How to fund REO deal - Partner backed out last minute

[Farrukh Amini]

I'm wondering if anyone has experience with a money lender or other ways to finance an REO that could help me close on this delicate all-cash deal. It's all cash because, for some reason, this bank said no to appraisal contingency from the hard money lender, so we're funding this all cash. Our offer is almost accepted - we're negotiating the closing date at this point, and all of a sudden my partner got cold feet and backed out last minute (The partnership was he brings the capital and I put in the expertise and the work and we split the profits 50/50). I understand him because this is a risky deal, but the return is great too. Below are the details:

Type of property: 2 bedroom condo (850sq ft) in a 5 unit B class building with dedicated parking. 

Location: Jersey City, NJ (in a very desirable neighborhood)

Seller: Bank Owned

Asking price: $200k

Negotiated price: $150k all cash (that's how much the partner had besides the reserved $20K that we planned on using for repair and resolving HOA arrears issues - explained below).

ARV: $300 (recently sold and currently listed comps range in $280-$400k based on size and condition and other factors).

The main issue: The main reason this property hasn't sold was due to HOA arrears. The previous owner of this condo who got foreclosed on stopped paying, including her dues, causing the entire building to stop paying HOA fees. Now everyone owes in arrears. The former head of the HOA association who's one of the apartment owners is not being cooperative to release any details regarding HOA financials. Based on my tax research and talking to another tenant I estimate $6,400-$10,000 owed in arrears for this unit. With legal fees and rehab, I'm estimating an additional $20k to make this property appealing to a buyer that uses conventional financing.

Potential: If acquired for cash, can finish the rehab in 2 weeks and rent it out for a minimum of $1,800/month (minus roughly $700 in taxes/insurance/HOA) which can generate an approximate positive cash flow of $1,100 while working on resolving the HOA stuff. Once fully resolved, can sell for $300k+.

My challenge: No conventional bank would loan to a borrower unless those issues are resolved. The only options are either a hard money lender or all cash. The bank doesn't want an appraisal contingency, and the two hard money lenders I've been in contact require an appraisal. Now the partner that originally agreed to fund the deal backed out. Need to find funding by Monday or Tuesday because the counter offer went back to the seller on Friday. 

Any advice and input are greatly appreciated. I have no prior experience with REO or cash/hard money financing.

[Jay Hinrichs]

Originally posted by @Thomas S.:

I would walk away from this deal, too high risk especially if you get stuck long term with a rental having negative cash flow. $1800 on a 300K property is not a worthwhile investment risk. This will not be a positive cash flow investment.

If you had your own cash going in to cover all costs that would be a different story but considering you have no skin in th egame you are also too high risk.

a dysfunctional HOA in our country is a HUGE Red FLAG ... irrespective of the ( is it a good deal for cash flow equestion)