My Story...Advice needed....

[wylie]

I may have this wrong, but I assume she owns her half as it was left to her and her sister, and her sister sold her half to you.

If so, and if your ex is paying no rent but only owns half a house, she should be paying you half the rent the house could get, shouldn't she? At least you should have some of her money to help pay off the debt.

I agree with you that if you can get some income from what you already own, things should improve with time, if the house increases in value. This way, your $50K "dead" debt now may be wiped out by a gain.

Maybe tell her that you are renting your half of the house to someone else, and maybe do just that. Without knowing you or her, I think she is on a good thing and you are being shafted.

Wylie

 

[MCS_80]

Thanks for the reply wylie,

I agree with everything you say.

I think the big reason why I havnt done anything is because of the comfort factor we have both grown into.

Without going into to much detail, they break up was pretty messy, so she wont be doing me any favours anytime soon.

Thanks again for the reply, keep em coming...

Cheers

Mick

 

[alexlee]

MCS, even if you get a thousand replies..... you're going to have to do something eventually. Don't keep hanging out for more replies. Take some action.
Alex

 

[MCS_80]

MCS, even if you get a thousand replies..... you're going to have to do something eventually. Don't keep hanging out for more replies. Take some action.
Alex

Fully agree with you Alex.

Just nice to get as many opinions as possible on a subject I have little experience with.

I havnt spoken to anyone about my situation in depth before, in here its good to be asked questions from all angles...

My first port of call is to find someone to sit down with and list all of my legal options, then maybe pick out which one would be the best to go with. Ill be looking for said person in the new year...

Thansk again for the replies everyone...

Ask away.

Always learning...

Mick...

 

[redsquash]

Thanks for the replies. Its really opening my mind.

The only way I can see any Win-Win situation is if I get to use all of the built up equity in the house to purchase furutre IP with the ex's consent, and make sure that its organised in a way that my interests are protected as much as I can I guess...

If it sells, im left with atleast a $50k debt with nothing to show for it but a lesson to learn. Im going to research a way I can turn this negative into a positive.

Once again thanyou for the replies, keep them coming.

Cheers

Mick

If you have 50k of debt after it sells , then you have no equity. Are you accurate on selling costs and current market house value?

 

[alexlee]

Thanks for the reply wylie,

I agree with everything you say.

I think the big reason why I havnt done anything is because of the comfort factor we have both grown into.

Without going into to much detail, they break up was pretty messy, so she wont be doing me any favours anytime soon.

And you expect her to consent to you refinancing the thing to build your property empire? You jest, surely. You have FAR too much faith in human goodness. Not everyone is like you.

Mate, cut the ties. Quickly. Even if you end up with negative assets on this, it's probably worth it.
Alex

 

[buzzlightyear]

Mick, whilst you have mentioned you will go and get some preliminary legal advice, it seems to me you are looking for a light bulb moment with the responses you find here and elsewhere you have consulted. I believe you already know what you need to do. There is no reward for your procrastination, you have already mentioned that you are in a comfort zone.

Once deciding what course of action you will go down, I would make some very explicit timing commitments to yourself and have some close and trusted friends/family hold you to those. Unless you change your strategy and thinking on this, then in 6 months time, nothing will have changed and there is another 6 months wasted.

Good luck with your decision and its implementation!

 

[bradje]

Can u get a tenant to live in the house and pay u the rent? Advertise for another female etc?
JB

 

[Perp]

More opinions for Mick - sorry it's long, I've been thinking about you!

Dear Mick,

I sense that you are a nice guy, but I think that you - and some other posters here - are having trouble seeing this situation clearly. I've been mulling over your situation quite a bit since I saw it a couple of days ago, and here are the conclusions I've come to...

You may be well-intentioned, but ultimately you've done the ex-girlfriend no favours at all. You not only have NO equity in this house, you've also chewed up half her inheritance as well, on your luxuries. You only own $105K of the house, but owe $154K! Of course this is her fault, too, for allowing you to borrow so much, but I feel you have a moral obligation (even if not a legal one) to put this right. I would agree that you've got no obligation to keep her in the family home, IF you only owed $105K or less; but now that you've run up the debt and used a lot of her equity as well, I do think you have an obligation to fix this situation, as she's now in a worse situation than she would be if you'd not helped her at the outset. At that point, if she'd had to sell, at least she'd have had half the value of the house in cash.

