Potential Dallas Texas bankruptcy clients have 95 rental units (residential homes/apartments) in their hometown. With regard to the properties, est. market value is $3.7M, secured debt of $1.7M. Problem is that, like many other places, real estate sales are at a standstill right now here, esp. investment properties. Many of the properties are “worth” (in a decent market) say $90k and the mortgage is only $9-10k now, but they are having serious cash flow problems and can’t find a bank anywhere to refinance despite all their apparent equity.
They are so frustrated that they are willing to let all the properties go into foreclosure and just get what they get after the sales. I encouraged them to try and sell, but real estate agents are very pessimistic about ability to sell them – small town near Dallas and this couple alone could flood the market with all these properties for sale at once. Anyway, I have been running various ideas through my head to figure out the best way to proceed and wondered about the following: they stop making payments on the properties they want to surrender and continue renting the properties until the foreclosure gets under way. What possible problems will this (the keeping of the rental income) present with regard to the lenders They are bringing in $30k a month in rental receipts right now, so if they were to quit making payments on the mortgages, they would quickly be able to generate some serious money until the foreclosures, even then being able to pay off some of the mortgages on properties they want to keep. With the way a lot of foreclosures have been going in this area, they could quit making payments and have ten months of rent (ie $300k) income before a foreclosure would be done.
These properties are their main business and only real financial problems except for a $50k credit card bill used for the business, which they could negotiate down I am sure if they had some of this rental money available to work with.
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