I'm sure that a skilled local investor in those less expensive markets can do just fine employing strategies that are vastly different from an expensive market, but not a newbie, small time, out of state investor with little market knowledge (no offense intended, just trying to keep it real).

Do you have a criminal record that includes drug charges or violent felonies, sex offenses? 

He was thrown in and out of jail because of these offenses.

Assuming his offense was not something that would legally tie up the property you should be able to continue your negotiations.

I'm guessing if they saw  $1,000+ as a possible fee because of something as silly as their dog having an accident, they'd realize it's a serious offense. 

At one point I began researching the route and I quickly found that this is a serious offense, and wasn't something I wanted to risk.

@Matt Bell   NO offense to @Brandon Turner  however I was funding BRRR deals for CA. investors before Bigger Pockets was even a twinkling in their eye.. having done about 2000 plus of those for investors.   

No offense, I don't know your company, but if you're working for another me-too lender, offering the same terms as the next guy, then you shouldn't be surprised that potential borrowers are shopping their loans around.

Also -- in the "lessons learned" category -- if you don't want drugs in the house, make it an evictable offense in the lease. 

Either move on simply offer what it’s worth- which may be offensive.