All Forum Posts by: Crystal Davidson

Overleveraged on personal credit.   I bought a beachfront property and decided to do all the repairs on credit cards, because it was easier and it was only about $35k in repairs.  The plan was to then take out an equity loan against the other house, and pay them off.  Then - disaster.   Then - pandemic.   Now - I have a bunch of credit card debt that I can't pay off so my "percentage of credit used" is like 50% or something and that crushed my credit score by about 80 points.

The house was (unfortunately) underinsured so the remaining repairs are on me.   As for the guy who hit the house - undocumented immigrant who disappeared from the face of the planet :-/

My score is low (despite perfect payment history) as I am overleveraged - having multiple properties in my own name rather than an LLC. My plan was to use a house that I own outright (valued ~$250k at that time) to payoff what was supposed to be short term use of funds to fix up another house, and then start moving my properties into my LLC. While doing that, a *car* hit the house that was worth $250k. Now, I need about $50k in repairs to get it back to livable again and I haven't been able to find a mortgage product anywhere with this credit score and a property that anyone driving up will see is damaged. It's a catch 22 - I can't improve my score because of debt and I can't pay the debt because all of my money is locked in this property!

Obviously, I could sell this or another property, but I don't want to do that.   

Any ideas??

Yes I would definitely be interested to know more about your experience!  Feel free to PM me.  As far as the units go - the place has a newer roof but no other major capital improvements.   The place was built in the seventies and it shows - I would say the furniture dates to maybe late 80s?   Tube TV's, ugly paisley comforters, etc.   That said, it's in use at the moment (if you consider 5 rooms full to be in use lol)   As each room is only currently bringing in about $200 a month, I think the smart play would be a few "long-term" tenants to boost the rent rolls immediately and take up some of the vacancy.   Again, as it's a rural area - average rents aren't high ($485 a month for an efficiency).   

As opposed to most investors, renovations don't scare me at all.  I'm a licensed contractor and I definitely know what I'm getting into.   If I left some of the deferred maintenance, and focused on new beds and more attractive decor, the costs are relatively minimal.

For financing, I'm looking at a commercial loan - would probably have to put up the 25% down myself (I don't have any friends or family with money lol)

As for management, my adult sons will be taking it over from me soon after acquisition.

So I need help with an analysis on a potential purchase.   The seller is elderly, foreign and is not working with a broker, so a lot of the financial work is not done for me, or he just can't answer my questions.   I have tried to get as much information as I can.

Looking at a roadside motel on a major road in a rural area.   15 miles away is a medium-sized college campus, and it's within 45 minutes of a big NASCAR venue, but other than that it is NOT a tourist destination - just rural area known for hunting, fishing, hiking, etc.   The owner rents the rooms for $40 a night.   He doesn't advertise online (besides having an extremely basic Facebook page) and the place isn't even on TripAdvisor or Google Reviews.  His current occupancy is a measly 16.5% annually (meaning $70k in gross revenue).   Fixed costs are relatively low as it's an owner/manager situation now.  $9,000 annually in repairs, maintenance, taxes and other costs, $29,000 annually in utilities.

He paid $350,000 for the property almost 30 years ago.   His asking price is $225,000 and it's been on the market for a long while so I could probably get him to be creative or even take less.

My strategy would be to rehab the place from a 1 star to at least a 2.5 star motel, market it appropriately, and raise the average daily rate.  3 star hotels in the area have an average 54% occupancy rate (according to a local broker) and an average rate of $78.

I've never bought a hotel/motel before and I want to know if I should ask anything else important that I've missed or if anyone thinks it's a totally terrible idea and I should run away now.   I appreciate your time!

Thanks for all of the advice! As far as house hacking again, I closed on this house just four months ago, so, with an FHA mortgage, another purchase is still a couple of years away. As far as e-Cornell, I already took all of the classes at Harvard, so I will probably not take any more.

Thanks for the ideas on MeetUp & facebook groups.   I am going to do that ASAP!

I'm interested in buying a small roadside motel in a rural area.  The price of the property is about $240,000.   Although I recently bought a house so my credit isn't TERRIBLE or anything - I have a high debt utilization on my credit cards and a seven year old BK that keeps my score in the low 600s - not exactly awesome.    Based on models, even if I pay off $20k or so, I will only get about 30 or 40 more points (which I may do also).  We could handle about 20% down payment from our cash reserves.   I have not invested in commercial real estate before, but we do own an investment single family property that is reported on our taxes, etc.  My question is whether someone with my credit profile can even get a commercial loan.  It seems the companies I have found the loan value is too small or I would need even more money down or they will flat out say no with my credit score.   I recognize, of course, that I could go with hard money, but that's not my FIRST choice.  Just wondering if anyone out there knows of resources for the mediocre credit having folks :)  Thanks in advance for your help!  Happy to provide any other details you want to know.