All Forum Posts by: Jacob Szeto

@Tyler Combs 

I submitted a complaint to the CCB so I could get access to his bond. Fortunately the CCB's letter to him scared him enough into paying so he wouldn't lose his license. 

Great tip on setting up alerts for contractor issues. I just wish anyone could do that.

Hi everyone,

I figured someone might benefit from my experience so I decided to post my story here. I will try to keep it short but I will respond with any details if anyone asks.

I purchased a triplex in August 2017 that needed significant repair, my budget for the rehab was $95,000. I met with several contractors and received several bids. I narrowed down my selection to a contractor who I felt at the time was the right fit for the job.

We agreed upon a deposit of 5% for the total job. The company was on top of what I needed and very responsive from bid to contract.

Unfortunately, once the contract was signed and the deposit check for $4000 was cashed, I stopped receiving communication from the company. The start date for the job came and passed. No response to my phone calls, emails or office visits. The end date for the job came and passed. No response to my phone calls, emails or office visits.

So I sent an email to the company informing them that they were fired and the return of my deposit was expected. Of course I received an immediate reply to my email asking for forgiveness and a second chance.  I responded letting them know the contract was still cancelled but I would be open to their proposal for how they could get back in good graces. I did not hear back from the company about their plan to get make it up.

I continued to email and call the company with the request to return my deposit but they went silent again. Finally I filed a small claims case in Clackamas County, had the company served with notice, and several weeks later received a check for about half of my deposit.

I was unsatisfied with the balance returned to me. The contractor never swung a single hammer at the job site. 

I moved forward with the small claims case and sued the contractor for the full amount allowable in small claims ($10k.) The outcome of the case was the Judge berating the contractor for several hours while catching him in lie after lie due to my binder full of evidence, with an award of $9200.

I guess the lesson I learned and am trying to pass on is don't let bad contractors get away with it. I guarantee this contractor will think twice before he tries to run off with someone's deposit again.

Shout out to Ambience Remodeling for taking over the job and doing a great so far.

Hi Jonah,

I just purchased a triplex with similar issues. The zoning just barely allows a duplex but it is a triplex. I went to the Clackamas County Planning Department to see if the triplex could be grandfathered in. It took some research into sewer records to prove it was a triplex before the neighborhood was zoned but after about a week of research the Planning Department gave me a letter saying they approved the grandfathering of the property as a triplex.

I did this all before I purchased the property. Let me know if you have any questions.

- Jake

@Brad Hammond

I used Mike Bivens from Bridge Town Equity Properties. He understands investment properties and deals in multi family. Mike was a super great agent and I highly recommend him. He does have access to pocket listings and even offered to send letters to plex owners in town on my behalf when we were having trouble finding any deals on the MLS.

I know this request has been made a million times on this forum but I have to ask again. I have a tri-plex rehab project I need to get done but I am having a heck of a time finding a professional, reliable contractor.

I am looking just as much for a contractor I can do business with in the future just as much as I am looking for someone for this specific project.

It would be really great if we had a list out there somewhere for everyone on this forum with attorney, CPA, realtor, contractor etc. recommendations for everyone here to refer to.

@Tara Ballenger

Definitely speculation but also a good educated guess. In my opinion, gentrification of that neighborhood is inevitable but the big variable is when and how long.

@Tara Ballenger

I have some insight into the new building at Foster and 205. The building will be the new community center for the Asian Health and Service Center. It will have event space, health clinics and office space for the AHSC. If you have any questions let me know and I will try to answer if I can.

PDC is making a pretty big commitment to that area right around the freeway so I would expect the immediate area to get quite the lift and gentrification to follow.

@Derrick Aragon I do not have much experience doing renovations outside of my construction experience many years ago. My brother does have a lot of experience and he will be my sounding board/second pair of eyes. The appraisal did not include an ARV. My ARV is based on NOI with a cap rate of 5.5 and a sanity check on price per door.

All units are vacant. One unit is rent ready, the other two need some updates including floors, kitchens and bathrooms.

Some repairs are needed to be considered habitable including, electric in the attached shop that needs to be brought to code $7k, foundation repairs $12k, and possible plumbing repairs which the inspector saw no issue with but the appraiser wrote in as a "subject to" inspection.

The lender is still trying to get an escrow hold-back but as I have stated before I am not holding onto any hope that they will go for it.

The property address is 14601 SE Arista Dr Milwaukie OR for the curious. I also have a pro forma if anyone is interested, I am always looking for deal feedback as well as analysis review.

The seller is in a rush and only granted a one week extension til July 18th. I may be able to convince him to give me more time, if he does I might pursue putting money into escrow and having the repairs done or just getting a 203K rehab loan.

I am also actively pursuing hard money so any recommendations would be appreciated. 

@Austin Youmans@Jason Turo

The seller is unwilling to do any repairs and would be unlikely to go for seller financing/option but great suggestions that are appreciated.

@Kelvin Lee Hi Kelvin, excellent points. I have done my analysis and research. With 20% down and rehab costs out of pocket my COC is 10%. The cap gain is about $200k including the capital investment of $90k, with an net of $110.

It is a class B neighborhood. Mostly an older working class suburb of Portland, OR. Appreciation last year was about 12% and I believe the neighborhood will continue to follow the general trend of Portland. While the appreciation/speculation would be great icing on the cake this deal works without it.

$90k rehab does sound like a lot for the area but I have it under contract for $87k a door which leaves me plenty of room for rehab.