Bad Deal—Help for 1st Investment

[Turner Wright]

My first RE investment may be a bad investment, according, to two realtors who specialize in the market area. I estimated an ARV of $310k after rehab, but they say I will be lucky to get $275-285k. Below are the details:

PurchasePrice: $177k

Cash to Closing: $22k

Rehab Budget: $60k

Interest Rate: 11.25%, 12-month term, interest only

Monthly Payment: $1,659-$2,175 per budget used

Both realtors are advising me to rent the house to minimize my losses, but I’ll lose about $200-300 per month with a max $1,550 rent. So, I have considered the following options:

1) Sell as-is and take my losses (approx. 30k)

2) Full remodel and get what I can for it

3) Mid-level remodel and get what I can

4) Rent out and eat cost, little by little

* Will prevent me from buying another property

for a while

5) Owner/Seller finance

* As-Is and at cost, or

* After mid or full rehab

6) Lease Option

* As-Is and at cost, or

* After mid or full rehab

I want to ask experienced and creative investors out there for their help in minimizing my losses. What do you suggest? What would you do? Thanks in advance!

[Dominic Pizzi]

Hey Turner! You brought up some good options, I think a cash out refinance might be useful to you as well. It will get you out of that 11%+ interest rate and can maybe get some money out for you if your payoff on the property is low. This way it would minimize your losses on the property, will get you residual income, and can potentially get you some cash out to put money into another property.

Send me a PM and maybe I can help you out with this!