All Forum Posts by: Gordon Forbes

The Dr. Evil comment was priceless, just priceless. I'd laugh out loud but then everyone would want to know what was so funny and they'd crowd around to see and then we'd all die...

Bulletproof plan? A bullet to the head or a bullet to the wallet, we'll have to wait and see. Actually I shouldn't be so pessimistic, those with guts and money who "buy when blood is running in the streets" will either do well or will go bankrupt with the rest of us. I say this from my family history perspective. Whenever there is a recession or a mild depression then "bottom feeding vultures" (and I use that term as a compliment towards those with guts and money) swoop in and buy great deals and do very well. However, in a true Depression, a real long term depression a la 1929 here is what happened then;

My grandfather owned rentals. EVERYBODY was out of work and NOBODY could pay rent so his choices were:

1) Evict the none paying tenants and let the units sit empty, have the pipes freeze, and fight off squatters.

Or

2) Let everyone continue to stay so that at least the heat would stay on and occupied units might deter vandalism.

Or so he thought...

Being a compassionate man he did not put families out into the snow. What he discovered is that with no money to pay for heat the tenants were burning his grandmother's antique furniture in the fireplace to stay warm. (This was back when renting furnished apartments was the expected norm).

So be aware, an appreciating cash cow real estate investment can have the cash flow suddenly turn the wrong way when you have to pay property tax, insurance, and God forbid a mortgage, with little to no rent income coming in. Of course your high paying wage slave job is guaranteed to be Depression proof and will provide you the money to ride out multi years worth of negative cash flow so Welcome To Oregon, our new motto is "If we are all gonna go broke anyway, might as well do it where the scenery is nice".

P.S. Be sure to budget in money for periodic trips back to the Bay Area for sushi as there isn't a decent sushi bar in this whole state.

I'm sure my attitude will improve once I'm out if this prison called Stay at Home Isolation.

Hey Todd, Go Oakers! I'm replying not because I have any insights for you but instead that you are in Oakland. Let me know if you want to meet up for lunch or something and chat about business.

Concerning your inquiry; I assume you mean that you are going through one of the Hard Money lenders who are basically matching up a potential borrower with private money like yourself, and of course they charge the borrower points etc as their "commission" for facilitating the deal. If that is the case then that middle man mortgage facilitator (that may be the wrong term to use) should be able to answer a lot of your question. Firstly, because I think it would be part of their job when gaining a new money client (you) that they would want to educate you about the process. If they don't know or are unwilling to get you up to speed you might look elsewhere. At that point you might just as well run a craigslist ad saying "money to lend but I don't know what I'm doing..." if they won't provide information. Secondly, if they say "you'll never have to foreclose" or "its never happened to any of my clients" once again I would back away. 

Some additional advice would be to have the borrower's payments processed thru a large third party collection escrow company. There is more of a counterparty risk to you if the mortgage facilitator is just a mom and pop company and they handle the monthly payments. The minor monthly fee of a collection escrow is "usually" borne by the borrower anyway. Have the property tax and insurance collected and paid  ia clection escrow also. Make sure you are listed as "additionally insured" on the policy so if it is canceled for any reason you will be notified. Of course any decent mortgage document will have provisions for you to start foreclosure if insurance lapses. Check with the city where the property is located and see if they will send you a copy of the monthly sewer bill. If the water isn't paid it gets shut off, if the sewer bill isn't paid it just grows and grows and can become shockingly large if you have to foreclose after years of sewer non payment have gone by and become a lien against the property. I know this because?..... painful memories!

Congratulations on being at the top of the real estate food chain: when you can make money by lending money and not have to swing a hammer, manage tenants, or constantly search for deals competing against investors and homebuyers then you are in a good place indeed.

Something I would recommend is to join your local landlords' association. Start going to the meetings immediately. Contact ORHA Oregon Rental Housing Association for info on a local group. If there are groups in both Albany and Salem you need to attend both as there is a lot you can learn. Also buy the "landlord tenant Oregon law book" from ORHA and use their Oregon specific rental forms. 