Just understand that having debts $50K more than your assets does not represent a change in your balance sheet - you already have liabilities exceeding your assets; you just can't quite see it for yourself because your ex-GF has some remaining equity and that's obscuring your vision.

Let me reiterate that I do think you're a nice guy and well-intentioned; I'm just saying that your dumb financial decisions have really screwed your ex-GF. You are NOT the victim of her, but the victim of your own financial decisions. And unfortunately she's now a victim of those decisions, too. She may not be paying rent, but her half of the rent would be less than $100 per week, or $5K per year, therefore you already owe her more than TEN YEARS of rent-free living to get her back to "even" with you. So I wouldn't feel too badly about her not paying rent thus far...

OK, lecture over - now on to your options... Whichever option you go for, your agreement should be memorialised in a contract, written up by your solicitor, to protect BOTH parties' interests in the future. Here are your options as I see them:

1) LIQUIDATE NOW ON OPEN MARKET

I don't blame your ex- for not agreeing to sell, I think this would be unethical. She loses her home, the bank gets their $154K, she'll get all the remaining cash (at least morally she's entitled to it), and you'll still owe her about $50K (again, morally).

The only advantages of this option are for YOU; you'll have an unsecured debt (the $50K) rather than a $154K mortgage, which would make it easier for you to move on and possibly buy more property (after that $50K is taken care of, that is); but you've still gotten your ex-GF out of her family home.

2) LIQUIDATE NOW, WITH EX-GF AS TENANT

Sell the home now, but with a long-term lease in place to your ex-GF, ie so that it can only be sold to an investor, who has to honour the lease with your ex-GF. If she can't afford to pay rent from her income, well, she'll have the proceeds of the sale, ie $210K less $154K (approx $56K), plus the $50K that you owe her on which you should arrange a payments schedule, and those two will cover rent for many years... I think this is absolutely the best option for all of you.

3) GET SISTER OR SOMEBODY TO BUY YOU OUT AGAIN

I suspect this isn't going to be feasible. There's also the issue of how you'd get rid of the mortgage - the bank won't relinquish the mortgage with $49K still owing (as sister would only have to pay you $105K to buy half the house). So with this option, you'd still have a mortgage over the property and still be tied to your ex-GF whilst you're paying that off. But it would improve your ability to borrow for further properties.

4) WAIT

Does the home have any reasonable prospects of capital gain? If so, then perhaps you could hold the home until it's worth double what you now owe, ie more than $300K, then look at your options for getting your girlfriend to refinance and buy you out. By that time, she may have a new man who'll help her But yes, I do agree that in the meantime she should be paying half market rental.

5) VENDOR FINANCE IT TO HER

Another option that you could implement now, if she can afford it, is to "split" the $154K debt into two accounts (or even track them yourselves as two portions if it's too expensive/difficult to do it through the bank) of $105K and $49K. The $49K is your debt to pay off for your previous financial sins. Your ex-GF takes over payments on the $105K, and pays rates etc, and buys you out using your borrowing power - kind of like a wrap but without the profit component.

If you're stuck only with options that keep you tied to her, eg 3, 4, or 5, then I feel that after eroding HALF of her inheritance on your financial errors, that's the price you're stuck with. I don't think that 1 is ethical. So I really think option 2 is the go.

Just let me repeat: have whatever agreement you come to memorialised in a contract, spelling out each parties' rights and responsibilities.

Best wishes to you both in moving on,

 

[GordonGekko]

this is only if he is a really nice guy .... as he mentioned before there is no chance that they will get back together ... soo he might as well look out for no.1. the deth you have is that proven to be only yours or is it just in the mortage with BOTH of your names (*EG*) ... if it is in both of your names you can wipe half of it on her ... and walk away with money in your pocket or you could do the nice thing and leave owing 50k.... i surely know what i would prefer... (whistles innocently)

relationships with x-anything is often filled with emotions of the past ... been there done that.. could have got much more but i didnt... and well we are still "friends"

the show must go on , no matter how hard it is ... you'll thank yourself when you find a new woman to share life with ... dont loook back ... look forward!

