All Forum Posts by: Account Closed

Ah, it makes sense why selling at full retail would be difficult if it's fully tenanted with year leases. Investors would likely want some kind of deal. 

If you need to get full market price, I wonder if doing some sort of lease back for up to 6 months would help? Pretty sure owner occupied mortgages will let you move in up to 6 months after closing. If you offer to pay the buyer's rent for 6 months, that may help seal the deal. Maybe combine that with cash for keys or  lower rent for a month to month agreement? Then only 30 days notice would be required if the buyer moves in.

In the future, if you like year leases, maybe writing a trigger clause into the leases would fix the problem, e.g. "lease will automatically convert to a month to month agreement upon change in ownership of property."

I'm not a lawyer. 

Edit:. I'm sure you've looked into all your options, but if there were any way to finance out the cash and hold the property, there seems to be tremendous upside potential. At $30/sf to finish the basement, you could add a couple downstairs bedrooms to some units at 300sf × $30 = $9000/unit. With the added ~$700/unit/month, it would pay for itself in about a year. 

You can use the 30 day evict clause for an owner occupant buyer if the notice is given to the tenant within 120 days of mutual contract agreement, so at least the buyer won't have to wait 3 months to move in... as long as it's a month to month agreement. 

A slight tangent but has anyone considered switching to week to week agreements? No 90 day notice required but the law says you can't ask for a security deposit either. I wonder if there's a way to legally still get some kind of refundable deposit. A week to week can be written to give the tenant 30 days notice instead of the 10 days minimum required by law, and to accept pre-paid rent so you're not cashing weekly checks. 

In Portland there are many single family homes with ADUs, which is essentially 2 units on one tax lot. You could live in the smaller ADU and rent out the house.

In other words, you may not want to limit your search to plexes.

Shoot me an email/PM when you're getting ready to start looking and I'll send you some listings. There are some search parameters and words I can use in MLS that can help to find otherwise overlooked properties.

@Mike Nuss, @Amanda Coleman, and @Jay Hinrichs all have great advice.  In fact, many people can offer great advice, but ultimately, what matters is the advice that works best for you.  

What I wonder, @Account Closed, is what are your long-term and short-term goals?  You're on BP, so presumably, you want to invest in RE.  If your near-term goal is more financial freedom via passive income, and your expenses are already low, then holding the property for now would seem to make sense.  If you want a wad of cash to invest in something else, then I suppose you could sell it.  But consider what you would actually have were you to do that--would the amount you have left over in cash allow you to buy a property in the area in which you could both live and cashflow, and if so, could it appreciate and cashflow at the same rate as the property you currently own?  Is cash flow even your goal?  

I'm a buy and hold gal, so my advice is biased based on that.  But I'm also a numbers person, so my advice would be to do what makes sense based on the numbers as it relates to your specific goals.  You'll consider things like:

• What part of town do I want to live in, or do I need to live in Portland at all?
• How much cash flow do I want today, or is cash flow important to me right now at all?  
• What's my long-term goal, and how would keeping this house get me there?  How would selling it get me there?  
• If I sell the house, how can I first increase its value to get the highest return possible?  Do I think this is the top of the market or do I think there is room for continued [average to good] appreciation?  
• If I keep the house, how can I invest in it to get the highest ROI in terms of monthly cash flow?

These are just a few things to consider. I'm a big fan of putting all my options down on a spreadsheet and comparing the numbers, both current and projected. Without having more details about the layout of your house and garage and lot, were I in your shoes, I would see if it's possible to convert the garage to an ADU and what the lowest cost to do that would be. For example, if I can run water/sewer and electricity out there, insulate the walls, add some windows, drywall, finishes, and appliances for $30k-$50k, that's less than any unit you could buy anywhere in Portland. Then I'd live in the converted garage and rent out the small house. (It may make more sense to build new, BUT there are a lot of factors that go into it, like zoning and setbacks and what condition your existing garage is in and is there a loft space etc. For example, if your current garage is in the setback that would now be required by code, it's grandfathered in and you probably wouldn't want to completely demolish it. You might keep that one wall and build a new ADU around it.)

But before renting out the house, I'd see if there was a way to get a third bedroom in there.  1,000sf should be adequate for 3 bedrooms.  Could I convert an attic?  Is there a basement?  (And if there is, that adds a whole new dimension to the story.) Is there a dining room that could be turned into a bedroom without disrupting the functionality of the house?  I've noticed that 3 bedrooms rent for about $500-$800/month more than 2 bedrooms in Portland.  (That's super general and depends on the area, but the point is, 3 bedroom houses are in demand.) 

If I had more specifics about the location and layout of your house, I could give you better numbers.  Rentometer.com and craigslist are good places to check rents.  

Another option for that site would be to rent yard space to a person with a tiny house.  I've heard that people are willing to pay between $400 and $500 just to have a place to park and live in their tiny houses.  There are some code issues that you'd want to be aware of (e.g. the neighbors need to be OK with it) but otherwise it's another way to generate cashflow from an existing plot of land.  If cashflow is your goal.  

Anyway, if you lived in the converted garage, you could still sell your house whenever (as long as 2 of the last 5 years before you sell were owner-occupied) and avoid capital gains tax as Jay described, but you'd also be taking advantage of the appreciation that will most likely occur in that area. If your plan is to sell the house within the next 7-ish years, then keep that in mind when designing your ADU. You'll want something that buyers will think adds value (i.e. the ADU should be nice enough to make people not regret not having a garage, or keep a single car garage, or build new above a garage, etc.)

