What do I do with this nightmare property?

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What do I do with this nightmare property?

Marc Woodward
Albemarle, NC · Member since 2015 · 26 posts · 12 votes

Hello folks, this is my first post and I would really appreciate some thoughts on my situation...  I could probably write a novel on the backstory, but I will do my best to stick to the relevant information...

I own a house in Matthews, NC (Charlotte market) that is in very bad condition.  It needs HVAC work, band sill repair, it has a soft floor in one bathroom while the other one is half finished.  It needs ALL flooring, needs all new Windows, could use a new roof, needs to be painted, needs a kitchen remodel and the detached garage is literally about to collapse and needs to be torn down.  My rough estimate is that it will take around $60,000 to make the house right.

The one thing this house has going for it is that it is in a very good location where there is a shortage of homes for sale.   I owe $115,000 on it and eappraisal website estimates its value at $165,000.  Zillow says $182,000.  

We no longer live in this house as we have bought another and moved the heck out.  It has been empty for 1 year.  The mortgage is current.  What should I do with this thing?  It is way too messed up to rent and I don't think there is any money to pay a real estate agent commission if I want to sell it as is, not to mention its condition would disqualify most buyers.  Any suggestions?  I am open to all ideas.  Thanks, Marc

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Jacqueline Carrington
Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
10y

I'd contact a loan officer and see if you could refi into a rehab loan. Once fixed, you could buy to rent out or if the ARV is good enough, sell for a profit.

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  • Michael Bowman
    Investor · Charlotte, NC · Member since 2015 · 187 posts · 137 votes
    10y

    Hi Marc,

    Do you have any money at all to make the necessary changes to make the home rentable? Remember, it doesnt have to be pristine, just safe a hazard free for a tenant. 


    Thanks! 

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    I have about $20k or so, but I don't know if that would get it done...  Then I'd be broke.

    0Reply
  • David GlassPro Member
    Rental Property Investor · Davidson, NC · Member since 2014 · 40 posts · 21 votes
    10y

    Find a investor you can sell it Subject too. For your sake i would say someone who is a flipper so you wont be tied to it for to long.  

    0Reply
  • Craig Hunt
    Flipper · Valparaiso, IN · Member since 2014 · 11 posts · 2 votes
    10y

    Doesn't look like enough profit for a Rehabber. Depending on your payments vs rent rate, you could do land contract or contract for deed with equity for repairs to the property, or "work for equity" - they provide repairs and get discount off back of full price property. You likely won't get a cash payoff but may be able to get repairs done plus a monthly spread. They get to live in and buy property. This is an option I look at when carrying two mortgage. Otherwise you might get equity loan fix it and sell it on it meets FHA criteria for inspections.

    0Reply
  • Cliff Graham
    Rental Property Investor · Jacksonville / Neptune Beach, FL · Member since 2015 · 14 posts · 5 votes
    10y
    Marc, Do you have the time and skill - set to do any of the repairs yourself ? The work doesn't have to be showroom perfect and I'm always amazed at the equity that can be created by making necessary improvements without paying retail. Just an idea to consider. Good luck!
    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Thanks for the replies...  I do not have the time to do repairs myself and my skills are also suspect..  LOL.  The idea of some kind of purchase contract is interesting, but would that be allowed by the mortgage company? (BOA)  I do not want to put myself in a position that might cause them to call the loan.

    I wonder if I could refinance the property plus enough to make repairs and hire a contractor to get it back in shape.  My original plan was to keep it and rent it out anyway.  

    One other concern I have is the detached garage.  It really needs to be torn down, but since it is listed as having square footage and value on the loan documents, would I put myself at some kind of risk by tearing it down?

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  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y
    Originally posted by @David Glass:

    Find a investor you can sell it Subject to. For your sake i would say someone who is a flipper so you wont be tied to it for to long.  

    How do you recommend that I advertise to a flipper? I have it listed as FSBO on Zillow but have had very little response... Craigslist?

    0Reply
  • Jacqueline Carrington
    Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    10y

    I'd contact a loan officer and see if you could refi into a rehab loan. Once fixed, you could buy to rent out or if the ARV is good enough, sell for a profit.

    2Reply
  • Don Harris
    Realtor · Charlotte, NC · Member since 2014 · 935 posts · 467 votes
    10y

    @Marc Woodward send me the address. I'm looking for properties in Matthews as well 

    1Reply
  • Don Gerstein
    Wholesaler · Charlotte, NC · Member since 2015 · 7 posts · 4 votes
    10y

    Ata boy Don!

    Thought this one might get your interest. 

    Don

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Anyone have any thoughts on if I would be putting my mortgage at risk or opening myself up to litigation if I tear down the garage?

    0Reply
  • Todd Trader
    West Palm Beach, FL · Member since 2014 · 41 posts · 25 votes
    10y

    You could offer it to a seasoned flipper with the concept when it sells, help them to set a reasonable time frame, they pay off your mortgage. Allow them to invest their cash and resources bringing it back to life.

    Split the mortgage payment until sold as well.

    This may be an option of just ridding the property and keeping your credit intact.

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Good thought...  Thanks

    Back to the garage...  The reason I am so concerned is that The city has already forced me tear down one other building on the property which was reported (apparently) by a neighbor.  If this comes up again, I will be forced to do something.

