OT- Advice on potential bankruptcy filing

[Ash Housewares]

Hey Piggs,

My brother has been hit hard by the housing downturn and is considering bankruptcy. I told him the smartest RE people I know are on piggingtons, and I’d run the situation by them. Here are the gory details:

Financial Outlook

Property A – Investment Property, 1st loan $165,000, rents for $1100.00/month – long-term tenants, market value $120,000.00 –monthly loan payment of $1100, fixed 6.5% interest only for ten years

Property B – Investment Property, 1st loan $40,000 – vacant – could rent for $595.00/month, market value $25,000.00, monthly loan payments $300.00 – adjustable rate, HOA dues $200.00/month

Property C – Investment Property, 1st loan $240,000, 2nd loan $63,000, vacant – could rent for $1300.00, market value $215,000.00, monthly loan payments 1st loan – $1888, 2nd loan $188 – fixed 1st at 6.25%, adjustable 2nd at 3.5%, HOA dues $75.00/quarter

Property D – Investment Property – co-owned with mother (would like to keep mother’s credit in tact and not hit by this property) 1st loan $109,000, 2nd loan 99,000, rents for $1395.00/month, market value $165,000.00, monthly loan payments 1st loan $960, 2nd loan $400 – fixed rate – 5.0% – $85,000 available funds from a HELOC to put towards paying down mortgages if advised, and saving mother’s credit

All properties are in Nevada

Additional Debt

1) Being sued by past tenant – potential (likely) judgment for $4000.00

2) Credit Card Debt $14,000.00

3) Car Loan $16,000 – monthly payment $400.00, Blue book Value $16,000

4) Checking Account $600.00, Savings Account – $300.00

5) Retirement Account $989.00

6) Monthly Income ~$1500, from renting out the grandparent’s vacation home.

Other info

Was a RE Agent and not making money on commissions now, so only real income is from renting out the mortgage-free grandparent’s vacation home. Wife and two kids, wife has teaching degree but can’t find full time work.

So the question is, what to do? How would a bankruptcy affect my Mom’s credit in the jointly owned property? Is it advisable to use the HELOC funds to hold onto the properties, if possible? He wants to use RE as his retirement vehicle and is worried that he’ll never be able to buy investment properties again if he lets these go. What do you guys and gals think?

[sdrealtor]

Looking at those numbers it does not seem hopeless and that he could escape this if he was willing to get a job doing whatever it took.

[sdrealtor]

Looking at those numbers it does not seem hopeless and that he could escape this if he was willing to get a job doing whatever it took.

[sdrealtor]

Looking at those numbers it does not seem hopeless and that he could escape this if he was willing to get a job doing whatever it took.

[sdrealtor]

Looking at those numbers it does not seem hopeless and that he could escape this if he was willing to get a job doing whatever it took.

[sdrealtor]

Looking at those numbers it does not seem hopeless and that he could escape this if he was willing to get a job doing whatever it took.

[Ash Housewares]

Update, he might have a plan. Here is what he wrote:

I just got done masterminding with some of the best investors/short sale experts in my office. This is what the group recommended I do.

Short Sale (Property C), wipes out the first $234,000 and drag out the second if lucky can settle the $63,000 for $10,000ish. That property is done no more $700-$800 per mo. loss.

Keep (Property D) current (saving Mom’s credit) and use the $100,000 HELOC money to invest down here in $30,000 condos that would cash flow $500-$600 per mo. ea (after HOA dues). Buy one, let property management company do all the work for $60 per mo. Once first unit rented repeat process for an additional 2 units for a total of three new properties, each cash flowing $500-$600 for a total positive of $1,500-$1,800.

Once that is done, Mom permitting, renegotiate the first and second mortgages on (Property C) to bring it from breaking even to a small monthly cash flow. Might have to miss a couple payments to get the credit unions attention.

In regards to the judgment…write the crazy lady a check for $2250 and stop thinking about it. Get property management to look over property….breaks even.

The house in (Property A) $164,000 breaking even, renegotiate loan to fixed 3-4% for cash flow of couple hundred a month.

Total outcome:

Sell 1 house that is loosing $700-$800 per mo. Keep all others and take from breaking even to $100-$200 positive cash flow per mo. 3 new properties cash flowing $1,500+ per mo.

My situation goes from a monthly loss of $700-$800 to positive roughly $2,000 per mo. while gaining total number of rental units. Save all cash flow and buy 1 new property every year (cash). Once market rebounds sell off property and look for apartment building.

Let me know what your blog members say.

[Ash Housewares]

Update, he might have a plan. Here is what he wrote:

I just got done masterminding with some of the best investors/short sale experts in my office. This is what the group recommended I do.

Short Sale (Property C), wipes out the first $234,000 and drag out the second if lucky can settle the $63,000 for $10,000ish. That property is done no more $700-$800 per mo. loss.

Keep (Property D) current (saving Mom’s credit) and use the $100,000 HELOC money to invest down here in $30,000 condos that would cash flow $500-$600 per mo. ea (after HOA dues). Buy one, let property management company do all the work for $60 per mo. Once first unit rented repeat process for an additional 2 units for a total of three new properties, each cash flowing $500-$600 for a total positive of $1,500-$1,800.

Once that is done, Mom permitting, renegotiate the first and second mortgages on (Property C) to bring it from breaking even to a small monthly cash flow. Might have to miss a couple payments to get the credit unions attention.