The only other advice I can offer is to watch your cash flow when you calculate if any specific building is a good buy or not.

Congratulations on starting.

Simply follow these steps:

1) Google the question and spend the rest of the day wading thru conflicting advice.

2) YouTube search the same and spend half of tomorrow watching mostly irrelevant videos that almost, almost but not quite, explain the needed proceedure.

3) Spend the remainder of tomorrow watching funny cat videos.

4) Locate a minor aged 7 thru 14. Approach cautiously. Verify that parent or legal guardian is attending said minor.

5) Verify that child is "typically developing" (this is the politically correct term for a child who is not developmentally disabled).

6) Obtain parental permission to attempt verbal interaction with
the proto-human in their care. If permission is given then proceed to attempt to get the vertically challenged, age diminished individual to look up from their smart phone.

7) Using Gender Neutral language verify if the child has shifted their attention from their phone to you. The phrase "Hey kid, you know anything about computers and **** like that?" is commonly used to reach cross the vast generational wasteland that separates you.

8) Responses from the child such as:

"Yo, whatever", "f*** yeah", "maybe", or a monosyllabic gutteral grunt that somehow conveys that you now have their attention for approximately the next 12 seconds are all indicative that you should proceed.

9) Explain the technical details of the specific software function that is non operable on your device. Use the following format: "My (name the device)) don't work, and (present device to child) I even turned it off and rebooted and..." (you may stop speaking if you wish as child no longer recognizes your existence).

10) Look over the child's shoulder while nodding and mumble "hmm, yes, of course" as their fingers fly across the screen with incomprehensible speed.

11) When child returns fully functioning computer device to you say "Thank you" which will provide the child the opportunity to show their social development by responding appropriately.

12) Translate their response with the following "Millennial Tween to Clueless Adult" dictionary.

"No problem" = You're welcome.

"No worries"  = You're welcome.

"Sure" = You're welcome. 

"Anytime" = You're welcome.

"Whatever" = You're welcome. 

"Later" = You're welcome. 

"Doof" = You are such a doofus.

Unexpected issues? No, just the usual issues whenever rent control is passed. I also just *love* the part where the government takes even more of my property rights away from my property that I own and belongs to me and.... oops, I mean the property that used to belong to me but has over time been confiscated by government, although they generously allow me to pay the mortgage, insurance, taxes, repairs etc.

Welcome to the Socialist State of North North California.

Rant Over.

The unintended consequences will be that marginal tenants will now not be approved and will have even more of a problem finding housing. I regularly give risky potential tenants a chance. When I'm able to "no cause evict" bad tenants I'm then willing to offer that 3rd chance (or 4th or 5th chance) to people who "have changed their ways". 

Not no more.

The other unintended consequence will be an increase in security deposits required. This will also hit the marginal renters the hardest, those for whom this bill is suppose to help. 

When marginal renters are turned away and they say "but me and my children will be homeless!" I will now say " go pitch a tent on the front lawn of Katrina Holland the executive director of the Community Alliance of Tenant".

Anybody want to buy my fourplex in Sutherlin which is currently filled with "no way will anyone else rent to" these sub par unqualified families who can hardly pay the below market rent I charge for these nice 2 bedroom units?

Anyone?.... anyone?... I'll even offer 90% seller financing. All you'll need to do is evict everyone before Bill 608 passes (or wait for tenants to be really late on rent... won't have to wait long) and then get market rent and receive a good ROI.

Anyone? I didn't think so.

I haven't looked at the BP rental agreement, but my take on it was that anything generated by an Oregon specific landlord group would be better than some nation wide supposedly good anywhere kinda maybe customized for each state got it off the internet rental agreement. Since, as I said, I am ignorant of the quality of the BP document and haven't the legal expertise to make that decision I too would be interested if the BP document was in some way tried, true, tested and superior in Oregon courts.

May I inquire as to what you find lacking in the ORHA document that the BP document might provide?