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    10y

    I am not sure you could do a contract for deed because you cannot sell something you don't own. The bank technically owns it and their loan needs to be satisfied before the title can transfer. 

    I would consider two options depending on your motivation. If you are ambitious and willing to struggle through, I would rehab it enough to rent it. Given that you let it sit for a year, leads me to believe you are in over your head and need to walk away. In that case try to find a buyer willing to pay more than you owe.

    If you want to go the ambitious route, they you need a true estimate of cost to make it rent-ready. That means taking care of any safety issues and making it presentable enough that someone will rent it. Try to save whatever you can. It is ok if things look dated, but make sure everything is safe, clean and operational. It is hard to know for sure from your description how bad it is, so this could be cost prohibitive. My experience is that old buildings can be a money pit, so I have gotten rid of mine. That being said, my first rental was old and had all the problems you described, still I rented it and made tons of money.

    Every day it sits, it will degrade more and you will keep paying money every month. Vacant houses are trouble waiting to happen. Don't let it sit another year. Either rehab and get someone living in it or sell it quickly. 

    Anyone on this forum contacting you knows how much you owe, how much work is needed, how much you think it is worth and how much cash you have. All your cards are on the table. 

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Thanks Joe for your thoughts.  This is more in line with what I have been thinking lately.  

    Like I said in the original post, it's a LONG story spanning over a decade.  It involves a legal battle, a fraudulent contractor and much more.  That being said, the loan is current and there is no financial hardship here now other than the fact that that I am bleeding money paying for this empty house every month.  

    I have been paralyzed for a year trying to figure out what to do.  My credit is good and I have some cash, but I don't want to throw good money after bad.  I have no connections in the home repair industry and I have been taken before, so I am somewhat leery of contractors in general.  I relish the idea of turning this lemon into lemonade, but I don't really know where to start or who to trust anymore.

    0Reply
  • Jacques Wurms
    Real Estate Agent, Property Manager · Fort Lauderdale, FL · Member since 2015 · 142 posts · 27 votes
    10y

    Finance the repair then sell or rent the place.

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y
    Originally posted by @Jacques Wurms:

    Finance the repair then sell or rent the place.

    I think this might be the best option.  Thanks for the reply.

    0Reply
  • Jacques Wurms
    Real Estate Agent, Property Manager · Fort Lauderdale, FL · Member since 2015 · 142 posts · 27 votes
    10y

    My pleasure and good luck!

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y
    Originally posted by @Don Harris:

    @Marc Woodward send me the address. I'm looking for properties in Matthews as well 

     Thank you for speaking with me earlier, Don... And thank you for the advice.  Lots to think about!

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    With limited options to sell this property as is, We are weighing the possibility of fixing it up to either rent or sell.  

    I met with a contractor who spent a couple days with the subs getting some numbers together.  The number is approximately $30,000 to bring the house to basic "turnkey" condition.  It looks like this is our best option, but I am concerned about how to fund the project.  I have about half that amount in cash, but it would not my first choice to go cash poor doing this.  Any thoughts?

    0Reply
  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    10y
    Originally posted by @Marc Woodward:

    With limited options to sell this property as is, We are weighing the possibility of fixing it up to either rent or sell.  

    I met with a contractor who spent a couple days with the subs getting some numbers together.  The number is approximately $30,000 to bring the house to basic "turnkey" condition.  It looks like this is our best option, but I am concerned about how to fund the project.  I have about half that amount in cash, but it would not my first choice to go cash poor doing this.  Any thoughts?

     Have you gotten a realtor to walk through it? That would be the first thing I would do. Than you have a true end value. Have you looked at rehab loans? that might be an option?

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Good thought.  Need to talk to a real estate agent.

    0Reply
  • Marc Woodward
    OP
    Albemarle, NC · Member since 2015 · 26 posts · 12 votes
    10y

    Here is an update on our "nightmare property"...  The lessons of this story are as follows: 

    -"It is a big mistake to assume You know anything without doing your research."

    -"You don't know what you don't know."

    -"You have not because you ask not."

    Cryptic, I know... so to make a long story short...  After making $1,000/mo. payments on an empty house in severe disrepair for 18 months... and assuming nobody would want the property because we didn't think the numbers would work for a rehab, we finally listed it with a very confident and persistent agent who sold  it in 2 days!   Not only that, but we actually walked away with a check after closing for over $7,000!  

    Our agent, Daniel, had the perspective that we did not.  He looked at the property with optimism and fresh unbiased vision where we were pessimistic and fatigued over the situation.  I am so thankful to be out of that house and thankful that pesky agent who called me for months never stopped chasing after the listing!  

    9Reply
  • Chin P.
    SILVER SPRING, MD - Maryland · Member since 2015 · 77 posts · 43 votes
    10y

    @Marc Woodward

    Thanks for the update.  Always interesting to hear how problems actually work out in the end.

    0Reply
  • Chelsea Fehlauer
    Investor · Middletown, NY · Member since 2016 · 16 posts · 1 vote
    10y
    Fix it up & rent to own. Typically the people that want a rent to own have a good down payment but are business owners so the bank won't give them a mortgage. They'll take care of it like it's their own and typically pay more than retail value. If they take off you still have a good down payment. Check with your city building inspector before tearing down the garage. You'll probably need a permit depending on where you live.
    0Reply
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