Should I borrow money to improve underwater property in order to sell/rent?


My husband and I have a unique property in a highly desirable neighborhood across from the Chesapeake Bay (1hr from Washington, D.C. & Annapolis and a little further to Baltimore, MD) that we would like to sell or rent, however, due to an injury, my husband was unable to complete the floors and minor renovations.

Now the equity is nil as the home sits unfinished and according to the local agents, it is worth less than we owe…surprise, surprise, surprise. Should we borrow the money to complete the renovations? Does anyone even make loans for this type of scenario? Of course, this ordeal has caused our credit to suffer…

Any advice or creative ideas would be greatly appreciated. We have put our blood, sweat and tears into this property and believe somewhere out there is a positive solution to this.

Thank you so much!

You might be able to find someone with the skills to finish this out for you who might want a place to stay for reduced rent if they do the repairs. Depending on what’s left to do, you may not really even be able to market this property to owner occupants because a bank may not finance it in its current condition. That leaves you to just investors or finishing it out.

Here is the real question, will doing these repairs truly get you that much equity and how is your local market doing? How long will you have to make additional mortgage payments until it sells? If there truly is good equity by doing the repairs, then that is the route to go.

The other route is to cut bait and get it sold now for at least what you owe. You can market this to any buyer that is willing to finance it with an FHA203K loan. The 203K can cover small cosmetic repairs clear up to structural additions.

I hope this helps.