We're in a pickle :-(

[MaryLang]

Ok, I don't know where to begin.
My DH was unemployed for the better part of last year. We own a home that is 950 sqft. We owe right around 100K on it, after the housing market crashed, the houses on our block are going for 35-50K. Our credit took a dive during a home loan modification we took while he was unemployed. (even though we were never late).
We are due with #5 so that will make 7 of us, the 950sqft house way too small.
So we rented it out and are now renting another house for us from family.
The family wants the house we are in empty by March because they are selling it.
Our renters have stopped paying these last two months.
We just dumped a ton of money into our other house over the summer, new furnace, fence, ect... and I don't have the money to pay the mortgage on it if the tenants are not paying (we are only asking the amount of the mortgage, so there isn't much wiggle room there). As we have a new baby on the way, no vehicle to fit us right now, my 4 yr old is possibly going to need a 2nd open-heart surgery soon, anyways bad timing for our renters to pull this.
We've been looking at other houses to rent, so as not to wait until March, DH has a decent job now.
But what do I do with the other house now?
I can't afford to pay their rent and ours and all of our savings was dumped into it this summer. HELP

[Lil'M]

I would take whatever steps necessary to get the people out of your rental house and find new renters! Then start looking for another place for your family to rent if the house you own really can't work for you.

[StormySar]

Your house can't work for you in a pinch, until you get back on your feet again? I'd get the renters out and move back in. It may not be very comfortable but it may make the most sense so you arent put in this position again. Renting is very risky, and especially with the economy right now I wouldnt risk putting yourself back in this situation again until you have savings built up to cover these things.

[bluebunny]

Originally Posted by StormySar

Your house can't work for you in a pinch, until you get back on your feet again? I'd get the renters out and move back in. It may not be very comfortable but it may make the most sense so you arent put in this position again. Renting is very risky, and especially with the economy right now I wouldnt risk putting yourself back in this situation again until you have savings built up to cover these things.

This. ^^^^^

I know it might not be comfortable but it makes the most sense right now. There are lots of cool ideas online for living in small spaces.

[nola79]

Originally Posted by StormySar

Your house can't work for you in a pinch, until you get back on your feet again? I'd get the renters out and move back in. It may not be very comfortable but it may make the most sense so you arent put in this position again. Renting is very risky, and especially with the economy right now I wouldnt risk putting yourself back in this situation again until you have savings built up to cover these things.

Yes, this is what I was thinking.

[candycat]

950 s.f. is totally do-able, even for a large group such as your family. I would suggest thinking outside of the box as far as room arrangements go. Depending on the layout, it might make sense to turn the living room into the kids' room, or whatnot. You could post on the decluttering forum for ideas on how to set everything up, there's been lots of situations like yours on. You might be surprised how well you all can fit into the house.

If you were renting from your family and they are now going to sell it, might you get some of the money you put into it back? Like, if you bought a new furnace for the other house, that's not fair. You're not benefitting from it because it's not your house. Typically if you're renting it's the owner's responsibility, no?

[CherryBomb]

It sounds like you're going to have to kick out your tenets and squeeze into the 950sq ft house for awhile

[VisionaryMom]

I agree. I'd start the process of getting rid of the tenants *now* and prepare to move in. Are you sure they're even there? I know of people who've just walked out & left the keys to rental properties rather than officially break the lease. If that's the case, move back in now. If not, find out the process for eviction and how long it takes. I think in our state it's 60 days, but I know it can be as much as 6 MONTHS in some states.

As for covering the mortgage + rent while you're working on getting the tenants out, can you work a deal from the other end? Can you explain what's happened to the family member from whom you're renting and reduce your rent, even if you make it up later?

[MaryLang]

Thanks everyone!
Lots of good ideas.
And just to clear it up, the money was dumped into the home we own, that the tenants are in. We spent a lot of money fixing the family house we are currently living in, but certainly not compared to the other.
The biggest issue I had with us fitting back in the small one, is that there is no storage, no basement, no attic, a garage, but not appropriate for storing kids stuff, I used to have to throw out a ton of stored things every year from the garage due to water damage.
I think for now, we've decided that a next step is to try and work with our tenants. Getting partial payments for a few months is better than nothing, that is if their intentions are good. And we should be able to cover a little bit of a difference, but just not whole payments. So we'll see how this all plays out.
And yes the tenants are there still, my mom lives in the neighborhood and drove by yesterday and saw the kids looking out the front window. I don't think they seem ready to leave, although that would make things a lot easier.

[GuildJenn]

Originally Posted by MaryLang

Thanks everyone!
Lots of good ideas.
And just to clear it up, the money was dumped into the home we own, that the tenants are in. We spent a lot of money fixing the family house we are currently living in, but certainly not compared to the other.
The biggest issue I had with us fitting back in the small one, is that there is no storage, no basement, no attic, a garage, but not appropriate for storing kids stuff, I used to have to throw out a ton of stored things every year from the garage due to water damage.
I think for now, we've decided that a next step is to try and work with our tenants. Getting partial payments for a few months is better than nothing, that is if their intentions are good. And we should be able to cover a little bit of a difference, but just not whole payments. So we'll see how this all plays out.
And yes the tenants are there still, my mom lives in the neighborhood and drove by yesterday and saw the kids looking out the front window. I don't think they seem ready to leave, although that would make things a lot easier.

PLEASE check your landlord & tenant laws before you do this. We had tenants in our basement apartment in our first house and we naively thought the same - that we should give them a chance to catch up. Instead, we found out that when you accept a lower rent you actually by law change the contract and it makes it much more difficult to get back to the original rent.

[MaryLang]

Oh boy Off to check on that
Wow, that could have been a disaster!

