With interest, property tax, and homeowners dues, it's costing us about $11k annually to hold on to it. We are commited to the military for at least another four years with an option to stay in longer if we choose. There is employment in the area, but the pay is significantly lower than other areas.
I kinda get the feeling that you're not absolutely in love with the location of this property.
I also think you may just have the wherewithal (an officer, senior NCO or military couple maybe) to actually bring money to the closing table vs. just walking away.
I could be wrong <believe it or not, sometimes I am>
If this turns out to be simply a bad "investment" decision and your heart isn't into living on a golf course in the Northern Florida Panhandle, I personally wouldn't throw good money after bad by building a house and living there "just because."
I don't think walking away is the right thing in your case--especially if I'm right that you've got some money they can come after. Additionally, I think the military might frown on someone who willingly skips out on their financial obligations and it's not exactly a career-enhancing move.
As I see it you've got a few choices--neither is good news:
(1) Mark the property down to a "hair on fire, I've gotta get out from under this property" price and get with your bank to finance what remains of the note after the sale. I know it will suck paying for years on a property that you don't own anymore, but that's the "risk" side of investing...you just happen to have to pay a higher tuition to the School of Hard Knocks than some.
(2) Hang on to the property and continue paying $11K a year and hoping you can break even sometime down the road. It's a big gamble but it is also an illusion since "breaking even" usually means "even" on the original purchase price and doesn't account for the Time Value of Money and fact that you are sinking an additional $11K per year, every year into the property.
If you can't afford the $11K per month and it is putting you and your family in a very <
and I stress, VERY> bad situation--by that I don't mean that you won't be able to afford that 2nd BMW or take the family to Europe for the summer--you might want to connect with your base JAG or Financial Services Rep and go over some other financial options.