All Forum Posts by: Anthony Varela

Well well well...  Three years have passed and I admit, I still haven't made a purchase.  But I did come back to review this thread and have an update on the property at the very least.   It did go into probate and I forgot about it then.   Zillow shows it sold in 2018 for $365,000.  Rents estimate still at a lowly $2,045/mo.  The estimated value today is $503,000 so it certainly would have been an appreciation play.  

Knowing the son sold it for $365,000 and not sure what he paid for the "turn-key" services, I'm not entirely sure my offer was that far of a stretch after the dust settled.  Another update was that the house needed a complete kitchen remodel, structural rot due to a slow water leak stalled the sale of the house for months.   Guess that was a good thing that I didn't buy it.  

Not an accomplished flipper, or investor as the first post states.   If not a learning tool at the very least, then what good are these forums?  Gotta get your feet wet somehow.   

What's your competitive advantage, Coombs?  You buy and hold, what are you looking for?  Are you marketing to 10,000 properties, or like most of us, trying to buy a few and build something?  

 You totally hit the nail on the head.   Play up the area and what it will take to get good quality tenants into the home.   It will take a lot of work, and in order for him to not worry about the hassle of listing (his words) he'll have to sell at a discount to make it worth a buyer to purchase.   Even if a family was moving in, they'd need to put a tremendous amount into it to make it livable.   Thanks again!  Even if I don't get it, there is so much learning here just analyzing a deal and making an offer.   

Thanks to everyone and their input.   

Thanks again for these points on cash flow.   It puts it all into perspective.   A lot of people call it cash flow when they are talking about making $400 a month, but fail to mention the amount of downpayment to put in.   So what you're saying here is if the big purchases are relatively new 5-10 years, then the play is for appreciation.   If markets continue to rise through another up/down cycle of 7-10 years, sell and roll into the next larger property.  Am I hearing that right?   If that is the play, what should I be shooting for in return cash each month?   I know it's not a steadfast number, but if I'm able to get $400-$800 a month, that should be enough to make it interesting.   

I should mention I was able to get in and see it tonight.   There is a lot of cosmetic work needed.  new carpets, paint, and curtains throughout.  The kitchen needs new stove/oven and cabinets could be painted with new hardware.  counters are fine.   

The plusses are - I need to confirm but I think the roof is only 10 years old, the windows are 10 years.  When I say that, that doesn't feel like a plus.   But here's the kicker, there is a corner room used as a bonus area that can easily be walled in for a fourth bedroom.   It will need a closet (easy enough) and already have a sliding glass door.   I think this would boost the rent to $2400 a month.   

The house is paid off.  I'm talking with the owner's son, who is taking care of the sale of the home.   He is eager to not list is, and mentioned wanting to pay a full-service turnkey realtor to clean it up and sell it.   I don't know enough about that service to know how much a cash deal would be saving him.   Thanks for the advice in probing him a little more about the financial situation.   I planned on getting my numbers better sorted out, and then giving him another call.   Before I share what I think it's worth, I'll dig deeper to find out their motivations.  

Thanks again J Scott for breaking that down.   So for a property, I'm looking at in the Bethany area, swapping my values in place of the ones you mention above, I believe I'd be working with the thirst option of hitting .5% with a 3% return...   Appreciation is at play in this market so tell me if I'm a fool for thinking 3% is low?   

If I were to get the 2% rule like you say, however, I'd have to find a property selling for $90,000 with the average rents here of $1,800 a month for a 3bd/2bth.   I don't know anywhere you can find a property for $90k?   

I totally appreciate your thoughts on the 2% rule and clarifying it's for buy-and-hold.   As I believe Jay is trying to point out, in the Portland area, there is no way the 2% rule ever works out.   In Bethany where I live, I'm currently evaluating an off-market deal (total n00b - first deal) and I'm struggling like hell to make sense of the numbers.   The values of property here are easy, $350k-$400k and rents are only $2,000 on average.   That's only 1%.   When I add in (our seemingly high) taxes and insurance, plus any sliver of annual maintenance, I can't make anything pencil out.   

For us, new guys, trying to not make any dastardly mistakes, the 2% rule and the 100/50/1 (or whatever) are great tools to start from.   But not knowing how or when to stray is extremely frustrating!   Like beating my head against a wall.   

For those in the Portland market.   Do you have any baseline models you start from when evaluating buy-and-holds in the area?   

