All Forum Posts by: Sara C.

I think you all are saying what I needed to hear! Sounds like the upside of hanging on to it is little to none. 

{Numbers included}

You've heard it before: in 2007, my husband and I were young and naive, and desperately wanted to purchase our first home. Not only did we pick a neighborhood that we didn't know well (which turned out to be rough), we bought way too high right before the crash. This particular area was hit hard by foreclosures and we soon found ourselves owing more than the home was worth. So many lessons learned. 

Long story short, we kept this property as a rental. It does not cashflow; our tenants have paid down the mortgage over the past 11 years and even now, we would barely break even if we sold. It's still not worth what we paid for it. There's a lease in place with renewal in January.

Numbers

Purchase: $172,000
Downpayment: $17,200
Owe on (interest only) mortgage: $102,303.33
Monthly payment including $100 Principal, Interest, Taxes, Insurance: $1031.45
Rent: $1125.00
Average Monthly Expenses: $150
Cashflow: $-56.45
Comps selling ~: $140,000
Improvements needed to sell: Likely $10,000

THOUGHTS ON WHAT YOU WOULD DO?

1. hold it and let it appreciate/pay down down the mortgage? If so, at what point would you sell?
2. Sell it and just move on?
3. Other ideas I'm not thinking of???

That's great cash flow! But I suppose you have to decide if you want to be in the short-rental business. Sounds like a lot of hours/work you're not sure you'd like to continue with?

I thought I would update this for anyone who is interested. Initially I did not work with this buyer. As I mentioned, I'm not interested in taking on a client and doing a custom home. BUT - she ended up coming back... and not requesting changes except a credit for the appliance package as she wanted to pick her own. We close May 15th assuming all goes according to plan. So, I guess my lesson here is... if the buyer wants it badly enough... they'll be back! (or not, which is ok, too). 

Thanks for everyone's 2 cents!

Thanks all, love the feedback. We are so far in (literally wrapping up the project) and I haven't seen any official paperwork or offers from her, only verbal. So, I'm continuing with my original plan, and every day that goes by makes less that she would be able to customize anyway. I'm not stopping work on hopes that we can make this deal work, especially as the market is so hot in this neighborhood. But I love the hypotheticals about how to protect oneself in this scenario. 20% non-refundable EM, working as planned until closing (she is NOT a cash buyer, so there's that), etc. Great feedback. I'm fairly inexperienced so very much appreciate the different perspectives. Thanks!

Thanks all, for the different perspectives. Really so appreciate hearing from you all. Will keep you updated!

Would love any thoughts on how to handle this situation...

We are about 3 weeks from completing a flip. All the finishes are purchased and are going in soon. Our realtors—who we have a great relationship with (they found us this deal)—showed it to a potential buyer.  It's not done and not for sale at this time. Anyway, this buyer LOVED it, wants to buy it at full price, but due to the unfinished nature of the home, got it in her head that she could customize EVERYTHING. She even told our contractors to stop all work while she was there viewing the house. She wants to take down walls, choose lighting, choose tile, etc (all of this has been purchased and install is scheduled out).

I told our realtors that we are not in the custom home business (I have no interest in that), and if the current unfinished state gives people walking through that customization is an option, I'd rather wait and not show it at all . Anyway, got a call this morning that they were back over there and she wants us to stop all work and she would like to buy it from us as is. 

The flip is in a desirable area and I don't expect any problems selling at it full price. So, I have no incentive to do this for her.

My realtor suggested we give her the right of fist refusal and we can go under contract after the flip is completed. I think I'm ok with that. But, she seems like a big "red flag" kind of lady and I'm not sure I want to work with her at all. I also feel uncomfortable with her continuing to go to the property and asking my contractor questions, telling him what to do, etc. 

Have you ever encountered this? Phew!

This will be my first time joining tomorrow. Looking forward to it!!

@Jeff Copeland good point about townhomes and the HOA being responsible for some of the big stuff. I appreciate your feedback. Thanks! Feeling better about going in without a formal inspection.

Yep @Brian Pulaski exactly. I mean an actual home inspector. I've looked at it as best I can, but I'm no expert in home systems. However, I am getting a deep discount and am basically budgeting for all the big stuff like electrical updates, new HVAC etc. I appreciate everyone's feedback. I do think it would be hard to get an inspector in there with the shape it's in now.