All Forum Posts by: Account Closed

It's funny that someone said "no one is doing this" because everyone is already doing this in Portland. So much so that hosts are dropping their rates in line with LTR rents just to attract business. At that rate, it makes more sense to do LTR. 

Which brings me to the kitchen. I'm an architectural designer/landlord. I highly suggest designing/building this unit in the most flexible way possible. So even if you anticipate just needing a hot plate, leave a dedicated 24" cabinet and counter space with more counter space on each side so you can slide in a 24" range later. Even better would be to get the 240V wiring all set up and tucked away in a junction box. 

When your market gets saturated with STRs, you'll still be able to rent your place as a LTR with minimal hassle and expense.

FWIW, I'm using an induction hot plate right now as my cooktop until my cooktop is installed. It's super inconvenient to only be able to cook with one pan at a time. 

Lastly, unless the yard is specifically excluded from your current tenant's lease, doing a year long construction project and then losing half their yard will, at best, annoy your tenants. At worst, you could be breaking the agreement/landlord-tenant law. I HIGHLY encourage you to talk about your idea with your tenants and (if you want them to stay) let them at least feel like they have some input. You don't want your LTR tenants to resent your STR tenants, or to sabotage your business because they feel you treated them unfairly.

You might consider taking @Derrick Aragon up on his offer to get in touch. He develops and manages multifamily in Portland. 

Also 3 units and up puts you in the commercial building code, which is more expensive. 2 duplexes on one lot is still considered a fourplex by banking standards. 

The other advantage to that is, you may be able to divide the lot and later sell each duplex separately, if you sell. Also, duplex feels more like a house and commands higher rents than 4 Plex. 

Lastly, you might consider building in Beaverton, Tigard, West Linn, Tualatin, etc. Anywhere but Portland proper. Permitting will be quicker/easier and landlord/tenant laws not as onerous. Portland city council is unpredictable and can reduce your property value in one single council session. Rent control may be on the horizon in Portland. Schools are better in most areas around Portland. Suburbs seem to be where it's at right now. 

I'm a dog person and had dogs as a renter. I allow dogs as a landlord, but ONLY if they're allowed on that particular lease. If the tenants don't have dogs, then they have a "no dogs" agreement, and if they want to bring dogs into the unit, they must get prior approval (and typically, an extra deposit) from me, for those specific dogs, based on an in-person evaluation of the dogs' temperaments. 

If a tenant is bringing dogs in despite them having signed a "no dogs" agreement, they would have gotten one warning the first time, then a 72 hour notice to cure or quit.

Your landlord should not be able to charge a pet fee if that's not in the agreement. She should have just evicted you after the warning. 

 OMG Mathew that's my favorite post this month!  After Chloe Eudaly publicly slapped my wrist at a council meeting in February for referring to her as "Eudaly" instead of calling her "COMMISSIONER Eudaly," I have faith in neither her diplomacy nor her judgment.  

ANYWAY, regarding earthquake insurance, I looked into it and decided against it.  First, State Farm wouldn't even insure my duplex at all for earthquakes since it was built before 1996.  Second, even if they would, the cost/benefit analysis didn't add up because earthquake insurance is pretty spendy (compared to just regular insurance).  

Instead, I bolted my 1958 building to its foundation (cost $3k), which would guard against the most expensive type of damage (house falling off foundation).  

Also, there's been a lot of hype about earthquakes in the Cascadia subduction zone lately.  I'm a Portland NET (neighborhood emergency team) trained to respond in a disaster situation, and even with that knowledge and bias, I still believe that the chances of an earthquake happening while you own your properties is low.  If it does happen, it's probably going to be incredibly strong, and would likely destroy anything not bolted down, and even some houses that are bolted down.  

The way I look at it is, if the insurance companies will only insure houses that are earthquake-proofed (because presumably that minimizes expense/damage), then why not earthquake-proof the houses and not pay the extra premiums?  And it wouldn't surprise me if there's some rider in earthquake policies that excludes this or that, including if the house falls off the foundation.  Still, might be worth looking into, as long as you read all the fine print, conditions, exceptions, and loss of income options.  

Oh, last thing: you might be in a liquefaction zone.  (https://www.portlandoregon.gov/pbem/58572)  In that case, bolting might not do much to prevent total destruction.  I don't know how that relates to insurance--maybe it's a case for buying it, maybe not--but it's something to think about.  

I'd been using erentpayment.com for applications, screenings, and payments.  After spending about a day researching other options (that also support weekly ACH rent payments, so no cozy.co), I realized maybe the vanishing ACH payment debacle with erentpayment was good for me, because I only lost $113.50 and could benefit from a more robust PM software package anyway.  It came down to tenant cloud and Rentec Direct.  I still haven't decided as I see benefits to both.  

