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Ben McPhail
Member since 2020 · 15 posts · 4 votes

I have made some poor investment. I invested too much money in a start up that never amounted to anything. I even made the mistake of putting some on credit cards.

I have a great cash flowing rental house. PIMI is about $1000 and it rents for $2000+.

I'm in a situation where I need cash to take care of debts. Selling is the only option I see but I don't want to get rid of the house if there are other options. I've ruined my credit so I haven't been able to refinance or get a HELOC with the equity.

I owe $105k and it’s selling for about $290k. Do I just sell it, learn, and move on or is there a creative way to access temporary capital to pay off debt, and retain the house?

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Aaron Zucker
Realtor · New York, NY · Member since 2019 · 68 posts · 25 votes
2d

Ben — run the sell number honestly before you borrow against this house. At $290k with $105k owed, after roughly 6-8% in selling costs you are still walking away with about $160k before taxes. That clears the cards, resets your credit, and lets you buy again later. That is not a failure — that is the one good asset doing its job.

The part that worries me about the hard-money route is you would be trading unsecured debt for debt secured by a good rental, in Soldotna where your lender and appraiser options are already thin, and with two recent 30-day lates working against you. Even $50k at hard-money pricing is $500+ a month interest-only plus points, and your $2,000 rent vs. about $1,000 PITI spread shrinks fast once you count vacancy, maintenance and CapEx. If the tenant is late once, the whole bridge wobbles, and the balloon still comes due.

If you do try to keep it, price a local option before a nationwide one — a community bank or credit union that actually lends on the Kenai, or a local private lender who knows Soldotna — and only borrow the minimum you need, with a clear 12-month exit. If that pricing is not clean, sell it, do not discount it out of desperation, and take the reset.

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  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 673 votes
    2d

    Ben, before you sell, a few things worth pricing out since the house cash flows well.

    A DSCR cash-out refi or a DSCR HELOC qualifies on the property's rent rather than your personal income or DTI. The HELOC version is a second-lien line that some non-QM/DSCR lenders offer, and it leaves your current first mortgage and its rate alone. Investment property cash-out usually tops out around 70-75% LTV, so on $290k there's real room above the $105k you owe. The catch is credit. These programs still have minimum scores, and recent lates, collections or charge-offs can knock you out or make the pricing ugly, so pull your full report first and know exactly where you stand.

    If credit is the blocker, a hard money or private loan against the equity can bridge you for 6-12 months while you pay the cards down and let your score recover, then refi into long-term debt. It's expensive money though, so only go that route with a clear exit plan and a realistic timeline for the score to come back.

    And if none of it pencils out, selling, keeping the gain and resetting isn't a bad outcome either.

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    • Ben McPhail
      OP
      Member since 2020 · 15 posts · 4 votes
      2d

      Do you know of any nationwide hard money lenders? I tried two. One couldn’t find a local appraisal they worked with and I had two 30 day late payments over the last 12 months so they wouldn’t lend.  The property is in Soldotna ak

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  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 133 posts · 43 votes
    2d

    Before you sell a home that is cash flowing, I would slow down and separate two questions: how much cash do you actually need, and for how long? Selling solves the debt quickly, but it also gives up future cash flow and any future appreciation, so it helps to compare that cost with the cost of a shorter-term bridge. Talk with a lender who works with investors about whether any cash-out or second-lien option is realistic with your current credit, and get a clear picture of fees, payments, and exit timeline before you decide. Also look honestly at the debts themselves: are they high-interest and urgent, or could a payment plan buy time? If the numbers only work by stretching beyond what you can safely repay, selling and resetting can be the calmer, cleaner choice — painful, but not a failure.

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  • Aaron Zucker
    Realtor · New York, NY · Member since 2019 · 68 posts · 25 votes
    2d

    Ben — run the sell number honestly before you borrow against this house. At $290k with $105k owed, after roughly 6-8% in selling costs you are still walking away with about $160k before taxes. That clears the cards, resets your credit, and lets you buy again later. That is not a failure — that is the one good asset doing its job.

    The part that worries me about the hard-money route is you would be trading unsecured debt for debt secured by a good rental, in Soldotna where your lender and appraiser options are already thin, and with two recent 30-day lates working against you. Even $50k at hard-money pricing is $500+ a month interest-only plus points, and your $2,000 rent vs. about $1,000 PITI spread shrinks fast once you count vacancy, maintenance and CapEx. If the tenant is late once, the whole bridge wobbles, and the balloon still comes due.

    If you do try to keep it, price a local option before a nationwide one — a community bank or credit union that actually lends on the Kenai, or a local private lender who knows Soldotna — and only borrow the minimum you need, with a clear 12-month exit. If that pricing is not clean, sell it, do not discount it out of desperation, and take the reset.

    1Reply
  • Jimmy Samaha
    Staten Island, NY · Member since 2013 · 106 posts · 42 votes
    2d

    Ben, I'd put the sell number right next to the borrow number before you decide. At 290 with 105 owed, figure roughly 6 to 8% to sell and you walk with around 165k. Compare that to hard money at 11 to 13% plus 2 to 4 points with two recent lates, and now that debt sits on your one good asset with a balloon due in 12 months.

    One thing nobody mentioned yet. If the debts are mostly credit cards, call the card companies or a nonprofit credit counselor first. A lot of the time they'll do a hardship plan or settle for less, and you might only need 20 or 30k instead of pulling everything out of the house.

    If you do end up selling, look at selling it with the tenant in place to another investor. A house renting for 2k with the numbers already proven is an easy sell that way and you skip a vacancy while it's listed. Just get your capital gains and depreciation recapture number from your CPA first so the payoff math doesn't surprise you.

