Profile picture for Mttnrrs

Should I rent or walk? Condo is under water and I need to move for work.

I purchased a condo in Atlanta in 2005. It's a condo I originally paid 110k for. I currently owe 79k at an interest rate of 6.5%. I have an HOA fee (I will never have another home with an HOA) that goes along with this that is $208 a month. I tried to sell it for most of 2010 with no luck due to all the forclosures and short sales in the neighborhood. Most go for around 45k. I'm in a situation where I need to move to find work because I'm barely getting by currently on freelance jobs that take up my life 6 days a week. 

My first instinct was to rent. The HOA has a waiting list of 25 people ahead of me, so I asked for a hardship. They granted it to me, but only for a short period of time, with no guarantee I'll be able to rent after 1 year. I don't have much extra money though currently with student loans that I'm still paying and I would be in a bind financially if something happened while tenants are living there. That scares me. The amount of money I would make from renting the place would be enough to cover the monthly bills with maybe $50 left over.

Being that I owe 79k and the places in the complex are currently going for 45-50k, I don't see this property recovering in the next 2-3 years. Between dealing with the HOA and the property being under water, am I waisting my time trying to hold on to this property when I need to be in another city where there are better jobs and more work? I went to NYC last year for a few months to test the waters and wound up with some really nice contract jobs. I want to head back up there permanently. 

Deed in Lieu of foreclosure?
Foreclosure?

I have been going over this stuff in my head constantly. I'm simply looking for another voice to tell me if I'm crazy or not.


Thanks,

Matt
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November 25 2012 - Atlanta
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Answers (15)

A deed in lieu would be nice if you can get your lender to agree to it and it will keep a foreclosure off your record. It sounds like you probobly need to cut your losses and make the move up north and start over. However, please consult with a tax accountant the tax implications of deed in lieu or foreclosure and speak with a real estate attorney before making such an important decision.
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February 08 2013
Try to interview several experienced real estate agents that can assist you with the short sale or give you the right advice.  You are not alone, and I am sure that you can find an agent that will click with your needs on the first meeting.
Best of Luck,

Maria Cipollone
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February 01 2013
If your mortgage is a purchase money loan do a short sale.You may be eligible for relocation monies.You will be able to purchase again 3 yrs out if you keep up with your credit.My advice is locate a CDPE Certified Distressed Property Expert in your area they will be able to give you the answers you are looking for.Check into www.cdpe.com for a agent near you. 
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January 24 2013
I agree with the short sale opinions.  Take the medicine - get better.
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January 24 2013
Profile picture for hpvanc
At this point, I think you need to make a financial decision on whether to keep it or not.  In addition to the excellent advice you have received from Sunnyview, you also need to factor in whether a poor credit rating will adversely impact you ability to earn a living.  If you don't have security clearances, require bonding or something similar where your credit rating is routinely checked by your employer and potential employers, the adverse implications to a poor credit rating are likely to be minimal.  If you do require any of those things you need to take it into consideration.

Good luck.
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December 21 2012
Profile picture for sunnyview
Unfortunately, many people are in your situation. Personally, I would not rent your condo out with a $50 margin and hope for the best. You sound financially responsible so I hate to say what I am about to say, but...I think you need to consider short sale or deed in lieu if the bank will approve it or walking away if the bank won't.

Before you do anything, you need to do a consult with an attorney to see what the laws in your state are. The laws are set to change as far as tax consequences go for walking away so you need to get that information ASAP. You need to know about deficiency judgements in your state. Many attorneys will do a 30 minute consult for free or for half rate. Do not skimp on getting the facts you need to make your decision.

If you walk away or short sell, you can repair your credit and have a good chance to buy again in about 3 years. You are right. It is unlikely that your property will regain it's value in that time and since it sounds like you need to relocate for work anyway. Get the information you need and make the best call you can. Staying in limbo is really stressful.
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December 21 2012
Profile picture for Mttnrrs
Hi Fay, 

Thanks for your input. I would like to lay out my situation a little more clear. I don't have an attorney or CPA and cannot afford one. Renting out units on our property is currently prohibited, as there is a waiting list of 25 people to rent out their property. I sat down with a Real Estate agent this week about a short sell, but they want $500 up front and $1500 at closing. The properties that have sold in 2012 are going for 45k. I paid 109k originally and owe 79k. We have 150 units and we have quite a few that are not up on their HOA dues. I'm not sure if we qualify for FHA still, but I do know we haven't had anyone to close in forever with FHA. 

