All Forum Posts by: Dan Gandee

Congrats on the closing! Just shoot me an email and I'll provide you contacts to a great landlord attorney, investor friendly CPA, and also the necessary steps for leasing to the new tenants, as well as the renewal of the current tenant if/when that has not been completed yet. We can discuss this in our next meeting as well. Happy to help and good work on the first acquisition. 

Welcome To The Journey!

@Katie Nolan

I'd be happy to share some insights I've learned along the way investing in Lane County and around all of Oregon. We should grab coffee in the coming weeks. I'll send out an invite and feel free to respond with your contact info so we can connect. 

One thing I've learned is that house hacking is definitely a great way to start but sometimes not the best trajectory if you want to scale this fast. We can review creative finance options and a few up&coming trends like MTR's with tools like pad split, etc. Lots of possibilities and that's what I love about this business. 

-DG

@Alecia Loveless totally agree and great points! We've gone through and vetted the local vendors to make sure the person inspecting it isn't going to just "look for work" as this very common in these industries. I've had conflicting reports more than 50% of the time which shows what you are bringing up is EXACTLY the case. 

I've been helping my clients and investor friends excel in rural distressed property projects. The demand for homes with a bit of land and a shop is high where I live, leading to a larger buyer pool and quicker sales. However, the biggest challenge is dealing with well and septic systems, which can cost $15K - $75K to fix. Here’s how to navigate these issues and negotiate with "AS-IS" sellers.

Step 1: Asking the Right Questions

During the initial phone call or walkthrough, I ask the seller key questions to assess the condition of the well and septic systems:

• Do you have any well reports, logs, purity tests, or flow tests?
• When was the last time the septic was pumped, and were there any issues?
• Where are the well and septic located?
• Have there been any repairs to the well, including the pump or pressure tank?
• When was the system installed or the well drilled?
• If we find that the well and septic need replacement, are you willing to negotiate on an all-cash offer?

Asking these questions helps frame the importance of accepting a good "AS-IS" offer versus risking the termination of the transaction due to unresolved issues.

Step 2: Ordering Inspections

Once we determine the seller's flexibility on price, we order inspections. This step prevents us from wasting money on inspections if the seller is not willing to adjust the price. We categorize the problems into two groups:

• Deal Killers (or Deep Discounts): These include complete system failures, such as needing a new well or septic system, which significantly impact the bottom line.
• Deal Modifiers (or Small Repairs): These are minor repairs like hydrojetting the drain field, installing a new riser, repairing baffles, or replacing pumps/tanks, which can leverage a lower offer.

Step 3: Making the Final Offer

We make our final offer only after a full system evaluation with remedies. This approach demonstrates our commitment by showing we've done the necessary inspections. If there's competition for the property, you might need to provide a price first and renegotiate later, especially if you have a contingency for well and septic issues.

Step 4: Fixing the Systems

After securing the property, we start the permitting process for well and septic repairs immediately. We avoid escrow holdbacks for distressed properties and instead reduce the purchase price. Timely repairs are crucial, as they can take 90-120 days. Once fixed, we get everything tested and documented, ready to list the property.

Step 5: Documenting the Process

Packaging the deal is critical. We gather all documentation into a Google Drive folder for potential buyers, including:

• Renovation details (brochures, warranty cards)
• Pre-listing inspection report
• Pre-listing appraisal
• Well system documentation
• Septic system documentation

Sharing this folder with agents and on the MLS helps create transparency, leading to bidding wars and waived inspections, often resulting in offers over the list price and fewer repair concessions.

By identifying properties that fit the rural buy box for entry-level to mid-priced buyers and tackling major expense items upfront, we remove risk from the transaction. This thorough process ensures higher chances of getting the desired price and timing. If you don’t address these issues at the acquisition stage, you could end up with significant unexpected costs and delays, i.e. buyers not closing on your deal!

GO FIND EM and GOOD LUCK!

Hi Manual, 

As Joseph mentioned you need to look at your entitlement limit and the pre-approval capability with the VA on a "family" rider type property. This means that you may not have enough purchasing power to take down a 1-4 unit property VA. Also, many of the multifamily listings that are a "good deal" will not appraise with a VA loan due to the limitations on a million items like FHA.

I would first start with talking with a lender and getting the pre-approval knocked out. Then I would consider refinancing your first property into a DSCR or conventional loan if you are stuck.

We just closed a duplex for a VA buyer yesterday and this was the same situation they were in so we had to actually sell their first home to open up the entitlement capabilities to then buy a better property that they will occupy for 2 years, then move to the next project.

Let me know if you have any questions or ping me if you need a good VA lender referral.

Dan Gandee

I've got a few mill in rental properties that I've BRRRR'd here in a Oregon, but most of acquisitions have been creative deal structure or joint ventures when we need to raise capital to get to a 50% LTV for maximized cash flow. My suggestion with you would be to raise capital or focus on marketing for off market deals (yes, I'm a broker telling you not to buy from me). The majority of our acquisitions are coming from my marketing machine I built. It's not that these properties don't cash flow, they just don't cash flow at traditional LTV entry levels. But appreciation and value add play has made us a killing. Most of the investors I know that complain about cash flow only flip 1-2 properties per year or own like 4 doors. All good insights but you need to be getting your advice from someone that has scaled to multiple states from ZERO. My mentor taught me this a long time ago. Learn creative finance - build the portfolio brick by brick, door by door. Don't stop until you hit your target gross income goal (think retirement and replace your 9-5 job). Happy to jump on a call and get better acquainted to share my two cents. Send me a message!

