Real Estate Investor · Portland OR · Member since 2015 · 15 posts · 8 votes
Probably a terrible time to buy a house but I just purchased my first home. It's a 3 story, 3 bed, 3 full bath townhouse in Vancouver WA. It is set up perfectly to rent out but I have to do some light work on it first, which I am looking forward to. After this I will either rent out some of the rooms or I will wait a few months and move out completely and give it over to a property manager. Minimum I can have it paying itself off with a tiny profit at first. It won't be hugely profitable at first but after PMI disappears and I refinance after a few years it will be pulling in a nice profit. Excited to start this journey.
Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
6y
Hey Reed,
It sounds like you've got a great house hack or BRRR going. If you are going for the BRRR strategy, it's important to put the home into "service" (meaning advertising it for rent) prior to doing your renovations. Otherwise, you can run into tax issues regarding your renovation. If you don't put it into service, then any repairs that you make will be capitalized instead of being expensed which creates depreciation recapture tax as opposed to expenses that reduce taxable income.
Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
6y
Hey Reed,
It sounds like you've got a great house hack or BRRR going. If you are going for the BRRR strategy, it's important to put the home into "service" (meaning advertising it for rent) prior to doing your renovations. Otherwise, you can run into tax issues regarding your renovation. If you don't put it into service, then any repairs that you make will be capitalized instead of being expensed which creates depreciation recapture tax as opposed to expenses that reduce taxable income.
Real Estate Investor · Portland OR · Member since 2015 · 15 posts · 8 votes
6y
UPDATE: I might lose this property. While trying to figure out what the HOA covers so I know kind of insurance I needed to pay for, I may have uncovered a blatant case of seller fraud.
Real Estate Investor · Portland OR · Member since 2015 · 15 posts · 8 votes
6y
FURTHER UPDATE: The seller has decided they are entitled to my earnest money for catching them lying and backing out of the transaction. Lawyers are involved now and I will likely end up going to court. The brokers said this is one of the worst first time home buying experiences they have ever seen....awesome.
Real Estate Investor · Portland OR · Member since 2015 · 15 posts · 8 votes
6y
FURTHER FURTHER UPDATE: @Julian Delgado for legal purposes I shouldn't disclose any further information on this until things are settled. In a nutshell, things have gotten even more ********ty'er. I'll update this thread with a more comprehensive update as soon as I am able.
Real Estate Investor · Portland OR · Member since 2015 · 15 posts · 8 votes
6y
FINAL UPDATE: The seller tried to sue me for my earnest money. After they realized I was fully prepared to take them to court they backed down last second and I ended up getting my earnest money back. I still lost the $1200 for the appraisal and the inspection but the real estate company I was going through (CANO) paid for my lawyer because they realized they royally messed up and failed to catch this lawsuit as well so at least I didn't have to pay for any legal services. The Principal Real Estate Agent apologized and said this was one of the worst first time home buying experiences he had ever seen. So all-in-all the nightmare is over. Lost 2.5 months of my life but it could have been a lot worse had I bought this property and that special assessment landed in my lap. Real Estate....not so much fun thus far.....
Real Estate Agent · Portland, OR · Member since 2016 · 19 posts · 5 votes
6y
That is so awful, Reed! What a terrible experience.
I'm an agent who has helped both low-income buyers and rental investors purchase condos in Portland. Looking at a lot of the cheapest condos in the metro area... I've seen a lot.
I don’t know what’s different in Washington, but for anyone else's future reference, the standard OREF Condo Sale Agreement form that Oregon real estate agents use includes a list of all the documents related to the condo association that the seller must provide at their expense and by a certain deadline. Then the buyer has a certain number of days after receiving all the documents to review them. That period is a contingency that protects earnest money. Essentially, if the seller never provides every document on the list even if they've provided some of them, the buyer's review period never begins. It sounds like that's the situation you were in. Most listing agents and sellers are not diligent enough to submit every document, or they are not proactive in communication to say, "This is everything. There is no document pertaining to XYZ."
Reviewing condo documents is a hard part of being an agent especially for people without an absolute abundance of cash sitting around. Those folks should hire a lawyer to review the HOA documents for them. Real estate agents do not take the liability for collecting and reviewing all the documents. I tell my buyers that I will help them organize the documents and glance over them but that it's their responsibility to read them and raise any questions or concerns.
The board meeting minutes can be a good place to begin looking for upcoming litigation and assessments. How did you first come to know or suspect an assessment was coming?
Here is my personal checklist based on the sale agreement list of documents:
A1.The HOA articles of incorporation. [Declaration of Covenants, Conditions and Restrictions (CC&Rs)]
A2. bylaws, including any revisions or amendments thereto.
B. HOA Rules and regulations, including any revisions or amendments thereto.
C .Policies, agreements, notices (not included in the requested items above) relating to: age restrictions, pets, parking, any restrictions on rental of homes.
D. All minutes of meetings for the preceding __ months for the HOA and the board of directors.
E. Documents verifying coverage under the current policies of casualty and liability insurance for the HOA and its directors and officers ("D&O insurance").
F. Documents verifying the current HOA assessments and budget, together with any HOA notices relating to potential increases in the assessments or any potential special assessments.
G. Documents prepared for the HOA or its directors and/or officers acting in their official capacity, such as inspection reports, studies, bids or proposals for repair or replacement of any actual or suspected material defects in the structural integrity or safety of the Property, and its limited or common areas.
H. Documents relating to any demands or claims made by or against the HOA relating to any actual or suspected material defects in the structural integrity or safety of the Property, and its limited or general common areas.
I. Documents showing the latest reserve study conducted by or for the HOA together with current reserve fund figures.
J. The total number of homes/units with assessments over 30 days past due expressed as a percentage of total numbers of homes/units in the community.
K. The total number of homes/units that are not owner occupied, expressed as percentage of total number of homes/units in the community.