Owning a property can be a great investment and in most cases a way to build equity for the future. But sometimes things don’t go as planned. You get a bad tenant, lose your job, or the housing market declines. Most of the time the best course of action is not to let things work out on their own. The tenant who hasn’t paid all year won’t miraculously start paying and you won’t get a new job by sitting on the couch waiting for it to happen. You need to take some kind of action to make some sort of change. Just don’t wait till all your equity is gone.
A tenant who isn’t paying can really set you back thousands of dollars. Some peoples full time job is to work the system and not pay rent. You as a landlord need to stay ahead of it by having a solid lease. Even with that sometimes it takes awhile 3-6 month to get them out. Which means money out of your pocket and principal paid down. Once they stop paying you need to take action, it rarely gets better. You can look up what to do step by step and handle it yourself or call an attorney or eviction specialist who knows how to handle these types of things. If you don’t want the hassle or drama you could also sell the property to a cash buyer who could buy the property with the tenant in place. They would buy it and take care of all the tenant problems.
Sometimes you can’t help losing a job or are unable to pay your mortgage for a variety of reasons. The last thing you want to do is lose equity in the form of interest and penalties. The cumulative effect of the interest/penalties compounding is staggering if you don’t take action quickly. You don’t want to dig yourself a hole you can’t get out of. If you can’t start paying again on your mortgage there are a few options. One would be to restructure your mortgage or get a modification. The main problem with these is if it don’t get approved you still have to pay all the fee’s and interest. Second would be to sell it to a cash buyer or sell it on the open market with a real estate agent. You will most likely make more money on the open market but you could risk getting nothing if you can’t sell it or your escrow continue to fall out. A cash buyers offer will surely be lower but you can rest assure it will go through.
If you take anything from this article it’s that you need to protect your equity and taking action is the best way to do that. Just don’t wait till all your equity is gone!