All Forum Posts by: Mathew Wray

@Mary M.

*Disclaimer* I'm not an attorney, so vet this idea with a LL/Tenant Attorney...

Can you keep the new, higher rent in force, but give the tenant a credit for the time between now and when you actually start collecting it. That way you still get to keep your rent rates up to market, but you can delay the impact to the tenant. I know that was an option in the past and believe it is still possible with the laws going on, just make sure that you vet it first!

Interesting times!

Mathew

Tim Murphy is another good go-to for up to date landlord tennat law. He's helped us navigate a few tenant issues while selling occupied properties. Heard good things about Brad's suggestion of Shawn Morgan as well! 

@Steve Morris I have ZERO desire to move to SFO!!

Nope, I'm a ma-and-pa with a mortgage, w/ rising taxes, w/ rising repair costs, and rising water bills. And yes, I'm concerned about the future of Portland. And yes, I'm watching the election results at the city council and mayoral levels closely. And yes I'm concerned about draconian rent caps and the impact to run my business. 

And while I do believe that profit is vital to any business venture, I also believe profit without taking care of your humanity isn't worth the profit. I've raised the rents in the past and I'll do so again in the future. We council our clients to do as we do: keep our rents at market so you don't have to panic in these moments. My point was, and is, I don't see any need to bleed a tenant when times are really tough for a lot of people. It's super unfortunate what the city has done and I see the listings every day with people trying to sell their rental problems with under-rent units. It's a tragedy! In my opinion, there is a huge difference in "nice guy" and "not paying attention"...most of those ma and pas I see aren't just under-rented, they're neglected properties in general. It wasn't that someone was being soft, they just weren't treating their rentals like a business. I think there's a middle ground.  

I recognize my approach isn't for everybody and that's one of the things I love about real estate...there's room for everyone and a variety of business models! 

I know not everyone does @Brad Hammond! I'm sure my water bill and trash and P Tax will go up too, eating into my profits...Again, maybe I'm wrong, but I'm thinking at some point the pendulum will swing back a little towards reasonable. And we, and everyone else who doesn't panic, will reap the benefits of hanging on. 

It was a bummer to read, more so to me that the council didn't accept any public comment in any form (although in the past that hasn't helped our cause at all). While it's a disappointing move, I can't say it's unexpected. 

What is worse to me is the humanity...who would be raising rents on a current tenant right now in Portland? Yes, we run a business, yes we have to make a profit, and yes we deserve to make a return on our investments. And yet, with Covid, recessions, and our region on FIRE, who is really raising rents right now? I just renewed two great tenants at the same rent they had last year. I'd rather have good paying tenants who paid through Covid than another $50 in my pocket. 

Maybe I'm turning soft in my middle-age, but I'm just not seeing the necessity of raising rents right now. Maybe that's why it's even worse that the council did this...I know we've heard from many of our owners and none of them raising rents right now so rather than tackling the true issues impacting the city, they're pandering to a base and trying to create a problem they can solve (demonize one group and set them against another...sounds like a familiar playbook).  

My two cents is that we'll continue to see opportunities as mom and pop landlords continue to sell, consolidating more of the rental market in larger corporations. In the near future, I've already made the decision not to sell because of news like this and this isn't going to change that. 

Just looking at criteria, I think you're going to be hard pressed to find a SFR 3/2 built after 2000 for $325,000 in the market. The ones you do find will likely have issues that may make using them as rentals less appealing to tenants and yourself.

A couple options:

1. Look at townhouses and condos. For a bunch of reasons I'm not a fan of these as rentals and the HOA fees are likely to bring your monthly payment up anyway.

2. Adjust your criteria-you may start seeing duplexes for under 650k that get you closer to your target numbers.

3. Like Michael said above, try to source your own properties off-mls. 

4. Go even further out (Canby, Estacada, Carlton, McMinnville, etc.) although will likely change your rent numbers and future appreciation opportunities as well. 

best of luck!

Mathew

Did you use the Oregon VA loan or the Federal?

State requires that the property be owner-occupied the entire time, but with the Fed VA loan you should only be required to live there a year. In that case, you can just leave it as a VA loan and after your year is up, use FHA like you mentioned to buy another multifamily and live in it.

Mathew

@Aaron Hollingshead

What a good problem to have! I like your stock analogy with some diversification in your portfolio that offsets one another. I can be okay feeding a property from time to time under the right circumstances (which will be different for everyone). You had me at "keep it" so you have a place to move back into if you decide to come back to Portland, although $600/mo is a lot to feed. But, when you said it's on a busy street and you wouldn't want to live in it even if you came back here then I'd say it's time to move on! The market is extremely hot right now with tons of buyers on the prowl, combine that with low interest rates and even lower inventory and you may find a buyer who won't care as much about the busy street and small rooms. Now seems like a great time to 1031, provided you think you'll be able to find a replacement property or are willing to take the tax hit now assuming that gains taxes in the future will be higher. 

Mathew

Also to consider is the timing...tough to sell a SFR in our market with tenants in place. Doable. But tougher. What're the tenants plans?

Maybe a slightly different take here...if she is just getting started in real estate then maybe she shouldn’t focus on investing first. If she’s going to be advising people on investing she should probably get her feet under her and figure out how to write a contract. 

If I misread your question and she already is successful in real estate then I’d say the first thing she should do is buy a rental herself. Why practice something on a client and make mistakes with their money when she isn’t willing to do practice and make mistakes with her money first? Owning her own rental will help give her credibility as well...would you take care advise or buy a car from someone who doesn’t drive?

if you’re talking more inspirational help then realize that you can’t make anyone else love investing...you can only try to help them see the wisdom in it through what you’re already doing. If she really wants to know why she should invest, ask her to talk with agents in her firm who have retirement plans. I see a lot of leased Mercedes and renting from agents who make a ton of money, but save and invest zero. They’re always one closing away from being broke. Don't model those agents! 

Hey Eric, 

Good thoughts there...the coast is such an impacted market (much like Bend and PDX) with a lack of long-term rentals. While rents are lower than what you'll get in town, you'll also find lower price points. 

Just something to simmer on and think about. I know of a handful of folks who had STR condos on the coast and have converted them to LTR during Covid. Could be they go back to a more lucrative STR model in the future, but for now I would be cautious/concerned about a lot of those coming on the rental market. You'd have to either target a different demographic or know that a nicely appointed STR is going to command a higher rent when you're looking for comps.

There is a definite need for housing on the coast but you might be better off looking in that range for homes to purchase so you can avoid the HOA issue (unless you're specifically looking to that to solve an exterior maintenance problem for you?). I'm generally leery of HOA's as rentals although there can be a few slight advantages if you're aiming to go that direction.

Might consider your payment as well...you'll qualify for more "home" without the HOA and have the same payment.

Lastly, do you have a local bank out there that will get you in for 10% down? I could see picking up one as a second home on a 10% down loan and converting it to a LTR as your agreed upon time commitment is up, but might have trouble finding someone to finance multiple condos at 10% down. Would love to know if you have a connection who has that available?!

Mathew