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

    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.

    Better re-read my last post.  :)

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Forget the house.

    Look at THE LAND to determine it's highest and best use. Are there high end homes being built around it? You might could sell off the lot and they tear down and build a new house. Does the land have flex zoning? Maybe you could tear down and build a quad on the land that has more value with rents.

    Is the land close to commercial for the area? You might could sell the land off for commercial development and let them tear it down. 

    Sounds like the value of the house to repair exceeds what it is worth.

    Is the house sitting on a large piece of land? You could parcel out part of that land and sell it off for development then use those proceeds to fix up your house etc.

    Lot's of ideas out there you just have to get creative and see what might work.  

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

    Forget the house.

    Look at THE LAND to determine it's highest and best use. Are there high end homes being built around it? You might could sell off the lot and they tear down and build a new house. Does the land have flex zoning? Maybe you could tear down and build a quad on the land that has more value with rents.

    Is the land close to commercial for the area? You might could sell the land off for commercial development and let them tear it down. 

    Sounds like the value of the house to repair exceeds what it is worth.

    Is the house sitting on a large piece of land? You could parcel out part of that land and sell it off for development then use those proceeds to fix up your house etc.

    Lot's of ideas out there you just have to get creative and see what might work.  

     Again, please read my last post.  The issue is resolved.

    1Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Thanks Marc.

    Glad it is resolved. My post will at least give others ideas for when they cannot go the route that you did.

    Glad it worked out for you in a good way. 

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

    @Marc Woodward nothing like a red hot market and a lack of inventory to the rescue. 

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

    It was a shocker and an eye opener for us that someone was willing to pay what they did for our property!  The agent knew the market and we did not.  It is as simple as that.  That was a great lesson for us going forward.  So that everyone can follow the numbers, we owed about $115k, our agent listed for $135K and we sold the house in two days to a cash buyer for $130K.  We were actually already in talks with the buyer after the first day!  Final negotiations were hammered out the following day.  

    My Dad read me an article yesterday over the phone, stating that the booming housing market in Charlotte, NC is such that very little discount is being realized for houses needing rehab...  Even less than 10%!  That certainly helps to explain how we came out the way we did with our house.  

    We drove by the old house a few days ago out of curiosity.  The new owners have certainly been busy!  By the looks of things, they must be over $60,000 in renovation costs so far.  I guess in a boom the numbers don't necessarily have to make sense to some people!

    1Reply
  • Chelsea Fehlauer
    Investor · Middletown, NY · Member since 2016 · 16 posts · 1 vote
    10y
    Marc Woodward awesome! Big relief!
    0Reply
  • Jailen Holt
    Real Estate Salesperson Licensed · Atlanta, GA · Member since 2016 · 114 posts · 22 votes
    10y

    You have the potential to atleast break even IF you found a rehabber who would be able to first give you more accurate estimate of rehab costs. But the numbers may or may not fit their criteria. Never know until you ask though.

    Also have you atleast considered selling it using owner financing (probably to an investor)? This would continue to pay down your mortgage at their expense while they more than likely fix the property up over time. Not to mention some cash flow for yourself. Even if they move out they would have paid down some more of what you owe as well as potentially made some free renovations. Or if they stay long enough to pay you off completely, even better.

    Best of luck, Marc!

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

    You missed my update post.

    0Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    10y

    @Marc Woodward...burn it down...just sayin'

    alternatively, get it repaired enough to rent to a tenant that covers your mortgage payment....sit on it an do repairs as you can...should be a sweet equity position in 10-years!

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

    Looks like everyone is reading only my first post and answering.  LOL

    0Reply
  • Account Closed
    Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
    10y

    @Marc Woodward, perhaps update/edit your first post so people see you've resolved your issue.  Other than that, congrats on getting out of it.  It takes a great investor to smoothly unwind a bad deal (but we only like to brag about the good ones) so kudos to you.  

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  • Lindsay McLaughlin
    Real Estate Entrepreneur · Liberty Twp., OH · Member since 2016 · 37 posts · 22 votes
    10y

    @Marc Woodward That's so great!  Always good to see a happy ending to a tough situation!!  Congrats!

    0Reply
  • Rizwan Qadri
    Investor · Jersey City, NJ · Member since 2016 · 20 posts · 5 votes
    10y

    Hi Marc,

    Glad to hear that you found some relief. Any insight on how your realtor tackled this? 

    Thanks
    Riz

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

    Hi Marc,

    Glad to hear that you found some relief. Any insight on how your realtor tackled this? 

    Thanks
    Riz

    Advice would be to find someone smarter/more experienced than you and make sure they have something to gain out of the situation.

    0Reply
  • Sarah Pratt
    Haslet, TX · Member since 2016 · 26 posts · 2 votes
    10y

    We recently sold my father-in-laws property that was in very poor condition as well, all thanks to a diligent and professional real estate agent.  So glad it worked out for you!  

    0Reply
  • Merribeth Burns
    Residential Real Estate Broker · Danville, IN · Member since 2016 · 1 post · 0 votes
    10y

    You could get an investor renovation loan. Given the value and the amount of repairs, I suggest you sell it and let someone else get the renovation loan. There's no money in it for you. There are several rehab loans available: FHA, Conventional, and VA. There are investor renovation loans, however, again, the numbers would likely not make sense for an investor.

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