Pay Off Mortgage or Rehab Property

[Edward Jordan]

Hello Everyone on BP,

This is my first post on BP so I will do my best to try and describe my situation. My parents own a House that has 40k line of credit and needs a ton of repair. I tried to get a traditional mortgage and was approved but when the bank appraised they said around 60k of work needs to be done in order to get a conventional mortgage on this property. I decided to give the dreadful 203k loan a try and as I suspected it was loaded with fees, shady contractors and 203k Consultants. One contractor sent the bank a total of 190k of repairs, permits , drawings and dont forget the 10% contingency fee cherry on top. I admit the house does need some work but someone was living there just a year ago. For instance on the SOR there was 14k for a new roof (replace shingles) and additional 15k marked as decorations and another 15k marked as paint. I subbed out the roof my self and when they took off the shingles the plywood was rotted so I bought all new plywood and new shingles on main roof and rear porch. I got all this work done for around 8k including materials and it took 2 days. My question is should I just pay off the 40k and Cash Out Refi for repairs? Should I pay for the repairs with my own cash for 60k and then do a mortgage on the 40k? When done the house will appraise for around 280K. It has a sales comparison approach value of 150k in the current condition in 2018. However, the House behind it sold for 430k and is half of the square foot. I told you I was a rookie