If Investments Are Hurting Your Credit, It's Time To Cut Your Losses
When it comes to investment properties, they have to be treated much like any other property that you have purchased, including the home that you're living in. In other words, if they go into foreclosure it's going to go on your credit, just like any other property would. With that in mind, you have to keep your investment properties up to date or liquidate them so that you don't damage your credit, and in this market it can be very hard to determine whether you can get a property rented or sold before you get behind on your payments, making the investment property issue a balancing act.
When the housing market was doing so well, investment properties were a huge business and everyone wanted a piece of it. They were rented out for the income, and they were flipped and resold by people who could do the work themselves and save money. Some houses even had waiting lists and/or went to the highest bidder because they were so very popular.
Now there are properties all over the place that no one seems to want and the people who have them as investment properties can hardly give them away. In Detroit and some of the other hardest-hit cities there are properties that aren't going for tens of thousands or even for thousands of dollars, but that are going for only a few hundred dollars, instead. People who were lucky and bought and sold when the market was good made a lot of money, but there were people who got stuck with a lot of properties and it left them wondering: what were they supposed to do next?
If you're stuck in the situation where you've got investment properties and you don't know what you're going to do with them, you are definitely not the only one and you'll find that there are a lot of people with whom you can talk and commiserate about what happened to the market at exactly the wrong time for you. You might also find that things aren't improving for you just yet and that you're starting to get behind on the payments that you're making to the mortgage company for the investment property that you can't sell, can't rent, and can't seem to do anything with. If you're facing this kind of problem your options are limited mostly to hanging on (if you can) until the market improves and trying to get out of the property in any legal way possible before it completely ruins your credit rating.
As for your credit rating, it's possible that there will be some damage done already, but stopping that as quickly as possible would be the thing that you would want to focus on, since the sooner you get away from late payments and other problems and the shorter amount of time that they show up on your credit report the better off you'll be. If you aren't able to complete avoid the damage to your credit, lessening it is the next best step and to do that you'll have to work with the bank or lender that you're paying for the investment properties. Find out what you owe on the property, what it's worth through an honest appraisal, and what the bank will help you with to get out from under it, since you might be able to do a short sale or a deed in lieu of foreclosure instead of having an actual foreclosure and letting your credit take such a hit.
Talking with your bank or lender and being honest about your financial difficulties is one of the best and smartest things that you could ever do when it comes to an investment property that otherwise might be facing foreclosure. Ideally, you should talk to your lender before you really get behind, but a lot of people wait much longer than that because they think that things will turn around and they're embarrassed to admit that they're having a problem. Don't let embarrassment or discomfort ruin your financial future and your good credit rating - talk to your lender right away as soon as you see that there might be a problem.
Being up front shows the lender that you're making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it's obvious that the property can't be paid for, talk to your lender and see what options the two of you can come up with. It's very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life. - 23159
When the housing market was doing so well, investment properties were a huge business and everyone wanted a piece of it. They were rented out for the income, and they were flipped and resold by people who could do the work themselves and save money. Some houses even had waiting lists and/or went to the highest bidder because they were so very popular.
Now there are properties all over the place that no one seems to want and the people who have them as investment properties can hardly give them away. In Detroit and some of the other hardest-hit cities there are properties that aren't going for tens of thousands or even for thousands of dollars, but that are going for only a few hundred dollars, instead. People who were lucky and bought and sold when the market was good made a lot of money, but there were people who got stuck with a lot of properties and it left them wondering: what were they supposed to do next?
If you're stuck in the situation where you've got investment properties and you don't know what you're going to do with them, you are definitely not the only one and you'll find that there are a lot of people with whom you can talk and commiserate about what happened to the market at exactly the wrong time for you. You might also find that things aren't improving for you just yet and that you're starting to get behind on the payments that you're making to the mortgage company for the investment property that you can't sell, can't rent, and can't seem to do anything with. If you're facing this kind of problem your options are limited mostly to hanging on (if you can) until the market improves and trying to get out of the property in any legal way possible before it completely ruins your credit rating.
As for your credit rating, it's possible that there will be some damage done already, but stopping that as quickly as possible would be the thing that you would want to focus on, since the sooner you get away from late payments and other problems and the shorter amount of time that they show up on your credit report the better off you'll be. If you aren't able to complete avoid the damage to your credit, lessening it is the next best step and to do that you'll have to work with the bank or lender that you're paying for the investment properties. Find out what you owe on the property, what it's worth through an honest appraisal, and what the bank will help you with to get out from under it, since you might be able to do a short sale or a deed in lieu of foreclosure instead of having an actual foreclosure and letting your credit take such a hit.
Talking with your bank or lender and being honest about your financial difficulties is one of the best and smartest things that you could ever do when it comes to an investment property that otherwise might be facing foreclosure. Ideally, you should talk to your lender before you really get behind, but a lot of people wait much longer than that because they think that things will turn around and they're embarrassed to admit that they're having a problem. Don't let embarrassment or discomfort ruin your financial future and your good credit rating - talk to your lender right away as soon as you see that there might be a problem.
Being up front shows the lender that you're making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it's obvious that the property can't be paid for, talk to your lender and see what options the two of you can come up with. It's very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life. - 23159
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