Need advice for my home

I'm about to give up on this one. When I purchased my home, I started the cash out refi process about a month after closing. Mind you it took 4 months for my loan officer to finally close and sign docs (Jan of '07 - April '07). I obviously didn't get the cash back I wanted, so I used what I had for carrying costs, because it wasn't even close to my fix up estimates.

So now, I have only one month in reserves for carrying cost, and still no progress on my home. Any suggestions on what to do would be very appreciative. My credit has gone down to the mid 6's, so I don't think a lender would even consider an application from me.

Anyone?? Help!

To answer you Jon,
This is my first project, so YES I am learning as I go.
No this is not my primary resident, and I got into this for a flip. I was trying not to go into details how I got screwed over by a contractor, and loan officer, and realtor...all in the span of 6 months.
What I got from the cash out refi, was about 1/4 of the estimated fix up costs, and then my contractor bailed, after paying him some upfront. My " carrying cost" from the cash out refi is almost depleted. As far as the fixing of the home, there has been no progress on it because of people who are slick with what the have to offer (more like take).

So any creative ideas from investors on what I can do in this situation. I don't want to lose this property.

If you know anyone that would be willing to assist, and then getting a portion of the profit when its flipped.

Edited: 06/26/2010 at 04:30AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

Moderator Pro

12,319 posts
15 awards
95 influence

Jan 10 '08, 07:29 AM

I don't understand your situation. You talk like its your primary residence. But, you talk like you can't afford the payments (" I used what I had for carrying costs" , " only one month in reserves for carrying cost" .) You mention " still no progress on my home" . What does that mean? What kind of progress? Is this a flip that you got into without enough cash to carry through to completion? Describe the situation more fully.

Jon

Edited: 06/26/2010 at 04:30AM

Jon Holdman, Flying Phoenix LLC

Michael Rossi

Real Estate Investor · Ohio

4,587 posts
14 awards
56 influence

Jan 10 '08, 04:48 PM

Cheyne,

Here's my idea. Do the work yourself. If that means you've got to work 16 hour days - do it? You didn't really think it was going to be easy like on TV - did you? By doing the work, you'll save a bunch of money and you should be able to work a lot faster than a contractor. I've found through experience that I can do the work of 5-6 laborers and do a much better job. Why, because I don't spend the majority of my time talking, taking smoke breaks, and screwing around. In addition, I never steal from myself or fail to show up. I don't miss work because I'm hungover or because I'm in jail. I also won't take my money and disappear.

Good Luck,

Mike

Edited: 06/26/2010 at 04:30AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

Moderator Pro

12,319 posts
15 awards
95 influence

Jan 10 '08, 06:18 PM

Cheyne,

If you do reply, just hit " Post Reply" to add on a new posting like this. It will get confusing to future readers if you keep editing your original posting.

Mike gives some great advice about making progress. If you do need to hire some contractor help, screen contractors carefully. Interview them, get references, and check out the references. If you have time to do the work yourself, go to Home Depot or Lowes and sign up for their classes. Very little about this work is complicated, if you have the knowledge. Read do-it-yourself books.

If you need more hands, there will be somewhere in your area where you can hire day labor, have them work with you, then pay them at the end of the day.

If you hire contractors, you will need to supervise them carefully.

It sounds like money is an issue. That's tougher to sort out. Do you have other assets you can sell or mortgage to generate more cash? Credit cards? Rich uncle?

If it comes down to it, the best option may be to sell it as is. Do you belong to your local REIA. You should. At ours they offer a chance to show deals at the start of the meeting. Someone might be willing to take it off you hands, if there's still enough room in it to make a profit. You might also find a money partner. Someone who could step in with cash to help you finish.

It would be helpful if you gave some numbers. What did it cost you? What's it costing you a month in holding costs (payments, insurance, taxes, utilities, everything else?) How much are you into it for, total? What your current ARV, which I'm sure is less than the ARV when you started. What do you think its going to cost to finish the rehab?

Jon

Edited: 06/26/2010 at 04:30AM

Jon Holdman, Flying Phoenix LLC

Jill Md

Real Estate Investor · AZ

45 posts
1 award
50 influence

Jan 10 '08, 11:42 PM

Cheyne,

Having done fix and flips for 12 years, both Jon and Mike give you excellent advice.

I always limit the number or use of contractors specifically for the reasons you have experienced and Mike described.

You sound as if you are at the end of the line money wise, if you can't get capital to finish, either through private money or a money partner, I would lean towards selling as-is and get out from it before it becomes a further burden.

Edited: 06/26/2010 at 04:30AM