Is this the one Palmer had listed? Just curious...

FREE WEBINAR EVENT! Learn All About Investing in Tiny Homes with Nate Stanley from Stanley Tiny Homes!

Join Nate and Dan for an engaging webinar packed with valuable information. They'll address common questions and essential details to consider before investing in a tiny home for your residence or investment property. Topics include permitting, zoning, pricing, financing, construction, and design.If you're considering building an ADU or installing a custom tiny home, this webinar is a must-attend!

Hosted by Dan Gandee, Team Leader of The Operative Group. Register Here: https://streamyard.com/watch/UX5dNVehit32

Good Day Joseph!

Lending choices are going to obviously depend on what type of asset you're trying to acquire, for example (distressed property into value add BRRRR), (fix & flip), (STR's) or (long term hold), as all of them are going to require different LTV (loan to value) and costs (fees, repair budget, points, holding costs) to make sense for the underwriting for the lender and yourself as an investor (anticipated cash flow after debt service).

I've got connections to both private and institutional lenders for the following:

DSCR (Debt Service Coverage Ratio)

Portfolio Loans (Buying multiple properties at once)

Fix & Flip (Buy, Repair, List, Sell, Repeat) 

Rental 1-4 Unit Investment Property Loans

Private Money For Bridge Loans, Construction Loans, & Development Deals 

Reach out to the following companies (not in any particular order):

1. Zach Smith at Cetan Funds (Fix&Flip, Bridge, Construction, Midterm)

541-515-0565

2. Matt Powell at Blue Inc. (Fix&Flip, Bridge, Construction, Midterm)

541-521-5321

3. Gabe De La Cruz at Secure Choice Lending (Long Term Rentals, STR's, DSCR's)

541-513-4542

4. Chris Watkins at BorrowSmart (Long Term Rentals, STR's, DSCR's)

(541) 972-3721

The last two people on the list are brokers so they shop loans prices and they are hard to beat when it comes to a million other people telling you to reach out to their "guy" - I've closed dozens of files with a combination of all these lenders at what time or another. I've referred these same individuals to my own clients and family.

Happy to jump on a call and talk about the acquisition side of things. I'm an active investor and broker/team operator with 4-5 investment deals going on at any given time and have millions in holdings. Love helping new investors create a plan and execute. 

Here's my Calendly if you'd like to schedule an investor consultation.

Look forward to possibly chatting and hope all this info helps!

Dan Gandee

Team Owner & Broker

The Operative Group | REAL BROKER

Yo Christopher! I've got a lot of perspective as both an investor in this market and investment broker working with dozens of clients acquiring multifamily, performing flips, running STR's, and performing BRRRR's. I'd love to jump on a call and see how I could help answer your questions you may have. Text me and we can begin dialogue at your leisure- 458.209.0163

Recent survey just released by a major moving company ranked Eugene, OR in the top 20 places people relocate in the entire US. BUT...There comes a bunch of items most investors need to navigate including Phase I, II, and III rental protections, State-Wide rental restrictions, seasonality of STR performance, and the bottomline job market that fuels rental demand. IMO this area needs more corporations and tech money to really push the rental performance to a "Boulder" market comparison. Without this, it will always lack high paying jobs that will in turn keep prices always growing at moderate appreciation (3%-5% Max YoY).

It was slated to be the "Silicon Shire" a few years back, but that has definitely choked out a bit with the tech industry layoffs and economic restrictions. STILL LOTS OF GROWTH, but not exactly the KPI's you want for a Boulder Like economy. From a landscape perspective we have it all (Ocean, Mountains, Wineries, Nightlife, Farm, Fishing) but we need more corporate infusion to really take this city to the next level. Can't lie though - A Great place to live, work, and play! 

From a performance arena we operate in the following metrics:

Cap Rates (3.9-4.3 - A Class Assets, 4.4-5.5 - B Class Assets, 5.5+ Deferred Maintance, Value Add Needs, Repositioning A Must) 

Gross Rent Multipliers (10.0-12.5 Most Deferred CapX, 12.5-15.0 For Most Retail Rentals, 15-17+ for New Construction or A-Class)

1% Rule (0.35-0.45 A/B Assets, 0.45-0.65 Most Retail Rentals, 0.65+ For Heavy Deferred Maintenance But Good Market Rents)

Cash on Cash Return (Always depends on financing vs. cash acquisition, type of asset (STR vs. LTR)

Price Per Unit ($150K-$165K for C+/B- Asset, $165K-$180K for B/A- Asset, $180K< A Class Asset, New Construction, Or 2-4 Unit In General)

Hope this helps anyone as I'm analyzing about 12-15 rentals per week both for my investment firm and brokerage.