Selling a half renovated property

Can you sell a house that is half way through a renovation? In this video our founder Aussie Steve visits a property in the ninth ward that an investor had purchased for flipping. However, due to rising interest rates and insurance costs and taking longer than expected, the investor is unable to complete the renovation and is facing mortgage payments. As a result, they reached out to Home Buyer Louisiana for a cash offer to sell the property quickly. Watch the video or read the transcript below.

Video Transcript

Hey guys, Aussie Steve here from Home Buyer Louisiana. We Buy Houses in any condition in Louisiana. I’m here at a property we’re looking to purchase in Orleans Parish, in the ninth ward. This property is owned by an investor who purchased it to flip it. However, they are having some issues getting it finished. Interest rates are going up, insurance is going up, and it is taking longer than they thought to work on it. They are approaching the end of their mortgage payment and need to pay it off. Therefore, they are looking to sell the house fast for cash. They reached out to us to see if we would make a cash offer, and we are here to check out the property right now.

Obviously, the property is far from being ready for a homeowner, so it is suitable only for an investor. Property investing is risky and hard, and we all make mistakes. I have definitely messed up a few properties in my time as well. This person just couldn’t get the job done, and their clock is ticking on when they need to finish the project. Normally, people get construction loans for about a year, and then they have to pay them off. They can either hope to have finished the project and sold it by then, or put a tenant in place, get a renter, and refinance the loan out. But in this case, they just couldn’t make that timeline, and the clock is ticking. So, they prefer to sell it for cash, and we are happy to take on a project like this.

They have done some work on it, but it is hard because if you take on a project, you are going to buy it for a certain amount and put a certain amount of money into it. Most people want to get that money back, and if you complete the project and have it ready for a homeowner, you generally will get that money back with a profit. That’s obviously why investors buy these properties. But if you don’t finish the property, it’s hard to get that money back unless the market has gone up. If the market has really appreciated while you’re renovating it, you can definitely make money. However, if the market hasn’t moved up, it’s hard to get your money back because, to be honest, any investor like us, we don’t know the work that’s been done. Therefore, we would prefer to buy it for the price they bought it for and put that money in ourselves. If they have put that money in, we’re not necessarily going to pay them the same amount back. It’s just unfortunately how it works because we don’t know the quality.

If you can finish these projects, we definitely recommend you do so. When you finish it, the homeowner will pay you for what you’ve done. But as an investor, if you stop working, you’re generally going to lose money, unfortunately. This is the harsh reality and risk of investing. Like I said, risk is something we take, and we definitely don’t win in every project. We have definitely made some mistakes, and you need to invest in risky projects.

Unfortunately, they’re probably going to lose a little bit of money on this deal, but hopefully, we can get close. So, we’re going to go crunch our numbers and see if we can figure out something that’ll work and help this investor get off this property, turn it back into cash, pay off their loan, and hopefully, we can finish it and have it ready for a new homeowner. If you guys are thinking of selling, go to HomeBuyLouisiana.com. We have a lot of information about selling your home. Thanks so much, guys. Have a good one.