Need Advice on Lot for Sale in Heritage Plantation

Discussion in 'Real Estate' started by ieatwings, Feb 3, 2009.

  1. Bobby J

    Bobby J Beach Fanatic

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    How does this stack up to Windswept where golf course lots 1/2 acre are down under $50,000.
    You posted earlier that you were told the standard fare about the market being slow right now. The problem is probably not the market being slow. The problem is the buyers do not see the current value of the property. Once you lock in on the right price you will be amazed at how fast a home or lot will go under contract. Buyers are everywhere! They are sitting and waiting to pounce. The problem is can you stomach the number to get the contract...
    Good luck and at least you are not alone.
     
  2. SHELLY

    SHELLY SoWal Insider

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    What are your annual carrying costs on this property? What is your mortgage rate? How much longer do you have on your military contract? Are you close to retirement or are you close to getting out of the military? Do you REALLY want to build a home and live in this location? If you are getting out of the military (or retiring soon) what are your employment prospects in that area (if you believe you need employment to live).
     
  3. ieatwings

    ieatwings Beach Comber

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    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.
     
  4. SHELLY

    SHELLY SoWal Insider

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    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.
     
    Last edited: Feb 3, 2009
  5. Bobby J

    Bobby J Beach Fanatic

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    This can actually be done. It will be very difficult to do without being late on any payments but if you persist you may get lucky. I have a few clients that pulled it off last year! The bank closed on the short sale without the seller being late on a payment or having the back end of the deal worked out. One of the sellers is still working the deficiency out. I will say that the sellers worked very hard to make this happen. Daily bank calls! Good luck.
     
  6. ieatwings

    ieatwings Beach Comber

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    Thank you for the advice. At this point, we are not even considering walking away from the lot. We both have excellent credit and would not want to ruin it. We can carry the annual expenses indefinately without any financial strain, however I question when, if ever, the property will appreciate enough for us to recover some of what we have lost. So I've been asking myself if it's better to cut our losses and let go now at a rock bottom price or wait it out and try again in a few years. From the responses I've received, it sounds to me like I will be better off holding onto the property for a while. It's been a little scary, since we are fairly new at property investing, but we are learning as we go! Thanks so much to everyone for all the advice!
     
  7. traderx

    traderx Beach Fanatic

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    That would be my guess. If you are coming out of pocket @ $11k annually, the present value over five years at a 6% discount rate is $46k. The problem with a fire sale is that you don't have a good idea of what price it could sell for. I guess you could knock $40k or so off the price but not sure that would mean much in this market. If you plan to eventually build and live there, it puts it into a little different perspective. As rates continue to drop, at some point you may want to consider refinancing to lower your payments. Also ensure that your property taxes are in line with the new value.

    Good luck.
     
  8. SHELLY

    SHELLY SoWal Insider

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    Can you please share what you've learned about property investing with the rest of the class??

    .
     
  9. GoodWitch58

    GoodWitch58 Beach Fanatic

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    Not sure(and don't want to know) which Realtors you have used; but I would recommend Teel and Waters in Crestview if you have not used them.

    They have been in the area forever; and have an excellent reputation. from looking at the MLS for that area, I do not see many recent sales of vacant lots.

    Laurel Hill is more the Crestview market than South Walton as some else posted, I think.
     
    Last edited: Feb 4, 2009
  10. Matt J

    Matt J SWGB

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    I don't believe a short sale adversely affects your credit if you pay off the difference.

    Bobby J that's your cue...
     
  11. SHELLY

    SHELLY SoWal Insider

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    I'm pretty sure a "short sale" will be a hard-sell to the bank if (a) it is an "investment" property; (b) you've got other assets that can be tapped; and (3) you're not hard-up for a buck and can't prove "financial hardship"


    .
     
  12. Matt J

    Matt J SWGB

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    I guess the term short sale isn't the correct one if the owner sells it short and then takes on a loan for the difference, what would that be called? Student Loan to SOHN?
     
  13. Santiago

    Santiago Beach Fanatic

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    Actually SWGB is right. Maybe its not a short sale, but the bottom line is that the investment is a dog and she should get out. With all due respect to Laurel Hill residents, the value will probably never get back to what she paid for the lot given the location. My advice based on considerble experience would be to contact the bank and let them know your situation. First and foremost, let them know unequivicolly that you continuing to pay 11k per month in perpetuity is not an option. If you give them any kind of clue that you will do this, they will lean on you to do it. You two(you and bank) have to come to a conclusion as to what the lot will sell for. If its 40 or 50k less than what you owe on it, dump it and apply the 11k annually to the note that is left over. Negotiate a low interest rate and favorable terms. 4% on something like this is pretty customary believe it or not. This may sound crazy but every day you wait is more money that you are pissing away. Two years will go by fast and you will be halfway home. Laurel Hill will still be Laurel Hill and you will probably be able to replace that lot for 60k or so if you really want to. I have worked out similar deals and have lots of friends that have done the same. Most banks with the exception of Whitney Bank, realize that the situation is what it is and everyone needs to work together to get out of it. I know of a situation where a gentleman settled a potential $2,000,000 deficit with a bank for 10% of that with the bank knowing of his having $1,000,000 equity in a gulf front property. They just wanted to get past it. If you are lucky, you are dealing with this kind of bank. I know it sounds crazy but if you are willing to work it out with the bank, you are in the minority and they will usually deal with you. PM me if you want more specific information but with the information that you have given, I can tell you that this is a salvageable situation. Good luck.
     
  14. Bobby J

    Bobby J Beach Fanatic

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    Good stuff Santiago. You just have to be prepared to press the bank. I would begin by finding the real value of your lot.
     
  15. SHELLY

    SHELLY SoWal Insider

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    ...I agree--but you know me, Santiago--I don't want to come across as "harsh" when it comes to investment real estate.

    .
     
  16. Smiling JOe

    Smiling JOe SoWal Expert

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    Crestview may come back sooner than later with the 11,000 new Eglin AFB peeps coming in.
     
  17. Santiago

    Santiago Beach Fanatic

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    Me neither, but as I've learned over the last couple of years, reality is sometimes harsh.
     
  18. beachmouse

    beachmouse Beach Fanatic

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    Though when you're talking Crestview there's a huge difference between South of I-10 and northward or westward getting out toward Baker or Laurel Hill when it comes to having a desirable commute to base. South of I-10 is tolerable; any point past the high school will be a nightmare until there's an actual Crestview bypass built.
     
  19. TooFarTampa

    TooFarTampa SoWal Insider

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    This is really good advice. In fact this may be worth a new thread. There are tons of people in situations like you describe. These deals that you talk about -- in what instances are there impacts on credit? If the seller gets a great rate from the original bank on the remaining balance (when there is no official collateral), and pays it off, is it possible to keep your stellar credit?

    I agree that getting out is a great idea if the original poster is not emotionally invested in the property or even sure whether he or she will use it. It will do wonders for peace of mind.
     
  20. Smiling JOe

    Smiling JOe SoWal Expert

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    hopeful news re BRAC >>>click<<<
     

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