Updated almost 11 years ago on . Most recent reply
When a sale falls through and the house loses its mojo
I could use some creative thinking on this one. My buddy flips houses and uses the proceeds to buy rental properties. His most recent flip in McKinney Texas was a historic home (for Texas standards) built in the early 1900s. When he put it up for sale, he got a lot of interest with one being full ask. Long story short is the people did not have the down payment they stated they had The bank appraised it for $60k less than what they offered and the deal fell through. The loan was a VA loan which means he did not get the earnest money. On top of that, he spent another $5k based on repairs that came out of the inspection. The deal took 3 months to fall through. When he put it back up on the market it lost its mojo and everyone thinks the deal fell through because there is something wrong with it. He has lowered the price to his break even and it is still getting no interest. Now he is looking to rent it out but he has a ton of his money tied up in it that he would use for another flip. Here is the kicker. The property has a main house and guest house. Both on separate electric meters so it would be a great rental. However, he is just wanting to get his money out of it. Any thoughts on how he can unload it or get the money back out of it without refinancing would be appreciated.
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McKinney is mostly a pretty good area. Some exceptions in the 'historic' (read older) areas. Sounds like it he may have over paid either for the property, the repairs or both and now is trying to get more than it is worth. Might think about selling it owner-financed and then selling the note to get as much working capital as possible. Or rent the two spaces and wait for appreciation to bail him out.
Hard to analyze without more property details thus hard to be specific in any recommendations.