All Forum Posts by: Cheryl Cunio

It will be a rental.

Seeking 44.5% LTV on 4/2 split level home on 2.29 acres in Eugene. The property is currently owned free and clear. Real market value, county records $339,091. Comp value $369,900. Loan sought: $150,000 at 8% for 5 years, proposed payment approximately $1,126.50. Purpose of funds: Home restoration for rental. Rent amount ranges: $2,500-$3,500/mo. Estimated repairs: $20,000. Eliminate debt of $100,000. Working capital to expand part-time business to full-time. Average annual gross sales of business is $105,000, 26% net ratios, largest expense is debt service on credit cards.

My company recently purchased a 2+ acre residential property in Oregon with a 4 bd/2 ba home on it and paid off the mortgage that it had as part of the acquisition. What we are looking for now is a way to get some cash out of the property to rehab it and keep it for a rental. Traditional/conventional funding options (HELOC or HEL) are not desirable as my goal is to avoid my personal credit or income being used. The property's rental income and the fact that it is unencumbered and worth about $250k in its current condition are what I would like to use to access funds. I am open to creative ideas as well as secured loans (giving a lender 1st position), 3-5 year balloons, or portfolio lending as I also own 2 other properties that have equity...or any other lending options I am not currently aware of. Any and all advice or referrals are appreciated.

I've been a landlord in Salem for the past 10 years and I can tell you I've never had a problem renting out a unit to good renters. That being said, I have also learned that Oregon is an incredibly tenant-friendly state. In the courthouse there are literally attorneys waiting for tenants walking around to try and represent them at eviction hearings pro bono because they are confident they will find some technicality (of which there are many) to win the case and get the landlord to pay their fees. There are no such services for landlords. That being said, I purchased my properties years ago when it was easy to find 3/2 homes with 2 car garages for $115-$130k and these same homes are going for $160-$200k now. So I cash flow just fine. On a 3/2, 2 car garage you can rent that for $1100-$1500 depending on the neighborhood.

I represented the Seller in a deal where he was trying to sell newer doublewides on land (real property) and after going through a few offers, it was found that it could not be sold via FHA because the home had been "twice moved". What that means is that no FHA loan could occur because the homes came from the manufacturer to another location, then moved to its current location. It's part of FHA underwriting guidelines that it come directly from the factory brand new and never have been moved again. Secondly, VA loans wouldn't work because although the flood certificate for the home had the floor inches above the flood plain, VA underwriting guidelines wanted about 5 more inches or they wouldn't loan on it. So in the end, we were looking for a cash buyer or someone who would pay the higher interest rates and higher down payments with lenders like Triad. Had we known the underwriting guidelines for the more popular low or now down (VA) programs, we wouldn't have wasted about 2 months of time on offers and buyers who couldn't get their loans to qualify for this property and we wouldn't have accepted their offers.

First of all, you are allowed to increase rents as a new owner to keep up with market rent in the area. Of course you want to follow your states laws about increasing rent, but don't feel like you have to keep her rent low. When I was looking to buy multifamily properties it was incredibly common to find units under rented so any property I would buy I would immediately issue rent increases to gradually get them up to market rent. For any upgrades, only do what is needed for safety and to ensure you are complying with your state's landlord-tenant laws (i.e., making it habitable). Repair any appliances as needed (fix, not replace unless it's necessary), if nonworking light fixtures need replacing, leaky faucets replaced or fixed, small things like that are fine because that is part of the general upkeep of the unit. Beyond that, any desired and unnecessary upgrades such as new flooring, cabinets, baseboards, crown moulding, painting, are only reserved for turnovers (new tenants at a fair market rental price). Think of your choices as business decisions and it will make it easier to see what makes sense.