First Fix & Flip - Need some advise.

[Elizabeth Naranjo]

Hi there,

I bought an investment property in Colorado in mid-may. I live in Florida but I know someone in Colorado who is a GC and I hired them to do the reno. Property is in the best neighborhood in Denver, and it was funded with some cash I had and a hard money loan. Loan includes money for the construction. House needed a full reno. Roof, windows, HVAC, kitchen, bathrooms, etc. My GC said we only needed a permit for the roof but when I submitted the paperwork for my first draw the lender asked me for permits for the HVAC and the interior work that is being done which is significant. So now I am stuck as I am not able to recover the money already spent to continue the project and I am concerned that not only this project is going to cost more morning but also my profit margin is shrinking as more time passes by to pull permits and now a can of worms has been opened not sure where to go from here. Someone suggested that I borrow the construction money elsewhere and forget about the construction funds that I was going to borrow from the hard money lender. I am seeking advice from experienced investors as to what the best approach would be in this situation.

In mid-May, I purchased an investment property in Colorado despite residing in Florida. Fortunately, I have a connection in Colorado who is a general contractor (GC), and I engaged their services for the renovation. The property is located in Denver's finest neighborhood, and the purchase was financed partly with my savings and a hard money loan that included provisions for construction costs. The house required extensive renovations including the roof, windows, HVAC system, kitchen, bathrooms, and more.

Initially, my GC advised that only a permit for the roof was necessary. However, when I submitted paperwork for my first loan draw, the lender requested permits not only for the roof but also for the significant interior work underway, such as HVAC installations. Consequently, I find myself in a predicament where I cannot recover the funds already spent to proceed with the project. I am worried not only about escalating costs but also about diminishing profit margins due to delays in obtaining permits. This situation has unexpectedly complicated matters, and I am unsure of the best course of action moving forward.

One suggestion I've received is to secure construction financing from an alternative source and forego the construction funds from the hard money lender. I am reaching out to seasoned investors for advice on the optimal approach in this challenging situation.

Thanks in advance,

Liz