A Lot Has Happened Since Feb. '10!

I finally came to grips with the realization that I could no longer hold onto all my real estate, my life long dream of saving by building equity was ridiculous now, seeing any equity at all was now the challenge.  Something was going to have to go.  There simply was not enough money coming in to cover what was being paid out.  By ignoring this I managed to dig myself into a debtors nightmare.  I was way in over my head, waiting for the market to turn, waiting for my other income resources to kick in, waiting and hoping for a miracle that hasn't come yet.  I decided to give up on the single family I had been trying to sell or rent, at least the other properties were paying for themselves.
I started out asking for what www.zillow.com had valued the property for.  Before long I was trying to sell my house for what I owed, realizing that my equity was gone.  Obviously, I was trying to sell it on my own.  Since there was no equity, there was no money for commissions either unless I wanted to come out of pocket, which was not an option either. 
I created online flyers at www.postlets.com and advertised on www.craigslist.com, www.backpage.com and other similar free online advertising venues.  I put "For Sale By Owner" signs in the yard, made up flyers and put them out everywhere I could think of. I also used social networking mediums like Facebook and Twitter to get the word out, I received zero inquiries.
I did this dance longer than I should have.  I should have stopped making my mortgage payments a long time ago and just let them take it.  Instead, I tried to avoid the inevitable and be responsible, to do the right thing and meet my obligations.  That's how I had been raised, that's what I believed.  The bottom line is that you get no credit for any of that on your credit report and your lender will not care that you tried.  I exhausted my credit trying to stay out of foreclosure and bankruptcy, in hindsight, this was a critical flaw in my plan.
I had gambled everything I had on out lasting this recession and I had lost.

I'll Never Buy to Hold Again!

I suspect that many of my fellow investors started out as landlords like I did.

I've been able to hold onto two multi families and one sfr for the last six years.  With the two sfr's my partner has, we manage nine units all together, not including the one we live in.  It's like having nine children, they're all different and we have a love/hate relationship with them all.

I started out thinking how perfect my life would be if I only had some rental properties that would just pump money into my bank every month.  I was convinced that this was the best way to stabilize my income.   I was tired of waiting on sales commissions, closings that were delayed or canceled created havoc for a budget minded family.  My goal was to be able to retire on the strength of these properties and I did.  But, I wasn't able to retire all together, just from sales.  I was able, the first four years, to focus on acquiring more properties and keeping them cash flowing.

The last two years have been turbulent within the housing market nationwide, historical lows for sales have resulted in mass foreclosures and the repercussion is a lot of new inventory flooding into the rental market.  The supply now exceeded the demand.  I suffered unprecedented high vacancies during these last two years while property taxes and utilities went up.  I happen to pay the utilities on two of those rental units as well as the mortgages, taxes,  insurance,  maintenance and repairs on all of them.

My tax returns show negative income; which is not exactly a glowing recommendation if you're trying to get any kind of financing for anything.  So, I drive a nine year old car that I love and I've learned every possible way to buy and sell real estate without using my own money.

Armed with all this, I have vowed not to take on anymore rental properties, not to buy and hold, but rather to buy and flip as many as I can.  This is my new adopted philosophy and I've learned it the hard way like every other life lesson.  I must be the hardest headed person... Or maybe I'm just not a quitter.

When Is Renting No Longer An Option?

I've really been dragging my feet on pulling up that "For Rent" sign in the front yard and replacing it with a "For Sale By Owner" sign.  I am clearly too identified with it because I'm reacting as if it's a personal failure.  It's not.  It's more a sign of the times.

You know, when a house has been vacant for awhile the decision making process can't help but be compromised.  No money coming in when you have two mortgages on the thing will do that to you.  By the time a persons' choices are reduced to selling for what they owe or else let them foreclose, trust me, ones' thinking has gone through more than a few scenarios.  It's not an easy thing to come to terms with, not being able to meet your responsibilities, whatever they are, is a sobering, humbling experience. 

Anyway, I've decided to stop advertising the house for rent, because then I'll just be stuck with a $400 deficit every month for the length of the lease.  It's way over time to start cutting my loses.  I've already stopped making payments, I just couldn't justify continuing to throw money into it.  I'd feel better if  I could remember how lucky I am because I had time to pull all the equity out of it before the market crashed.  I'd feel better if there were more money coming in period.  The Presidents' stimulus package is not going to help me.  I've taken training on how to process loan modifications, so I know that I wouldn't qualify for one.  What has compounded the problem is that the rental market here has taken a nose dive, I have no choice but to accept the remaining options, sell or face foreclosure. 

So, tomorrow I pull up the "For Rent" sign.

The "For Sale By Owner" Experience

I created this blog so that I would have a place to gripe, bemoan, brag, swear and, as needed, to detail my efforts, my failures, my successes, all my experiences with buying and selling houses.

I bought my first house in 1973 (!), but, since I believe in living in the present, that's where we'll begin.

Right now I'm marketing a 2 bdrm in what's considered a desirable midtown location.

I bought this house in 2004, it's 3 blocks from where I live now. A neighbors' mother owned it and needed to sell so, I was able to get a good deal. I thought it would be great investment because my partners' mother was relocating here and would need to be close by but, that didn't happen for another two years.

No problem, I did some cosmetics and got a nice tenant right away. Everything was great for awhile, then I refinanced it and used that money to build another rental property behind where I live now. Anyway, I had no problem keeping it rented until this year! It's been vacant for 6 months!

I hate admitting that I am a victim of this declining real estate market. The rental market in my area has been flooded with houses that haven't sold. I am being undercut to death by the competition. Meanwhile, my taxes have gone up, therefore, my PITI has gone up. I was able to get $950 for the last 2 1/2 years and now I can't get $850. Did I mention that my PITI was up to $1158!

I have been biting my tongue for a long time; I think I've been in denial for the last 6 months. I had decided to offer the house for sale or lease option about 3 months ago. I started out at $150000, now I'm a month behind in my payments. I'm asking $140000 now, I figure I owe close to that. I haven't received one call on it in 3 months.

What else am I supposed to do? I have been in real estate since 1989, first as a licensed realtor then as a private investor. I have done everything I know to do in addition to everything the guru's tell you to do.

The bottom line is that I will either sell it or just give it back to the lender. My job now is not to identify with the situation. My inability to rent it does not make me a bad landlord. My inability to sell it OR keep it does not make me a bad risk. I cannot allow this to affect my judgement as an investor or it WILL destroy my judgement as an investor. It has already affected me, I'm losing my confidence when talking to a seller about buying their house.

I really need to get rid of this house, it's killing my mojo.