Agents in Oregon - Househack Brainstorm
Hello Oregon BP,
I am an agent in the Salem surrounding cities and tend to get a lot of house hacking clients. The issue is that not many agents do these in the and they all think the process is easier than it actually is. Particularly starting 2019 it became more complicated.
Here are the current issues with being competitive at buying small multifamily for house hacks in Oregon right now.
-FHA is usually the only choice as it sticks to 3.5% down while conv jumps to 15% for most lenders on a small multi. Although I know a portfolio lender willing to do a 10%.
-My biggest problem is that they have to terminate a tenant during the transaction. Due to the 2019 landlord/tenant laws, tenants living for over a year must be given a 90 day termination notice for buyer move in. The termination cannot be started after closing because owner occupied loans require a 60 day move in. This makes house hackers ALOT less competitive when buying... not only do we fight vs cash buyers but now a basic buyer is more competitive. The extended closing date doesn't seem to bother sellers much, but the starting of a termination does. I have previously suggested starting termination after appraisal, then closing 35 days later so the sellers don't lose a tenant to a random buyer but that still deters sellers from accepting.
-The Buyers are generally newbies and tend to be less educated in the purposes of the different investment techniques. It takes a long time before they realize living in one side of a duplex with 3% down payment is not even going to get close to living for free. I see the purpose of a househack as an opportunity to grab an investment property for an extremely small amount compared to what a regular investor would pay. Just got to be careful that it cash flows on paper... that's the other issue, newbies think it should cash flow WHILE they live in one side. Most buyers so far are avoiding rent by the room single family homes so that is why I am specifying multifamily.
Anyway, the FHA issue isn't too much of a problem for me considering the availability of escrow holdbacks for repairs and whatnot. The newbiness issue just takes a while for them to see it with their own eyes to start trusting more.
The main issue is how to be competitive with Oregon's 90 day termination in relation with the Owner occupant loan 60 day move in rule.
Anyone figure a way around this?