Vacant Rental Property –
My sf rental home in Los Angeles is currently vacant. I have been told that it is worth about 0,000. I owe about ,000 on the first. I recently took out a HELC, 0,000. I used about ,000 to payoff some bills and to do some work on the property. My total indebtedness on this property is about 5,000.

Now that this house is vacant, I must pay about ,080 per month to carry the property. My husband and I cannot afford to make this payment without the rental income. I am a stay at home mom.

What should I do?
Would I be better off selling the property and reinvesting in multi-family property? A friend just purchased a duplex in Ohio for ,000 cash. His gross rental income is 0 per month.

Or should I refinance, taking some out to invest in multi-family property.

Are there tax implications of not having interest payments to write-off? Is it to my advantage to have free and clear property?

Thank you in advance for your help.

 

  • Goldenbearloan.com 9:05 am on March 12, 2010

    Suggestion is if you cant get someone in there than yes sell now. Los Angeles is a stable market and you should be able to get someone to purchase the home. Keep the property on the market until end of October latest. In meantime keep trying to get renters in there as short term. Since I dont know which area of LA you have the property I cannot tell you how to help advertise the property. Yet, I would suggest that since College is starting to try local Community colleges or Craigslist. Great thing is if you sell you have some great equity and you can purchase those foreclosure homes in your area that are popping up like hotcakes here in the next couple of months. Great flipping time.

  • Stacey B 9:05 am on March 12, 2010

    That has to be a personal decision…..what you can afford. Interest rates are higher on investment properties that they are for primary residence or second homes. Do you have a property manager or trying to rent the house yourself? How long has it been vacant? You might consider refinancing and rolling the 1st and heloc into one loan, thus 1 payment.

  • Reginald Whitcomb 9:05 am on March 12, 2010

    I don’t know ALL the details to your situation, which may cause me to change my mind if something important was left out. Things like where you live, what you owe on your primary residence, where you would be looking to buy, taxes, insurances, etc, etc….

    But in my honest opinion, I would keep the property and find some tenants ASAP.

    After it was properly rented, I would start looking for a multi-family property to increase and diversify your portfolio. Right now you are at about 28% Loan-to-Value on your rental property. You have about $200k in equity at your disposal (in order to keep your CLTV at or under 80%). I would use part or all of this equity as the down payment on a multi-family.

    This is assuming you are looking to expand your rental capacity and could be your source of income as a stay-at-home mom.

  • W. E 9:05 am on March 12, 2010

    You have alot of good answers – but what concerns me is your comment " Now that this house is vacant, I must pay about $1,080 per month to carry the property. My husband and I cannot afford to make this payment without the rental income". That kind of hard ship can hurt, and it can also carry over to payingyour other bills, and than you will have lower credit, for mis payments, and possibly mortgage lates. If you do not rent it (soon) to anyone – even multiple college students – (my son is renting a house with 4 others this sem.) Than do sell it. You can always take the money left and purchase the multi-family units you are wanting to do anyway. It sounds like you are leaning toward that anyway. Good luck to you. Hope things start to run smoother for you.

    By the way – if you refinance the property, and you still do not have rental income coming in – where will that put you – in the long run? With a higher payment – and a open mortgage that you can not afford – Write down all the pros and cons on a legal paper – and you will come up with the best answer.

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