moderate growth area like Nashville, who was one of the top corporate relocation cities at the time, sell in 3 years and purchase homes in CA when the prices level off. Everything seemed to be working until recently.

Unfortunately I am highly leveraged (10% down and even this was a second on my home in CA) and my loans were all short term - neg ams, some interest only ARMS, and my positive cash flow has turned negative over the last year.

I am not sure if I should fight to keep the properties or begin looking into foreclosure.

Sales are slow out there but home values are holding ok. I tried selling with no offers. I have equity in some of the homes and none in others. I can handle the neg cash flow for another year or less, longer if I can find work that pays me my regular rate( a whole other story). I can get some cash if needed for refi or to pay off some loans but not nearly enough to cover re-fiing everything. Also do I pay my negative cashflow or use the money to re-fi?
So far my plan has been 2 steps:
1. Increase rents and stabilize bad tenant situation.
2. Re-fi mortgages

After a horrible period of evictions and squatters, the bad tenants are being replaced with more stable ones at the moment and the rents are as high as I can get them.

The loans are a whole other story. I can’t even do a conventional re-fi due to the amount of homes I own, so I may have to refi in my wife or parents names. Even if I re-fi is it worth it? First of all there is the cost of the re-fi, and then the high LTV percentage-90%, this is where it would be good to have help with cash but if it looks like it is better for me to walk away, I surely don’t want to re-fi and dump more cash in.

I have literally been studying and running scenarios for the past year trying to figure out what to do. I have called many banks, looked at commercial products, as well as blanket loans, and I am exhausted. I am not in default yet but look to be if I don’t have a plan soon.

Does anyone have ideas?

[Dan Bailey]

Nash, welcome to the forum. You may want to read some of Prof. Shays threads and posts on walking away There is some discussion on the pros and cons of both scenarios.
I don't think anyone can make the decision for you, and I'd imagine it would be almost impossible to get re-negotiated loans on homes that are not principle residenses.
Good luck!

[Nash17]

Thanks Dan. I guess I am looking for ideas that I may not have thought of also. Will visit Prof Shay's threads

[ForeclosureCoach]

Keep the faith and don't lose hope..

[kburgin]

I would first break down all the expenses on the properties and what types of loans on each property. Find out where you are at after all monthly expenses minus what you bring home after rents , income etc. Can you afford to keep all properties? Then I would put all 17 properties in priorty by equity , cash flow , loan programs etc. Once you get a clear picture on where you stand then you can make your move in finding resolution.

Persistance Breaks Resistance !!!!!

[pattona]

I like kburgin's plan and would take it a step further. Can you lease option any of these properties to raise the rents and to get a better quality tenant?

[faith]

Wow, that's really a tough one! Have you tried selling your house through Short Sale?
This is one way of relieving of some properties you have. If you will do this, you need to hire an agent that has experienced doing Short Sale. You can go to bbb search and look one in your area, it will at least give you an idea which one to hire. Check zillow.com to find out the selling prices of your homes in your area. Once you find out how much the selling prices, say for example the prices in your area is around $300k, you need to lower that price down to $290k to attract a buyer, without a buyer there's no Short Sale. Send a hardship letter to your lender and explain what you are going through, there's an example of hardship letter to your left in the Homeowner's Tool Box, click on that and it will give you an idea how to write one. As far as Short Sale there's a Short Sale Tips that Moe made in this site, there's also a lot of successful stories about Seller Short Sale in the success stories, and there's also tips how to do Short Sale in walking away in CA.
Take time to read the success stories and some of the issues of all of us, it's all here, the struggles, the problems, brilliant ideas from Moe, ***, Professor Shays and others, even lender phone numbers and contacts.

I hope and pray that God will help you making the right decision and give you favor from all your lenders, investors and negotiators. I know this is hard, but there is nothing too hard for God. Take heart, be strong and courageous. May the Peace of God that surpasses all understanding will guard your heart and mind through Christ our Lord.

God loves you and God bless you and your family and make his face shine upon you.

With tender loving care,
Faith

[Nash17]

Thank you so much for the advise and messages of hope.
I have indeed broken down the situation and prioritized the properties.

