Creative Investing in Oregon

17 Replies

Hello, I am not in Oregon but I have had a motivated seller contact me about selling their house in Klamath Falls. Before I even pursue this, since I live in Northern Nevada, is it possible to do creative deals such as subject to or lease options? Thanks.

Just in case anyone was wanting to know if it is possible to do a subject to or lease option in Oregon, well it is, you have to make sure that it is a smaller entity like a title company or private lender to even think about doing it. The bank will almost 90% of the time trigger the due on sale clause and you end up stuck with the bill. As long as you find a motivavted seller that has gone to a title company or sometjing smaller than a bank you can still do creative deals in Oregon.

I don't know how its not correct. I called around and they all confirmed that it is possible to do subject to deals as long as the bank is not involved. If I am wrong, I am fine with that but I guess that all thise people thag I called were wrong then too. What is the way to go about it? 

@John Cannon   not sure who all those people are..

but you can do sub too on any property.. with any lender.. and any lender private or not has an alienation clause in their debt instrument so they can call the loan if its alienated.

Title company is irrelevant other than faciliting the transaction.  And you don't need a title company for Sub too.. I have done hundreds of them and did them all myself.

However in practice lender calling the loans it rarely happens as long as you keep the payments current.

Now I am not a FAN of sub too for most Sellers I think they take huge risks because most buyers of sub too don't really have the wherewithal to cure if the bank calls the loan.

So if you have as a seller deeded your property away and the buyer walks your screwed you don't own it any more so you can't refinance and you have to do a foreclosure to get it back which costs thousands.  I know for limited capital investors or limited credit investors its a tool they like.. but its really bad for a seller unless the sellers' credit is already trashed and their is no equity and they were walking anyway.. and its a purchase money 1st were no deficiency judgment could be obtained by the lender

@Jay Hinrichs good evening jay, I'm new to bigger pockets and I read your incredible profile and I would love it if I could get in touch with you via email to ask you a question or 2.

Is there anyway to write into the contract that if the bank decides to call the loan, then you (the buyer) promise to give the property back to the seller, at which point it's possible the loan has been paid down depending on how long you've owned it? That way it would shift some of the risk from the seller to the buyer. Also, could the bank still call the loan even if you transferred it back?

In episode 2 of the podcast, the guest talks about doing subject to deals, and she said she only had one bank on the 100 subject to deals she's done contact them about it, and after discussing with them they were happy just to have payments coming in. So maybe it would be less risky if you were doing this with properties that were delinquent, as the banks will just be happy to be getting payments again?

@John Cannon did you end up buying in KFalls?  

I was looking at some bigger cities near I5 in Oregon and didn't look at Kfalls, because there is no appreciation out that way and really.

Just wanted to see if you would share your experience with Kfalls as it's been 2+ Years.

- Hows the Tenants

- Property Manager

- Repairs after Tenants

- Any Issues

Thanks,

The deal fell through. I couldn't find a buyer for it if I were to take over the mortgage, and the seller was not really wanting to do that. Plus there wasn't enough room for there to be any profit for a fix and flip as it was pretty beat up.

@John Cannon Ah ok, I was looking at a few over in Kfalls mainly for the cash flow, but don't think i'll pull the trigger.  They have some decent looking houses 60/65k range 3/1.

I talked to PM they had ~25day vacancy last and rent 695/725 2/1  and 795-850 3/1 depending on sq ft.

Crime Rate IndexesKlamath Falls, OR      Medford, OR      United States
Total Crime Risk12658100
Murder Risk11051100
Rape Risk14779100
Robbery Risk16576100
Assault Risk12772100
Burglary Risk162103100
Larceny Risk152135100
Motor Vehicle Theft Risk12883100

I have a rental out in KFALLS.  It has worked out great so far. I do not believe people in Kfalls feel unsafe like the numbers posted show. I have lived in Southern Oregon my whole life.  Just like "West Medford" is the dump of medford.  I have around 8 properties in West Medford and appreciation and rents have been outstanding.  Kfalls is also appreciating, you just have to get a good deal on purchase.     I don't think Kfalls is the land of milk and Honey but it's a lower entry point to play ball then other area's of Oregon. Kfalls is growing, The medical centers, OIT is a very respected technical college also. 

@Marques J. Thanks for the response.

I've made a few requests on properties on Southern Oregon and asking a few questions to the listing agents.  I'd like to buy a few houses this year, looking at properties below Eugene and have a population of 20k and growing.

