All Forum Posts by: Account Closed

Ryan, sometimes there just aren't good comps, and you have to let the market decide its value. 

That said, you could try finding a smaller/larger home of similar vintage that sold within the past ~year in that neighborhood and figure out the square foot price. If comparing to a very small home, your sf price will likely be less.

But you probably won't get many more specifics on BP then what your broker provided.

On an old house, if it were me, I'd want to see a higher margin for my first flip, because it's going cost more than you realize to begin with. 

Welcome Joshua! BP is a really great way to get educated so I'm sure your next flip will be better than the first. Everyone seems to be looking for reliable contractors these days, so you'll be popular here. :)

I think Portland is safe to buy in if she plans to live there for a while, and if she's certain that she will maintain or increase her income during that time, or is independently wealthy. 

Buying a duplex as my first home was the best purchase I ever made. I was also looking at SFRs, and while they would have appreciated since 2012 when I bought, I would have nothing more in the bank with which to buy the second property. 

A SFR that you live in is not an "investment" since it only pays you when you sell, if you're lucky. A stock that's sold at a loss isn't an investment either.

While I doubt we'll have a drastic decrease in RE prices anytime soon in Portland, were I buying my first home, I would make sure not to overextend myself and to even buy a much cheaper house than I could "afford." I also would advise against a heavy fixer as a first home unless the buyer knows exactly what she's getting into. 

Prices are already starting to soften at some tiers and in some locations in the Metro. 

It's very tempting to get caught up in the hype, which some agents perpetuate, when fear sets in about being "priced out." In 2006, I worked with an agent in Eugene (where I was a student at the time) who told me (knowing that I was pushing my limits of affordability) "there's only so much land" and "real estate is always a good investment." 

I ended up getting priced out and thank God for that, because I would have been underwater on a SFR in a city I didn't want to live in and without steady income for almost 10 years, if I'd managed to keep it at all.

I use a RUBS program for my Oregon duplexes. Each unit pays a proportion of the bill commensurate with the number of residents, regardless of their ages. Our local water bureau bills once per quarter, so I email the tenants a copy of the bill with their portion written on it with a due date every 3 months.

It gives tenants incentive to not waste water, and I don't have to pay for it. Simply incorporating the average water bill amount into the rent would result in higher water bills, plus water rates are rising 7% each year.  

Tenants' leases are written such that any payment they provide posts to their account in chronological order, so nonpayment of RUBS means their account is past due. 

I don't think we can evict based on nonpayment of utilities, but it is a violation of the lease, so they'd have to remedy the violation or be subject to eviction for cause.

p.s. Infants use a lot of water in washing machines!

Thanks @Randy Johnston and @JR Hinds for the mention; I might not have seen it otherwise.  It's in my calendar.  Looking forward to seeing you fine people again, and to meeting those of you I haven't.  

Buildium is $49/month minimum. The per unit cost of PM software is high under 20 doors.  I've looked into this a lot but gave up. I have 4 doors currently. 

You might be able to build something with Podio, which you can get for free, or at least, you could last year. 

Or take Stuart up on his generous offer. I'd want something that helps with the actual management/record keeping, the PM accounting, the LANDLORD accounting, and reporting. Automatic bank imports/linking would be nice, as well as a cloud-based system for tenant maintenance requests. Integrating with a website or providing a website where tenants can browse available properties and apply would also be nice. Oh and a cloud based database that interfaces with that system to automatically store paperless (and scanned) tenant records. 

PM has many facets and it's more complicated than most people realize. That's why the software isn't free.

Underwriters will count at least 1-2% of your student loan balances as your "monthly payment" if you are on any income-based repayment plan, even if your payment is actually just $100/month. I don't know what your repayment plan is, but underwriters will count at least $2300/month as debt against your DTI. That is in addition to your other debts.

The best DTI you can probably hope to achieve with a bank loan is about 45%. This means your monthly debt payments can total no more than 45% of your monthly income. You're smart people and can do the math yourselves, if you haven't already spoken with a loan officer. I suspect that your DTI is already over 45%. @Frank Jiang was very generous with his time in coming up with a hypothetical scenario for you, but I'm guessing your debt payments are even worse, since he's assuming that your car and house payments are (roughly) based on the current balances rather than the original principal.  

