Exit Strategies When Selling A Bad Flip

[Robert Herrick]

Hi everyone, I have a SFR flip right now that is simply not selling. I have a hard money loan on this place and it is maturing soon.

My partner and I can keep lowering the price but we are already set to lose a Lot of money on it. I was thinking I could cash out refinance and short term rent it. The numbers for that look a bit better but ultimately not that great at all. Do any of you have any ideas for other ways to get out of the hard money loan on this property?

Please let me know!

[Nathan Gesner]

Quote from @Robert Herrick:

We can't answer your question without knowing all the numbers. I recommend you and your partner sit down and put pencil to paper. How much will you lose if you drop the price and sell it for a loss today? How does that compare to keeping it as a long-term rental? Short-term rental? Talk to experts and get your numbers as accurate as possible. Then choose your poison.

When considering an investment, it's best to look for properties that have multiple options. If option A doesn't work, you can change gears and go with Option B.

[John Mason]

@Robert Herrick some ideas https://www.biggerpockets.com/blog/2014-02-23-5-exit-strateg...

[John Mason]

Seems people have escaped similar issues 

https://www.biggerpockets.com/forums/48/topics/1178658-flip-...

[Robert Herrick]

Quote from @Nathan Gesner:

Quote from @Robert Herrick:

We can't answer your question without knowing all the numbers. I recommend you and your partner sit down and put pencil to paper. How much will you lose if you drop the price and sell it for a loss today? How does that compare to keeping it as a long-term rental? Short-term rental? Talk to experts and get your numbers as accurate as possible. Then choose your poison.

When considering an investment, it's best to look for properties that have multiple options. If option A doesn't work, you can change gears and go with Option B.

@Nathan Gesner Yes I know the numbers, we owe about $225,000 on the note and it is maturing soon. Long story short a lot of different things have gone wrong with this house but we are not even getting showings at $269,000. We can lower to $250,000 and be in the hole for basically $32,000. We can also try to cash out refinance (I do think it would appraise for $260,000) and pull out $208,000. We then need about $30,000 to cover the hard money loan and the closing costs. If we did that we would then short term rent it and likely pull in $3175 a month. Once all monthly costs are covered we could cash flow about $500 a month. The problem is my partner and I do not have $30,000 to cover that refinance right now. Frankly it is invested into another house that we are flipping. So we would have to bring in an equity partner to cover that for us. I have private lenders but nobody for this right now.

That is my problem. I could sell and take a big hit right now, then I would be done with this house. Or I could try to refi with someone and hope to rent it out and sell in a year. No possibility is ideal right now so I am trying to see if there are any other options I have not considered. This is my 7th house renovation and the first one that has been this problematic.

[Robert Herrick]

Quote from @John Mason:

Seems people have escaped similar issues 

https://www.biggerpockets.com/forums/48/topics/1178658-flip-...

@JohnMason Thanks for the links. Yes I have looked into a lot of these strategies. It was beneficial to look at this but these are not ideal for me for the reasons I detailed to Nathan above.

[Nathan Gesner]

Quote from @Robert Herrick:

If your other flip is successful, you could use the cash from that sale to dig yourself out of the hole on this one. I would focus your energy on that flip.