All Forum Posts by: Dennis Parslow

The virus definitely made us pause in our search, as did the extremely overpriced homes in Albemarle County, VA. A few months ago the owner of the house we were renting decided to move back home and we were forced to find a new place to live. We decided renting was too risky so I needed to balance my investment goals with my family needs. We decided to buy the best asset we could and do a 'love it or list it". We were adamant about 'buying right', which led to two deals falling through after inspections. Finally, we have bought a fixer upper ranch priced below market value! Thank to @Walter Keyfor his patience and guidance through this adventure.   Now, I'm on day 5 of demo and dumpster #2 is filling up.  This is a total tear out.  4522 Stony Point Rd, Barboursville, VA 22923. 

NEXT UP: Work with Walter Key to dial in the ARV, then get contractor estimates. We plan to extend the master bathroom out the back of the house, turn the carport into a great room, and vault the kitchen/dining areas.

Thanks for asking, Meghan.  So far, it has been a little frustrating.  Every property that I'm interested in is snatched up by someone else.  I've found off-market properties, which I inquired about, only to get no response and then see if show up on Zillow a few days later and go to a case buyer.   I've had lenders tell me they won't lend on a property because it's too rural, or no of high enough value.  I've had properties that I was ready to make an offer on, only to have my contractor tell me it's not worth it because it will cost too much to repair.    The Charlottesville market is insanely overvalued so I am being very careful, knowing that my first deal has to go well or I can't do a second deal for a long time.   

The other frustration is that I paid a company to set up my all of my LLCs. They did this for me in Mass and it went well. However, I wanted a Va LLC, due in part to the much lower fees (10x lower than Mass). For some reason the agent I am working with has still not completed the set up. Therefore, the bank won't set up my business checking account, which I plan to use to make the purchase. I'm hopeful that is resolved this week.

I am searching for a local bank where I can set up a business bank account.  During my research I found a good place to check on the health of the banks;  

https://www.bankrate.com/rates/safe-sound/bank-ratings-search.aspx

Despite feeling like I've accomplished a lot in the first month, I have to admit it's also been very discouraging at times.  Throughout this time I've been searching for houses as well.   Things are so expensive, and anything decent is instantly snatched up by a cash buyer (investor).  So, I moved out to more rural areas and then the lenders won't lend out there.   Then, I find an off-market deal and attempt to contact the user.  I get no response, but then I see if on ZIllow in the next few days.  Then, the cashs buyers take it.   

There have been days when I have a lot of doubt.   It's then that I grab a Grant Cardone podcast, or other energetic, positive type investor to bring me back.   

There is a a perfect property in my target area that is "on hold" for the first twenty day to investors.   However, every time I go by there are at least two others looking at it.   There will probably be 50 bids on this place, most likely pricing me out.

I am looking at FSBO, just outside of my ideal target area, but still could be profitable. I tried to get the deal done on Friday, but the guy is out of state and said his son would have the house open between 1-3 on Sunday. I asked; "you mean an open house". "well, I guess, ya" he said. We have had a few more calls". I replied, "It sounds like we are close on a deal, let me get in there tomorrow and we can make it happen unless there is a major suprise". He later said his son couldn't do it and I should just come on Sunday. He added "price and certainty of closing are key to me". Translation: I'm going to sell to a cash buyer who is going to beat you out again.

I'm not giving up, and will go there and get more 'practice' in, but do feel a bit like dissapointment is inevitable.   Time to go listen to some movitavtional podcasts on my way to the house...

Day 30 Status

After 1 month I have completed the following

- analyzed 33 potential deals

- Driven for dollars in every county surrounding my target marker; Charlottesville

- Conducted market research of the region

- Met 4 lenders, who I am establishing relationships with

- Set up my LLC

- Met 2 contractors

- found an investor friendly CPA

NEXT: Set up business account with a local/regional bank.   I'm looking to deposit $30k in whichever bank will provide my business with a line of credit.   Bank of the James seems to provide the most loans to small businesses in the area. So, I'm starting with them tomorrow

Once that is achieved it is full steam ahead to buy a property in the next 60 days!

Here is something to share...a few challenges with obtaining lending on rural properties. Since Charlottesville has become so overvalued, I'm looking out further and finding good deals. However, here are the answers from lenders on a rural 3BR, 2BA, 1400 sq ft. Purchase: $75k, rehab $30k, ARV, per my agent, fellow BiggerPockets member, is $165.

Private Lender group - 'Too rural and Value is too low."

Conventional Lender, who lives in that area, albeit a nicer part- 'It's a good area and the ARV seems right, but I can't loan because the water and power are off.' He also added that he wouldn't lend on a fix and flip, regardless.

So, I've got $35 of the $75 and I'm working on the paperwork to obtain a line of credit now.   However, I'm also looking at a few other opportunities, as I really want to establish a relationship with a lender and do deal that we both feel is solid.  

The good news: I've completed the request for my 401k loan and that will be in my account in 5 days

The not so good news: I've found a deal and brought it to my first lender, only to be rejected because the property is rural. It looks like a great deal; $75k purchase, $30k rehab, $170 ARV.

Tomorrow I will continue to try other lenders.

Amalfi, I appreciate your willingness to share your story. Real-life stories from other investors helps us all.   It's easy to brag on the forums, but not as easy to open youself up to some of the unhelpful comments that may come.  I never think it's helpful when people respond with "that was a bad decision..."   Well, no kidding.  She is asking for advice.   I think the advice about reading their current lease is very good.   As a program manager I occassionally deal with tough situations like this, and can only say that creating a good dialogue with the tenant so that you can find out what THEY really need, will be the genesis of a solution.  Best of luck.

A new article in the Wall Stree Journal outlines change to the way that FICO will be calculated, with mor emphasis on recent miss payments and debt incurred.  Investors should pay attention.  

https://www.wsj.com/articles/fico-changes-could-lower-your-credit-score-11579780800?mod=hp_lead_pos6

After meeting with 4 lenders, I now need to gather all of the necessary documents, and in some cases simply find a deal and bring it to them.    I'm going to put a simple table together, showing my lending options as A, B, C, D this week.   I'm trying to get all of the financing in place to be able to act quickly the next time I see a great deal.   I've missed out on one that I really wanted, so I'm focusing on the lending until it's 100% ready to go.  I expect this to take about 2 weeks.