Sell or Rehab Moneypit

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Sell or Rehab Moneypit

Member since 2024 · 46 posts · 28 votes

Hey, I have put over $100k in a property and it will cost $309k more to renovate, it has been a challange so far and has taken up 2 years. Essentially, I took on a 4 unit old property that had way more work than I thought it would.

The mortgage is $150k and the arv is $600k. Part of me thinks I should just cut my losses, however, it would be difficult selling in an unfinished state.

It is in the midwest in a growing town. I have a solid GC plan for the $309k renovation but I am worried that it is too much risk and me trying to reclaim sunk costs.

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Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

4mo

How much would you net or lose from selling as is? There probably some assumptions re: ARV, actual reno cost and time frame. If you aren't local it makes it all the more difficult.

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Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
4mo
How much would you net or lose from selling as is? There probably some assumptions re: ARV, actual reno cost and time frame. If you aren't local it makes it all the more difficult.
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Arman AhmedPro Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 968 votes
4mo
Quote from @John Friendas:

Hey, I have put over $100k in a property and it will cost $309k more to renovate, it has been a challange so far and has taken up 2 years. Essentially, I took on a 4 unit old property that had way more work than I thought it would.
The mortgage is $150k and the arv is $600k. Part of me thinks I should just cut my losses, however, it would be difficult selling in an unfinished state.
It is in the midwest in a growing town. I have a solid GC plan for the $309k renovation but I am worried that it is too much risk and me trying to reclaim sunk costs.

The biggest mistake would be making the decision based on the $100k you've already spent. That money is gone whether you finish the project or not. I'd focus entirely on today's numbers: if you put in the remaining $309k, what does the finished property realistically appraise for, cash flow at, and allow you to refinance into? If those numbers still make sense and you have a reliable GC with a clear plan, finishing may be the better move. If not, it might be worth exploring an exit before throwing more capital at it. At this point, I'd treat it like a brand-new investment decision and ignore the sunk costs as much as possible.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
4mo
Quote from @John Friendas:

Hey, I have put over $100k in a property and it will cost $309k more to renovate, it has been a challange so far and has taken up 2 years. Essentially, I took on a 4 unit old property that had way more work than I thought it would.
The mortgage is $150k and the arv is $600k. Part of me thinks I should just cut my losses, however, it would be difficult selling in an unfinished state.
It is in the midwest in a growing town. I have a solid GC plan for the $309k renovation but I am worried that it is too much risk and me trying to reclaim sunk costs.

If the $300k is cash you have sitting in a bank, is it better to invest that elsewhere or in this property? What provides a better ROI? As others mentioned, the $100k is sunk costs, you haveto evaluate it based on selling now or what that $300k would net you, which sounds like not that much.
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Eric M.
Member since 2023 · 34 posts · 13 votes
4mo
Reading through your previous posts I think the best option is to sell it. The numbers are swinging wildly in the last few months - ARV has gone from $375k to $600k, rehab cost to finish has gone from $150k to $309k. Without realistic numbers when two years into a project, there is no possible way to more forward.
A bit of a harsh truth, but take the lessons from this one and move on to a simpler project.
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Michael Crouse
Rental Property Investor · IL · Member since 2026 · 11 posts · 1 vote
4mo
There are a few more questions I would ask myself before selling. What is the cost to build the units new? If I could put the remaining $309K in and be all in for $559K (includes the mortgage) could I still cash flow on the property? Are you currently sunk $100K with nothing to show or do you at least have income coming from one or more units?
If $559K is cheaper than building new and you can justify higher rents after remodeling it then it may be worth it to keep. Its all a numbers game at the end of the day. If you do decide to continue I would say focus up on getting units active. If you have spent $100k already and don't have at least one turn key unit then I think you may be focusing on the wrong renovations (assuming thats not all structural, roofs, mechanical systems.)
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