With condo units in our complex selling for 45k to 50k and me owing 79k, I don't even see staying there as a smart move in any case. It's like renting for the next 7 to 10 years as I wait for the principal to decrease and values creep up. 

It's possible I can get a hardship to rent, but will have to come back every 6 months to a year and get permission again. They can revoke my ability at any time. 

I'm considering the Short Sell route, but didn't realize it would cost me 2k at the end of the day. 

I've been in a lot of misery trying to decide what to do. I have excellent credit and basically have a spotless record, but I'm to the point that number is not that important. I don't use credit really and would only use in the case of buying a house again 5 or so years from now. 

Thanks,

Matthew

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December 21 2012
Do a short sale !! It's free and gets you out of the deficiency. Don't let it go to foreclosure, short sale is much better in the long run. 

Find a short sale expert in your market, In Atlanta I recommend:
http://www.wendybrown.net/home.asp



Lonny Miller

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December 21 2012
That depends on your circumstances and on the number of owner occupied units vs. the number of rentals in the complex. Are rentals allowed?. First carefully review the current financial statements from your Home Owners Association.  How many of the units are in arrears on their monthly HOA dues? That is a huge red flag for potential buyers looking at FHA or VA financing. If there are only a few accounts in arrears, you might look at renting out your unit (if the HOA allows it and if you will benefit tax wise from any rental write offs?) Contact your attorney and your CPA for their recommendations. If it is a fairly new development, how many units does the developer control?  Are they sabotaging your rental potential?  If they are, the complex is like a ship with a lot of leaks and no life preserver for you.
In that case, cut your losses, sell it short and jump ship. Good luck!
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December 18 2012
I'm sorry that you are in such a tough spot!  I think the short sale route is the best route if you are willing and/or able to wait 30 to 90 days for it to be approved by the bank and sell.  I would talk with an agent who specializes in short sales and they should be able to give you a more accurate timeframe, based on recent sales in your building/neighborhood and their past experiences with your mortgage holder.

The Deed in Lieu of foreclosure is the 2nd best option, but it will just depend on your mortgage holder.  Some of them are willing to do it, but many aren't as flexible.

Best of luck to you!
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December 18 2012
Profile picture for Mttnrrs
Hi Monica. I appreciate that. We aren't allowed to sell to investors anymore unfortunately as the HOA forbids that as well. They say our rentals are at capacity. According to my agent most units on the property that are in short sale are taking a long time to sell even at 40k. 

I unfortunately don't have the funds to pay a lawyer right now, which leaves me with little wiggle room on this property overall. I just don't have the spare money at the moment. Counting dollars here, which is part of the reason I was leaning toward renting or Deed in Lieu

Thanks,

Matt
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November 26 2012

I will answer with the horrid response of "It depends" I don't know all the facts and I don't know what is better for you. But what I can say you can try a "shortsale" but consult with your lawyer first about the implications on your credit and the time it will take to have a shortsale. Another answer is ask an agent if he knows an investor who can assume your mortgage without going for that long process of "shortsale." You can find an investor who has experience with the process of lease option. Try to research and choose the best option.

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November 26 2012
Profile picture for Mttnrrs
I've considered a short sale, but it appears that process takes 90 days or so according to what he bank has told me. I'm not so much concerned about my credit as I am about carrying a dead property for years to come. I have no plans to buy another home in the next 5 years. I'm not happy about renting, especially when dealing with an HOA, but it is an option. I just worry that I don't have a lot of money available in case something goes wrong while a tenant is living there. I also cannot get a guarantee that I can continue to rent from the HOA past 1 year. 

News this week shows Atlanta property values dropping 2.4% year over year. Not good news for the next few years.

I guess my big question is renting a good course of action in a case like this?


Thanks,

Matt
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November 26 2012
You should seriously consider[deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines] A Deed in Lieu Of or Foreclosure can severely hurt your credit and home purchase ability for the next five to ten years. A short sale is difficult, but it affects you credit much much less, and in the end, if you and your agent handle the short sale well, you will be able to buy again very soon.
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November 25 2012
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Have you considered a short sale?  It sounds like you may qualify due to financial hardship and having to move several states away for employment. 

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November 25 2012
 
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