Need Help on a flip house deal gone bad!

Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes

I bought a flip property in Houston, located in the 77063 zip code. Rehabbed it from the underground plumbing to the roof, everything is new. Had set backs from the City on get permits so I lost 6 months and the market changed. So now my Hard Money loan is about to mature and need a way out. Trying to sale is my main goal or refinance it but my DTI is high and I don't qualify.

Anyone looking for a long term investment property for rental or vacation rental OR ideas PLEASE?

Thank you!

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Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

I'm here to echo what @Jacob Sloop said.

Hard money lenders (or any lender for that matter) are not in the business to foreclose on borrowers. If you call up your hard money lender and explain the situation, they will likely extend your loan another 6 months for a couple of points.

Another option is to throw a tenant in there and refinance using a DSCR loan. You say your DTI is high but that doesn't matter if you're doing DSCR financing.

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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
Happy to look at it, shoot me a DM.
1 Reply
Jacob SloopBusiness Member
Rental Property Investor · Virginia Beach, VA · Member since 2020 · 274 posts · 111 votes
3y
Sorry to hear that,
Have you talked with your hard money lender about this?
Is it possible to extend? They will usually accommodate but its going to cost you
[email protected]757-235-0369
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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
3y
I'm here to echo what @Jacob Sloop said.
Hard money lenders (or any lender for that matter) are not in the business to foreclose on borrowers. If you call up your hard money lender and explain the situation, they will likely extend your loan another 6 months for a couple of points.
Another option is to throw a tenant in there and refinance using a DSCR loan. You say your DTI is high but that doesn't matter if you're doing DSCR financing.

4 Reply
Chad Davis
Lender · Richmond VA · Member since 2012 · 307 posts · 32 votes
3y
@Chris Ufomaduh DSCR may be the way to go. No income and DTI requirements
1 Reply
Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
3y
Quote from @Chris Ufomaduh:

I bought a flip property in Houston, located in the 77063 zip code. Rehabbed it from the underground plumbing to the roof, everything is new. Had set backs from the City on get permits so I lost 6 months and the market changed. So now my Hard Money loan is about to mature and need a way out. Trying to sale is my main goal or refinance it but my DTI is high and I don't qualify.

Anyone looking for a long term investment property for rental or vacation rental OR ideas PLEASE?

Thank you!

If your first inclination is to sell, then sell.

If you want to keep it and your DTI is too high for conventional, refinance it using a DSCR loan, BUT, make sure the numbers work AND make sure you want to be a landlord. If one or the other isn't a yes absolutely, then default to your first inclination.

Your hard money guy will probably give you an extra 6 months of so for a point. Talk to them. They don't want your house, they want their money.

2 Reply
Chris Teti
Realtor · Southern NJ · Member since 2017 · 188 posts · 68 votes
3y
Quote from @Chris Ufomaduh:

I bought a flip property in Houston, located in the 77063 zip code. Rehabbed it from the underground plumbing to the roof, everything is new. Had set backs from the City on get permits so I lost 6 months and the market changed. So now my Hard Money loan is about to mature and need a way out. Trying to sale is my main goal or refinance it but my DTI is high and I don't qualify.

Anyone looking for a long term investment property for rental or vacation rental OR ideas PLEASE?

Thank you!

Hey Chris, sorry you are in this situation. The DSCR option might be a good idea, they won't be looking at your personal income. Also, I have a couple other ideas, but would need to ask some questions to find out more of the details.
1 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Quote from @Jacob Sloop:

Sorry to hear that,
Have you talked with your hard money lender about this?
Is it possible to extend? They will usually accommodate but its going to cost you
Thank you for your response. I have already extended the loan and can do it again!
3 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Quote from @Scott E.:

I'm here to echo what @Jacob Sloop said.
Hard money lenders (or any lender for that matter) are not in the business to foreclose on borrowers. If you call up your hard money lender and explain the situation, they will likely extend your loan another 6 months for a couple of points.
Another option is to throw a tenant in there and refinance using a DSCR loan. You say your DTI is high but that doesn't matter if you're doing DSCR financing.