I'm looking at one that has been rehabbed, went from a 2/1 to a 3/1 and I can rent it out right away. I want to buy some easy ones I can just get started on the cash flow aspect then dive into using the BRRRR as I find some contractors in those areas.

Yeah Columbus area is rough and wouldn't touch stuff over there myself, but there are some central areas that are decent that fit the 1% rule.

Exactly, I'm looking for growing areas that might offer a good deal and while not appreciation my main focus is cash flow right now as I'm getting started.  Long as I can finance a few properties I think that's the right way to get started.

Do you own yours in an LLC or in your own name? from what I understand I can;t finance a loan in an LLC unless I personally back it.

@Brent M.    I love Columbus. I love west medford, I live there among all my properties. Guess perspective is the key. Closed on a Columbus house today ironically.  Better than 1 percent. 90k purchase price Owner carry at 5.5%, no points or fees, 8k down payment. P/I is 427 a month, insurance 280 a year, taxes 1300.  Rents 1100+  7k to rehab rent ready.  Also between 30 and 40k in equity at purchase once the property is stabilized.  Still wouldn't touch it? :)   I mean obviously this isn't a typical deal.    I spent many years in Roseburg.  I know that area. Stay away from ANYTHING post and pier on those black mud hills.  Even rocky point I would stay away from. Green area is a entry level home and rental mecca but everything in the Burg is lower then Southern ORegon....      

  Regading LLC. I ditched the LLC after I found it very expensive long run. Higher insurance to be named in a LLC. Cannot close conventional in LLC. Up until Dec 2017 title held in LLC did not count toword seasoning to get your Cashout and execute BRRR.     I chose to do a umbrella liability policy and put everything in my name. LLC liability protection can be rendered invalid by a variety of mistakes one could do.     All my commercial loans go into my LLC though. They require it or DOD FRANK kicks in and that is not an option.

@Marques J. I changed my mind :-), Would you consider those properties C Class or D moving on up?

Well that's interesting, I'm reaching out to knab my first dealio here soon.  Is the Owner Carry meaning you just took over the loan for someone else?

Was it occupant owned and they moved away or an investor?

Well sounds like a great deal, looking to learn much here :-)

@Allen Tucker   Thanks.  This is not as exciting as the deal I was emailing you earlier this week but at least this one isnt illegal haha..     @Brent M.     I got the lead via a Nonprofit I work with. Owner needed to sell, city wanted house cleaned up. 

The owner carry I went with, seller owns the house outright, a trust deed is put on the property for sale amount minus down. Pacific trust out of GP sets up a service escrow account. I pay Pacific trust they pay owner. There is a 5 year ballooon payment so all is due in 5 years.  I can refinance this right now actually but owner wanted monthly payments for 5 years. I compromised with a slightly higher interest rate than I could get but less down.    It was occupied by the owners family which became an issue..    

I would consider any property anywhere. I trust my skills in due diligence and analysis, I check with my gut and if there is value and I believe in it then I go for it.   

128 Chestnut (drive by shooting death on chestnut couple months ago) is an example.. on top 5 worst problem homes in Medford. 10 years+ with no power to the building.  Druggies in the mother in law unit.   I walked it and it had solid bones.  New pressure treated bottom plate even. No asbestos all removed. I snapped it up asap. Frankenstein house with burned out crack house across the street.  It's a 2k a month property once house rehab finishes next month. Payments very low. It's in an area I am fighting to improve.    I am a West Medford advocate :) 

The only area I dont like in Medford is by the OK Market. between court and riverside.  I don't like it because it has the worst planning. sloppy lots, sloppy streets, no sidealks, no curbs in places.  I would still buy there if deal was right :)

@Marques J. Nice, I read through some of your past posts and what you've been involved in.  Looks like your on a good path forward and working hard, nice nice!

Looking to get started soon and learn as I go , my plan is to buy and hold and have my start plan drawn out.

I have alerts on Zillow/Trulia/Realtor - I don't have access to the MLS and had talked to a real estate agent, but he does his own investment/business too so hasn't been as responsive so have talked to a few others.

I looked up 128 Chestnut, is that your pictures of the rehab process? (That's awesome)

Do you have a local team that does all your rehabs?

Do you go to the Medford Meet Ups? 

Anyways listening to the BP Podcast, I'll catch ya soon.