All Forum Posts by: Jeremiah B.

Capital seems like the lifeblood of early RE Investing. As such, if you have the skills, I tend to lean towards a fix and flip option while building capital. It's the best short-term capital gaining strategy of the 3.

With that said, it's not something that I've ever done. So what do I know... :)

I'm a long term, small fish, part time, hands off investor. And I value appreciation over cash flow but would never purchase a place that did not have a decent and reliable cash flow.

Hi there,

Using round numbers for a newer single family house that you will use as a rental:

Down Payment: 20%-25%
Closing: ~5%
Safety Net: ~$15,000 (I let this fall to around $10K after it is rented and things are a little stabilized)

I'm sure someone more smart than me may tweak these, but that's what I work from.

My understanding is that in Oregon, and 'as is' clause does not really exist. A buyer can generally complete an inspection, and has a back-out period to complete/review that inspection, and can always ask for repairs based on that inspection. The seller can always say 'no' to these requests.

My confusion is that:
1- all properties are sold as-is, unless the seller/buyer both agree otherwise.
2- The buyer can typically inspect the property and back out of the deal as the result of that inspection (retaining their earnest money).

Including a signed addendum stating that the property is 'as is' would not alter either of these points.

Not a lawyer or licensed anything. But I can design an incentive compensation plan for a not-for-profit healthcare system like no one else (my day job)!

Thelma Garwood

Welcome to BP!

First, as harsh as it sounds, try and ignore the seller's situation and first ask 'is this a good deal?' I ask because the price per square foot, price per 1991 selling price, and price per tax rate all seem about average for Portland. It's hard to say without digging in deeper/knowing the exact neighborhood, but the first question should be: are you getting a good deal? How far below market value is 259? What repairs are needed? Do you have the money to fund those repairs today? If this deal is 'average' - you can still proceed - just know that you are doing so in part as a charity case.

Second, it sounds like you're trying to come up with creative financial solutions - but they are much, much, much, more (yes, 4) complicated than your post suggests. Generally speaking, if you purchase the property, the seller will need to immediately payoff the loan balance to his/her bank. This means that 'paying him later' is probably not an option. Reading up on Subject to lending as Bill recommended is a great idea.

I'm hesitant to give advice without knowing more about the situation, but this really feels like you're rushing into a deal that may not make sense, without the resources or experience to back it. If you had another buyer lined up, or 80k extra cash laying around, or if the house would rent for 3k/month, then maybe you should consider proceeding. But based on what little I know, it sounds like you're trying to help this guy out, which may put you in a bad bad bad bad bad (yes, 5!) spot financially.

Best of luck!

Mike S

I've found myself waffling on the best approach to estimate expenses: line items or the 50% rule. I'm leaning towards using the 50% rule to start/narrow down properties, and then doing a detailed itemized analysis prior to buying. Interestingly, my detailed itemized list is almost always a range that includes 50%....

With that said, I want to highlight that if you use an itemized approach, be comprehensive! And probably conservative.

Joel Owens Again - thank you! What do you mean by "rough" - is it a highly competitive market, or run-down neighborhoods? And are these primarily on the E and S. sides?

Joel Owens - Thank you!

That actually explains a lot. In my home market (Portland), resources typically cover the entire city. Honestly, I had expected to find Atlanta to be similar - and to account for the larger area with larger companies.

With that said, what I've been finding is that virtually everyone 'specializes' in a given area. Logical, and at some point I'm sure that it will be beneficial, but for now - it sure makes my life more difficult :)

I'm surprised this hadn't gotten more attention. It's a question that I'm interested in as well...

Chris D.

I'm no pro, but I did a very similar thing to you. When we upgraded from our first house, we kept it as a rental. And while I would do it again, it's not a move for everyone and there are some things to consider:

This is a risky move, and I would strongly recommend a cash reserve if you have a rental. My personal target is 10k cash. To me, the worst case scenario is that my investment somehow bankrupts me.

When we made the move, we lost around $250/month for several years. In fact now, 3 years later, we are still losing around $100/month. However, even ignoring appreciation, we were still increasing our net worth due to paying principle and tax benefits. Given our long-term time horizon, this is OK for us, but wouldn't be for a lot of people.

If selling would just break even, then there is literally no value in selling. This is not to say that renting is necessarily the right option.

I wouldn't get hung up on why you bought the house, or what your plans were. Plans are good, but base your decision the future, not the past!

Regarding the refi, going from 5+ to 3.25 sounds like an easy call. Even if you do not keep it as a rental, my hunch is that it would only take a year or so to break even - and it sounds like you will not sell in the next year.

IMO: Saving 10% is too low. If you have a decent job with no liquid assets in our late 20's, I would recommend saving north of 20%.

Sorry for the long winded response, but those are my novice thoughts.