Intoduction and House Hacking Questions (Portland)

[Ty Jahn]

Hello Everybody!

I remember being in college and telling my mom that the first house I was going to buy was going to be a fourplex so I could rent out the other 3 units then live for free. Fast forward 10 years and I'm turning 32 here shortly. Haven't purchased a property yet while having a good paying job as an engineer. Realized that I have been letting self limiting thoughts control a portion of my life and am working on breaking the cycle! I've been researching real estate investing for years now and really focusing on it over the last 6 months. It's time I get my feet wet and actually buy a place to learn first hand. I currently live in Seattle but looking at moving to Portland for a change of pace plus it's slightly more affordable (keyword: slightly). Currently looking at 4plex's or a duplex that I could convert into a 4plex within in a year. Plan on buying using an FHA loan with 3.5% down, remodeling, living in the place for a year, then refinancing to repeat the process over again next year.

I found a duplex in Portland that is currently for sale and been on the market for a little over a month for just over $500,000. Current rents in the area for a 1-bedroom are around $1,100 to $1,300 but used $4,000/month to be conservative. Looks to me like while living in it I would almost break even then when I move out I would start to cash flow plus could use the extra equity for another 4plex somewhere plus use some of my cash to buy a 10-unit complex somewhere out of state.

Since it's my first time I was hoping I could get some input from people who have done this before of what to look out for, what I might be overlooking, thoughts on this deal, etc.

Appreciate your time and willingness to at least read this far plus hopefully offer some advise.

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[Mathew Wray]

Morning Ty!

Good on you for deciding to take the plunge! Having someone else pay your mortgage is a really nice feeling AND great for your future. 

A couple quick things on the property you're looking at...

1. Location is great for taking advantage of proximity to Reed/Woodstock. 

2. I think it'll be a tough road to get it to $4K/mo in rents. With the new rent control laws in Oregon you can't just take that studio at $675/mo and bring it up to $1,200 without some maneuvering. There are some habitability/improvement upgrades you could potentially take on that would allow you to remove the tenant without cause, but there's still a lot of grey area around that since the law is new. 

3. I think your closing costs are likely a little low. With credits from the seller they could be $3,500 but I'd rather get that as a bonus and not count it as a guarantee. 

The home has potential though, especially for a live-in investor, would just want to make sure you know what you'd be getting into. Are you handy and going to do the work yourself or are you going to hire it out? Have you factored time for rehab into your calculations? Can you afford to swing the whole mortgage while you get it up to speed? 

Just some things to think about!

Mathew