[Stoff]

Hi, I am new to the forum in need of some help.

I own a 4-family home as an investment property for a little over 3 years now in New York City. I bought it in the middle of 2006 when the marketing was still strong and from what everybody was telling me "was only going to get better." Soon after purchasing the property the market and economy began to plummet. When I purchased the property I was planning on holding onto it for a good 5 years, fix the house up and then hopefully sell it for a profit later on.

It's been over 3 years since and the value of the home is still way below what I purchased it for. With all the rent I receive I cover the montly mortgage payments but the utilities and repairs come out of my pocket. Once I bought the house one problem after another started to build up that has required repairs and a lot of money (Yes, I did have an engineer inspect the house prior to purchashing it who thought it was in good condition)

I am at the point now where I dont see the point in holding on to the home anymore, from what people tell me the housing marketing wont correct itself for anotehr 5-10 years and I just cant keep throwing money into it as its crippling me financially. I dont make the same salary that I was making at the time I bought the house and I am struggling to cover the costs. At this rate Id have no choice but to either foreclose or shortsale as my savings is dwindling.

So I ask, is there any hope for me with this property? Any tips on what I can do to turn this into an asset for the time being? Any chance of some unforseen real estate boom occurring a lot sooner then people are expecting?

Thank you in advance for your time.

[Toby Lane]

Try contacting your mortgage company and see if they are willing to modify your existing loan, so that it is more manageable for you. They may not do it, but it doesn't hurt to try.

[maryd]

In Arizona, I've heard you can only modify a primary residence. I'd consult a Real Estate Attorney to see if your exposure would be less if you foreclosed

[askmr]

your situation is kinda hard, may be you could raise additional money to fix it up and sold it

[PeterFleming]

Nice forum, great idea...thanks for the tip. I would like to know about ups and lows point in investing a property or real estate.

[jessiesc]

Unfortunately you're not alone. We own a property management company and our customers have been asking us these types of questions quite often thanks to this wonderful economy.

I would try and think 'outside' the box to try and compensate for your losses before attempting a short sale or foreclosure.

Not knowing NY state law, I do believe that tenant laws are pro-tenant so what ever you decide or try make sure you follow the law.

Here are a few suggestions

Originally Posted by Stoff

the utilities and repairs come out of my pocket.

If you can increase the rents to cover the utilities, I would start here.

However, I would set this as an "allowance". Example: Rent is 500.00 without utilities and 650.00 with a 150.00 utility allowance. Any amount/bill over the 150.00 the tenant must pay.

Also, make sure you know what your competition rental prices are and price accordingly.

Originally Posted by Stoff

required repairs and a lot of money

This one can be difficult but again have the tenant pay for any repairs that are not structural and make sure it is spelled out in the lease.

Example: Stopped drains, broken windows, common area issues etc.

Originally Posted by Stoff

Any chance of some unforseen real estate boom occurring a lot sooner then people are expecting?

IMO that time frame is quite a bit high. I believe you may be looking at more like 1 year or so, but then again none of us are fortune tellers (not even the so called financial experts who didn't even see this economy coming).

In some states you can modify a lease as long as all parties agree in writing to changes. Make sure you follow the law with respect to any lease changes you make.

Some other ideas:

Pets - Charge a non-refundable pet fee if you allow pets. If you don't consider allowing pets. Make sure to only allow small pets or those approved by your insurance company.

Are there laundry facilities on site? If so are they coin operated? If not, make them so.

Are there garages or storage facilities? If so, charge extra for them. If no storage sheds, can you add one or two and charge a fee for them?

Late fees - Do you charge a late fee for tenants paying rent late? If not, you should.

There are many many more ideas, but you have to look at your property and market to see what will work.

Also, many institutions are working with those who own more than one property to help over come the current economy.

Speak with your lender and be nice.

You may be surprised what they are willing to do for you during the current crisis. I know of one person who contacted their lender as they were having difficulty and the lender postponed all mortgage payments for 1 year to help.

Best of luck

[Stoff]

Jessie, thank you for the response. YOu bring up a lot of good ideas. As for as raising the rent to cover utilities/repairs or charging late fees, I can forget about that. The building is in a lower income area and my tenants struggle financially and barely make the rent I am charging now. No way can they afford anything else.

I am just thinking about contacting the lender and see if they could help.

Thanks

[escapeso]

Is there any chance to get the mortgage refinanced rates are still very low.

Also we generally try and raise rent through minor improvements. Spending $200 on landscaping can sometimes increase monthly rent by $100 which is not a bad return. The best time to do that is right before a unit goes vacant/starts getting show.

We have also seen by spending a little on making a property nice beyond basic repairs we get better quality tenants and in the end spend less on repairs.

[Toby Lane]

Originally Posted by escapeso

Is there any chance to get the mortgage refinanced rates are still very low.

Also we generally try and raise rent through minor improvements. Spending $200 on landscaping can sometimes increase monthly rent by $100 which is not a bad return. The best time to do that is right before a unit goes vacant/starts getting show.

We have also seen by spending a little on making a property nice beyond basic repairs we get better quality tenants and in the end spend less on repairs.

With investment property you generally have to have a 700 credit score and have at least 20% equity in the property. Mortgage Insurance companies will no longer insure investment property and there are no conventional second mortgages available.