As a designer, I like the visual interface of tenant cloud, with the widgets and integrations.  I also like that there's a roommate payment option (couldn't find info about that on Rentec's site).  But Rentec is also an Oregon company, they offer general ledger accounting, and their screenings are less expensive.  The difference in monthly cost for my 5 units ($9 for TC vs $35 for RD) is nominal, but if I scale up, then it starts to make a difference.  

Does anyone have experience with both of these platforms, or compelling reasons why they chose one over the other?  

 Erwin, what did your accountant say?  

Some strategies people are doing is, they just don't buy the building.  

If you don't mind kicking people out and you plan to reposition the building, then you would need to factor the relo fee into your cost of doing business (I've had success presenting a table with all the expenses I anticipate, and subtract that from the asking price to come up with a below-offer purchase price.  Typically I do this after inspection, but you would know that the fee applies when you present your first offer.) 

Otherwise, if the tenants are good, you could opt to keep them and raise rents 9.9% each year.  At 50% of market, you won't reach market within the next decade, likely.  

Since you don't own the building, you could also ask the current landlord to evict them or raise rents, if you want to do that.  That would make it much easier for you, if you were going to do that anyway.  But it may not make your offer look very enticing.  (I don't really remember the changing details, but I think the tenants have 45 days after getting a 10+% increase to collect the relo fee, so if you went that route you'd want to wait at least until that amount of time before closing )

Do you plan to live in the building?  That would affect my strategy, if it were me.  I'd probably want to choose the tenants, if I lived there.  

Essentially, you can't get around the fee if you raise the rent over 10% and they decide to move as a result, unless you don't buy the building.  

I once looked at a rental in a suburb of Portland Oregon that had sloping floors, and I passed on it.  Maybe this is my inexperience with settling issues talking, but are people noticing it on the outside, or on the inside, when they walk around?  If the latter, could the issue be fixed above the foundation?  I realize there are plumbing and HVAC etc. systems, but I wonder if a contractor could detach the sill plate from the foundation and put some sort of shim-like system in there?  

@Cole Hafner welcome to the forums!  

First thing I'll say is: make your own decisions based on your own very personal situation and goals.  Don't let anecdotes and rules of thumb make your decisions for you.  

Second, every market is local, so if you're going to seriously consider anyone's advice on this, talk to some local investors and maybe some property managers.  PMs have an agenda, so keep that in mind, but no one said you have to hire a PM just because you talked to them on the phone for 10 minutes.  Many people, even PMs, are happy to give their advice and opinions (biased as they may be) just to be helpful.  

Which brings me to my third point: take everything anyone says with a grain of salt and consider the source.  Everyone has an agenda, even if they don't realize it.  Some people just want to be helpful and get kudos (I'm a sucker for kudos), and other people want your money.  

Fourth: You are asking a lot of basic questions, so I suggest that you:

- Attend a landlord training (the City of Portland offers one for free each year in the winter; maybe Beaverton has a similar program?), 

- join a RE investing club (e.g. RareBird or REIA),

- meet other landlords (see 2 above), 

- read a book or three on landlording/property management.  There are some great suggestions on the book list here at BP.  

My grandmother, who lives in Encinitas CA (a suburb of San Diego), is moving into assisted living next month.  She's lived in her house since 1984.  My aunt, who has been her main caretaker, wanted to sell the house just to be rid of the hassle.  I emailed her my analysis of the rental comps, along with a list of benefits/drawbacks to renting out the house (including tax consequences), and ultimately she decided to rent it out instead of selling it.  

This was her primary residence, and it is an expensive market.  But in her case, renting it out made sense, even while using the services of a PM, because every situation is different.  

No one on this thread has talked about researching the fundamentals in your neighborhood (e.g. job growth, population growth and demographics, RE and rental market trends, schools, planned development, current and future zoning and lot development potential, etc.) or how to calculate your COCR or cap rate, or even the fact that you said you're not interested in earning a big profit right now. What matters is: does your plan fit within your long term goals (both financially and in terms of your return on time/opportunity cost), and would you be able to earn a higher ROI if you were to sell this asset and purchase a new one today?

You don't have to make a decision on whether to sell or hold right now. You could simply hold the property and decide in a year or two. Keep in mind, there's [currently] a capital gains tax exemption if you lived in the property for 2 of the last 5 years. So after ~4 years, you should probably decide whether you want to sell it or not. If, at that time, the market has shifted and there are more deals to be had, you can always decide to sell and reinvest in an asset with a higher COCR and ROI.

@Nick Mays is your wife @Chelsea Mays?  Welcome to BP and hello!  While I can't help you with a brokerage, I'm sure there will be plenty of realtors here who would be happy to refer you.  I've seen the property mananger/realtor partnership work out well for couples, since the the realtor can accept referral fees in cases when the PM can't, and even without the fees, there are more opportunities for referral business.  Congrats!