Sell flip at a loss or turn it into a rental?
Ok, so there's a whole back story (and tons of lessons learned--see more on that below) wrapped up in this question, but it essentially boils down to this:
I started a flip in April with a hard-money loan. It started out well but it was clear from pretty early on that the builder was going to be way behind the initial schedule. Fast forward to August and the place was finally ready to list (even though the contractor bailed before it was over I was protected because the renovation money was held in escrow and only dispersed upon completion of the different phases of work).
I've dropped the price from $220k down to $180k over the last three months. If I sell it for the current asking price I'll break even. So, now it's November and snow will start falling and there will be even fewer buyers in that area (the prime market to sell is April to August) so I'm facing a dilemma: do I rent the place out and start getting a steady cash flow or do I hold on until spring and hope to sell it for enough to break even or earn a little profit?
More facts on the deal:
- It's located in Maine near lakes and a ski mountain (35 mins from Portland), but houses tend to sit on the market there for a while due to a small pool of buyers.
- I have a candidate lined up to rent the place at $1450/mo plus utilities with good income, credit, etc.
- Only expenses are taxes ($2200/year) and insurance ($1600/year) as I now own it outright
- If I put it on a year lease (which is what renters want in this area) I'll be back in this position in a year from now and could extend the lease or sell it.
- The house was extensively renovated so this is the only time it will ever be "new."
- I don't necessarily "need" the cash that's tied up in it but that is a big chunk of money I could potentially invest elsewhere (but without a known rate of return like I'd get on this place).
- The property is 2 hours from where I live so I need to find a property manager.
Interested in any and all perspectives on this and happy to answer additional questions if they help paint the picture.