So unless you can get a private lender to lend you the cash at an interest rate below your lowest extant loan (i.e. car?) rate, and unless the property was guaranteed to cashflow at a cap rate that is at least 2-3% higher than your highest interest rate loans (school?) it would be imprudent and unwise to accumulate any more debt until you have paid down existing debt and/or lowered your expenses.  

Were I in your situation, I'd:  

0.  Make sure you have an emergency fund of at least 3 months' worth of living expenses and good health/home/liability/disability/life/umbrella insurances.  

1.  Pay off the credit card and keep it paid off each month.  

2.  Concurrently with #1, I would see if I could get an equally reliable car with a lower monthly payment than the one with the 10k remaining on the loan, or ask myself whether I even needed a second car (maybe in Texas, you do, but it's also possible to carpool, take public transit, bike, etc.)  And/or if the paid-off car is a nice/expensive one, I'd sell that and pay cash for a more modest used car.  I lease a 2015 hybrid gas/electric plug-in (Ford C-Max) for $234/month.  It's a $35k car, but federal tax credits for electric vehicles make the monthly lease payment low.  But I digress.  

3.  Then I'd start paying down the Wells Fargo student loan, throwing anything extra towards the principal (you need to tell them that you want the extra payment applied to the principal, rather than pre-paying the loan).  After that's paid, I'd do the same with the government student loan.  

4. While I'm doing all/any of the above, I might also see if I can get cash-out refi with a very low rate to pay down the student loans (private first, then government) as much as possible. (Chances are slim though because to get a refi, you still need a good DTI. It's a chicken/egg scenario, but maybe a community bank would do it.)

5.  I don't know what your house is like, but if you can get a lodger to rent out a room, or if you can add a separate space by inexpensively finishing a basement or attic (microwave, hot plate, mini-fridge, bathroom, + bedroom or studio), you can use that income to both pay down debt and to establish yourself as a landlord in the IRS's eyes.  

6.  If and only if the numbers work out for your current residence, you may consider renting that out to a tenant and then renting a much less expensive place in which to live (closer to work so you can get rid of one car and its related expenses?)

Essentially, pay down your bad debt (which is pretty much everything except maybe your mortgage) before you accumulate any more debt. (There are some rare exceptions to this relating to interest rates that I would probably only suggest an experienced investor make.)  

Your first rental will cost you more (in time and money) than you anticipate.   

I also second everyone who suggested house-hacking as a way to get your foot in the door of RE investing and re-evaluating current desires vis à vis life goals.  

Lastly, this isn't advice and I'm no CPA/lawyer.  It's just what I would do were I in your situation.  

Ultimately, anyone can get fired from a job or lose a big client or run out of unemployment insurance or have a medical emergency.  Anyone. That doesn't mean they'll stop paying rent, but if they do, they signed an agreement that says they'll get evicted soon. 

Someone who would stop paying rent because they no longer have X source of income was probably a poor credit risk to begin with. If you are worried about this law, then you are likely renting to poorly qualified candidates to begin with and have larger problems at hand. 

Lastly, it is not our job as landlords to be parents or bosses of our tenants. We can't control for all possible outcomes when life happens and have to rely on our screening process first and lease second.

It's not unusual in older homes to not have air conditioning. Typically temperatures don't rise into the 90s and it's not humid, and everything cools off at night. 

BUT the past few years we've had heat waves that last about a week, and temps have risen above 100, usually in July, but it's pretty hot today. If you plan to be home between about 10AM and 7PM and happen to catch a heat wave, it's sure nice to have A/C. I broke down last summer and finally got a portable unit after living in Oregon for 11 years without it, mostly because I was worried about my animals when I was at work. 

@Anne only one person mentioned taxes, and it was an oblique reference. Because you're not based in the US you probably won't get the same tax breaks that US RE investors do, which makes Jay's comment even more relevant to you. Notes don't have the same tax advantages as investment real estate, so they're a good option if you're in retirement living off your investments anyway and don't want to be very hands-on. 

I'm not a tax professional though so you might want to talk to yours for advice.