Failed Fix and Flip Exit strayegy

[Anil Villamkandathil]

Hello all,

I am doing my first rehab flip. It has turned out to be damm adventureous/scary/ Stressfull/ Sleepless journey. I have my great share of mistakes, and if I survive this , will do it lot better next time. There are these continous moments where I absolutely think I should have not got into bussiness at this time.

I  had the worst contractor whom I trusted till very late in the project who did all jobs very lousyly. The paint job, tile Job and flooring done by him is very bad and pathetic. I will put in a detailed post of How I got here, the story is stupid and miserable for me.

so I have listed the house for 343k in concord -28027 zipcode, the house had very good interest and views on zillow and redfin, but none of these has converted into a offer. I had two semi offer, I think they were the undecided buyers. I had many people tell me how lousy the paint and tile job is. I can see it, nobody need to tell me that and that is the reason why any of these leads are not converting to a offer

As I stand today, I will lose 15k to 20k [without counting my travel and food expense] on this property at the above ask price. And my loss is increasing every day I hold it. I live about 1 hour 30 min from the property. One round trip costs around 25 bucks with the vehicle I own.

I have a hard money on this house costing 2200 every month + 2380 every three months in renewal costs. This is the highest cost line item in my flip.

With credit market in big risk and high costs of capital, I am super stressed/ sleepless /not mention scared and worried how to go about with this now. In short I am worried about my exit.  

So now I am trying to figure out how do I go about this home now.

1.refianance and hold l. I  will lose about 200 or 300 every month. I should be able to rent at 2000. I am looking for a good lender who can help me. Good thing is I have good credit and equity on this project.

2. Suck up and Fix up the issues and sell. It does not mean I will still get the asking. This will cost me another 10k in labour and material. Bigger problem is if I need to mess around with the floor, they are discontinued in lowes.

3. Reduce price, if yes by how much. Will I still have buyers.

Any advise is greatly appreciated.

Thanks

Anil

[Kevin Sobilo]

@Anil Villamkandathil, first envision who your end buyer is! It sounds like it is an owner-occupant. Someone who wants this to be their "forever home". A buyer like this is often spending to the edge of their budget to get something they would be happy to live in. They want things to be done before they purchase because they won't have the money to fix them after, its also harder to rehab when living in a property, and ALSO because when its done before purchase the costs are all wrapped up in their mortgage financing.

If the carrying costs are over $2k per month to hold this house while trying to sell it. Wouldn't you be SAVING money to do some work like fix the paint job if you believe it will help sell the house sooner. If you could spend $1k fixing the paint job and sell the house 30 days faster you have saved money.

I would LISTEN TO THE FEEDBACK. When they tell you about the paint and tile job, that is because those are the things turning them off from buying the property! In addition when people see shoddy finish work, they often wonder if the functional aspects of the house were done in a similar half-*** way.

I would try to take a step back and pretend to bought the property today for what you have invested and then make decisions for the best outcome. I suspect that will entail tackling some of these issues. Not necessarily repainting the whole house, a crappy paint job should be able to be fixed with a little time and care I hope. The tile work might also require some creative problem solving to avoid a complete redo.

I would jump on fixes NOW so that when the summer selling season heats up you are ready to sell again!