Distressed Property in Baltimore - Hold or Sell ?
Hey BP,
One of my family members owns a 2br/1ba distressed property in Baltimore City free and clear and is considering transferring it to me (she has gotten older and can no longer care for the property). The property is located in the 21216 area east of Hilton Pkwy and if I chose to keep as a rental, it would require a full gut renovation. The three GC renovation bids exceed $50k - more than the ARV (based on comps in the 21216 neighborhood - the highest comp is about $60k). The area also is not the best.
I've been thinking about how I best leverage this property and these are the possible options I have come up with:
1. Save my own cash and fund the repairs myself
2. Sell it and use the funds to 1031 exchange into another property
3. Hold the property and use as collateral to secure LOC or loan - use those funds to acquire other rentals (an appraisal in its current condition probably would not allow for this to work)
4. Use a HML to fund the repairs and refinance into a conventional mortgage later (I'm thinking I would have trouble with this, as many of the refi lenders I have spoken with have minimum loan limits that this property would not fit into)
I'm curious what other investors would do in this position. Any constructive feedback regarding these options or additional ones is welcome.
Thanks,
Keenan