Are you stuck with a bad income investment property forever? The short answer is no. There are escape routes, though some are better than others. Your best defense against ending up the owner of a bad property is to follow our advice and not invest in a property unless it makes sense the day you buy it.
But, unfortunately, some people stray outside the Empowered Investor Network advice and find themselves stuck with an “asset” that no longer strictly falls under that definition. Here are some ways you might consider getting out of an upside down mortgage.
1. Loan Modification – Meeting with your lender and working out a mortgage with more favorable terms is your best bet. Roll the dice. You never know if this will be easy, hard, or impossible until you try.
2. Refinance – Currently, it’s hard to get a lender to refinance an upside down mortgage, especially if you’ve been late or missed payments.
3. Tenant Sale – Either call the tenant yourself, or have your property manager approach him about buying the house. Make it a soft approach, as if you’re simply doing a favor by making the offer.
4. Short Sale – This is when both lender and owner agree to put the property up for sale at a price less than the loan balance. Both sides stipulate that a moderate loss is better than a foreclosure.
5. Deed in Lieu of Foreclosure – The owner hands over the keys, transfers the title to the lender and walks away clean. A lender may prefer this to the time and cost of the foreclosure process.
6. Foreclosure – Your last and worst option is to simply let it go. Stop making payments and wait for the foreclosure process to grind its way to your front door and kick you (or your tenant) out into the street. It’s not pretty but it’s been happening a lot lately.
If you find yourself in dire need of a solution to your upside-down mortgage, start at the top of this list and work your way down. Visit www.JasonHartman.com if you’re interested in learning how to modify or refinance a mortgage yourself at a drastically lower price than what you’ll pay elsewhere. Jason has used the strategies to successfully modify 11 mortgages of his own.
The Creating Wealth Team
