A few years ago, I purchased a home at $142,000 that has 12 bedrooms, 4 full bathrooms, a workroom, a basement with cement flooring, and an attic. In my divorce, it was awarded to me, as my ex was unable to secure financing in her name. She no longer has a claim on the home. I now owe $130,000 or so on the mortgage. It was listed at approx. 2500 square feet.
Since then, shortcuts in repair were found that have caused damage. They are things I believe an inspector would have caught, but my ex sigh rushed us into the purchase because of the deal for the space. Other damage has occurred just from living in the home, such as a need to recarpet. In actuality, the total living and storage space is closer to 5000 square feet.
I want to sell this home/marital doom trap, but don't want to end up with an owed balance. The following problems exist:
- There is a humidity issue caused partially by bad plumbing. While the house was plumbed with PEX, it wasn't done right. The 2nd floor shower drain has a pipe which does not seal to nor does it cover the drain, causing water runoff to drip onto the ceiling of the first floor master bathroom. This has eaten a hole in the ceiling there, and the mildew is real. Further, the connected main bathroom on the first floor is unusable due to severe mildew and leaks from the cabinet; much of both will likely need to be torn out and re-walled, as well as the plumbing repair. The basement full bath has broken seals that I was able to repair, but the water needs to be restored to the room and the soundproof panels (why in a bathroom? Really?) need to be replaced with something solid.
- There is a tree in the front yard which has a root that has pierced a connection where the air conditioning unit and plumbing drain their water. The tree needs removing so the pipe doesn't back up every couple of years.
- The basement and attic require insulation, drywall, and some way to complete their flooring; the attic has wood baseboard with insulation beneath it, and the basement needs a ceiling installed over the support beams. Doing so would up the house to at least 4600 countable square feet.
- The HVAC from the central heat and air unit connect well on the first two floors, but do not provide enough power for the second two. I discovered that a "vent" was actually an access point for a powerful fan that once vented the heat from the second floor into the attic, but its wiring has oxidized due to the moisture issues. The ductwork exists, but a second unit in the attic would be needed to completely provide for the space. I currently use two powerful window units in the upper floor on the street-away side to cool that floor.
- The basement water sealant is the cheap stuff and has begun to bubble through the painted cinderblock on the side with the most earth. I have a quote to install an internal drainage and pumping system for about $6000 to resolve the issue causing it, but the bubbling must be covered or otherwise repaired.
- Some of the wiring in the walls needs to be re-run, as oxidization has killed a couple of the outlets. This is particularly true if the outlet shares a wall with a bathroom.
- The windows are metal-framed industrial glass windows instead of wooden-framed windows, and some of the weather sealing is shoddy.
- The faux hardwood laminate floor in the dining room has permanent stains.
- The back door shifted since it was initially mounted, and the deadbolt no longer meets the jamb.
- The wood rear deck and front stairs that lead to the entry doors need to be replaced entirely or just removed and replaced with concrete.
- Obviously, all of the place which has carpet needs new carpet. That's mostly normal wear and tear but includes some animal waste that was cleaned out of the carpet, but may have gone below.
- The laundry room has two washer and two dryer connections, and connects gas. Unfortunately, the floor is slightly off-level. This room has more wood laminate.
- The driveway is gravel, until it goes past the rear fence. At that point, it looks like paving began around a basketball hoop but was never finished. It will probably have to be jackhammered out to restore the yard, or completely redone all the way back out to the curb.
- The telecom wiring is all 2-line telephone and only leads to two rooms. I would like to run Cat5e or Cat6 to all rooms, as I heard this is a cheap way to jump house value. I can do that myself, but if the walls have to be torn open anyway, I'd rather have someone certified in low voltage do it.
- The curtain panels snapped open on one of the upstairs window units during a storm, causing the room's carpet to soak up water. The carpet was cleaned, but I haven't seen the subflooring there.
- Obviously, repainting needs to be a thing. For the size, I'm wondering if it's a better plan to have someone respray the walls like they do in apartment complexes and commercial buildings than to do it myself with paint and brushes.
I'm a little torn on what to do, since this is a lot, but at the same time, I know it could be a profitable flip or even duplexed and rented out for well above the mortgage (1k/month). I'm at a total loss on what loans would be required, especially since my credit is currently at the high end of fair. Unfortunately, the only thing to get into "good" credit I can do is wait two years for my post-housing-crash-bankruptcy to be off my credit, and that's not so much an option. I make less than six figures, but I'm well above the poverty line. Unfortunately, I'm a father and my son (of whom I have custody) is a teenager, so cash on hand is very low.
What is my best financial approach to get out of this place? What loans are the best to go after for the work? The house isn't one of those "nightmare, sure we can flip it" deals from a bad TLC show...is it?
This house is in major city limits in East Tennessee, USA, is solid oak construction underneath the mess, and sits on a quarter acre with cemetery-owned undeveloped property behind it.
Edit: "Cut and Run" answers will not be accepted. From what I can tell a short sell would leave me with so much debt that I'd be in the same boat but less one building.
