newbie needs exit strategy for duped deal

[PaulBroni]

You are in a real bind. You have a house that is way over-leveraged, and you're not going to get out through appreciation over time. The rent will not come even close to covering the mortgage any time soon.

I think it would be really admirable of you to put $1,100 per month into this deal out of your own pocket each month, but I also think the reality is that you're going to get tired of doing that fairly soon. If there were even a realistic chance that you could get out whole in the next few years, maybe you'd do that, but I think the reality is that you're going to be paying that $1,1000 per month (plus all the other expenses that go along with owning rental property) for a very long time.

Have you called the lender yet? Explain to them exactly what happened. Tell them that you get a $700 rent check each month (which I assume you're applying to your payment each month, even if it's only a partial), but that your payment is $1,800. Tell them that you're trying to live up to your obligation, but that you need their help in figuring this out. They have every reason to work with you, but you need to call them first and be proactive about it.

I will say this, however. If it looks like you're going to lose the property to foreclosure, don't put any more of your own money into the loan. There's no sense putting thousands of dollars into a house that you're going to lose despite your efforts.

If you really wanted to, you might be able to find someone to go after to recoup some of your loss, but the reality is that you signed all of the paperwork, and you knew that you were overfinancing a house. I know that $36K check was very tempting, though. It sure looked like free money at the time.