Thanks for your thoughts @Harrison Liu .  I think this is an appreciation play as well, as the values have increased 20% in the last two years alone.  Portland is growing and while the market will cool off, it will continue to development hasn't kept up with growth.   And $2,000 a month isn't unheard of around here.   I don't think I'll get the $250k price, but for the amount of work needed, $400k was out of the question and $340 will make it tough.   

@Ralph R. I appreciate your thoughts on the rental.  It's tough down here in the PDX market.   I don't know which needs to be corrected, the housing prices or the rent prices.   1% while a good measure, seems unheard of here these days.   

Question for both of you.   In the debate of cash-flow vs appreciation, at what point does that change.   Does making $50 dollars a month count as cash-flow?   Or is it more like $500 a month before it's truly considered a cash-flow investment? Should any investment cover your costs at the very least?  Maybe I'm being too nieve and short minded.  

Hey BP,

Thanks for taking the time to read.   Newbie here with only two properties, primary and one accidental rental.   

Just got off the phone with an owner looking to sell his mothers place.   Knowing she was moving I asked about an off-market deal.   After talking briefly on the phone with him, I got some good information and my first thought was to bring it here to discuss with investors more seasoned than I.   

I am in the Portland, OR market and finding deals here that pencil out is extremely difficult.   I knew that in order to find anything I needed to look off-market.  The house is a 3 bed 2 bath - 1,550 sq.ft.  Local comps are selling for $325,000-$350,000.   As mentioned, she was in the house for 40 years with minimal upkeep in the last 10-15 years maybe.   The owner's son told me they owned cats for many years, and it would need new carpets, paint, and curtains.  I imagine it would need some real TLC in the kitchen with renter level upgrades, and probably the bathrooms as well.   

I asked flat out what they were looking/hoping to get, and he said if the house were in the tip-top shape they'd like $400,000, but given the condition, they'd go as low as $340,000.   I told him I didn't want to make a low-ball offer and upset him without seeing it, but reminded him I'd be using this for an investment and I need it to pencil out.  I'll be taking a look at it tomorrow and making an offer.   I was thinking there might be at least $20,000-$40,000 needed in repairs and updates (pulled that number from the sky really... thinking kitchen, bathrooms, carpets, windows(?) and paint, plus maybe the roof and some lawn care).  Without seeing inside, I was thinking $250,000 was my starting point.   

Here are some plus sides - We are in a highly desirable area with 70/30 owners to renters.  I live 5 houses down and therefore want the rental to remain highly valued.   Rents are about $2,000 in this neighborhood for a 3bd/2bth house.   We are adjacent to the top-rated public elementary school in the state.   Walking and biking distance to shopping and dining.  One mile to the highway onramps (minimal noise - buffered from the beautiful old growth Oregon white oaks).       

I guess my first question is this, how do I begin to assess the value of the work needed as a noob.   I'm handy (currently replacing my own windows)  I can do some light stuff, but run my own company fulltime and don't have a ton of time, will hire a lot out.   And, finally, going off the advice of a lot of the podcasts, if you feel a little bad about your offer, it's probably just right.  Is that good advice?    

Secondly, I can finance one of two ways. Take out my own HELOC for the down payment and finance through the bank, or possibly secure hard lending for a quick loan to secure the property, then sell my condo rental and pay off or down the hard money LTV and refinance with a conventional loan. Any thoughts on this?

Thanks in advance!   

I didn't take the time to read every single response in this thread.   I'm sure I will say nothing that is novel, enlightening, or new, but here goes.   I too am brand spanking new!  I've been in the learning phase for over a year now.   I too am scared that when I do find it, I won't know what to avoid and I'll make a tremendous mistake and lose the confidence my wife has in me and set my family back.   

You know what makes me even MORE AFRAID?  Not getting in at all, and saving my retirement fund, hoping to get 6% return and live poor in my old age.   The drive to not let that happen far outweighs the fear of getting in and making a mistake.   

I still have not made that first deal.  I did, however, just get off the phone not more than 10 minutes ago in my first off-market prospect!   The owner is interested in selling a property his mother was in for 40 years!   Paid off, don't need top dollar market rate.   I actually came to this site right away to share the known details and look for guidance if there is a deal there or not.  

This is an excellent resource for people wanting to pass on their knowledge to others like you and me trying to get in.  Stay with it, figure out your WHY? and make it happen!