All Forum Posts by: Jonathan Blum

Hey Jared-

A few bigger picture things to think about:

1)  If this is your first deal, and the down payment is $40k (and that's 20%), you're probably looking at a property that is too expensive, especially in Montana.

2)  You can't combo owner financing with bank financing without being super creative and having sellers who are willing to subordinate to the bank.  I.e.  The seller needs to give the bank first position, which means if your gamble doesn't pay off, the sellers lose their home.  There is no smart owner who would take that risk.

3)  If you are worried about agent commissions, you should look up the owner information on the city/ county GIS map and send them a letter telling them you want to talk with them about buying their house.  Or, if you're really brave, go knock on their door and ask if they are the owners.  If they are renters, ask them for the owners number.  Try to negotiate directly with the owners.

Like @Jake Hartnett said, do some research and don't try to reinvent the wheel here on your first deal.  Follow the basics that are outline on BP and you'll be successful.  Also, save up a better down payment.  Few sellers want to talk to buyers who don't have money.  People who don't have money have a much harder time closing deals in the end, so unless its been sitting on the market for a long time and the sellers are desperate to get rid of it, they don't have much incentive to work with you.

Best of luck!

+1 for Ikea kitchens.  The quality of the cabinets is okay to good, but their hardware is top notch.  The drawers and hinges never sag and they are great for 15-20 years.  Butcher block from Ikea is a super cheap counter top that looks high end and costs ~$140-200 for an 8ft counter.  Plus, you can do it yourself, while granite/ stone needs to be hired out.  

Wow.  Amazing features for the budget.  Where do you get the tile/ flooring on such a small budget?  In my area (Oregon), just the kitchen, bath and fireplace with those materials would run you $45k!  Great work.  You deserve every penny you made on this one!  Well managed and constructed!

Go to City Planning.  They are the best resource to tell you if your lot (or lot you're looking at) can be split or no.  They can pull the lot size, dimensions, map, and give you a realistic idea of if it will work or not.  A survey company can do that for you for $1000s, or just ask planning and they'll tell you the feasibility and process for free.  They'll also be the people to look at and approve your application, so its good to build a relationship with them early and make friends.  Let them know you want to do good things for the community by providing housing, value, improving the neighborhood, ect...

If you buy the property with a conventional loan it is very difficult to split.  It is better to buy for cash, split, and then refinance on the house on the one lot while leaving your new lot unencumbered.

Most planning departments will do this in 3-5 weeks, but the process can be drawn out to many months depending on if you need a survey, restrictions, ect...  I just did one and the full process with permits and survey cost more than $5,000.  That said, $5,000 is the cheapest piece of land you'll find anywhere, making this a very good investment.

One other tip:  Commercial lending looks at the price you paid for a piece of property as part of the valuation for building/ new construction lending.  If you managed to get the land for zero, that is approximately the value they will give you on financing new construction there.  I had this idea they would say, "...oh, you own a lot that is worth $50k, and you want to build for $200k, which means you have 20% equity of the $250k finished product... so we'll loan you $200k with no money down..."  Sadly, in reality, they say, "You own a lot and want to borrow $200k.  You'll need 20-25% down to get that loan."  Bummer.

I had a similar situation with a property in The Dalles, OR.  I bought it with two items on the title.  Both were liens from previous credit card debt that was encumbering the property, about $15k worth.  I was able to settle one for the amount originally owed (got rid of $3k of accrued interest) and am still working on the other one.  It has been a major hassle but worth the struggle.  Many of the creditors will only correspond with you via mail and its hard to get them to settle without having a lawyer involved.  I bought this one because I knew it was a good deal even if I had to pay the entire $15k, but yours doesn't sound so good if you had to pay the entire amount as a contingency.  Best of luck!

@Steve Gunasingh  You should check out the market in Gresham and Troutdale, OR.  Both of these seem to have multi family inventory and house commuters for Portland.

Another thing to consider is that WA state doesn't have a personal income tax, so depending on your income, this might make it go 10% further than in Oregon if you'll be living there.

Welcome to BP!  There is so much to learn here.

Wow.  I love what you did with the tall skinny mirror in the bathroom.  Makes it look huge!  Good work on the rehab.  You did well for $18k of work!

I have been building a small collection of rental properties in the Columbia River Gorge.  My strategy has been buying distressed properties for cash, rehabing them, renting and holding.  I am interested in networking with others in the area who might have similar interests, or be looking for a partner for larger ventures.  I am a skilled builder/ remodeler with experience in all trades.