Over-improved a house I thought I was going to live in long term

Grand Rapids, Michigan
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Over-improved a house I thought I was going to live in long term

Edward Neuman
Member since 2025 · 2 posts · 3 votes

Long story short, I thought I was going to live in Grand Rapids long term so I bought a house for $450k and after some surprises and some impulsiveness I ended up spending $370k on renovations. 

Due to work and personal circumstances, I would like to leave and move to Chicago within the year.

Even though it truly is a beautiful and very unique modern home after the renovations, a real estate agent I’ve worked with before told me the house wouldn’t resell right now for more than $650k (even though the house is like 300 yards away from neighboring East Grand Rapids where homes like mine go for 30% more just because they are in EGR).

So I have an unrealized loss of $170k if I try and sell now which really isn’t an option. Based on appreciation trends in Grand Rapids, the house won’t appreciate to break even in like 6-8 years. I estimate I could rent it for $3,500/month which isn’t amazing but feels like the only option now.

I wanted to check with the community to see if this has happened to anyone else and maybe get some advice as I’m feeling really stupid. I very much appreciate everyone’s time and thank you very much in advance for.

Additional context: I paid for the house and renovations by getting a bridge loan from my parents. I’m planning on selling my Nashville condo next year and expect to be able to pay them back around 60% and pay the rest by taking out a mortgage. They’re not pressuring me to pay back until the Nashville condo is sold.

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Luka Milicevic
Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
1y

@Edward Neuman

Believe it or not, I'm going to go ahead and tell you—you didn’t actually make a mistake. What happened is simply that life happened to you.

I had a neighbor recently who made an upgrade to their house that they’re never going to see a return on. Is that a mistake? Not really. If you're going to live there, you want to enjoy the space you're in.

The only thing that happened here is life, and there's not much you can do about that. I don’t think you made a mistake by overspending on a house you're going to live in. Not every decision has to make perfect financial sense. In your case, maybe it didn’t make financial sense—but it made life sense. And I think that’s perfectly okay.

I’ve been laid off from a job I didn’t expect to lose. I’ve known people in military families who had to transfer unexpectedly, even when they weren’t supposed to. Just recently, I showed a house overlooking the river that was custom-built by a family planning to stay there forever—then one of them got cancer.

Sometimes, life just happens, and we have to deal with it.

Now, as for what you should do from here, you also have to consider opportunity cost. What is keeping this house preventing you from doing?

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  • Kyle Banghart
    Kennewick, WA · Member since 2025 · 15 posts · 2 votes
    1y

    Ed,
    I've over spent on several houses. At the end of the day, sad truth is.. theres more money in the investment that you can get out of it. 
    Waiting for appreciation is an option, getting any cashflow you can from it to assist paydown.

    Exiting now, carrying the remaining debt over into a new loan for a profitable deal is usually the only/best way to fix one of these mistakes. Dragging it out leaves you exposed to further risk and loss. Damages, tenant repairs, vacancy, etc. All chances for you to get in deeper. 

    Ive gone too deep several times and in all my experiences, its like quick sand, the more you move, the deeper you get. 

    Get out. LEARN THE LESSON, and yes that might mean losing money and struggling like a MOFO to keep up with your liabilities.  
    You wont make this mistake again. even your home is an investment and over investing in any investment is the mistake. 

    Crafty-ness may help, but think long and hard and get as much advice as you can, bc it can get you deeper, fast and easily. 

    Seller financing to a cash heavy buyer (non-occupant) could help you increase your spread.

    you can manipulate numbers a vatiety of ways but I cant imagine youll get that 170k back out.

    jack the price ungodly high with as much down as possible. this is still too much of a stretch. someone might pay an extra 100k or more bc they dont need the bank loan (your risk goes way up; get legal advice) 
    huge down pmt. like hundred of thousands. 

    youd wanna make it so if they come to you after a few years and wanna buy it for like 80% the agreed amount, that youd still be okay with the amount bc thye might come as to pay off early for a discount. 

    either low monthly with a 3-8 year balloon payment (due in full)
    or steep monthly payments to get you paid in full in whatever time frame.

    maybe apply interest on that, maybe simple vs amortized. 

    or look into note investing guidelines and consider structuring a seller finance mortgage such that another investor might buy the loan, not the house, and then seller finance for as much with as much down pmt as possible, interest, but still I dont see a way for you to get out ahead unless you can seriously jack up the price offering seller financing. 

    someone might be able to vacation or Short term rental this for a good enough cash flow, but high risk, gotta find that person to see if thats even an option. 

    Sell brother. Take the hit, move on clean and apply the lessons. 

    1Reply
  • Robert Masucci
    Real Estate Consultant · Remote · Member since 2025 · 48 posts · 21 votes
    1y

    Hey Edward, wow that's unfortunate and some of the risks that come with this industry if you're not 100% sure about the risk vs. reward up front. However, you can't go back so I would start exploring how you can manage this property from Chicago. Take a look at credible property managers in your area and start vetting them now. Have your broker start getting the property ready for leasing and start working with you legal team on putting together a thorough lease agreement. Also it wouldn't hurt to have your property reassessed every year going forward to see what it might sell for so that you know exactly what year you can finally recoup your investment based on that years market conditions. Hope this helps get you started in the right direction. 

    1Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    1y

    @Edward Neuman

    Believe it or not, I'm going to go ahead and tell you—you didn’t actually make a mistake. What happened is simply that life happened to you.

