In October 2013, my realtor called with a frantic pitch: “You have to buy this place! I’ve never seen a price this low for a property like this.”

It was a 2 story condo listed at $140,000. I’d seen the listing before and brushed it off because my plate was already full. To be honest, the place was a hot mess—but it had that magic trifecta: location, location, location.  As the listing would later read: 

… Townhouse nestled in a quiet and private setting across the street from the beach. ..

I saw nothing but possibility. My mom took one look and gave me her expert verdict: “Offer $110,000.”

The Reality Check

That sounded great in theory, but who has $110,000 just lying around? (Back in those days it was a substantial amount of money) I already had two mortgages and the Cape Coral house needed to be completed. I felt like I was losing my mind, crunching numbers late into the night. My logic was simple (and perhaps a bit dangerous):

• The beach house was paying for itself.
• The mortgage on my Cape Coral house was low.
• Conclusion: What could possibly go wrong?

Hard Lessons & Fannie Mae

I was about to learn a lesson in “lender logic.” It turned out the property was ineligible for a standard mortgage due to Fannie Mae guidelines. (For a condo, Fannie Mae typically requires a minimum owner-occupancy rate of 50%) Suddenly, the mystery was solved. I finally understood:

1. Why the house hadn’t sold.
2. Why the price was so incredibly low.
3. Why offloading it in the future might be a nightmare.

The Pivot

Since no bank would touch it, this had to be a cash purchase. Ugh. To make it happen, I had to get creative with my equity.  I learned my first big financial lesson: equity is a powerful tool. I tapped into the equity of my primary residence, securing a much lower interest rate than a traditional investment loan

It was time to tighten the belt and dive headfirst into the “hot mess.”

The Lesson: Sometimes a “great deal” is just a property that Fannie Mae has blacklisted. If you can’t finance it, you’d better have a plan (and a very tight belt).