The plan in the beginning was to have all the properties as lease purchases. Unfortunately none of the tenants had good credit and couldn't get loans by the time the contracts came due.
I was also with a very bad management co. I had over 6 evictions, and countless other tenants that had to be negotiated out within a period of a year. Many of the properties were left damaged due to the tenants and I have also poured in thousands to get them fixed.
My road to recovery plan is two fold.
1. get a great management property and stabilize things on the front end.
2. Fix the loans-the back end.

I have found a great management company and we are nearing the end of replacing good tenants.

As far as finding a new lender-that has been difficult since most will not accept owners with more than 10 properties to their names. Some even less than 5. I have called local Nashville lenders as well as big lenders. I have also contacted brokers with access to hard money, independent investors etc. Still no luck. I have 2 more lenders to hear back from before I go down the road of Modifications and short sales. I have also contacted some local Real Estate clubs to try and find investors who would be willing to buy with a tenant in place, as the properties are hard to sell with a tenant to a normal buyer.

It has been months of feeling bad and depressed and then I had a thought. I will never have this opportunity again in my lifetime- to own this many properties, as lending restrictions tighten. If I foreclose or do anything that will hit my credit- I will most likely never be able to invest like this again as I am nearing 40 and to clear your credit could last 7 years or more.

If I can hold onto the cash flow loss and hope the adjustables remain sane, I would be in a great position in a couple of years Right?
If I could raise the cash I need then I should fight on right?
Do you think I could be in a good spot within the next couple of years being in Nashville, or is the general feeling, that this market could take even longer?

Again Thank you all for even taking the time to respond!

[faith]

There are many reasons why the economy will not recover this year or two years from now, even 5 years from now.
- We have problems with Federal Reserve who changes rates up and down and is virtually powerless, if they lower rates we face further inflation and if they raise rates, the housing and credit markets will face even larger pain.

.- Energy prices –still very high, as long as America and our government depend on foreign oil we will be begging Saudi’s and other countries to produce more oil like what President Bush did.

- Colleges, and School tuition fees are getting more expensive and I don’t know who has control over the tuition hikes and no one can do anything about it.

-The coming elections and who to vote, whoever the next president will be I feel sorry for him because he will be inheriting a big headache and he will be blamed for it just what is happening now to President Bush who by the way inherited a big deficit and problems from the Clinton Administration.

Lenders are stuck thanks to whoever really started this big mess. Thanks to all predatory lenders, thanks to you a real estate broker and agents, thanks to you an appraiser who appraised my home to be $486k when in fact it’s only worth $300k and thanks to other appraisers that overappraised homes. America is such a mess and it will take a long time to recover for all of us, thanks to you..

I’ve seen on TV that the bottom will hit in July of 2009, but I’ve heard real estate experts that said it will take 10 years to recover from all this mess, because we are not only talking about California, or Florida but the whole America. When America’s economy goes down, the countries all around us like China, Japan, Philippines and others will go down. So it’s a big huge Domino Effect.

I am just wondering why the government and these scientists spending billions of dollars to an experiment finding out where we all came from. Apparently they don’t care about the hurting economy and most especially the homeowners who lost their lives because of foreclosure and the people’s lives who are all up in the air. I hope common sense and wisdom will follow our leaders and put the money into of good use, saving and helping our homeowners who are hurting not only their pockets, but their spirit, soul, body and mind and their families as well.

I do pray that God will help you make the right decision and that you will always think that if there is a Will there is always a Way. You’re in the right path, keep strong and stand firm, everything will be okay. My heart goes out to you. You are always in my thoughts and prayers

God bless you always.


From a sincere heart,
Faith

[wannamodify]

Good post, Faith!

[Nash17]

If I am not behind on my payments yet and I am seeking a loan modification, will it hurt my credit score if I get a modification?

[schwefls]

Hi Nash17:

Welcome to our forum. Shortly someone will be reaching out to you to address your questions.

[Moe Bedard]

Nash,

If you remain current with your payments while going through a modification, it will not hurt your credit.