[JudiAU]

As the pp said, do not ever take partial payements in rent. And don't take late payments either. Get them out, move in, and rent a storage space elsewhere. Even six months will put you in a better financial position.

[CarrieMF]

not appropriate for storing kids stuff, I used to have to throw out a ton of stored things every year from the garage due to water damage.

If stuff is stored in plastic bins then water shouldn't be able to damage it. I'd take the time to purge. You could buy a storeage shed to put things in too.

[RiverSky]

Get rid of your tenants. If they haven't even communicated with you about the rent and their intentions, they are just planning to stay there as long as they can, before you kick them out. They don't seem to have any plans to pay ever again and meanwhile, they might be damaging your house. The longer you wait, the worse they might damage it, I think.

Next, why does the garage get wet? Is there a leak in the roof? A while back, we have a leak in our room over our garage, and my DH bought some sort of clear sealer stuff at a hardware store (gallon for about $15?) and he painted it on the parts of the roof that were leaking and voila, it stopped the leak for well, over 2 years now. I agree that plastic boxes will also help with that.

You can always let the house go into foreclosure. If you truly can't pay for it, and your credit is already ruined, and you can't live in it (not sure why you bothered modifying in the first place), then it's time to cut your losses and try to actually make a plan for the future. I think it would be crappy to let the house go into foreclosure while you have tenants but by law, you can actually do that and the tenants will still legally have to pay you any rent agreed to via a lease (legal contract). But, I think it's much better for you to really truly pare down and make your house work for you and your family. If you choose to not pay your mortgage, then you will be able to afford a monthly storage unit to hold the rest of your most valuable stuff before you move. A foreclosure will likely take 12-24 months and during that time, you will need to save up so that you can plan for your future.

[MaryLang]

Nothing in the garage leaks, it just got a new roof a few years ago and is insulated, but it's just general moisture, like clothing and carseats ect... get moldy.
I guess I need to find out what the advantage to moving back would be. Our credit is already trashed, so it wouldn't be saving that. I just see spending an awful lot of money to be back at square one, pay on two mortgages, moving expenses, court costs, and back in a house I can never sell.

[zebra15]

This may not be the popular vote on this board but have you considered letting the 950sq ft house go back to the bank? and just starting over? Either try to sell it (I know you said it wont tell for near what you owe, if it will sell at all) or do a short sell - if you can, or just give the keys to the bank. Sometimes you do what you gotta go. Ya know. Kids and family come first. If you can find a secure rental for everyone and your 950sq ft is never gonna work then seriously consider it.
I would rather totally bottom out, (foreclosure) and start over then continue to struggle for years, and struggle with a house that I didnt like and was never going to work for me and my family.

Thats just my view and its probalby not the popular one on this board....

[CarrieMF]

it's just general moisture, like clothing and carseats ect... get moldy.

It needs air circulation. It's easy to get a vent put into the roof of the garage.

I guess I need to find out what the advantage to moving back would be. Our credit is already trashed, so it wouldn't be saving that. I just see spending an awful lot of money to be back at square one, pay on two mortgages, moving expenses, court costs, and back in a house I can never sell.

why would you be paying on 2 mortgages, is one of those the home loan modification?

the advantage is as long as you're paying the mortgage(s) nobody can kick you out. Right now you're being kicked out. What if you can't find someone to rent the place? Then you're still paying that mortgage & rent somewhere else, what is the benefit there?

[StormySar]

Originally Posted by MaryLang

Nothing in the garage leaks, it just got a new roof a few years ago and is insulated, but it's just general moisture, like clothing and carseats ect... get moldy.
I guess I need to find out what the advantage to moving back would be. Our credit is already trashed, so it wouldn't be saving that. I just see spending an awful lot of money to be back at square one, pay on two mortgages, moving expenses, court costs, and back in a house I can never sell.

If you stay in your house, you don't have to pay a second mortgage. There is no more risk that something bad is going to happen to the house that would require you to fix it immediately and possibly be a huge dollar amount (because you're still responsible for repairs and whatnot) in addition to paying a mortgage on a second home (or rent) where you live. There is no more risk that your tenants will not pay rent, which leaves you paying a 2nd mortgage. Stay in the smaller house until things improve - your savings are sufficient to cover any major household repairs and mortgage payments incase your tenants don't pay, etc. Buy a storage shed or even rent a unit, renting a storage unit is cheaper than a 2nd rent payment and everything should remain dry and safe.

I have a family of 6 living in an 800 sq. ft. house - we're due with our 5th baby any day now. You have to get creative with space, but it's doable, especially in a pinch.

[surrogate]

It sounds like you want to be done with the house. If so, try to sell or let the bank take it.

Personally I would move back in and make due. Bunkbeds, bookshelves and storage totes will take you a long way Maybe the market will recover and you can sell in a few years.

I assume the house would be 2br, if so put the new baby in a mini crib or PNP in your room and do 2 sets of bunkbeds in the other room. If there is a dining room you can line the walls in bookshelves (the short ones) and put the cloth baskets in them to store stuff. Get a higher bed frame for your bed and you can use the underneath for storage (i bought a metal frame from walmart for $99 that I just put my matress on so no box spring and I can fit multiple 18 gallon totes under the bed) You can use storage ottomans in the LR. Have a yard sale to declutter, if you dont need it now, then you don't need it. Space Bags to store opposite season clothes....you get the idea...

Oh and there are many small house threads on the outside board

[MaryLang]

The tenants are IN the smaller house.
So what I'm saying is I would have to pay MY rent and the mortgage on THAT house, since they are not paying, this is what I can not afford to do.
Am I missing something about moving back that involves only paying on one of the houses? I can't stop paying rent on the house I am currently living in as long as I am living here. And I have to live here until that one is empty, and I don't know how long this will take.