I have an architecture degree but I don't really trade my time doing drawings for money. That said, I do enjoy giving free design advice and suggestions to nice people who I meet in person.  I'm also finishing up real estate school and have been an investor for 4 years in Portland, so I'm happy to provide you my opinions about ways to reach your RE goals and about where I think the value lies within the Portland RE market in general.  Feel free to PM and we can chat.  :)

My agent at Keller Williams wrote it to protect *me* so I could back out if they adjusted the lot line too much, not so the seller could breach contract because he got a higher offer. What's the point of a contract otherwise?

Apparently Vantage is a hedge fund.  Do you know them Charlie?  They sent the offer directly to the seller, though it was a pending listed property. It would not surprise me if they asked to see the contract to find a loophole they thought they could exploit. The seller is 95 years old and lives in Palm Springs (property is in Oregon). The seller now thinks he can get more for the property and can break our agreement as a result.

Update: seller has verbally said he'd sell it to me for $10k more than the contract price. We've been in contract a year. It's now 10 days until closing. 

Who knows if he'll write an amendment but if he does, it's still not what we agreed on! And it's extortion! Even if there might be a loophole, I'd sue for performance and attach a lis pendens to the title.  Long distance lawsuit will be more expensive than what the seller thinks he will gain by breaching contract.

I've been in contract since January to purchase a property that is contracted to close by 5/31.  I have funded escrow and completed by side of the agreement.  

Because there were some boundary questions that I wanted resolved before closing, we wrote an amendment in January stating that: 

The seller didn't resolve all the boundary issues (the neighbor's garage encroaches) and the deadline to close is fast approaching.  I funded the escrow account and let the seller know that it's OK with me to close despite not resolving the encroachment, that I would resolve it myself after closing.  

The seller has been taking his sweet time to sign the closing documents and I just found out why:  Blaine and Jesse of Vantage Homes submitted an offer to the seller back in April that was $20k higher than our contracted price.  Then just today, I found out that Blaine and Jesse have increased their offer to $30k above our contracted price.  

The seller is saying that, since he didn't resolve the boundary issue, he can just wait out the contract until 5/31 and then sell the house to Vantage Homes for higher than our contracted price!  

I'm about to claw my eyes out.  How is this possible??  I spoke with a lawyer who said that, if there wasn't a specific consequence to cure the boundary issue, like extending the closing deadline, then the seller may have a case.  How can this be??  The amendment was written for my protection, in case I didn't like where the results of any boundary change ended up, so I could back out if needed.  NOT so that the seller could back out because he got a higher offer!  

This is just killing me because this deal was going to be the one that was going to finally set me on a path to financial freedom.  I was going to live there and develop this property (it's industrial zoned) and then cashflow it long term.  I tried to contact Vantage but just got voicemail.  I wonder if they'd be as interested in the property if there's a lis pendens on the title, or whether they're doing anything that is bordering on illegal by trying to coerce the seller to not honor the contract?  I just want to talk with the Vantage people to straighten this all out.  

Does anyone have any suggestions about what I can do??  This is crazytown!

Hi friends,

I'm closing on a property soon where I'm inheriting a tenant who's been living there for over a year.  There's no written agreement or lease; the tenant is paying about half of market rent currently (I think--I don't even know the exact amount he's paying because there's no agreement).

Laws here require giving tenants 90 days for a no-cause eviction or to raise rents more than 5%.  Do I just have to wait the 90 days, or is there any way to shorten that time period, especially since there's no agreement? I could move into the house myself if needed.  (Law says the seller can give just 30 days notice if the buyer is moving into the property herself, but that notice must be given within 120 days of contract signing, and it's been longer than that.)

The plan is to have him sign an agreement on day 1, so it's not a question of whether to have an agreement or not.  It's more about what I can legally do--if anything, aside from cash for keys--to bring the rent closer to market faster, given that there's no written agreement currently, and the verbal agreement is with the seller, not with me.  

Melissa and Lynne,

It will be very helpful for you to spend some time in town before deciding on a neighborhood or property. If you buy when you first get here or before, you could end up in a neighborhood you're not crazy about or worse, get a bad deal. 

Sure, you can get a fixer duplex out near SE 181st for $250, but then you have to live there. Plus, rents there are lower and you're managing tenants that could be more hassle than they're worth. 

You can get a sense of the neighborhoods by looking at home prices and rents (sort listings by price and then hover the cursor over each property down the list on redfin to see where the marker pops up), by going to walkscore.com, greatschools.org, rentometer.com, Craigslist, and Google Street view. But these tools don't replace actually physically spending time in the area. 

I purchased a listed duplex in inner NE Portland for $225k in February. A friend has an offer in on a listed duplex in Foster Powell. It was listed at $239. You just have to know where to look and how to put together and negotiate a compelling offer, or have all cash and find off market deals. Many of us on this thread have our license and can help you. When looking for a broker, ask what areas of town they specialize in and how many offers get accepted relative to the number submitted. Ask to see a typical offer package and why they are a more successful negotiator than their competition. In this market, you need more than just an offer writer to win a property bid. (Of course it's a given that whomever you work with should probably also be an investor themselves.)

Good luck!

I thought there was a BP podcast where the guy talked about assigning contracts and getting the escrow company to just send him his cut directly. The seller didn't know what the buyer paid. 

More foreclosures meant homeowners became renters and the rental market tightened up around 2009-2010.