My rental property is a money pit! Help
I bought a triplex in 2006 with plans of flipping it. I wasn't able to do it quickly enough before the market bubbled. So I've tried to set it up as much as possible. I was advised to set up an LLC to run the property as a business, and quitclaimed it in the name of the LLC. I've had the property listed for sale since 2007 at the amount I owe on it...with absolutely no luck in selling. Now I'm stuck with a rental property that is decreasing in value, is difficult to rent for the amount it went for a few years ago, is on an interest only ARM loan (huge regret), and now has a $6,000 emergency repair in process. Since purchasing this property I've gotten married and pregnant. I've been dumping all my savings into keeping this property afloat but I just don't know how I can continue to do that with a child coming. I feel absolutely horrible at the thought of defaulting but I don't know what else to do. I've lost about $40k in cash already on this property in the form of repairs to flip it, lost rents over the last 5 years, and now this emergency repair. I'm sick over the thought of adding to the foreclosure crisis but what do I do? So far I am current on the loan but I most likely will not be able to keep that up for more than another month or two.So here are my questions:What do I need to be aware of before I call my mortgage company? Should I try for a short sale (I've heard they are basically impossible in Utah)? If it goes into foreclosure do I still collect rents? If it goes into foreclosure are any of my personal assests (my home) at stake... what can the mortgage company come after? If it forecloses will it effect anything I currently have - or just my credit and all that entails?Thank you in advance for any advice or wisdom shared! by saltlakemommy554 from Salt Lake City, Utah. Apr 15th 2011
Chris Gummerson (cgummerson11)
#0 ranked lender in California - 648 contributions
Hello, Each state is governed differently as far as the laws ect. You need to find out from an attorney how your case is. Utah I believe is both a recourse and non-recourse state, and they have judicial and non-judicial foreclosures. The non recourse means that they CANNOT file a deficiency judgement, and a non judicial foreclosure means a sale of TRUSTEE SALE on the property, usually takes about 105 days to complete, where a judicial foreclosure is a lenghy court action. If you have a MORTGAGE instrument, then you have a judicial, if you have a DEED OF TRUST instrument, then you have a non...But the lender can go to court if needed. Also, if you have an ASSIGNMENT OF RENTS clause in your promissory note, then the lender will take your rents, to cover the loan while in default. How much are you upside down? Can you increase your rents? Rent out storage, or garages? Can you lower your management, call your utilities and explain your hardship, anyone that services your property, get a break on it. I would call your lender upfront and ask what options they have, but 99% of the time, lender representatuives will lie and mislead you and ultimatley lose the property. Contact your local attorney to get the exact breakdown of your mortgage and your rights to the property. Good luck
Linda Miller (Linda Miller)
#0 ranked lender in Utah - 572 contributions
I am sorry to here you have had so much trouble with this triplex and I understand how exhausting it is to try to do the right thing when everything seems to be working against you. I can't really give you any legal advice and would suggest you go to a real estate attorney. If you want to contact me I could give you the names of a couple of real estate attorneys I know. As a loan officer, I know that a short sale affects your credit in the same way as a foreclosure which can be 2 to 7 years before you can get another mortgage. I don't think having it in the LLC protects you from this. Don't take this as legal advice but on a short sale the lender may be able to come after you for the difference between the sales price and mortgage loan. It doesn't happen often but I have seen it and they can then put a lien on other property. On a foreclosure, once it is over it is over. Feel free to call me at 801.506.3133 and I will try to help you the best I can. Linda Miller
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