What should I do with this house?

[jfpen]

A property I bought in cash was rehabbed to be turned for a profit. House came out nice and was over budget but not too bad..... It appraised and was listed for $125 and I have had 2 contracts on it that fell through around this price. I have now dropped it to $119 to get more buyers interested. I will have about $106k in the property including closing costs upon sale. That will leave about $13k in profits at $119.

 I am having a hard time selling it in this economy and am considering owner financing or leasing it. One problem is my realtor who has been great for many years, made a mistake and did not catch that this property is in a flood zone and requires flood insurance. This has killed a few deals with buyers also. So at this point I am on the fence on what to do with it....

Lease it and I run the risk of flooding and loosing good tenants. All though besides this factor it would be a good rental.

Lease to purchase maybe??????

Seller finance it and not get my cash back for a while but make more on the interest in the long run?

Wait until I get a buyer?...... So far it has been 6 months on the market.

Any advice would be appreciated on what you might do in my shoes. I have 13 rentals and am not against leasing it. I just put in more than I normally would for a rental in this house and the flood issue bothers me some.

Here is link to the house.

http://search.har.com/engine/10939-Gulfdale-Houston-TX-77075_HAR98391682.htm

VMAX,
         I know my following statement is water under the bridge but:  The exit strategy for flips like this should be to list and sell at 20% below FMV and make a profit. The listing should be for 30 days. Listing contracts for 3-6 months are not for flips.  If listed at 20% below market value you will have the undivided attention of brokers/agents viewing MLS at least for the first week or two. At 20% below FMV you are likely to get multiple competitive bids and make a nice profit.
           If you are going to carry financing, use an attorney that specializes in mortgage origination and note creation. Make sure he/she is educated on the implications, if any, of the Dodd-Frank legislation.
           If you are considering renting it out, ask yourself if you would buy this property at this price and rent it out. If you wouldn't buy it at this price as a rental, I would liquidate it and be happy not to lose money. Chaulk it up as an educational experience.

JP

[bdub]

Sorry Dave this house has no basements. All floor level. One of these storms (Allison) Half the city flooded so I really dont count that one. Hell one house I have from 1930 flooded for its 1st time during that storm.

This agent has worked his ass off for me on say 15 deals. But they were all purchase deals..... On the selling side of the table (just this deal) I am not too happy with him. Amazing what you can learn with the tables turned. But we are under contract or I might have allready fired him. But after this deal he is gone......

After all the time and effort I just cant swallow taking a loss. I would rather lease it and take my chances. Or at least get 15k in rental income than sell. I know it is stubborn mentality but failure is just not an option with me.

Truthfully I enjoyed the rehab and would like to do more. It beats the hell out of having a client to deal with. I like the freedom and being able to use my creative side without a client never ending opinions.

I take it you're in Houston...  for future reference, you need this:
http://www.harriscountyfemt.org/

If you're in this business and you don't know to check for flood plain, etc...  well, now you do.

You can look at the property for yourself and see if it's in a flood plain / way / etc...  This wasn't your realtor's fault. 

Your time of the year is off a little bit for selling, most likely.  You might get a bump around Christmas, then it's going to be March/April before the season "heats up" again (literally and figuratively).

If you rent it, you really only want a 6 month lease, because you want to clean it up and sell it during selling season.

Just keep it on the market - list it for sale or lease and see what hits you get.  maybe reduce the price a little each month during the slow season.  If you're in Houston, and not in the 'wrong' neighborhood, there's a buyer.  There are too many jobs for people not to need a place, and people will buy a good house in a flood plain.  I moved into the 100-year plain.  My neighbors just sold their house for $70+/sf, also in the 100-year.  It's not the flood plain.  It's the timing and price.

[bdub]

My first reply was before you posted the HAR link.

You're WAY overpriced.  You're the highest priced house in the neighborhood.

Median $/SF for 2010 was $48.  You're at $53.  So, not only are you not priced at a flip price, you're 11% above median.  Yes, I know that includes foreclosures, but that's what buyers are going to pay.

Drop it below $115k$ and you'll get more action.  You'll still be slightly overpriced, but for the 'newest' home in the neighborhood, you should get more looks...

also, a suggestion for the future...  skip the wiring (unless it's super cheap / diy).  it doesn't sell houses.  the buyer can get cable drops for free from the provider and internet is wireless.  use that money to upgrade the counter tops and/or backsplash in the kitchen.  the place looks really good, but the kitchen formica backsplash going up the wall is not a selling point.

(credentials:  real estate agent, investor, and owner of 3 houses in greater Houston - all 30 - 40 years old and remodeled.)

good luck.

[VMAX]

Thanks for the info man. Well according to the sold comps we are actually under price per sq ft at initial listing price. This was 6 months ago though when we ran it. We did compare only the nicer homes in the area for obvious reasons. The cable and data drops were done for nothing since I own a home theater company in Houston. Maybe $300 including material. I totally and completely agree on the back splash. It was in the budget until the heater was presumed dead.

Oddly enough we had a showing yesterday and two today. Fingers are crossed ready to move on to the next deal.

[VMAX]

By the way. Internet connections that we ran have three purposes. One they can be a phone jack, two you run apple TV, Netflicks, Internet TV ect off of them at the media center, Those devices are rather slow wireless and some of them are not wireless at all. Lastly you can run anything over ethernet you can imagine. In this case most people that buy this house might and might not use them for more than a phone jack. Also bone head cable guys would of ran most of this on the outside of the house. We did all internal wiring.