My first property and I think it's a BUST!!!

[Adrian Reyes]

Hey everyone,

So I am in desperate need of some help, just purchased my first property at auction and I think I went way in over my head. Here are the numbers: 

I purchased the property for 98k as is, It is a nice two story 5 bedroom 3 bath and comps are at 204k in the area, but this property can easily be listed at 210k arv. But there is an ugly side too this property. When I arrived to take a look at my "golden nugget" it was horrible, the back of the house was still under construction adding on a balcony or so it seems, no windows, inside of the house wasn't any better. Long story short we had a contractor estimate 100k plus in repairs!!! So now I need to plan a good exit on this purchase I can use all the help I can get, but as of right now I'm marketing to wholesale this property that's the only thing I can think of at this point. Any advice would tremendously be appreciated. What are my options in this situation? What else can I do? 

Thank you 

[Alec B Calzada]

Adrian Reyes

We deal with situations like this all of the time. Consider trying the following:
1) get separate bids, bid the demo separately from the renovation work (consider demoing the balcony as it looks damaged anyway and just finishing up that section of roof)
2) when bidding the renovation work, get only "shell finish" bids. Leave out the finishes (trims, paint, fixtures) leave everything rough, just drywall and slab floors, a weather tight structure, not not much else.
3) resell the shell home to an investor buyer or contractor who is confident they can finish it nice and for cheap.

You may not sell it for $200K, but it will cost you more like $20k-$25K to get to the shell stage and you could sell that to an investor for $150k or $165k.