All Forum Posts by: Brian Kloft

 I don't know for sure but my guess is that if she can get a chunk for the land and have it where it all goes to the bank note then the bank wouldn't have a problem with it. The note would be lower and the bank would still have the piece that has some real value to it. 

Unless this is some different kind of ROW than I have seen before, the developer doesn't get to tell you what you can do with it appearance wise. They need to be able to use it as a right of way, that's it. Wether it detracts from the appearance of his entrance or not is not your concern and I doubt part of the ROW. First, I would see what I could do with the property to make money as others have suggested. The city gets to tell you what you can do or not with the property, not the developer. If you don't want to do that and you want to play hard ball with the developer then come up with a price for them to buy it from you; and make it a good high price. More than it is worth. Tell them you want them to buy it from you for that amount. If they say no then tell them what you plan to do with the property. Make it something that doesn't violate the ROW and something that the city will allow but make it Very Very Very ugly. Something that will really detect from his entrance. Something like pink and green striped sheds, ugly art like gold painted toilets. They will then have to decide if it is either better to over pay you for your lot or to let it hurt the values of the properties they are trying to sell. This may sound horrible to do; but it sounds like the developer is trying to bully you into doing what they want with your property. I don't like to tell you to get nasty like that, but I like even less for some developer to bully you and it cost you money so they can make more money. 

First, figure out how to get the renovation done in a couple of weeks not a few months. Every month it is not leased you are losing that rent and that is typically a killer. Unless you are doing some massive renovation a couple of weeks should be sufficient even to take it from an ugly rental to a very nice rental. Can the two of you do any of the work? Painting changing switches outlets lights etc. Look at buying online instead of at the big box stores. I personally get all of my lighting on Amazon. I like the looks much more than HD &L. I have also found good brands of faucets on Amazon that are less expensive.

@Jay Hinrichs @Taj Richardson. It all depends on the type of investor you are. I am a bit different and have found the Oregon Coast to be very lucrative. I only do long term rentals and I have low LTVs. I wouldn't touch anything in CA. Oregon had its challenges but most markets do and these challenges keep many of the investors away. For me it is all about finding properties that are ugly and low rents. Most landlords up here (I happen to be sitting on the Oregon Coast right now.) Don't bother making their places nice because of the demand for rentals. For example I sold my ugly small apartment fridge and stove for $100 each to another landlord that was going to use them for his rental. I fix the ugly units up very nice and get a higher quality tenant for them and higher rents. I also force appreciation. I deal mostly in the smaller properties of under 10 units. One 3 unit property that I bought in 2021 I got lucky and all tenants moved within 2 years so I was able to renovate and get market rents. That property basically doubled in value over the two years. I have done it a couple of times, the third one is taking a bit longer as I am not having the higher turn over. However I just finished renovating one of the units and the rent is going from $900 to $1600. In November I did the same thing on a different property but from $900 to $1500 after renovation. Those are very nice boosts on cash flow.  Plus they significantly increase the value of their property. Personally I enjoy the Oregon Coast which is why I don't mind coming up here to do the renovations plus I get to save $10k by doing it mostly myself.

 You definition of risk and mine are drastically different. With low leverage if the economy goes really bad and 25% of my tenants are having trouble paying rent I have zero concern about being able to pay my loans. Most people that only have 20% down would not be able to make their loan payments in the same situation.

There is no reason to try and find a different way of thinking about it to put your mind at ease. Instead change your ideas of how to invest. I am an outlier on these forums as we have very little debt on our properties. What you can do is put a larger amount of cash down. This will allow you to get a higher amount of cash flow. High leverage will allow you to make more money as the properties go up in value, but you also put yourself at higher risk if there are problems. If we were to go into a big recession and you have tenants that are not paying and you can't get them out in a timely manner (think California), or if you all of a sudden have multiple houses that need new roofs or new ac units that can be a huge hit and if you can't pay for them you can be in a big problem. Having large cash reserves can also help alleviate the risks. 

Most of the BRRR people tend to have a lot of properties but they only make a little bit on each property because they are highly leveraged. The theory is the increase in value on all properties plus the rents go up each year so that profit margin gets bigger each year. I have very little debt so I make a much larger amount on each property. Granted I have fewer properties so I do not get as much appreciation gain as they do since they will have more properties to appreciate. However fewer properties is less work to manage and I have significantly less risk. It sounds like you worked hard to get completely out of debt and taking on new debt is bothering you which is why I am giving you a middle ground option of keeping the debt amount lower to minimize your risk. I am guessing that if you look at the numbers of what it would be like getting the debt on the properties down to only 50% as quickly as possible that you will find it not as troubling. Figure out what you really want to achieve (how much cash you want to get monthly) and how many paid for properties you would need to achieve that. Once you get to that number of properties (assuming your goals have not shifted by then) then start aggressively paying down those loans to even further lower your risk.

Were the walls freshly painted when the tenant moved in? If so then I would think that needing painting after 2 years would be a bit of excessive wear and tear. If they only need some touch up for areas where the back of a couch rubbed on the wall then that would be more normal wear and tear. This one is the most questionable wear and tear vs abnormal item.

The garbage disposal: If the tenant had called before moving out and said that the disposal wasn't working then you would have had to send someone to repair it on your dime so I don't see that you can charge them unless you find something like a fork in there.

If the place was clean when they moved in then you can charge for cleaning. 

If you are managing this on your own make sure that you send the itemized security deposit accounting within the 14 days as required by law. I have found that most the time if you are reasonable on the charges to the tenants there isn't any problem. Typically they know that they left it dirty and they figure they are either going to pay you to clean or they would have to go thru the hassle of cleaning it themselves or find someone to clean it and this way they didn't have to be out earlier to get it cleaned. 

@Blake Dailey  Thanks. Not so worried about building momentum. We already have had that and are only looking at getting one or two more properties unless we decide to 1031 one of our multi unit properties. Between Oregon and AZ residential and commercial we have around 23 units with only a couple of small loans. I know not typical on here to have such a little amount in loans but we enjoy great cash flow that we live on, have lots of flexibility in what we can do and have no concern about making payments if the economy were to take a dump. We are just interested in doing something a little bit different than what we have done over the last several years. However when a great property that fits what we like (ugly and a great price where we can use our skills to make it beautiful) comes around that we can take advantage of our position and get it, we want to be knowledgeable about that property type and be able to jump on it. 

John S. Jones

Attorney at Law

494 State Street Suite 300E

Salem OR 97301

503.362.6396 office

I started to use him the one time I have needed the services up there; but one last ditched effort to my tenant and I got them to move out so I didn't end up needing him. Not sure if he will be able to help with your more unique situation.