Advice on flip that just won’t sell

Advice on flip that just won’t sell

Member since 2025 · 2 posts · 1 vote

My husband and I run a fix and flip business. We own a property in Midtown, in the in the Valentine neighborhood that has been a struggle to sell. We came on market one week before the shut down, so we're not sure if that's affected buyers eabting to make a purchase. The home has been fully renovated and is ready to go, but we just can't get a buyer. We're considering our options with refinancing out of our money loan, possibly into a DSCR. We feel like there has to be other options that we just don't know about it.

Can you guys offer other creative options outside of the DSCR?

We're all in on our loan at $413,000. Our hard money interest rate is about 13%. with Realtor fees and what we owe, we have to sell it at least $500,000 to make it make sense. Our appraisal came in at $590,000. Comps in the neighborhood of that are all over the place. There's a house two door down that sold for $710,000 that's only a couple hundred square feet larger than ours. there are other houses in the neighborhood that sold around $500,000 to $550,000. 

thanks for your help!! 

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    10mo

    if you're selling it, then I would not refinance into a DSCR as you will run into prepayment penalties. If it is not selling, it is most likely a price issue, so have you considered dropping the price?

    I am guessing for DSR  the numbers probably do not make sense and you need to also put more money into the deal. Have you looked into that?

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  • Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes
    9mo

    You can do a DSCR refi with no PPP, the rate would be higher but you can get into a 30 yr loan and be able to sell or refi without penalty from day 1.

    But, I learned this the hard way myself. Even the comps are not comps. You see inventory moving at price X, and so you think that's what the market will bear for this kind of asset and then you can't get that price. I've seen that scenario over and over. I set up a fix n flip for a client, the bridge appraisal was 330k on ARV. He sold it for 275k and took a small loss.

    The real numbers are not in the appraisal or even the comps, your only real number is what is offered to you.  What is your breakeven sale price?  Loan is 413k, that had to have a heft holding cost to it.  3500/month for 6 months?  Then a 6% RE commission on a sale of 500k in 30k.  Will you breakeven at 500k?  Sounds like your net breakeven will be around there somewhere.

    • Member since 2025 · 2 posts · 1 vote
      9mo

      @Mike Klarman yes are holding cost are starting to climb again. The interest rate is 13.9% if I sell it for sale by owner and do away with the 6% Realtor fees with closing cost, I would have to have 450 thousand to break even. I just think there has to be a better way somewhere where I can engage out of state buyers or investors perhaps

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