Getting a Little Nervous...

[Shannon L Fogarty]

Hello!  My fiance' and I are investing in our very first rental property.  Just last week we got our preapproval letter from The One Brokerage. We picked this bank because it was on Bigger Pockets.  We made our offer on a small home that needs to be rehabbed in a small rural community south of Rochester and it was accepted ($55,000). It's only 930 sq. feet.  It's on a nice big lot and includes a large metal garage/shed.  The house is rough, but we have experience remodeling and have a GC and an Amish crew ready to go.  We have $60,000 budgeted for the remodel.  This money will also come from The One Brokerage.  We uploaded ALL of our financials to the bank and are now waiting.  Communication with the loan officer is not the greatest.  I have searched for him on all the social media platforms and there just really isn't much.  I'm kind of freaking out because I expected a strong social media presence with this guy.  Like I said, communication now is less than I would like.  Yesterday morning he said we should have the final terms by end of day.  Did not hear anything.  I texted him twice with no answer.  This morning I texted again, emailed him and his assistant with no answer.  I called the brokerage and left a message.  They texted back and I left another message.  I then called the loan officer and left a voicemail with no return call.  Called the assistant and she answered.  She was very kind and apologetic and said she would message him through their portal.  She is in Texas, he is in Florida, brokerage is in California!  (YIKES!)  Within 5 minutes I got a message from him stating that underwriting has concerns about the location of the property being rural and not having enough sales comps.  He said he was working with them to get that cleared up and that he would keep us posted on the file status.  O.k. so is there a chance this won't go through??  I'm really feeling dumb and naive,  thinking I didn't investigate the lender more thoroughly. They have ALL of our information! Am I being paranoid?  

[Jason Taken]

Quote from @Shannon L Fogarty:

Hello!  My fiance' and I are investing in our very first rental property.  Just last week we got our preapproval letter from The One Brokerage. We picked this bank because it was on Bigger Pockets.  We made our offer on a small home that needs to be rehabbed in a small rural community south of Rochester and it was accepted ($55,000). It's only 930 sq. feet.  It's on a nice big lot and includes a large metal garage/shed.  The house is rough, but we have experience remodeling and have a GC and an Amish crew ready to go.  We have $60,000 budgeted for the remodel.  This money will also come from The One Brokerage.  We uploaded ALL of our financials to the bank and are now waiting.  Communication with the loan officer is not the greatest.  I have searched for him on all the social media platforms and there just really isn't much.  I'm kind of freaking out because I expected a strong social media presence with this guy.  Like I said, communication now is less than I would like.  Yesterday morning he said we should have the final terms by end of day.  Did not hear anything.  I texted him twice with no answer.  This morning I texted again, emailed him and his assistant with no answer.  I called the brokerage and left a message.  They texted back and I left another message.  I then called the loan officer and left a voicemail with no return call.  Called the assistant and she answered.  She was very kind and apologetic and said she would message him through their portal.  She is in Texas, he is in Florida, brokerage is in California!  (YIKES!)  Within 5 minutes I got a message from him stating that underwriting has concerns about the location of the property being rural and not having enough sales comps.  He said he was working with them to get that cleared up and that he would keep us posted on the file status.  O.k. so is there a chance this won't go through??  I'm really feeling dumb and naive,  thinking I didn't investigate the lender more thoroughly. They have ALL of our information! Am I being paranoid?  

 Many lenders take issue with rural properties unfortunately. That should've been screened upfront. We personally fund rural deals all the time -- unfortunately, we don't lend in Minnesota. I wish I could help on this, but now you know one thing to look out for (rural properties are sometimes VERY tough for lenders to get behind).

Advice would be here to force their hand in communicating, and if they're not living up to your standards, proceed to find another lender that will. There are plenty out there that would love to earn your business.

[Jill F.]

I mean... It's fourth of july in the middle of the week. Everyone I know that still has a job has taken at least part of the week off. I wouldn't panic yet.

[Ryan Kelly]

@Shannon L Fogarty I’m personally a fan of working with local lenders who know all the nuances of their market and how to get deals done. National or multi state brokers are fine for vanilla cookie-cutter deals, but not always for specific local projects like you are taking on. Plus, good communication is key, so if you aren’t getting it, keep shopping.

[Guy Gimenez]

Yes, you should be worried. Your due diligence was done late in the game. Please tell me you didn't pay them any money upfront! After the fact, you identified red flags and now understand why someone promoting on BP is no different than someone posting on other social media pages...it shouldn't automatically lend credibility to the company simply because they pay to promote themselves on BP. I suspect your chances of closing are slim so start looking for a credible lender who will do their due diligence on the property early in the game instead of just now figuring out that the property is rural.   

[Alecia Loveless]

@Shannon L Fogarty I’ve had great luck with my small local bank. They’ve gone out of their way to help me. Strongly recommend looking local for financing. They’ll be more familiar with the area and property.

