You Can Cut Your Investment Losses And Save Your Credit Rating
When a lot of people think of investment properties they seem to assume that they are treated much differently from the home that you live in, but that's not true, especially where issues like payments and foreclosures are concerned. Any investment property that's facing foreclosure is a serious problem because that will go on a person's credit like any other foreclosure. The payments on the investment property have to be kept current and that can be hard to do in a recession and a tight credit market where an investor might not know from month to month whether the money to make the payment will be available.
When the property market was going so strong there were all kinds of people buying investment properties. They were renting them out or flipping them and re-selling them for a lot more than they had paid. It was working well because people were eager to rent or buy them and sometimes there were waiting lists or 'highest bidder' scenarios.
It's become almost impossible to give some properties away now, though, and no one seems to want them. Some cities, like Detroit, have homes that can be bought for only a few hundred dollars, not the thousands or tens of thousands that they would normally go for. If a person was lucky enough to pick up and dispose of a lot of homes when the credit market was hot and everyone was buying he probably did very well, but what happened to those people and those properties when the market bubble popped and things weren't selling anymore?
If you're in that 'I don't know what to do with this investment property' situation, you're definitely not alone, and you'll find plenty of other people to commiserate with, most of whom have lost a lot of money to an uncertain and very volatile market. You could also be one of the people for whom things have gone from bad to worse and you're finding that your investment property is costing you so much that you're getting behind on the payments and can't make them for much longer. If that's where you are, you have two choices: you can try to stick it out because the market is showing some slow signs of improvement or you can try to sell the property and get out from under it before it totally destroys your credit rating.
As for your credit rating, it's possible that there will be some damage done already, but stopping that as quickly as possible would be the thing that you would want to focus on, since the sooner you get away from late payments and other problems and the shorter amount of time that they show up on your credit report the better off you'll be. If you aren't able to complete avoid the damage to your credit, lessening it is the next best step and to do that you'll have to work with the bank or lender that you're paying for the investment properties. Find out what you owe on the property, what it's worth through an honest appraisal, and what the bank will help you with to get out from under it, since you might be able to do a short sale or a deed in lieu of foreclosure instead of having an actual foreclosure and letting your credit take such a hit.
One of the smartest things that you can do with financial difficulties that involve paying for an investment property (or properties) is to talk with your lender and be honest and upfront about the issues that you're facing. It's best to talk with your lender before you get behind on your payments but a lot of people are afraid to do this and they are very uncomfortable and embarrassed about admitting that they can't pay their bills - and they keep expecting and hoping that things will turn around. You don't want to let those things ruin your credit rating and your financial future, though, so talk to your bank or lender right away, at the first sign of any upcoming problems.
Being up front shows the lender that you're making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it's obvious that the property can't be paid for, talk to your lender and see what options the two of you can come up with. It's very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life. - 23229
When the property market was going so strong there were all kinds of people buying investment properties. They were renting them out or flipping them and re-selling them for a lot more than they had paid. It was working well because people were eager to rent or buy them and sometimes there were waiting lists or 'highest bidder' scenarios.
It's become almost impossible to give some properties away now, though, and no one seems to want them. Some cities, like Detroit, have homes that can be bought for only a few hundred dollars, not the thousands or tens of thousands that they would normally go for. If a person was lucky enough to pick up and dispose of a lot of homes when the credit market was hot and everyone was buying he probably did very well, but what happened to those people and those properties when the market bubble popped and things weren't selling anymore?
If you're in that 'I don't know what to do with this investment property' situation, you're definitely not alone, and you'll find plenty of other people to commiserate with, most of whom have lost a lot of money to an uncertain and very volatile market. You could also be one of the people for whom things have gone from bad to worse and you're finding that your investment property is costing you so much that you're getting behind on the payments and can't make them for much longer. If that's where you are, you have two choices: you can try to stick it out because the market is showing some slow signs of improvement or you can try to sell the property and get out from under it before it totally destroys your credit rating.
As for your credit rating, it's possible that there will be some damage done already, but stopping that as quickly as possible would be the thing that you would want to focus on, since the sooner you get away from late payments and other problems and the shorter amount of time that they show up on your credit report the better off you'll be. If you aren't able to complete avoid the damage to your credit, lessening it is the next best step and to do that you'll have to work with the bank or lender that you're paying for the investment properties. Find out what you owe on the property, what it's worth through an honest appraisal, and what the bank will help you with to get out from under it, since you might be able to do a short sale or a deed in lieu of foreclosure instead of having an actual foreclosure and letting your credit take such a hit.
One of the smartest things that you can do with financial difficulties that involve paying for an investment property (or properties) is to talk with your lender and be honest and upfront about the issues that you're facing. It's best to talk with your lender before you get behind on your payments but a lot of people are afraid to do this and they are very uncomfortable and embarrassed about admitting that they can't pay their bills - and they keep expecting and hoping that things will turn around. You don't want to let those things ruin your credit rating and your financial future, though, so talk to your bank or lender right away, at the first sign of any upcoming problems.
Being up front shows the lender that you're making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it's obvious that the property can't be paid for, talk to your lender and see what options the two of you can come up with. It's very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life. - 23229
posted by X - Men @ 1:27 AM
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