Why did I buy a house in 2006? Am I a complete and total idiot?

toro wrote:

I've seen posts about what he should have done then. Or how they are too smart to make any mistakes.

Or about the price of tea in China and what currency it should be measured in.

But not so much about what he could do now.

Easy. Walk away.

I spoke with my new tax guy yesterday who happens to be a total beast. I was referred to him by a wealthy friend. Basically, this is a tax guy I couldn't afford in a million years, but through this friend it's a favor. This tax guy normally serves clients whose W-2's are in the 7 figures.

He said I need to immediately do the following:

1) Stop paying the mortgage on it

2) Stop paying property taxes on it

3) Continue paying the insurance

4) Continue collecting rent

5) So long as there is a tenant, continue paying the HOA/maintenance fees, so the tenant is taken care of.

He said that the mortgage was THE BANK's gamble just as much as my own.

Well that's one way to go. No matter what though, you're still an idiot for getting into that mess in the first place.

I'm going to try to sell it one last time. For how long? I don't know. Let's see how it goes.

Why Oh Why? wrote:

I spoke with my new tax guy yesterday who happens to be a total beast. I was referred to him by a wealthy friend. Basically, this is a tax guy I couldn't afford in a million years, but through this friend it's a favor. This tax guy normally serves clients whose W-2's are in the 7 figures.

He said I need to immediately do the following:

1) Stop paying the mortgage on it

2) Stop paying property taxes on it

3) Continue paying the insurance

4) Continue collecting rent

5) So long as there is a tenant, continue paying the HOA/maintenance fees, so the tenant is taken care of.

He said that the mortgage was THE BANK's gamble just as much as my own.

Maybe. But the credit problem you'll create is going to be all yours.

back flipper wrote:

Why Oh Why? wrote:

I spoke with my new tax guy yesterday who happens to be a total beast. I was referred to him by a wealthy friend. Basically, this is a tax guy I couldn't afford in a million years, but through this friend it's a favor. This tax guy normally serves clients whose W-2's are in the 7 figures.

He said I need to immediately do the following:

1) Stop paying the mortgage on it

2) Stop paying property taxes on it

3) Continue paying the insurance

4) Continue collecting rent

5) So long as there is a tenant, continue paying the HOA/maintenance fees, so the tenant is taken care of.

He said that the mortgage was THE BANK's gamble just as much as my own.

Maybe. But the credit problem you'll create is going to be all yours.

Keep in mind an accountant comes from a specific perspective on numbers and money and though smart in a specific way, he may not be an investor at all. If he IS and investor my guess is he's not a very successful one else he wouldn't bother with going to an accounting office and work a day job, though perhaps he just loves it.

If you elect to stop making payments on it, be prepared to crawl in to a hole as far as creditors are concerned for a looooooong time. No, you won't be the only one in that cave, but you will be in the cave nonetheless.

Blowing.Rock Master wrote:

Senior Software Engineer wrote:

I think you meant to say gold/silver/oil and anything else that can't be conjured up out of thin air.

Amazing that the real estate bubble was so obvious that anyone should have seen it in 2006, but you don't seem to notice the bubble forming in gold.

http://www.the-privateer.com/chart/usgmonth.html

this is a very simple simon view of it, but i'll be happy if most people keep thinking like this!

He could be worried about creditors or he could be piling that cash in his own bank instead of giving it away so he will have less need for creditors or at least be able to afford the higher interest rates that come with bad credit.

Why Oh Why, does your wife own the home you both live in or are you renting?

toro wrote:

He could be worried about creditors or he could be piling that cash in his own bank instead of giving it away so he will have less need for creditors or at least be able to afford the higher interest rates that come with bad credit.

Why Oh Why, does your wife own the home you both live in or are you renting?

She owns the home we live in. She has a good mortgage on it - low, fixed rate. Because she bought in '04 she might even have a little equity in it.

Why Oh Why? wrote:

She owns the home we live in. She has a good mortgage on it - low, fixed rate. Because she bought in '04 she might even have a little equity in it.

then why can't you sell her house and move into your current rental?

I asked my wife about this and she half-jokingly said she would "commit suicide" if she had to live in our current rental. I lived there for a year in 2006/07 and she used to visit. The sounds of people walking above us, and the sounds of the upstairs dog scratching on the floor at all hours of the night, used to make her insane. Not to mention the plumbing backups from above that filled my kitchen and bathroom sinks with black sludge.

I could try to take the position with her that preference shouldn't be a factor when we're trying to avoid financial losses (or disaster). But for those of you that are married to women, you know this argument won't fly.

By the way, I listed this dump in the MLS a few days ago. I've gotten two showings already! But the first couple who looked at it got scared away by the special assessment which must be paid down until the year 2023. Ugh.

Well at least the housing market is making a strong turnaround! (sarcasm)

The problem was that you bought a 2006 Toyota Camry at all. It was that you paid $50,000 for it.

That, my friend, sums up the housing bubble (or any other bubble for that matter). It was insanity.

So did you stop making the mortgage payments?

Update: I sold the condo! Well, I short sold it.

I have no complaints about the bank. They really took care of things for me. I only had to bring about $1100 to closing. They even paid off the special assessment. I got lucky because I found a buyer willing to pay 100% cash. That helped a lot because the sale wasn't contingent upon him getting a loan.

Now the bank has 5 years to file a deficiency judgment, if they want to. It's unlikely they will, but it's always a possibility.

I am officially debt-free except for the mortgage on my primary residence. No auto debt, no credit card debt, no underwater mortage on a rental property.

I wish the best to everyone else in this position. Good luck and Godspeed.

Why Oh Why? wrote:

Update: I sold the condo! Well, I short sold it.

I have no complaints about the bank. They really took care of things for me. I only had to bring about $1100 to closing. They even paid off the special assessment. I got lucky because I found a buyer willing to pay 100% cash. That helped a lot because the sale wasn't contingent upon him getting a loan.

Now the bank has 5 years to file a deficiency judgment, if they want to. It's unlikely they will, but it's always a possibility.

I am officially debt-free except for the mortgage on my primary residence. No auto debt, no credit card debt, no underwater mortage on a rental property.

I wish the best to everyone else in this position. Good luck and Godspeed.

Awesome brother! Your credit will be dinged a bit, but so what! Debt free but for the mortgage is the way to be! Just one step behind being completely debt free...something I'm still working on (still have a mortgage).

You've probably thought about this, but since your credit will be dinged, you really should start setting some money aside to replace your cars when it's time, so that way you can go in and pay with cash...you don't want some stupid car loan at 8% or much more.

Anyway, glad to hear the good news. Congrats on the sale!

Thanks! Yeah, that's good advice on the car. Our only car is getting a bit junky but luckily it's a Honda so it should last a while longer. We had some significant savings (and the bank didn't even seem to care) when I short sold, but since then, a family emergency popped up and we had to use most of it. So now we really do need to keep saving and fund that reserve again.

Although inflation is low now it's not always going to be that way and when it goes up and it will go up with all of the federal borrowing going on, having fixed dollar debts is not going to be a bad thing.

yeah I'll shit in one hand and wish for that in the other and see which one fills up faster.