DD called my wife last night in tears and said they are frustrated enough with their condo that they have begun taking steps to sell it short:
They are $35,000 underwater on condo purchased in 2006. In 2012 they found a renter at a monthly rate that covered the condo, taxes and fees... but not by much. They were able to purchase a short sale house themselves and after living with us for 5 months moved in to a better home for a growing family.
Replaced the first "family" of problematic renters with a renter they like- single girl with a cat and they work in the same school district so nice and low maintenence. Rent is still too close to break even.
Maintenence crept up on them and they had a $1000 plumbing bill last month which was not in the budget so they will be in the red this year.
They are reluctant landlords in the first place and do not have the time or skills to DIY beyond the most basic tasks. I have been involved the best I can, but they chose not to involve me last month out of... "love" for our relationship. I understand where her heart is.
So, they have a stable renter who wants to be involved in the short sale, have already started with a realter and have talked to the professional tax guy the family shares. 2 offers came in and the current renter outbid it, so the fact that we have a legitimate buyer in the wings is a positive factor.
So I want to be a good dad with my advice. My words are : A mistake was made in 2006, and I don't want to you to make another in
2014. I am concerned with the unintended consequences, and I don't know what I don't know. They are sufficently stable, are current with all the bills on both there own and the condo. They think they can live with a lower credit score for a while and rebuilt it over time. My concern is I can understand that sometimes it is best to get out from under a transaction if they were $200,000 down, but is finding a short sale remedy for $35,000 worth the ding to thier credit.
Any thoughts appreciated- Mom and I could help in theory, but we are 10 years out from retirement, with a plan that we prefer not to disrupt. I do not think the condos value will get back to purchase price in the next 5 years.