Since the 4th bedroom is a converted garage the main electrical panel might be right there. That might make it fairly easy to run a 220 volt circuit for an in wall heater. If the existing forced air hvac is easily accessible in the attic you could tap off a short duct as you mentioned. A lot of hvac systems use flex ducting and those are pretty easy to T off of since no sheet metal work is required.

You will want to do some more research as the county may not consider your conversion a 4th bedroom unless permits have been pulled for electrical and/or mechanical. Also, unless there is a built in closet it might not be considered a bedroom.

Informally ask an appraiser (or a Realtor who does "Broker Price Opinions") for a guess-estimate of how much additional value a 4th bedroom would add to make sure its worth it.

Depending upon the severity of the community CC&Rs (if your townhouse has them) adding more bedrooms might be a violation. A violation that would be pretty easy to prove when the county records would show an unauthorized 4th bedroom.

Good luck and good house hack'n

Money talks, I don't know why.

I heard it once, it say "bye bye"

Some pretty amazing technology has come on the self storage scene recently. From fully automated Kiosks (an ATM looking thing that rents the unit, sets up auto billing on tenants bank or credit card, dispenses a lock if the new tenant wants to buy one etc), to smart phone Apps that do the same thing (except vend a lock) to 24 hour USA based call centers that will manage the business and rent the units for those customers who want a human to talk to (and the Kiosk software, smarphone App software, and call center sofware can all be seemlessly integrated within your business management software. There are even companies who set all this up for you. 

Behind the counter employees are a huge expense (unless you are a multi hundred unit facility) and if your competitors use them and you do not then you can either undercut their prices or reap more profits. There are "smart locks" that will even automatically lock out slow paying tenants. Pay someone a few bucks (found thru fivr, task rabbit, or craigslist) to walk thru and use their smart phone to upload a video to you on the condition of the facilities once a week or so. 

To check if there is demand for storage units in your area there are companies who will do a marketing study for you (costs a few grand) or you could run some ads and see if people call. Of course call all your competitors and pretend to be a potential renter and see what their occupancy rate is. 

In addition to storage containers (which can be costly to have delivered depending upon where you are located) there are a few companies that actualy make a "portable" single storage building that are shipped flat and you tilt up the walls and have a rentalable "no building permit and no tax hit" unit ready to rent in a couple of hours. When set up side by side they look just like the onsite built metal storage buildings we are all used to seeing but they are not a permenant structure. They make these in all the standard sizes people expect storage units to be available in.

There is/was a huge need for storage space in my neck of the woods and I came "this close" to buying some shipping containers and doing exactly what you are thinking. Fortunately discovered that a multi hundred unit facility had just been approved nearby so I dodged that bullet. 

So, I could walk upstairs and dig out all the links and contacts and web sites for the research I did on self storage and post it here for you.... but I just sat down, opened an adult beverage, I'm lazy, and besides searching Google for all this will be half of the fun. Enjoy and best of luck.

Hey Ben, here is what I would do. Call all the mobile parks around and see if they know of any of their tenants who are trying to sell, or if they have any park owned homes they are trying to sell. Sometimes people who get way behind on space rent will just abandon their old grungy mobile and then the park owners have to either fix it or dismantle it. You may find a park owner who would let you fix n flip a mobile they ended up with. Considering it is expensive to dismantle an old trailer (if pre HUD there is nowhere to move it to and mobile home moving companies often won't move a pre HUD trailer anyway), the park owner that is facing the expense of dismantling an old mobile might "equity share" with you; you fix it up and they/you sell it and you split the profits. With only $5k you are going to be looking at the lowest of the low old grungy trailers so if $5k is all you have to purchase plus renovate that is a pretty tight budget. That is why I suggest you convince a park owner to partner with you so the entire $5k can go towards materials. I assume you will do all the work yourself. Old mobile homes are notorious for leaking roofs at the wall seam and then the water rots the rafters, the wall studs, and then the floor. Sometimes even a "free" mobile home isn't a good deal.

If you find a park tenant who is selling their mobile be sure to talk with the park owners and make sure they are ok with your fix n flip plan. Don't try to "sneak" this by the park owners. (If you want to know why I can explain...)

Good luck