When to give up on a flip and take the loss......................

[Howard Montaque]

I had a lender that could not keep his word of 90% LTV and 100% of the rehab. I had to go back to my old lender who gave 80% and no rehab. This has left me maxing out all my credit to get the house partially rehabbed. The important things were pricey. The roof and pool. I bought the house for $265k. The roof was $25k and the pool was $30k. Totaling $320k. The closing cost will be around $20k. We are at $340k. I have held the house now 5 months at $2448.23 a month. I have had offers from $300k to $340k but the pool has 2 weeks until completion and should help a lot with the sale as buyers will see it all practically new.

I was just offered $340k and the house needs about $100k in rehab. Comps are around $500k.

Its listed for $390k.

Do I try to hang on or do I sell and take the loss?

The house is in my profile.

Howard

[Zachary Inman]

Hey @Howard Montaque,

I'm sorry that this deal didn't work out — it's the worst feeling.

I always think about it like this: if I were to observe this situation for the first time, would I put my capital into this investment? Often we can be affected by the sunk cost fallacy because we want to make the time and money "worth it," even if the more profitable and risk-mitigated decision would be to cut losses and move onto the next deal.