In regards to the judgment…write the crazy lady a check for $2250 and stop thinking about it. Get property management to look over property….breaks even.

The house in (Property A) $164,000 breaking even, renegotiate loan to fixed 3-4% for cash flow of couple hundred a month.

Total outcome:

Sell 1 house that is loosing $700-$800 per mo. Keep all others and take from breaking even to $100-$200 positive cash flow per mo. 3 new properties cash flowing $1,500+ per mo.

My situation goes from a monthly loss of $700-$800 to positive roughly $2,000 per mo. while gaining total number of rental units. Save all cash flow and buy 1 new property every year (cash). Once market rebounds sell off property and look for apartment building.

Let me know what your blog members say.

[Ash Housewares]

Update, he might have a plan. Here is what he wrote:

I just got done masterminding with some of the best investors/short sale experts in my office. This is what the group recommended I do.

Short Sale (Property C), wipes out the first $234,000 and drag out the second if lucky can settle the $63,000 for $10,000ish. That property is done no more $700-$800 per mo. loss.

Keep (Property D) current (saving Mom’s credit) and use the $100,000 HELOC money to invest down here in $30,000 condos that would cash flow $500-$600 per mo. ea (after HOA dues). Buy one, let property management company do all the work for $60 per mo. Once first unit rented repeat process for an additional 2 units for a total of three new properties, each cash flowing $500-$600 for a total positive of $1,500-$1,800.

Once that is done, Mom permitting, renegotiate the first and second mortgages on (Property C) to bring it from breaking even to a small monthly cash flow. Might have to miss a couple payments to get the credit unions attention.

In regards to the judgment…write the crazy lady a check for $2250 and stop thinking about it. Get property management to look over property….breaks even.

The house in (Property A) $164,000 breaking even, renegotiate loan to fixed 3-4% for cash flow of couple hundred a month.

Total outcome:

Sell 1 house that is loosing $700-$800 per mo. Keep all others and take from breaking even to $100-$200 positive cash flow per mo. 3 new properties cash flowing $1,500+ per mo.

My situation goes from a monthly loss of $700-$800 to positive roughly $2,000 per mo. while gaining total number of rental units. Save all cash flow and buy 1 new property every year (cash). Once market rebounds sell off property and look for apartment building.

Let me know what your blog members say.

[Ash Housewares]

Update, he might have a plan. Here is what he wrote:

I just got done masterminding with some of the best investors/short sale experts in my office. This is what the group recommended I do.

Short Sale (Property C), wipes out the first $234,000 and drag out the second if lucky can settle the $63,000 for $10,000ish. That property is done no more $700-$800 per mo. loss.

Keep (Property D) current (saving Mom’s credit) and use the $100,000 HELOC money to invest down here in $30,000 condos that would cash flow $500-$600 per mo. ea (after HOA dues). Buy one, let property management company do all the work for $60 per mo. Once first unit rented repeat process for an additional 2 units for a total of three new properties, each cash flowing $500-$600 for a total positive of $1,500-$1,800.

Once that is done, Mom permitting, renegotiate the first and second mortgages on (Property C) to bring it from breaking even to a small monthly cash flow. Might have to miss a couple payments to get the credit unions attention.

In regards to the judgment…write the crazy lady a check for $2250 and stop thinking about it. Get property management to look over property….breaks even.

The house in (Property A) $164,000 breaking even, renegotiate loan to fixed 3-4% for cash flow of couple hundred a month.

Total outcome:

Sell 1 house that is loosing $700-$800 per mo. Keep all others and take from breaking even to $100-$200 positive cash flow per mo. 3 new properties cash flowing $1,500+ per mo.

My situation goes from a monthly loss of $700-$800 to positive roughly $2,000 per mo. while gaining total number of rental units. Save all cash flow and buy 1 new property every year (cash). Once market rebounds sell off property and look for apartment building.

Let me know what your blog members say.

[Ash Housewares]

Update, he might have a plan. Here is what he wrote:

I just got done masterminding with some of the best investors/short sale experts in my office. This is what the group recommended I do.

Short Sale (Property C), wipes out the first $234,000 and drag out the second if lucky can settle the $63,000 for $10,000ish. That property is done no more $700-$800 per mo. loss.

Keep (Property D) current (saving Mom’s credit) and use the $100,000 HELOC money to invest down here in $30,000 condos that would cash flow $500-$600 per mo. ea (after HOA dues). Buy one, let property management company do all the work for $60 per mo. Once first unit rented repeat process for an additional 2 units for a total of three new properties, each cash flowing $500-$600 for a total positive of $1,500-$1,800.

Once that is done, Mom permitting, renegotiate the first and second mortgages on (Property C) to bring it from breaking even to a small monthly cash flow. Might have to miss a couple payments to get the credit unions attention.

In regards to the judgment…write the crazy lady a check for $2250 and stop thinking about it. Get property management to look over property….breaks even.

The house in (Property A) $164,000 breaking even, renegotiate loan to fixed 3-4% for cash flow of couple hundred a month.

Total outcome:

Sell 1 house that is loosing $700-$800 per mo. Keep all others and take from breaking even to $100-$200 positive cash flow per mo. 3 new properties cash flowing $1,500+ per mo.

My situation goes from a monthly loss of $700-$800 to positive roughly $2,000 per mo. while gaining total number of rental units. Save all cash flow and buy 1 new property every year (cash). Once market rebounds sell off property and look for apartment building.

Let me know what your blog members say.

[Doofrat]

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