[James Hamling]

@Shannon L Fogartyif your asking thoughts on if they are a scam (The One Brokerage) I will say I am 99,9% certain there is NO scam involved. 

The issue of 1 person in FL, another in TX, that's just this modern world of remote location for workers because reality is they don't need to all be physically sitting in a cubicle in CA to do there work. 

So on that side I'd chill. 

What you DO need to worry on and focus is your transaction. Know your key dates of everything, contingencies, options to such, and strategize for getting any amendments to extend if need be. 

And you should ALWAYS have a minimum of 2 contingency plans. So don't operate just hoping the 1 to come through, no, you should be working on plan B until have that set, plan C, D etc.. 

Assume the worst and work for the best. 

[Michael Diossa]

Quote from @Jill F.:

I mean... It's fourth of july in the middle of the week. Everyone I know that still has a job has taken at least part of the week off. I wouldn't panic yet.

 Agreed with this. Yes they should still have some form of communication but not everyone's hustling 24/7 and could just be enjoying time with their family.

to other point Local is definitely key for the next time. But also send an email with Key deadlines and expectations. Be polite

[Tim Swierczek]

Quote from @Shannon L Fogarty:

Hello!  My fiance' and I are investing in our very first rental property.  Just last week we got our preapproval letter from The One Brokerage. We picked this bank because it was on Bigger Pockets.  We made our offer on a small home that needs to be rehabbed in a small rural community south of Rochester and it was accepted ($55,000). It's only 930 sq. feet.  It's on a nice big lot and includes a large metal garage/shed.  The house is rough, but we have experience remodeling and have a GC and an Amish crew ready to go.  We have $60,000 budgeted for the remodel.  This money will also come from The One Brokerage.  We uploaded ALL of our financials to the bank and are now waiting.  Communication with the loan officer is not the greatest.  I have searched for him on all the social media platforms and there just really isn't much.  I'm kind of freaking out because I expected a strong social media presence with this guy.  Like I said, communication now is less than I would like.  Yesterday morning he said we should have the final terms by end of day.  Did not hear anything.  I texted him twice with no answer.  This morning I texted again, emailed him and his assistant with no answer.  I called the brokerage and left a message.  They texted back and I left another message.  I then called the loan officer and left a voicemail with no return call.  Called the assistant and she answered.  She was very kind and apologetic and said she would message him through their portal.  She is in Texas, he is in Florida, brokerage is in California!  (YIKES!)  Within 5 minutes I got a message from him stating that underwriting has concerns about the location of the property being rural and not having enough sales comps.  He said he was working with them to get that cleared up and that he would keep us posted on the file status.  O.k. so is there a chance this won't go through??  I'm really feeling dumb and naive,  thinking I didn't investigate the lender more thoroughly. They have ALL of our information! Am I being paranoid?  

 I would make sure that One Brokerage has the correct loan product for what you are attempting. Any transaction where the rehab exceeds the purchase price is a red flag for the lender, when you add rural, extraordinarily small size, and combine it with a very small loan amount you create a tough situation. The risk is high but the loan size is not profitable. This is a very tough deal for the lender to justify.

[Bill B.]

I’d contact a lender in Rochester or the small town you’re looking at. Honestly I can’t believe you found someone to do a loan for $40k give or take. (455k minus 20-25%). It’s usually hard to find a loan under $60k, much more so a purchase under $60k. Have you looked in to getting a heloc on your primary home?

[Mario Morales]

I am currently working with them, not sure if I will continue, as there has been some unfortunate issues with the LO out for a week, then their license in Illinois went through the renewal process. Which things happen but I am the one that has to communicate/ reach out to them. I think they don't understand that, it is important to reach out to clients when you say you are going to even if you don't have any updates. 

[Shannon L Fogarty]

Quote from @Mario Morales:

I am currently working with them, not sure if I will continue, as there has been some unfortunate issues with the LO out for a week, then their license in Illinois went through the renewal process. Which things happen but I am the one that has to communicate/ reach out to them. I think they don't understand that, it is important to reach out to clients when you say you are going to even if you don't have any updates. 

The communication was great one minute and the next they dropped off the planet.  Maybe I'm just used to Minnesota ways, lol.  I feel a little relieved.  I was just way too eager and excited to jump into this.  I THOUGHT I did all the research, but I learned that I had misunderstood somethings about financing and needed more education.  We DID speak with a local lender who was extremely educational and sat with us and explained and discussed all of our options and the pros and cons of investing in this particular property.  I am chalking this up to education.  If we hadn't moved forward and made the offer and went through the process, negative as it was, we wouldn't have met the people we have who ended up helping us more in the 2 hour meeting at the end than anyone else.  We will be ready for the next one!

Good luck to you.  Trust your gut.