Debt Reduction Advice

**minnie1928** · 08-06-2007, 06:12 PM

If the debt is the cause of your stress, then sell atleast some of the properties to pay down or pay off the debt. Peace of mind is priceless.

**Harrison** · 08-08-2007, 01:44 AM

Hmm.. you have 8 properties right? Why not sell those break even properties and pay off the $134K debts? I think with $134K in debt, the interest can easily eat up all your investments' profits and make you fall into a non profit or negative balance. In this case, it is useless to own any investment property.

If you want, you can PM me so we can discuss more in details. I'm not an expert but I will lend you my brain and know how to help you. 2 brains are better than 1 brain right?

**Dave Rowtree** · 08-08-2007, 02:31 AM

I'd be very cautious, but in some circumstances a secured loan, if you are sure you can comfortably afford the payments, can be a better option as they are typically lower interest payments than other loans. Obviously wouldn't bother if you need to go sub prime...

**myself** · 08-08-2007, 03:03 AM

Originally posted by DeepinDebt View Post

I'm 30, single with no kids, I have 8 investment properties, I make money on some & break even on others. I have $134k in non-mortgage debt (credit cards, student loans, car loan, etc.)

Should I sell the properties to pay off the debts or just continue making monthly payments in hopes of one day paying everything off?

PLEASE HELP I'M STRESSED BEYOND BELIEF!!

I agree with Harrison who suggested getting rid of the "break-even" properties to payoff the unsecured debt.
I sincerely hope you didn't believe that it would be as easy as all those gurus say it is. Don't forget, real estate is very, controlled by the local market. In some cases, it can literally be bad to be on one side of the train tracks vs. the other side.

**mekish** · 08-08-2007, 07:23 AM

Originally posted by DeepinDebt View Post

I'm 30, single with no kids, I have 8 investment properties, I make money on some & break even on others. I have $134k in non-mortgage debt (credit cards, student loans, car loan, etc.)

8 properties is really alot, if you have equity in them, sell 1 or 2 of those that don't make a profit. unless you think you'd make a loss by selling, in which case sit tight and wait for their value to increase.

**Ima saver** · 08-08-2007, 09:23 AM

I owned 3 rentals and the stress was terrible. I would never do that again. I sold them all for less than I paid for them. I would advise you to sell.

**dayana** · 09-21-2007, 02:06 AM

For many of us, the material world is a very tempting place. Like hungry children whose eyes are bigger than their stomachs, a growing number of Americans habitually purchase more than they can reasonably afford-- and one glance at the soaring count of bankruptcies nationwide confirms this.

Personal debt is comprised of everything from home loans to credit cards to educational expenses - and reducing these burdens is just as vital to your financial well-being as accumulating personal savings. In fact, not only does debt reduction make sound fiscal sense, it is an essential part of qualifying for personal, home or business loans. Lenders look closely at debt-to-income ratio when qualifying their customers, and if the gap between debt and income is too narrow, chances are the loan will be denied.

**myself** · 09-21-2007, 04:09 AM

Originally posted by dayana View Post

...

Personal debt is comprised of everything from home loans to credit cards to educational expenses - and reducing these burdens is just as vital to your financial well-being as accumulating personal savings. In fact, not only does debt reduction make sound fiscal sense, it is an essential part of qualifying for personal, home or business loans. Lenders look closely at debt-to-income ratio when qualifying their customers, and if the gap between debt and income is too narrow, chances are the loan will be denied.

I agree with this statement in general. However, lenders do look at home loans in a slightly different light than the rest of the credit lines one may have.
I'll use myself as an example:
Current mortgage payment: $1,937/month (13 years left on a 15 year note).
Mortgage/Income: 30.7%
PITI: 41.2% (high property tax state of NJ)
Unsecured debt: 2% (all on interest free or low rates and in our savings already)

Recently acquired investment property:
Mortgage/Income: 8% (full doc loan @ 7.5% for 30 years)
PITI: 13.9% (high property tax state of NJ)

So as you can see, on paper, it appears as though I'm putting 55.1% of my income into housing. The missing parts of the equation above are assets and net worth.
Our primary residence is only 64% LTV now (and dropping by .63% every month), and the investment property is 79% LTV (after the rehab, the LTV will drop to 73% because of the increased appreciation due to renovations ... again, assuming numbers on the lower end of the scale). Not to mention that the rents in the area would more than pay for the full PITI on the house, with an extra $200/month coming into our pocket, although our desire is more to resell it ASAP.
This basically means that our net worth is only going up at this point, which makes the lenders feel quite comfortable.

Debt Reduction Advice