should i consider foreclosure on a rental property?

This is my situation. My wife and I were kinda forced into buying a home in Arizona. We had planned on moving out there, but things changed and the builder would not let us back out. We explained this to the broker, but they still qualified us and the builder got his money. Fortunately, we were able to get renter into the home, us still having to foot about $800 bucks out of pocket to complete the monthly mortgage. We were able to buy a house in Ca this year. I had to use my 401k from my last employer, and now we have to ante up the penalties and taxes due on that. So, now we are looking at complimenting the rental property's mortgage ($1000 a month, because the lease is up in July and the renter's want to pay $200 bucks less), $500 bucks to the IRS (payment plan for the penalties on the 401k), $100 bucks to the State (payment plan for taxes owed also), our Mortgage of $3,500.00 on our current home. my question is, should i dump my rental property and lose it to foreclosure?

Public Comments

  1. i think you should file for chapter 7
  2. Can you find another renter? I've never heard of paying less when it's time to renew the lease... Especially in a declining sales market - rents usually increase not decrease. It's the old supply & demand scenario. Those that can no longer buy must now rent. (Arg, some employers allow you to take a loan against your 401K so you don't have to be taxed & also penalized on the early distribution) Unfortunately, you don't qualify for Mortgage Forgiveness Debt Relief Act of 2007 and you will have to pay yet more taxes: Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details. http://www.irs.gov/irs/article/0,,id=179073,00.html Check out rental market data here & see what comparable homes are renting for: http://www.zilpy.com/
  3. tisk, tisk, tisk. Forced? I don't think so. You could have forfeited your deposit and walked on the contract in AZ. You'll face less of these types of problems when you come to terms with the fact that you are an impulse buyer and easily manipulated to boot! But, heck the US is tanking and with the markets flooded with listings and foreclosures...why be part of the solution when you can be part of the problem?
  4. Sell the property - the foreclosure could hurt you more in the future. Alternatively, find another renter whose payments will cover the cost of the mortgage. To short-change your costs for the sake of the renter is not helping your situation. Another consideration to make the rental a little more attractive may be to set up a "rent/lease to own" program for a new tenant. This way you can get the mortgage paid, and unload the property within a set time frame, or find another tenant... Best wishes!
  5. I would put your current home in your wife's name because then the ppl cant take the home away. Then if you cannot pay your morgage on ur arizona home, foreclose it. Then i would get debt free and start all over.
  6. I am sorry, but I don't understand how the lender or the builder forced you into anything. Did a judge order you to go through with the contract? Did they hold a gun to your head? I am surprised when people say they were forced into something like this. The most likely scenario is that you would have lost any deposit that you had made with the builder, it is highly unlikely that they could have legally forced you to uphold the contract! But since you are in the scenario, I strongly recommend finding a realtor who can market the property and get it sold asap! It may be necessary to process a short sale if you are upside down on the mortgage to value of the home. If you have equity then get rid of it! Make sure that your realtor has negotiated short sales in the past. Foreclosure should be the last option after doing all you can to sell it. Good Luck
  7. Hi, I used "Credit Solution" to settle my debt and avoid foreclosure.They managed to reduce my debt up to 58% .It's legitimate.I came across this company on NBC News Special Edition.Check it out here: http://nanoref.com/linksynerg/DB0yjA
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