All Forum Posts by: Caleb Webster

@Oscar Cardenas Always great to meet another agent/investor on BP! Welcome!

Silverton is a great little town, could you run my through the numbers on your duplex?

@Mike Dymski Couldn’t agree more. We often seek comfort in those self-limiting beliefs because confronting them usually requires some sort of change that we’d rather not make. It’s much easier to live as if the deck’s stacked against us and there’s nothing we can do than rise above challenging circumstances and overcome them.

I live in Portland and I hear excuses all the time for why it’s impossible to buy a house here. These are really just thinly-veiled self-limiting beliefs that prevent people from building wealth. But the entire city with restaurants, bars and coffee shops on nearly every street depends on wealth being distributed away from savings accounts and assets and into consumer spending.

@Scott Pennington This isn’t necessarily something you do to add value but more to protect yourself in light of current rental regulations but it’s a good idea to make your first lease less than a year because as soon as your tenant has occupied the property for a year or more, it becomes drastically harder to move them out if you ever have any issues with them. @Mike Nuss is much more well-versed in the Portland rental regs though and can provide more insight.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $382,000
Cash invested: $50,000

I call this one the BEIGE INVASION monstrosity. It's a whopping 5 bedrooms and 3 bathrooms and 2800sqft of elbow room. All mechanicals were updated by the investor/hardmoney company and everything updated cosmetically. It's basically a new home with the bones of a 100 year old house. I hope I look this great when I'm 100!

What made you interested in investing in this type of deal?

I knew how many bedrooms I needed to have to be able to afford to live in the neighborhood that I wanted to live in. This was the only house I saw that fit my criteria after looking for almost a year.

How did you find this deal and how did you negotiate it?

This house has a VERY confusing history. From what I could piece together, someone tried to flip it but ran out of money before finishing the renovations. As a fellow investor, that one hurts. The hard money lender (one of the bigger outfits in town) repossessed it and finished the renovations. Everything was redone, electrical, plumbing, HVAC, roof, you name it. The hard money company then listed it for waaay too high and it sat on the market. I swooped in and offered $50k under asking which of course the sellers were stoked on. NOT. But they countered and I countered and they countered and I countered and at the end of the day I came up $7000 from my original offer and they came down...$43,000. So I'd say that was a win!

How did you add value to the deal?

I bought it under value because the house was 3x the size of the average home in that neighborhood and most people simply weren't in the market for that much house, at least not in that neighborhood of mainly starter homes. The current value of the house is somewhere around $500k which is $120k more than I paid a year ago. As soon as I can qualify for a refinance (need 2 years of self-employment returns) I will lower my interest rate from 4.9% to hopefully somewhere <4% and pull out my initial capital, making for a great BRRRR!

What was the outcome?

I immediately rented 4 out of the 5 bedrooms and moved into one of the bedrooms myself. I now live rent free in Portland! This house hack has been so much more successful than I could have imagined and has given me the confidence and freedom to take bigger risks in real estate.

Within the next year my goal is to put a kitchen in the basement and make it a separate unit. This will have 2 advantages: it will be much easier to rent a 2/1 unit and a 4/2 unit than a 6/3 house AND it will make more money.

Lessons learned? Challenges?

Be VERY specific when setting search criteria for properties. I only had a handful of houses show up in my automated search over the course of months which made the deal hunting process much less overwhelming.

Found a brand new, unopened iPad Pro in the back of a kitchen cupboard. This was my personal residence that I had just purchased from a hard money lender that had foreclosed on it after a failed flip. No idea what the story behind that was but I sold it for $800!

@Michael Ealy Definitely interested! I'm curious how you select (or apply) for a franchise. What requirements do hotel groups have for operators as far as experience goes? Is it beneficial to be a limited partner in a hotel deal before investing as a GP?

@Joel Owens Great points especially about incorporating rent increases annually to force mom and pop tenants to more easily absorb the higher rent rates. This can probably be pitched so that it sounds like you're doing them a favor by increasing rents annually. Going for the yield investor on the exit since I doubt mixed use is attractive to the jewelry box buyer. 

Maybe a CPI clause could be put into the lease since the lease term we're negotiating is 10 years and A LOT can happen in 10 years. 

@Greg Dickerson Yes you're probably right, that's more or less the feedback I've been getting. First time negotiating 10 year long leases so just want to make sure that I've thought of everything!

I've been listening and reading to a multiplicity of economic pundits regarding national debt, quantitative easing and other such fun things. I'm also currently negotiating several 5-10 year leases on a mixed use property of mine and the thought crossed my mind that I don't have a contingency for a high inflation scenario - my annual rent and CAM increases are 2% and 5% respectively. 

Are you accounting for the potential for higher-than-normal inflation in your leases? If so, what does this look like? 

@Luke Hadden @Sam Marquez @Alan Hall Hey guys, just passing through Sing tomorrow but looking to grab some lunch with locals (expats count too ;) ), I work in development and buy and holds full time, based in Portland, OR. If any of you dudes are free, I'd love to meet up!