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Negative Equity - what can I do

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danyaz | 27 May 2015, 07:40 AM Agree 0
I am looking for advice on what options might be available to us in relation to an IP we have (located in a mining town) that is in serious negative equity, any ideas, advice or even others experiences in a similar situation would be of great assistance right now.

We were young and had suffered quite a few struggles through life and decided that we didn't want to live like that any longer so we chose property investing as our vehicle to financial freedom however we went in blind, uneducated and not really having a strategy, which now is definitely hurting us.

The situation is this:
PPOR - Value $430k, Mortgage $400k. This has potential to be subdivided which ideally we would like to do.
IP 1 - Value $300k, Mortgage $263k.
IP 2 - Value $320k, Mortgage $289k
IP 3 Value $280k, Mortgage $616k. This property is in Moranbah and we pulled equity from it at the height of its boom to purchase and renovate IP4.
IP 4 - Value $795k, Mortgage $760k. Bought under company/trust structure

The tenants in the mining town asked if they could break their lease which we couldn't allow under the circumstances therefore it's pretty safe to say they won't be renewing when their lease expires in Sept which is of great concern as the mortgage repayments on that property are too much for us to carry (and they have been for quite some time thus our cash flow is severely impacted) and considering the rental market in that area we'll probably be waiting at least close to a year to get another tenant based on other properties in the town.

I'm not sure what to do, where to go or what options I have available. I'm also unsure what would happen if the property sold and there was a balance left owing to the lender of around $330k is this even possible or would we have to sell everything to try and reduce that?

Any help would be much appreciated. Thank you in advance.
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