What are my options regarding investment-rental properties?

Question

I live in Arizona. I bought 2 investment properties in Ohio. Both have a principle ballance of under $55,000. I pay just under $1,000 each month to the bank. Both properties had tennants in them when i bought them. Now, neither one have anyone in them. The property management company is saying they are working on getting someone else in. I do believe they are doing the best they can given the less than opptumistic economy.

I live paycheck to paycheck. The money coming in from both properties gave me what i needed + some reserves. Those reserves have now run out. I will owe $1,000 by the end of this month, and have only $700 left to spend.

I need to know every option out there. I realize that the world of real estate / investments / banking... not what i know the most about. Whatever the possibilities are... I NEED TO KNOW!!!

Please...give me reliable guidance, along with websites/places to research / people to talk to with solutions...

Did i mention how quickly i need an answer?

I owe more than i have in only 20 DAYS ! ! !

Answer 1

Not sure I can give you every option, but here are a few (some will undoubtedly work better than others):

1. lower the asking rents to attract tenants quicker

2. offer tenants free rent -- LATER -- like at the end of the lease term to generate cash now and help you get back on your feet

3. sell the properties, hopefully for enough to pay off the mortgages

4. talk to your bank about refinancing.  If the properties have increased in value, or you have sufficient equity, they may be willing to lend more money on the property.

5. move to Ohio and occupy one of the properties (hey, it's an option)

6. talk to your bank about modifying the loan to pay interest only to reduce the monthly payment

7. talk to your bank about switching to a "cash flow" mortgage, meaning they receive whatever cash the properties generate.  Sometimes you will be short and the interest will accrue; sometimes you will have extra and pay off unpaid interest and pay down principal.

8. Find a friend that is willing to lend you money to make the payments until you get the properties leased; or would like to invest money to buy part ownership.

Fortunately your loan balance is low enough that the bank probably won't be too concerned about it (most have much bigger loans to worry about), and based on the numbers you stated I'm assuming these aren't properties they would be too interested in foreclosing on and owning.

If you haven't thought about it, what are your plans for paying for maintenance during vacancy, property taxes, and insurance?