Hello BP! I've got a story!
I'm a deep South gal at heart, specifically HOTLANTA, but circumstances moved me to Central PA and my REI blood, sweat, and tears paid off in a big, personal way. My family needed a place to live for ~5 years, we couldn't rent because I have lots of kids and a giant dog, and since I'm an investor, I wanted a deal with numbers and exit strategies I could be happy with. I ended up purchasing a bank owned SFH for ~50% ARV with cash, from family loans at 12% & 0 pts, rehabbed it, refinanced it into a 30 yr loan and walked out of closing with ~$8k in hand - all within 60 days. It was a tight, TIGHT timeline.
#1 First - Family loans. Although I've been investing successfully for years in Atlanta, this was my first investment outside of Georgia. With none my own lenders, contractors, or reputation to draw from, for the first time, I had to ask for loans from family. Thus the high interest rate. The largest portion was a draw from my MOTHER-IN-LAW'S IRA - that I had to redeposit within 60 days or pay an additional 40% of the loan in taxes. My breathing gets erratic and my heart races even now as I recall this. Kids, do not try this at home!!!
#2 First - House in PA. This house was a 3000sqft 4-storied 1920s Victorian that had been vandalized and vacant with a leaking roof for 6 years. I received a tip from an agent friend that knew it was coming to market, so I ran my numbers, prepared my cash offer with no DD and a fast closing, EM, and POFs, and submitted it the day it listed (yes, I had to pull my MIL's $$ a precious week early to do this). The bank was not happy with my discounted offer, but they accepted it because of the terms even while other bids were coming in. This I learned from the competition in Atlanta - the advantage of being the first offer in hand with excellent terms.
Meanwhile, I had about a week before closing to perfect my budget and timeline while walking hordes of contractors through the house - bless my agent's heart - plumbers, electricians, roofers, painters, HVAC installers... at one point there were so many contractor vans and trucks that we stopped up the street. I wanted to cast a wide net since I didn't know anyone yet, plus each contractor gave me more opportunity to learn as much as I could about the house and its systems. And boy, was there a ton to learn. Gas boiler? Hot water baseboards? Slate roofing? Radiators? IS THAT A BAT!!??! The house had all the plumbing and some electrical cut, all the appliances ripped out, an elevator removed, and the roof stomped in. The gas line condemned. At some point, a poor cat trapped inside. And no A/C, y'all! (Southern girl sigh) BTW, this was all being done remotely - I was still in Atlanta at this point, camping out in my friend's basement with my kids and my dog!
The day I closed, we started work and the refinancing application simultaneously since the loan process would take ~45 days. Certain work had to be done before the appraisal, so those jobs took priority. Which leads to...
#3 First: PA RE and Lending practices. State LLCs, title companies, paperwork turnaround, agent customs, local banks, insurance.... this part was a little like building relationships in a foreign culture - even words are pronounced differently here. My lender worked very closely with me through both closings, making sure I had correct and legal paperwork on the first closing so that it would go through smoothly for the second, walking through the timeline with me, following up on the appraisal and just really being on top of her game for the entire process. Since I only had an agent for the first transaction, she stepped in and coordinated everything for the refinance. I have BRRR-ed almost a dozen units in Atlanta, and not one lender holds a candle to this amazing woman. AMAZING woman.
We got it all done and closed right on the last hour before the deadline to wire the money back to my MIL's IRA. I came away with a chunk of change, the respect of family and their potential business, and a couple extra grey hairs.
The highlights of this experience? Getting the beautiful house I wanted for a terrific deal, but more importantly, gaining the network of amazing people I met along the high-pressured way - my mortgage loan officer, closing attorney, agent, roofer, plumber, electrician, and very importantly, my AC installer. These guys are the heroes of my story!!
Any questions, advice, or opinions on my experiences in this deal are very very welcome. I'm always eager to learn and to improve. And as a newbie in town, I'm looking to network with local investors in this area, so if you're from around here, please reach out! I'd love to grab a coffee or beer and chat with you.