Thank you for responding to my post.

I am not familiar to DSCR and will look into it asap!

Thank you!
1 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Quote from @Chris Teti:

Quote from @Chris Ufomaduh:

I bought a flip property in Houston, located in the 77063 zip code. Rehabbed it from the underground plumbing to the roof, everything is new. Had set backs from the City on get permits so I lost 6 months and the market changed. So now my Hard Money loan is about to mature and need a way out. Trying to sale is my main goal or refinance it but my DTI is high and I don't qualify.

Anyone looking for a long term investment property for rental or vacation rental OR ideas PLEASE?

Thank you!

Hey Chris, sorry you are in this situation. The DSCR option might be a good idea, they won't be looking at your personal income. Also, I have a couple other ideas, but would need to ask some questions to find out more of the details.

Thank you for responding to my post. I am all ears!
Thanks!

0 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Quote from @Chris Ufomaduh:

I bought a flip property in Houston, located in the 77063 zip code. Rehabbed it from the underground plumbing to the roof, everything is new. Had set backs from the City on get permits so I lost 6 months and the market changed. So now my Hard Money loan is about to mature and need a way out. Trying to sale is my main goal or refinance it but my DTI is high and I don't qualify.

Anyone looking for a long term investment property for rental or vacation rental OR ideas PLEASE?

Thank you!

Thank you all for your responses on my post. My number is 832-908-6000 if anyone wants to hear more.

Thank you all!
0 Reply
Michael Kinsella
Lender · Member since 2018 · 617 posts · 275 votes
3y
Chris,

Others in this thread have offered some reasonable suggestions.

To summarize,

1) Have you spoken with your current HML? As @Jacob Sloop mentioned above, HMLs sometimes offer extensions in exchange for a fee. For example, a HML may charge you 1% to extend the loan term for another 6 mo's.

2) As @Scott E. said above, a DSCR loan is another option. A non-bank lender with a DSCR program is likely to be more flexible than a traditional lender.

Best,

Michael
1 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Thank you for that feedback. I am looking into the DSCR loan.
0 Reply
Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
3y
My last flip ran over this way recently. Believe me, they dont want to foreclose on you. Many of them have more junk property foreclosures than they know what to do with now. If they deem the investor to be capable/competent they will extend and tack on a point or fee or whatever (depending on the relationship). You are done; unless there is a **** load of equity in there, there is no plausible way they have any incentive in not extending.

Good Luck
1 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
Real estate has been a tricky market to navigate lately, and it can be difficult to know what the best move is when your property is at risk of foreclosure. Thankfully, many lenders understand that this is an especially tough time for homeowners and are willing to work with you if they can. Don't let yourself get overwhelmed by the situation - there are options out there that don't involve foreclosure. Reach out to your lender and see what kind of solutions they may have available so you can keep your home safe.
[email protected]832-889-5607
1 Reply
Alex Ramirez
Rental Property Investor · Houston, TX · Member since 2019 · 184 posts · 147 votes
3y
Talk to hard money lender. It is more costly for them to foreclose than granting you an extension. As long as your loan is current, I’m pretty sure you can be given another extension. I’ve done it multiple times
0 Reply
Keenan Fitzpatrick
Flipper/Rehabber · Anchorage, AK · Member since 2017 · 223 posts · 177 votes
3y
I've been in a similar situation and I get PTSD just reading about this. I'm glad your hard-money lender got you that extension!
1 Reply
Chris Ufomaduh
OP
Real Estate Investor · Rosharon, TX · Member since 2016 · 10 posts · 5 votes
3y
Quote from @Keenan Fitzpatrick:

I've been in a similar situation and I get PTSD just reading about this. I'm glad your hard-money lender got you that extension!

PTSD is for sure... I am still trying to sale it. The loan can only be extended ones which I have done.
0 Reply
Account Closed
Member since 2021 · 10 posts · 1 vote
3y
Hi Chris
Would love to take a look at your deal. Connect with me
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