All Forum Posts by: Justin Green

Looking for BP input. If you were in my shoes would you take the risk? Quick background.

This summer acquired the bigger primary residence, foreclosure bought well 80/20LTV minimal rehab living in it now. Turned the older SFR into a rental, left mortgage in place. Rental is on a 15 year loan rented with 1 year lease at the PITI payment $1500 (delayed gratification 10 years left) So no cash flow other than personal items sold with rent for $1-200 a month over the next year then rental increase to net $100 a month at first. With both homes have about $410,000 in mortgages with about 150K in equity. In process of leaving W2 job with good track record to pursue Real Estate full time as a Broker and Investor. (I know investments will take a while longer to catch up, Broker income is on track to replace or exceed W2 income) So that's my RE picture in a nutshell.

About the deal. I have a personal connection with the seller who will give me a better deal/possible seller carry for a bit. Seller is in the mist of other investments out of state and needs to sell this estate property = more motivated. Problem, title cant clear for a few more months. The house is setup as a duplex in a very hot neighborhood where rents can approach $2.00 sq ft. Property is in very rough shape so priced accordingly. Price for the property will be around $250K with rehab approaching $100K. Once rehabbed market value would be $400-425K. 2 Units 1100 sq ft and 600 sq ft upstairs with a full 1100 sq ft basement. Total cost in would be around 350K. the 1-2% rule is pretty non existent around here as well. Rents would total $2500 on a Conservative approach with PITI on a 350K loan would be in the 2000-2400 per month depending on PMI amount and down payment. So cash flow can start out around $500 per month if PMI is eliminated. This is also considering 100% financing.

Where to get the capital? I am fairly leveraged already for Mortgage debt and have a lender chat next week to run numbers to see what I can get in terms of regular financing. The property wont finance with a normal lender so I will attempt the seller carry until I can rehab it to refi into a conventional. I don't have much capital after purchase this summer for rehab. So even if I get seller carry on the property I still need rehab capital. 

I can pull equity from the rental and refi that for about 50-60K. How do some of you guys move on deals when feeling tapped out being able to finance? The rehab costs are the big challenge.

In my area if you can cash flow anything right off the bat that is a good deal. I can certainly provide more numbers as well.

@Nate Lindquist  Private money/hard money is always an option although higher rates/fees also a seller carry. I have worked with clients to purchase those cash only deals then fix up and refi conventional, with self employed it is harder in the first 2 years without proven income/results from investments. I too will not be able to finance in the coming years being self employed. I made the jump to being a landlord to help shorten that 2 year window.

Sounds like you are close with 1 year of rental income so far. Non traditional is key here

Hello BP forum,

Question? How much to charge for the below scenario?

I have a client that lives out of state and has purchased a second home here in OR. They will use it 2-3 times a year for vacations. The rest of the time they want to rent it out as a vacation rental. They will perform the bookings, collect payments, order cleaning services. I would handle checking people in giving keys, inspections before/after, available for the guests locally. Basically be eyes on site and also arrange any needed repairs as they come up.

Typical PM fees for regular rentals are 10% and 1/2 first month rent here. Vacations are usually more but I am not offering full service as far as finding guests, for now at least.

I am a licensed broker in Oregon with our license we are also able to perform property management. I am starting to build up the business as well. I want to be fair with these clients and also be appropriately compensated for my time running around.

What does the community think of how to structure this scenario?

That is am amazing deal and great cash flow. Thank you for sharing these small successes it helps all of us keep our heads up.

in my area its almost unheard of anything costing less than 100K for similar rents.

Welcome @Brittany Irwin This community has an amazing amount of knowledge and experience. The daily blog post are great reads as well. 

Its rather easy to stay involved and keep learning and growing on here

Since you are not licensed, in my state you can not legally receive any commission. I would either reduce my offer by the 2-3% and represent yourself and push all your own paperwork. Or I would suggest @Jeff J. method. If I were listing the property and someone came to me politely I would consider it similar to another brokers referral fee just negotiated out of purchase price. By the way @James Wise is correct the buyers agent fee may not even be 3% it could be anywhere from 1-3% or nothing. I would play nice with the listing broker and show them respect and not word it as you are taking anything from his/her plate. 

Short answer offer less and let the list agent work for what they negotiated the contract for. I'm sure you found the property because of his/her marketing. You can believe once you are in escrow the list agent will be working hard to make sure it closes whether for you or not (a dead deal is worth nothing). Do you have access to all the needed forms that both sides will accept?

I just obtained a Fannie property last month. As for the commission I was warned sometimes they wont pay a broker direct. I put another agents name on it just to be sure I got that back then did everything myself. They are sold AS-IS and I got hit with a health and safety issue for damaged sheetrock 2 days before closing. Fannie will not allow any repairs. So look out for lender required repairs. Timelines are also really tight on your end only. I love how they want you to give them 7 days then they give you 24 hours, half of that is eaten up by the other side not sending you docs until they decide to check email. Also no Docusign allowed all wet ink.

Congrats and hope you close it.

You don't have alot of room, and the MI payments are not helping on your FHA loan. It is better than just buying a SFR though. How long will it take you to reach the 80/20 LTV to eliminate the MI/FHA loan and go conventional? just ball parking numbers but if you get your PITI payment closer to $700 a month and rent the other side at 650-700 you can live in your side free or very little and prepare for expenses i.e. $0 cash flow with free rent less your downpayment and CC for about $30K.

Since you are in contract you have much to consider during your walk period. You can risk feeding it and hoping for appreciation to reach 80/20 LTV (78% with some FHA) then refi. Keep in mind the refi will cost another 2-4K depending.

Elliot is a great neighborhood I have also been working in King recently both up and comers flanking Irvington with strong markets.

love the "put a bird on it comment" Dawn. Perhaps you can add a bicycle and a beard to the mix. Portlandia is so amusing and quite fitting.

I agree very much with Mike don't go east of 205 unless going south to Happy Valley, well past Foster. And that's more of a buying to live area not so many rentals.

@John Chapman I too did not realize what to do once High School was over. I entered into IT right around 2000 where anyone with an IT degree was making 70K+ during college that entry level wage dropped to 30K. I landed in Cinema/Hollywood Technical. I love the job just not the hours, travel, politics or satisfaction from completing the job.

It could not have been said better, why wait to live your life.

Freedom is my why.