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  • Dan Duenas
    Lender · Member since 2026 · 45 posts · 25 votes
    2d

    Ben — don't sell a cash-flowing rental to pay off a debt if you can borrow against it instead. Selling kills the income stream; borrowing keeps it.

    You've got a few lanes here, and the credit situation doesn't close all of them:

    First, DSCR cash-out — it qualifies on the rent, not your personal income. No tax returns, W-2s, or pay stubs, and the ones I work with go down to 620. Two thousand in rent against a thousand in payments is a strong ratio story.

    If your score is below that, there's a refinance lane that doesn't require a minimum credit score or income docs at all — built for exactly this kind of investor refi.

    And the appraiser problem: an investor HELOC needs no appraisal. Second-position line, no tax returns or W-2s, fixed rate, no prepayment penalty. That sidesteps the 'no local appraiser' wall the hard-money lenders hit.

    One warning: borrow only what the debt actually requires. The temptation is to pull the full equity; the discipline is pulling what you need and keeping the payment comfortable on the rent.

    — Dan

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  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    1d

    As others have said, I’d look to explore all loan options. I have a lender I recommend for these types of situations. Feel free to PM me and I’d be happy to provide the contact.

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  • John Leland
    Specialist · I give advice - [email protected] - I focus on states where investing is profitable, reasonably safe & secure · Member since 2026 · 152 posts · 53 votes
    1d
    Quote from @Ben McPhail:

    I have made some poor investment. I invested too much money in a start up that never amounted to anything. I even made the mistake of putting some on credit cards.

    I have a great cash flowing rental house. PIMI is about $1000 and it rents for $2000+.

    I'm in a situation where I need cash to take care of debts. Selling is the only option I see but I don't want to get rid of the house if there are other options. I've ruined my credit so I haven't been able to refinance or get a HELOC with the equity.

    I owe $105k and it’s selling for about $290k. Do I just sell it, learn, and move on or is there a creative way to access temporary capital to pay off debt, and retain the house?

    Have a real estate agent run a spreadsheet on how much cash you will end up with. A house selling for $290,000 might cost you $20,000 to $25,000 just in fees, closing costs and concessions. Make sure you know your numbers before you make a decision.

    0Reply
  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    11h

    Ben, there are some good financing ideas here, but before taking on another loan, I’d figure out what the sell option actually looks like after taxes. The $290K value minus the $105K mortgage makes the equity look like roughly $185K, but that isn't necessarily what you'd have available after selling costs and taxes. I'd want to calculate your adjusted basis, depreciation taken or allowable, improvements, estimated gain, and the actual cash you'd walk away with.

    Then I'd compare that number against what it would cost to borrow enough to solve the debt problem while keeping the rental.

    The fact that the house cash flows well is important, but I'd also look at how much of that cash flow is left after vacancy, repairs, CapEx, insurance, taxes, and any management costs. If the property is genuinely a strong rental, it may be worth exploring ways to preserve it. But I wouldn't take expensive short-term debt just because you don't want to sell.

    I'd make the decision based on after-tax proceeds from selling vs. the total cost and risk of keeping the property.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2h

    Hi Ben,

    Have you ran the numbers doing a Cash out refi instead? What is your first mortgage rate?

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  • Ryan BakerBusiness Member
    Lender · Strongsville / Cleveland, OH · Member since 2026 · 32 posts · 4 votes
    1h

    Hi Ben, you have a lot of equity there, which helps. With damaged credit, a conventional cash-out may be tough, but there are other paths. A DSCR cash-out refi qualifies mainly off the rent the property brings in, and some programs allow lower credit scores at a lower loan-to-value, which you have room for.

    A private or hard money loan is another short-term option while you rebuild credit, though it costs more, so have a plan to refinance out of it. It also helps to pull your credit reports and look for quick fixes before you apply.

    Happy to walk through the options on a quick call. My direct line and email are on my profile.

    (Drafted with AI assistance.)

    [email protected]330-548-3340
    0Reply
  • Keenan Fitzpatrick
    Realtor · Anchorage, AK · Member since 2017 · 226 posts · 178 votes
    1h

    I vote for sell it, wipe the slate clean, feel the pain and be stronger for it. Just don't forget the lesson. You got this!

    0Reply
  • Adam Messmer
    Member since 2023 · 4 posts · 1 vote
    44m

    How bad is your credit? <600?

    0Reply
  • Nyisha Walton
    Lender · Houston, TX · Member since 2026 · 70 posts · 18 votes
    29m

    Ben, a rental that brings in double its payment is worth trying to keep before you hand it to a buyer. Those two 30-day lates are usually the real hurdle, so ask each private lender how they treat recent lates before anybody orders an appraisal in Soldotna and you're out the fee. Startups eat cash like moose eat gardens. If you want another set of eyes on the numbers, send us a message anytime.

    0Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 657 votes
    3m

    You do a no PPP DSCR loan with a lender who will do low credit DSCR. The rate will be ugly. Probably 10%. but there is no PPP so you can get out at anytime.

    You'll get 60% maybe 65%. So that is 188,500. You pay off the 105k and minus closing costs you walk with 75k. You pay off your debt, strategically repair your credit and in 6 - 9 months you refi out of the no PPP high DSCR loan and into a 5 year step down 30 year DSCR with a competitive rate.

    I've done this for many bad credit clients who needed money from a property with equity. In this industry your credit will fluctuate so it is good to have a plan in case. I've found this one works well.

    You pay in the short-term but the debt is secured on an asset and you still will cashflow because of the spread. You can DM me for particulars. I don't want to give it all away publically.

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