    I had a neighbor recently who made an upgrade to their house that they’re never going to see a return on. Is that a mistake? Not really. If you're going to live there, you want to enjoy the space you're in.

    The only thing that happened here is life, and there's not much you can do about that. I don’t think you made a mistake by overspending on a house you're going to live in. Not every decision has to make perfect financial sense. In your case, maybe it didn’t make financial sense—but it made life sense. And I think that’s perfectly okay.

    I’ve been laid off from a job I didn’t expect to lose. I’ve known people in military families who had to transfer unexpectedly, even when they weren’t supposed to. Just recently, I showed a house overlooking the river that was custom-built by a family planning to stay there forever—then one of them got cancer.

    Sometimes, life just happens, and we have to deal with it.

    Now, as for what you should do from here, you also have to consider opportunity cost. What is keeping this house preventing you from doing?

    2Reply
    • Edward Neuman
      OP
      Member since 2025 · 2 posts · 3 votes
      1y
      Quote from @Luka Milicevic:

      @Edward Neuman

      Believe it or not, I'm going to go ahead and tell you—you didn’t actually make a mistake. What happened is simply that life happened to you.

      I had a neighbor recently who made an upgrade to their house that they’re never going to see a return on. Is that a mistake? Not really. If you're going to live there, you want to enjoy the space you're in.

      The only thing that happened here is life, and there's not much you can do about that. I don’t think you made a mistake by overspending on a house you're going to live in. Not every decision has to make perfect financial sense. In your case, maybe it didn’t make financial sense—but it made life sense. And I think that’s perfectly okay.

      I’ve been laid off from a job I didn’t expect to lose. I’ve known people in military families who had to transfer unexpectedly, even when they weren’t supposed to. Just recently, I showed a house overlooking the river that was custom-built by a family planning to stay there forever—then one of them got cancer.

      Sometimes, life just happens, and we have to deal with it.

      Now, as for what you should do from here, you also have to consider opportunity cost. What is keeping this house preventing you from doing?

      Ah man I appreciate you saying that. I needed to hear it. I guess it’s the opportunity cost of having that money invested in something with better returns or a home with better appreciation potential. I guess I just need to run some numbers and see if it’s worth holding on to and renting or taking the loss like an underperforming stock and reinvesting in a “better stock”

      1Reply
  • Jeb Durgin
    Lender · South Lake Tahoe, CA · Member since 2019 · 109 posts · 36 votes
    1y
    Quote from @Edward Neuman:

    Long story short, I thought I was going to live in Grand Rapids long term so I bought a house for $450k and after some surprises and some impulsiveness I ended up spending $370k on renovations. 

    Due to work and personal circumstances, I would like to leave and move to Chicago within the year.

    Even though it truly is a beautiful and very unique modern home after the renovations, a real estate agent I’ve worked with before told me the house wouldn’t resell right now for more than $650k (even though the house is like 300 yards away from neighboring East Grand Rapids where homes like mine go for 30% more just because they are in EGR).

    So I have an unrealized loss of $170k if I try and sell now which really isn’t an option. Based on appreciation trends in Grand Rapids, the house won’t appreciate to break even in like 6-8 years. I estimate I could rent it for $3,500/month which isn’t amazing but feels like the only option now.

    I wanted to check with the community to see if this has happened to anyone else and maybe get some advice as I’m feeling really stupid. I very much appreciate everyone’s time and thank you very much in advance for.

    Additional context: I paid for the house and renovations by getting a bridge loan from my parents. I’m planning on selling my Nashville condo next year and expect to be able to pay them back around 60% and pay the rest by taking out a mortgage. They’re not pressuring me to pay back until the Nashville condo is sold.


    Hey Edward, first off, don’t be too hard on yourself—over-improving happens to a lot of investors, especially when plans change unexpectedly.

    Your plan to rent it out at $3,500/mo seems like a solid way to hold through the market downturn without locking in a loss now. Given the gap between your cost and current value, waiting it out while generating some income is smart.

    Since you’re planning to sell your Nashville condo to pay back your parents, keeping this as a rental in the meantime lets you avoid a fire sale. Just keep an eye on cash flow, expenses, and potential vacancies.

    Also, consider talking to a property manager who knows the area well to maximize rent and tenant quality. And if you haven’t already, get a detailed market analysis on rental comps to make sure $3,500 is realistic.

    You’re not alone in this—many have pivoted from a flip or primary home to a rental when life threw a curveball. The important thing is you have a plan to repay your parents without stress.

    If you want, I can help brainstorm ways to boost cash flow or explore refinancing options down the line. Hang in there!

    1Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    1y

    Would be careful about renting it out and hoping the market saves you.

    REASON: many tenants will NOT take care of the property like you do:(

    Rented out the first property my wife & I bought, that we had put a decent amount of time into renovating.
    - First tenant took great care of the house, but not so great care of the yard (my wife had created gardens she took care of). 
    - Second tenant was hard on the house, but no real major damage.
    - Third tenant was another great one.
    - Fourth & last tenant lived like a pig and caused a LOT of damage. My wife cried when she saw it after tenant moved out.
    All the tenants paid their rent on time.

    After the last tenant caused so much damage, we fixed it up and sold it. 

    Overall, we made money by holding it, even after subtracting the damage repair costs. We only did so though, because the property's value almost doubled in 6 years.

    So, if you choose to rent it out, understand that you MAY have to spend more money repairing it in the future.

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