What Happens If An Investment Goes Into Forclosure?
Thanks for reading.
I am in the State of Washington and I have a duplex that is losing me money ($800) every month. What happens to my other investments and/or my bank accounts, etc...if I were to let my duplex go into foreclosure?
I know my credit will be screwed up for a couple of years but I would rather do this than lose $800 per month. I could also just let the 2nd go into foreclosure, just a thought.
I have four other rentals that are fine and about $40K in the bank. I want to know what will happen to my equity in the other properties and my money.
Will the lender go after my other properties that have over $50K equity each or my account or both?
I know I can try to sell the duplex but I would probably lose about $50K if I tried to sell it. FMV for the duplex is $370K and I have mortgages for $370K. The market is kind of wierd here and I feel that I would not be able to cover all mortgages unless I sell for approx. $400K.
Sorry for the long post but I am getting to wits end with this property and would like to put it behind me as a lesson learned.
Thanks again for reading and I look forward to hearing your suggestions/insights into my problem.
slushman,
If you want to keep rolling, you need to keep rolling.
Sounds like you robbed one investment and moved cash to the other investments. Now you might consider putting the cash back. Work it out.
Maybe sell one of your other properties and pay off the second mortgages and start to cash flow. Then go out and find a replacement property with enough equity to keep your balance sheet straight. What interest rates are you paying on the second and third mortgages vs what interest rate are you getting on your cash?
The state of WA does allow Deficiency Judgments. So, if they wanted to do a judicial foreclosure, rather than a non-judicial…yes, they could come after you.
Why is the property losing you money? Why not try to sell it or shortsale it instead of letting it go to foreclosure?
Hey everyone
Thanks for the responses. Actually, this was a package deal with a piece of vacant land next door (which I sold) and I did pretty well on the land. Long story short there was a issue with closing the land and the seller tried to take the land back after I closed on the duplex. Every since then I just have this bad aura about this property.
I want to sell the property but I do not think I can sellit for enough to cover the mortgages and selling fees. I would need to sell it for around $400K to get out of it and it is only worth about $370. The market is getting softer here so I just do not know what to do but to let it go to foreclosure.
I guess I could try to get the banks to accept a short sale but what are the odds...
Anyway, I am not trying to just walk away I just do not want to have this property in my portfolio anymore because of the negative experience that I had with it.
I am trying to look at this like a business...companies get rid of bad debt all the time...why is this wrong.
Thanks again and any suggestions would be great.
If the banks were to accept a short sale how does it affect my credit?
Why should they take a short sale from someone who has all the assets you have. A short sale usually comes from a bank that sees they cannot get blood out of a turnip.
As per your post you are not a turnip.
You have plenty of assets and cash.
You even sold the lot next door and made more cash.
The bank partnered with you so you could both make money.
Now you made yours and want to stiff your partner.
Would you want to partner with someone like yourself?
If you sell it for $370 and lose $30K (you say you bought it for $400K) but made good money on the land piece of it, would you still come out ahead or at least even? I make a not so great investment every once in a while, but with others doing well, it evens things out.