Money Pit Dilemma Holding Up Investment Opportunities

[Edgar Jimenez]

I purchased my first home in 2009 and was able to make several improvements while paying down the mortgage by 60% within 6 years. Due to the rise in property values in my area I was able to sell the home and gain enough capital to both buy a new home and invest in a rental property. The plan was to purchase a rental property from my father who was offering to sell to me below market value. 

My plans of buying the rental property quickly came crashing down soon after beginning a renovation project on my new home. The inspection failed to discover many structural, plumbing and electrical issues with the property. The GC walked away from the project leaving the work areas demo'd, and all new bids have come in at a cost well above what we'd be able to recoup in selling the home for the foreseeable future. Due to these events I have had to postpone and possibly forgo the purchase of my father's rental, and discussions with a contract attorney have indicated that I have no recourse in seeking damages from either the seller or my inspector. 

At this point we are devastated and unsure as how to move forward. The thought of being stuck with a money pit is crippling. Any advice on what to do with a home that requires improvements costing well above the value of the home would be greatly appreciated.