Exit Strategy Help! First rehab has gone wrong...

[Trevor Smith]

Hey guys,

Well, I am still awake because of this dang flip I'm trying to wrap up. I can't sleep. I am cutting this super close. I could explain what I think went wrong, how I came to do this deal, etc. But that is not relevant. It is what it is now. My question is: should I try to sell for 450k or refinance and rent for awhile? Is there another exit strategy you can suggest? 

Here's some numbers: 

Purchase $276,000

Borrowed rehab money at 11.9% $45,000

Our rehab money no interest credit cards $37,000

Total Rehab cost $82,000

Closing costs $21,800(hard money: 3 points at 11.9%)

Total Hard Money interest(and property taxes)if we sell within the next 60 days $21,600

Total other interest(to my brother and my grandma around 3%) $2,176

Other(pest control, appraisals, inspection, utilities, insurance) $2,2263

ARV $450,000

Realtor commissions 5%(my listing agent has agreed to 2%) $22,500

TOTAL $428, 339

PROFIT about $20,000

In theory, this is a 21% return on our down payment of $58,000+$36,000 rehab. Which is decent right? But why does it feel so horrible?? I've also heard the profit should be 15% of ARV which is $61,000 so I'm definitely not even close to that.

This is all assuming that my rehab does not go over-budget which I am certain it will by about $15,000. And it is assuming it will sell for my asking price in the first month, which it very well may not. 

If this thing doesn't sell, what should I do?? Should I refinance immediately and rent instead? If we rent for 10 years, maybe it will be a money-maker after all, someday. What can I expect to pay to refinance? The refi cost is what would kill this option. If I squeek out with $5,000 profit, but it costs me $15,000 to refinance, then I would have to rent for a long time just to make up for the refi cost! 

I am confident that I can find renters. I don't think it will cash flow though after PITI, repairs, and vacancies. But that's okay. If we pay down the mortgage for 10 years with rent, we will come out ahead eventually.

Thank you for reading. I appreciate any help! Especially if you know a great bank that will refi very affordably for me!