Fix And Flip Gone Wrong

[Mario Martinez]

HELLO BP FAMILY!

I COMPLETED MY SECOUND FIX AND FLIP FOUR MONTHS AGO, BUT AFTER NOT SELLING AFTER TWO MONTHS I DECIDED TO RENT. MY TENANT LOST THEIR JOB IN THE FIRST MONTH, AND I HAD TO EVICT THEM. I PURCHASED THE PROPETEY AT 125 AND INVESTED 50,000. MY BREAK EVEN POINT RIGHT NOW WILL BE 210 BUT I DO NOT THINK I CAN GET THAT. MOST COMPS NOW ARE COMING IN AT 180 WHICH WILL PUT ME IN THE HOLE ABOUT 30K. SHOULD I JUST TAKE THE LOST OR DOES ANYONE HAVE ANY OTHER RECOMMONDATIONS? I TRIED TO PITCH IT TO FRIENDS AND FAMILY TO BUY AND HOLD, BUT THE INTREST RATES ARE SCARYING OFF MANY POTENTIAL BUYERS. AT THIS POINT I JUST WANT TO GET RID OF THE HOME. HELP! IM USING HARD MONEY SO THOSE MONTHLY INTREST ONLY PAYMENTS ARE KILLING ME ASWELL 

[Stuart Udis]

While I do not know the specifics of the purchase or exact location, I understand the Philadelphia market well enough to place this property in a lower tier neighborhood based on the ARV Mario shared. I hope Mario can mitigage his losses by selling the property quickly to stop the bleeding, or re-tenant and refinance to less expensive debt but this serves as a case study on the perils of investing in lower tier neighborhoods.

The amount of people on the internet and social media selling the false narrative of how easy it is to create wealth through investing in real estate, specifically these lower tier neighborhoods is upsetting.  Truth be told, the only easy part is the actual purchase where there are no barriers of entry. I am particulalry concerned for those who spend hard earned money on courses and mentorship where they are taught to use credit card debt to fund the downpayments and/or improvements and the ease of funding deals when in actuality the only funding available is high interest alternative lenders.