Bought a distressed property in Spring of 2007. Dumped a ton of money (over 100k) into it and put it on market in August, but never could sell. After 13 mo. of being vacant, have had renters in ever since.

House was purchased on a land sale contract. The gal we bought it from-for $147k- still owed $30k to her lender. She was able to get that lender to agree to allow her to sell to us on a land sale with 10k down.We now pay into a monthly escrow $1014, with payments going to her and the original lender. In addition, we took out a loan from our bank that summer, as a 2nd mtg, to help with the remodel. So I have an escrow payment to cover the seller and original lender, and a 2nd mortgage from my bank. Total balances of both loans appx. $190k. My monthly deficit, after rental income is received, is about $600 (which includes property tax and insurance). Both loans are at 8%.

I no longer want to hold onto the property and absorb the $600 monthly hit. According to Zillow, the value of the property is about the same as the payoff. I realize that in many cases homes ARE NOT selling for what Zillow is suggesting, so to sell it quickly it may require a $15-20K hit. In this case, My bank would be the one to approach regarding short sell, if necessary, as they have Junior position. I don't really have money to bring to the table to offset any difference in sell price vs what is owed. How should I proceed? Do I contact an agent on the coast who specializes in short sell first? Should I contact the bank first? I could ride this whole thing out for awhile longer-maybe up to a year if need be- but really want to walk away from it all and chalk it up to one of life's little lessons..oh, and one other thing. I currently have my Brother and Sister in Law living in the house. They take wonderful care of it, and would absolutely love to buy it, but have bad credit and no down, so that's not an option at this time. I hate the thought of selling it out from under them, but can't continue to subsidize too much longer. Would be great if I could maybe find an investor who would buy, knowing that there are good renters in place. Not sure how to go about doing that? Any/all suggestions are appreciated!

If you could get your rate cut to nearer the current 4% instead of the 8% you are paying would that make enough of a difference. Are your tenants interested in paying more rent to be able to stay (or possibly they do a land contract with you).

Otherwise talk to your lawyer and accountant before moving forward with anything.

Best of luck

If the property is under water you won't find an investor who will touch it, regardless of how much income it is producing. Based upon the financing arrangements used in the purchase and remodel it is unlikely that a successful short sale or loan modification could be executed. You need to contact an attorney and find out what your available options are. From here it looks like your only possible solution short of a bankruptcy and foreclosure would be a Deed in Lieu.