Author Topic: Parents Rental Property [Savannah, GA]  (Read 2558 times)

HairyUpperLip

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Parents Rental Property [Savannah, GA]
« on: November 20, 2015, 07:46:05 AM »
Hello everyone -

Was hoping for some advice/opinions on this situation. My parents have a rental property down in the Savannah, Georgia area. My father had a job there for some time and there was talks of moving the whole family down so my dad bought this house. Then he got a job back home and the house has been rented out over the years. The only time it wasn't a headache was when we had a section 8 tenant that lived there for about 3.5 years. Other than that, every single tenant has been difficult to deal with.

Details -

3bd/1.5ba 1358sq ft built in 1955

Purchase Price - $133,000 in 2006
Loan Payoff - $104,000
Mortgage Payment - $950
Rent - $980
Zestimate - $67,000


Sunk Costs -
HVAC system redone
Typical maintenance items

Current Situation -
Not married couple with 3 kids moved in.
They broke up, the man left.
The man earned the salary and really paid the rent.
The female works odd jobs and has not paid full rent in 2 months now.
She promised to pay in full today - I'm doubtful she will.



My real question -

What are our options with a situation like this and getting rid of the home? The mortgage is only in my fathers name. My parents both have 780+ scores. They currently pay a mortgage on their current home as well.

Can we let the house go to foreclosure? Internet reading didn't really give me a solid answer about whether they would necessarily come after my parents other assets or not.

Would my mother's credit also be impacted if my father did let it go?

Does anyone suggest not letting it go?

And as usual, open to any advice/opinions/suggestions!

Thank you everyone!

frugaliknowit

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Re: Parents Rental Property [Savannah, GA]
« Reply #1 on: November 20, 2015, 08:24:47 AM »
Purchase Price - $133,000 in 2006
Loan Payoff - $104,000
Mortgage Payment - $950
Rent - $980
Zestimate - $67,000

Have you had a professional (realtor or appraiser) place an estimated value on the house as well as an estimate after (cosmetic) fixups?  This seems like a huge drop in value...

arebelspy

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Re: Parents Rental Property [Savannah, GA]
« Reply #2 on: November 20, 2015, 08:48:43 AM »

This seems like a huge drop in value...

Yes, that's what happens when you buy at the peak of a bubble.  =/

Got some of those myself.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

HairyUpperLip

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Re: Parents Rental Property [Savannah, GA]
« Reply #3 on: November 20, 2015, 10:53:59 AM »
Purchase Price - $133,000 in 2006
Loan Payoff - $104,000
Mortgage Payment - $950
Rent - $980
Zestimate - $67,000

Have you had a professional (realtor or appraiser) place an estimated value on the house as well as an estimate after (cosmetic) fixups?  This seems like a huge drop in value...

No.

A quick search shows most of the similar homes in the area going for $30-81k. Most being in the 45kish area.

Most of the homes are owned by elder people. As they are passing, the children are selling the homes for dirt. A similar home sold to my parents in proper condition sold for $30,000 because the children just wanted cash after the parents passed.

4

This seems like a huge drop in value...

Yes, that's what happens when you buy at the peak of a bubble.  =/

Got some of those myself.

Yeah, my Dad's decision to even purchase this home is frustrating since it's disgustingly ugly but sadly fitting for the area.


Zman

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Re: Parents Rental Property [Savannah, GA]
« Reply #4 on: November 20, 2015, 11:42:29 AM »
Is selling not an option?

HairyUpperLip

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Re: Parents Rental Property [Savannah, GA]
« Reply #5 on: November 20, 2015, 11:59:15 AM »
Is selling not an option?

Kind of, but if we sell it for $67k and ignoring anything else, we'd still owe $37k on the house itself.

Thats why I was wondering about cutting our loses on it and just letting it go more?


Axecleaver

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Re: Parents Rental Property [Savannah, GA]
« Reply #6 on: November 20, 2015, 12:21:08 PM »
I think the question you're asking is, if you go into foreclosure, what risks are there beyond losing the house, which is underwater and you don't want anyway? Your dad's credit will take a hit, and he would be liable to the bank for the difference between what they eventually sell it for at auction, and what was owed on the loan. He would probably be sued for that, plus all kinds of additional fees and penalties. That takes a long time to play out, but could end up being a lot more expensive than selling the house yourselves and dealing with the shortfall.

A friend of mine lived in a place, paid rent reliably for years, and the landlord defaulted on the loan. He collected rent for four years after he stopped paying the mortgage. Sounds insane but sometimes these things take a long time to resolve.

A short sale may be a better alternative. Have you considered doing a short sale with the bank?

HairyUpperLip

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Re: Parents Rental Property [Savannah, GA]
« Reply #7 on: November 20, 2015, 12:41:29 PM »
I think the question you're asking is, if you go into foreclosure, what risks are there beyond losing the house, which is underwater and you don't want anyway? Your dad's credit will take a hit, and he would be liable to the bank for the difference between what they eventually sell it for at auction, and what was owed on the loan. He would probably be sued for that, plus all kinds of additional fees and penalties. That takes a long time to play out, but could end up being a lot more expensive than selling the house yourselves and dealing with the shortfall.

A friend of mine lived in a place, paid rent reliably for years, and the landlord defaulted on the loan. He collected rent for four years after he stopped paying the mortgage. Sounds insane but sometimes these things take a long time to resolve.

A short sale may be a better alternative. Have you considered doing a short sale with the bank?

Yes, thank you. That may be the more correct way to ask the question.

We did not check with the bank because either way we don't think it would sell for anything near the loan amount. If we do a short sale google research says we would still be liable for the amount owed.