Needing advice re: two houses, not enough $$
I currently own 2 homes -- the one I live in (the good house) and house 2 (let's call it the evil house). The reason I own the evil house is my ex and I bought it in 2000. We split in 2005 and 'sold' the house as an owner-finance to a flake. Said Flake abandoned ship in 08/08, leaving a disaster in her wake (hideous paint inside, broken everything, missing stove, no home maintenance, etc.). Ex and I tried to work together to get things sorted (we had both purchased our own homes by then) -- anyway, we could NOT work together. I ended up refinancing without him, investment loan, interest only, 1 year renewable for 3 years. Mortgage is for $151K, which included refi charges and $9K that was used to fix the house. In addition, I spent another $15K on improvements, along with 5 months of paying two mortgages. Improvements included new HVAC, hardwood floors, granite in kitchen/bath, new toilets, new appliances, new lighting, new door hardware, new garage door, new screened porch doors and screen, painting inside and out, custom paint/glaze on kitchen cabinets, new carpet in bedrooms, landscaping and sod. And, yes, a new kitchen sink (and fixtures!).
Finally was able to rent the evil house in May to a couple who was 'very interested' in buying the house down the road.
Unfortunately, one week (yes, ONE week) after the renter moved in, the huge retaining wall blew out to the tune of $25K (plus killing the 3K in sod that had JUST been put down). In the meantime, the market went down, down, down, along with home values. Every time I turn around, the house seems to need something replaced/repaired/fixed. I already have $50K+ in this house that I don't believe I will ever see again. Very little is selling in my area, and there are houses in my price range that are brand-new, and used to list for $100K more (lots of competition). My evil house is 20 years old. It probably will need a new roof and siding in the near future, could use new windows, and the new HVAC system is not cooling properly (though sized right). The renter says several doors no longer close properly (we fixed that issue once), there is a place in the house where the drywall is about 1/2 inch separated from the ceiling, and he thinks there is a foundation problem. Another $300+ for an inspector to find out...
The point is, I cannot afford to put any more money into this money pit. I was planning on working with a real estate agent beginning in February to try and sell it (but I am not optimistic). The idea of mailing the keys to the bank and walking away is really tempting. I have considered that I might could do a short sale (but I have no idea if I can get any offers). I have a good job, but they are furloughing us, and will most likely do more of the same (to the tune of $400+ less income a month). The renter does cover the mortgage, but he leaves in May. I still owe for the retaining wall and prior medical bills, plus my son just started school. I also have about $18K in unsecured debt. I can handle my bills, up until I add that second mortgage back.
So, do I try to sell? Walk away? Talk to the bank, tell them the renter is there until May and good luck? Go for the short sale? Try for a deed in lieu? (not likely as I'm in GA). I don't want to walk away and still owe for the house. I could technically qualify for Chapter 7 bankruptcy (according to the questionnaire on NOLO website), but I don't want to file for bankruptcy.
Ugh. Any suggestions? Besides the financial concern, it is so stressful waiting for the next problem with the house. The last ones happened on my birthday, Christmas day, New Year's day, and the days after (mostly because of the extreme cold snap and my renter's refusal to accept that heat pumps don't do well in these temps).
What is the 'right' thing to do? What would YOU do, in my situation?
Feel free to blast me, but I know I have made mistake after mistake in this situation. I thought I was doing the right thing (refi) and the smart thing (improvements) -- turns out I was completely wrong. Oh, and I absolutely suck at being a landlord and despise being one!