Serious Question about my 1st property.

I have a property that was a complete nightmare to rehab. Hindsight, I should have knocked it down and started from scratch, but that's all behind me now. So, the home is finally finished and has been for about a month. My exit is just to sell the home,( because of the whole big nightmare, I don't want to look at it anymore) should I refinance so I can pay my rehab lender their money back and then sit on the house until I sell it? And How long should I sit on the house B4 renting or something? I don't know what to do. I know the house will sell eventually, but I guess I just need to hear some sound advice from the Pro's.

Edited: 06/26/2010 at 04:36AM

Tim W.

Real Estate Investor · Indiana, Indiana

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Jan 29 '08, 02:25 AM

Here's what I just did on a rehab. I had a rehab loan to an hml and had planned to sell this sucker. Got a partner who could get this thing financed so I could hang on to it (what I much prefer to do - multi unit prop.). We have the thing refi'd now and I would still be willing to sell, but now I'm not under the gun of an hml. This is what works for me and if you can rent the place out and cover the expenses or cashflow positive, it may work for you as well. The beauty of my situation is I cashflow positively (very well - 1,420 gross rents on a property where total of purchase and rehab cost me less than 40 grand) so that if I do decide to sell, I can hold out for a good offer. If I don't sell this month - darn, another month of rental income. :violin:

FYI - If you want to refi it, do it before you list the property for sale with a realtor. Properties that are listed for sale or were recently listed for sale are a lot harder to refi. I've heard some lenders require not listed for a period of 6 months.

Tim

Edited: 06/26/2010 at 04:36AM

Jared Christiansen

Real Estate Investor · Fort Wayne, IN

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Jan 29 '08, 03:32 AM

I'm no pro but I'll chime in. Can you price it so that it sells quickly? If so that's the way I would do it. I know of plenty of investors that finish a rehab and then refi immediately to pull the cash out and the house sits. And sits. And sits. Then guess what? They can't lower the price because they owe so much on it from refinancing. To me when you refi it seems that you lose any wiggle room.

Edited: 06/26/2010 at 04:36AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

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Jan 29 '08, 05:38 AM

A rehab to sell and a rehab to rent are two different things. If you did the rehab to sell, you probably want to move it. If you end up renting, you'll need more work before its over and done. Get it priced right, and be done with it. If you do need to refi, then do that before listing, as Tim mentions.

Jon

Edited: 06/26/2010 at 04:36AM

Jon Holdman, Flying Phoenix LLC

Tim W.

Real Estate Investor · Indiana, Indiana

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Jan 29 '08, 07:58 AM

Originally posted by "BlueStarHomes"

I'm no pro but I'll chime in. Can you price it so that it sells quickly? If so that's the way I would do it. I know of plenty of investors that finish a rehab and then refi immediately to pull the cash out and the house sits. And sits. And sits. Then guess what? They can't lower the price because they owe so much on it from refinancing. To me when you refi it seems that you lose any wiggle room.

I should clarify - a refi just to refi the hml, not a cash out. People who cash out then wait to sell can get in trouble. That only works when you intend to keep the property and it will positively cash flow after the cash out.

Tim

Edited: 06/26/2010 at 04:37AM

Charles Whitaker

Real Estate Investor · Amarillo, Texas

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Feb 03 '08, 05:52 AM

Originally posted by "Wheatie"

A rehab to sell and a rehab to rent are two different things. If you did the rehab to sell, you probably want to move it. If you end up renting, you'll need more work before its over and done. Get it priced right, and be done with it. If you do need to refi, then do that before listing, as Tim mentions.

Jon

I would have to agree here. Do you have enough wiggle room for a quick sale price reduction? I've heard that some HML's offer to refinance the loan for another term, only if you haven't maxed the house out with 2nd loans. Either way out, hml or bank, you'll have more points to pay and the monthly payments just keep on a coming.

Edited: 06/26/2010 at 04:38AM

Tom C

Real Estate Investor · Ohio

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Feb 03 '08, 09:40 PM

Refi, pull your cash, then sell to break even or make a little profit and pay your gains. Sell and not refi, you will have a much bigger capital gains hit.

Edited: 06/26/2010 at 04:38AM

Michael Madden

· Milwaukee, WI

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Feb 09 '08, 07:23 AM

Where do you find a deal for 40K that does $1420 in rents?

I can do that here, maybe, if I want to risk being robbed and or shot, or both, or maybe just stabbed, or maybe only jumped going to my car.

you get the point.

I have props in somewhat questionable areas here, and am about 80K and $1200 in rents.

Mike

Edited: 06/26/2010 at 04:40AM