Many people find property investment as a way to gain extra income. But due to recent economic slump, it is inevitable for the property owners not to be affected by it. Major impact can lead to foreclosure on investment property that's why you need to know what you are facing and what options you have in dealing with this type of situation.

Foreclosure on investment property is usually the only solution some owners can think of when they fail to pay their mortgage. Some properties are also rented out and leased, so if the tenants are not paying it only means no profit and bad business for the investor. If they can't handle their mortgage payments, this will only force them to foreclose the property.

As an investor, foreclosure on investment property is the worst thing that can happen to you. Not only will you lose your business and affect your credit score but this also can badly hurt your reputation. Loan is essential in building your business but cases like this greatly affect the lending institution's decision from giving you the resources you need. It will take seven years before you can make some loans again. So a bad credit score will have a negative effect for your assets and other investments. Before you give in to foreclosure, you must find other means to resolve the situation quickly and not let it get out of hand.

In order to determine your options, you must get foreclosure counseling first. There are real estate attorney who can give you more options in managing your investment property issues. But if you don't have money to hire one you can still go to some government-funded programs that assist property owners who are facing foreclosure. Then, speak to your mortgage company as they may be able to help you defer your loan and let you keep your investment property.

If the mortgage company will not be able to defer your loan, you can opt to refinance the property at a lower rate and plea for a loan modification. Although the closing cost in refinancing is not included in loan modification. In this way it can help you lower your monthly payment, since most investment loans are at high interest rates and this can also prevent foreclosure on investment property.

But if you can't hold on to your investment property or if there is no way to refinance, then see if you can put the property up for sale. This way you can protect your other assets and speak to a professional Realtor to help you market the property faster.

You can also ask you mortgage company if they consider short sale as an option on your investment property. When you short sale, this is when you sell for an amount less than your total mortgage. That is if the mortgage company will agree to this type of payment.

If all the other options won't work, your last choice is propose to deed the property back to your lender so it will take less of a hit to your credit score. Yes, you will have to give up the property but at least you will be able to re-establish your credit more quickly.