Help, post fire and can't even give this Chicago deal away

[Anita Fofie]

Hello all,

As a wholesaler, what are your options when you have a dilapidated property under contract needing a full gut rehab that might exceed the ARV? Rehab is about $100K.

I have a small brick multi family building on Chicago's south side. Recently sold comps say one thing regarding ARV (~$130-150K), but it's a C/C- neighborhood so my buyers are having a tough time getting the funding for the rehab based on lenders preception of the appraisal value. Prior to a fire the four units were cashflowing really well. So not sure ARV is really the best metric...Cap rate even with the full rehab and acquisition costs would be in the double digits. Even cash on cash return to acquire, rehab, and costs to hold the property would be over 15% in the first year...

I've negotiated the contract down with the seller by half and would of course pass that on to buyer. I get that this isn't a deal for a fix and flip, but should be a decent fix and hold project. 

Still can't give this one away.

What am I missing?

I can give more specific numbers of need be but thought I'd just start with the general scenario to figure out what to do. 

Thanks.