Newbie investor in a pickle
I bought a vintage 4-flat in a rapidly gentrifying area. It has taken 9-months to get building permits for my gut rehab! My municipality is demanding changes which, in essence, is turning my project into a new construction project and I am going broke with two mortgages and no tenants. I've gotten behind on my new mortgage and current mortgage and it's a long way to completion (4 months), and my credit has been negatively impacted. What should I do? HELP!!! My dream is turning into a nightmare.
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- Realtor, General Contractor, and Developer
- Redding, CA
- 4,185
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@Stephanie Phillips There are a few different options for you, but a little more information would be helpful.
- How much do you owe on both the 1st and 2nd loans?
- What are the payments for each?
- How long have you had each loan?
- What is the value upon completion of the house? (conservative estimate, not rosy picture)
- Do you have the money to finish your house?
- Are you trying to do the work yourself or are you using contractors?
- What still needs to be done to finish the house?
For those of you reading this, that are new investors wanting to flip, THIS is why you don't just jump in. Unless you are doing a cosmetic makeover (paint, flooring, switch out appliances and fixtures, etc.) you must know the process and what will be required. Remodels ALWAYS have unforeseen issues, even for experienced contractors. However; experienced flippers know to plan for those in their budgets, and how to deal with them. SUGGESTION: Find someone to work with on a project and get some experience before venturing out on your own. There's a reason contractors are licensed and need experience to get their license. You can't go treat patients because you want to earn doctors wages, why do you think you can go do a contractors job with no experience? DO THE WORK TO LEARN, and save yourself from this scenario.
- Karen Margrave