BRRRR gone bad .. what’s next next??

[Jay Jones]

Hi, I am in a pretty tough spot I have flipped some properties successfully. I decided to do the BRRRR strategy on this one house. I currently have it rented as of March 2022 for $1381 section 8. But when I went to refinance 6 months later I got denied for 30 year fixed loan.

Financials :

I have a hard money loan on it for $106K at 12% interest only, interest only payments start in June. The house appraised for $183K and if I was approve my loan amount would been $137K and I would of got back $18K in cash. My middle credit score is 638 (but I had a lot of late payments a few years back and only 1 late payment in April 2021 which hurt me)

Do I have any other option as far lending someone mention a non traditional loan but it would be an ARM (yikes) so

Any ideas:

*Should I file a notice to quit for the tenants let know I have to sale I’m in the Michigan market  . Put the house up for sale as I would still profit from the deal . (This option just sucks for my tenants) 

* Try to refinance into a non traditional loan 

* go to my hard money lender let them aware of the situation and see if they have options for me?

** option to suggestions**

[Larry Turowski]

@Jay Jones I wouldn’t call this gone bad. It’s a hiccup. You’ve got over 60k of equity from the sounds of it.

Worst case scenario, sell the house. You could talk to your tenant, explain the situation, ask if they could leave, and if they balk say, “Look I’ve got to sell it, how about if I cut you a check for 2,000 at closing. We can put it in writing. You’ve just got to keep the place neat and tidy for showings.”  Then go up from there if they balk. 

Or do some research for asset based lenders—hard money lenders for landlords and see if you can get rates you can live with.