When it comes to investment properties, they have to be treated much like any other property that you have purchased, including the home that you’re living in. In other words, if they go into foreclosure it’s going to go on your credit, just like any other property would. With that in mind, you have to keep your investment properties up to date or liquidate them so that you don’t damage your credit, and in this market it can be very hard to determine whether you can get a property rented or sold before you get behind on your payments, making the investment property issue a balancing act.

When the housing market was doing so well, investment properties were a huge business and everyone wanted a piece of it. They were rented out for the income, and they were flipped and resold by people who could do the work themselves and save money. Some houses even had waiting lists and/or went to the highest bidder because they were so very popular.

Now there are properties all over the place that no one seems to want and the people who have them as investment properties can hardly give them away. In Detroit and some of the other hardest-hit cities there are properties that aren’t going for tens of thousands or even for thousands of dollars, but that are going for only a few hundred dollars, instead. People who were lucky and bought and sold when the market was good made a lot of money, but there were people who got stuck with a lot of properties and it left them wondering: what were they supposed to do next?

If you’re in that ‘I don’t know what to do with this investment property’ situation, you’re definitely not alone, and you’ll find plenty of other people to commiserate with, most of whom have lost a lot of money to an uncertain and very volatile market. You could also be one of the people for whom things have gone from bad to worse and you’re finding that your investment property is costing you so much that you’re getting behind on the payments and can’t make them for much longer. If that’s where you are, you have two choices: you can try to stick it out because the market is showing some slow signs of improvement or you can try to sell the property and get out from under it before it totally destroys your credit rating.

Even if there’s already been some damage to your credit, the less damage there is and the shorter the period of time where late payments and other issues show up the less costly it will be to you in the long run when your credit is checked by a company that you’re trying to use to finance something. The main thing is to avoid the damage, but if you’re not able to do that the next best thing is to cut your losses and do some damage control in the form of getting rid of your investment properties before they can harm your credit and/or your financial future any more than they already have. To do that you have to know what’s owed on them, what they’re worth, and how you can most easily and quickly get rid of them – either by a deed to the bank in lieu of foreclosure, a short sale, or some other method.

When you’re honest about the financial problems that you’re having, your lender will be more likely to try to work with you on them, and it’s a very smart thing to do where an investment property is concerned. It’s really better to talk to a lender before any problems get started but a lot of people are embarrassed about financial troubles or don’t want anyone to know, so they just don’t say anything until it’s too late and they’re really stuck. If you want to save your credit rating and your financial future, don’t let your pride get in the way of talking to your lender at the first sign of trouble making your investment property payments.

Being up front shows the lender that you’re making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it’s obvious that the property can’t be paid for, talk to your lender and see what options the two of you can come up with. It’s very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life.

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