 

[kathryn d]

Ozperp,
After reading your post, I went back and read the original post by MCS_80.
If his friends are saying "that's not Fair" etc..I wonder if he is telling them the Whole Story.It was his idea of buying the sister's share and he refinanced for luxuries ($64K) that he doesn't even have anymore!!!
As you, I have been thinking a lot about this thread.
If I was this woman, I'd refuse to sell or refinance either.He got himself into this mess, he can wait it out.Eventually she may wish to sell.

My previous post about them possibly buying more properties would be a mistake. He may very well be a poor risk.I'm curious what luxuries he spent that money on.

 

[GordonGekko]

i dont know why it posts double/tripple posts? when ever i post it asks me to log in again ....

 

[GordonGekko]

well she cant refuse him the right of getting "his part" according to the good ol marriage act of 1978 .....a good saying .... what is mine is mine and whats yours is also mine! hehe.

if his luxuries has been taken out from the shared mortage .. he is in the clear to get away with a lot... and well if he feels like that good on him!

and she isnt paying any rent either ... soo you can see this "case" from both sides...

 

[MCS_80]

Thanks for replies everyone, very much appreciated.

Special thanks go to ozperp, I thank you for your time and thought that you put into your reply, it has got my mind ticking over.

I will be going to see someone with more knowledge and experience face to face in the new year. The house has good potential for capital gains so waiting may not be the worst idea. It will just put off buying more property for now, I may just have to look elsewhere to make my investment fortune. As stated earlier I am only 27 and have plenty of energy to make extra money in my spare time (ie, I run a part time house painting business, painting the doors I sell in my day job, also becoming a freelance photographer)

Once again thanks for the replies everyone, this has got to be the warmest forum ive been on yet, investment related or not.

I will throw up a couple of photo's of the property in question later on tonight.

Cheers

Mick

 

[GordonGekko]

thats good ... you shouldnt have eaten them at the first place.....

(if you have humor you'll get it.. else not...)

are you going to charge her rent? ... come on! its like days of our lifes! i need my fix!

 

[MCS_80]

Here are a couple of photo's of the property ive been talking about...

As you can see, it has potential...

 

[alexlee]

The issue with a property sometimes has nothing to the property at all. The problem is sometimes with the owners. The best property is an albatross if there are ownership issues.

MCS, if you refuse to face the reality of the situation, it's going to seriously bite you in the a*s. Your problem isn't whether the house has potential or not. This issue with your ex isn't going to go away.
Alex

 

[MCS_80]

Thanks for the reply Alex.

Point taken. I believe in staying positive and keeping open minded, thats why I posted the pic and keep thinking of ways to turn this into a very positive outcome, for everyone.

Ive come up with a few great idea's that ill be discussing in depth with my advisor. once I find a suitable one in the new year.

Thanks again

Cheers

Mick

 

[alexlee]

MCS, I have to say, it's very hard suggesting any ideas to you because you seem to be ignoring your biggest problem. I wouldn't be thinking too much about the potential of the house if I were you. Getting emotionally attached to it will only make it harder for you to make the tough decisions.

It's like someone asking 'I want to train to run a marathon' and we can all see that the person's shoes are tied together.

Stop agreeing with us and make some hard decisions. Things don't always have win-win solutions.
Alex

 

[VYBerlinaV8]

MCS - I think what you need to do is get your finances legally separated from your ex's. This means going to a solicitor, spilling the whole story, and simply asking for advice and assistance in ending this whole thing. OK, so you'll likely be left with debt, but you already said you enjoyed some luxuries which are now gone.

Perhaps the plan needs to be:
1) Get all finances legally separated from ex, pay the solicitor, end the formal part of this mess.
2) Live simply for a while, and pay down whatever debt remains.
3) Turn 30, and go on to a life of investment success and personal satisfaction.

I think there are two key messages in this for you:
1) You need the legal side cleaned up and your financial responsibilities distilled down to a simple debt (or equity position). Be completely clear of the house. DO NOT leave your name anywhere near it, for ANY REASON. DON'T let people try to tell you it's better for tax, etc...
2) Sorting out this problem doesn't mean you aren't a 'nice guy'. The solicitor will likely develop a strategy with you, then get you to run it by your ex first, before going into battle. Polite but firm is the term we need to use here.

Make the appointment as soon as your solicitor's office opens. Get your folks to help you choose one, if need be, or post your general location here and ask for recommendations. Frankly, I think the longer you let this run, the worse it is for everyone. You had the relationship, and the luxuries, now it's time to close the book and move on.

Let us know how you go!