All Forum Posts by: Cori Leste

@Dennis M. Ew. They are humans. Have you no heart, as obviously this new landlord does? While the law is on his side, we should all strive to treat fellow humans with dignity and respect. And we all need a roof over our heads. That’s the business we’re in - providing that basic human need.

@Cori Leste Seems you cant edit a post, I meant to ask who your favorite suppliers/retailers are.

Just bought my first investment property and looking for advice on best suppliers for rehab materials. It’s a triplex that needs all units updated. I want inexpensive materials that will stand up to tenants, yet photograph well. The property is in a trendy area with lots of new condos to compete with so the photos have to sell it well. Where do you get your rehab materials? Any go-to brands/suppliers for cabinets and fixtures? Thanks!

@Denisse Lara Just want to point out that your answers suggest that compared to all of the naysayer repliers (mostly men who as a group are less likely to understand the realities of wedding planning and pricing), you seem to be the expert here on this model, and on the right path to success. Listen to yourself. Best of luck to you!

@Eric Washington the ARV could be anywhere from $825 - $925k. It's currently listed at $660. I'm not expecting the offer to be a slam dunk, but I do know they had expected to sell by now and since the season has passed, they're a little regretful of not taking previous offers. It seems they don't have the money or energy to remodel it themselves. Typically people buying in this neighborhood have school-age kids and are less likely to want a fixer of this scale.

I live in a desirable neighborhood in Portland and there’s a house around the corner I’ve had my eye on that’s been on the market since the spring. It needs literally everything: electrical, roof, ext paint (lead), plumbing, kitchen, and baths. Floors are in great condition. They came on the market way too high and have already turned down a few offers. (Emotional- it was their moms). By now they’re highly motivated because homes don’t really sell in winter here, and they’ve already come down $100k in price.

I walked it yesterday with my agent and contractor. At the price they’re at now, the margins are still too risky to do a flip.

I’m considering putting together a seller-financed offer where I’ll put down $X and pay $X/mo and do all the work in order to have it back on the market by next summer. In order to mitigate the risk to myself I wanted to build in a guaranteed amount I get from the sale and stipulate contractor and I get paid first, and the sellers get whatever the balance is. In order to incentivize all parties to be on time and budget, as well as do high quality work required for this neighborhood, build in a schedule of profit sharing at various thresholds of sale price, to be shared between me, contractor, and seller.

Has anyone done a deal like this? How should I structure offer? I’ve worked with the contractor on a big project before so I’m confident in that side of the equation.

Any thoughts, concerns, advice, personal experiences greatly appreciated!

@Lisa Thoele Yes, Tanglewood. The name itself seems ominous, ha! It’s helpful hearing everyone’s perspectives on the pitfalls about condos, especially this one in L.O. In the words of Marc Cuban, “I’m out”.

@Jeff S. Yeah, the management of a project of this scope by a group of people who are not experts and have a lot at stake seems ripe for trouble. Thanks for that additional perspective.

@Jaysen Medhurst Not sure if it is technically a “special assessment”. But it is supposed to be temporary... for 20 years, the length of the loan period.

There are different schools of thought on investing in condos so I’d love perspectives on this deal that looks amazing on its surface… until I found the "gotcha"

Background: I'm looking for my second investment property. My first was building an airbnb in our basement, so I haven't yet had the experience of analyzing and actually purchasing a secondary property. I've been obsessively practicing using the BRRRR calculator and finally came upon this deal that seemed like my golden "first deal" ticket.

The property: It's a bank-owned 3br/2.5 ba condo in an upscale suburb of Portland, OR. It needs cosmetic work to the point where it shows terribly (busted counters, decrepit fixtures, terrible flooring and paint, etc.). But, the schools are all 10's! The HOA has an onsite pool and access to an exclusive neighborhood rec center with legit gym, free fitness classes, childcare, kids pool, lap pool, party space, etc.

The deal: It's listed for $170k. The same floor plan is selling for around $230-$240k in the same complex. HOA dues listed as $509 (seemed high, but numbers still checked out). Rent comps for 3br condos/apartments in the area range from $2100 (slightly lower rated schools and no access to exclusive rec center) to $3000. My plan was to make a cash offer of $160k, put $10k into cosmetic updates, rent for ~$2300 (conservative estimate, more if possible), and refi hopefully at an ARV of ~$225k. The numbers on that plan look pretty attractive and I'd pull out more than I put in!

My agent called the listing agent and that's where things got dicey. He mentioned that the HOA dues just went up and recent buyers were obviously upset, some trying to offload their recent purchases. But he said it used to be $226 and $509 was the new amount. He said they were having consistent showings but no interest because it looks terrible and most of the folks coming through were FHA and turned off by the amount of work needed. He said he would happily entertain any offer.

I was so enamored with the numbers that I had planned to go see it in person this week and then make my offer. However I've always hated the idea of HOAs and feeling like I'm essentially renting my property, so I started digging into all the HOA docs (as of course any investor should), and fell down the rabbit hole of the HOA website. Turns out the listing agent was wrong and the HOA just issued a special assessment, which will raise the dues in 2020 from $509 to… $785!! It's to cover a 20-yr bank loan needed to complete a $8.5M dollar project to replace all siding (there's been a water problem), stairs, decks and sliding doors on all 125 units. Further, the original bids for the project were coming in at around $15M, but eventually they got one contractor down to $8.5M, which is the estimate the special assessment increase is based on. A recent letter to owners from the HOA said $785 is just an estimate and couldn't legally be relied on for sales/purchases of the condos. And we all know how likely it is that the project doesn't (gasp) go over budget!

So my questions are:

• 1. Is this a great example of why you shouldn’t buy condos? The potential for special assessments can ruin your investment.
• 2. Even with the high HOA dues, it has the potential to cashflow at least $111/mo, and maybe more if I can charge higher rent based on comps. Does that mean I should still consider it? If I can refi at an ARV of even just $213,500, I'll still have pulled all my own cash back out.
• 3. Should I be scared of an ongoing project of that scope being done around my rental?
• 4. How big a hit is an HOA fee of $785 on resale value?
• 5. How much do you love or hate condos as investments?

Thanks for any and all feedback/insights.