All Forum Posts by: Melissa Hartvigsen

Hi @Daniel Jodrey,

The Portland Metro market still has opportunities, you just have to look a little harder here. There are pros and cons to long term and short term from a rental management side, and purchase/acquisition.
Long term = lower vacancy, lower expenses, potentially lower revenue

Short Term = higher vacancy, higher expenses, potential for higher revenue, financing is more expensive than long term rentals

Watch out for local STR regulations, they vary from city to city. In Portland for example, you cannot do STR for greater than 90 days per calendar year if you do not owner occupy the property (unless you have a property with commercial zoning). For that reason, many local investors do a hybrid of short term and mid-term. Some of the surrounding cities that don't currently restrict short term rentals are discussing adding restrictions in the future. For that reason, I always advise clients to make sure the property pencils as a long-term rental so you have a plan to fall back on.

As far as connecting with other local investors, have you considered joining the local REIA? They meet regularly and can be a great resource for learning and networking. https://www.northwestreia.com/events I have a great network of property managers for long term and short term, so if you are looking to interview some folks who can help with that, please send me a PM.

@Chris Watkins and I also teach a "New Investor Series", our third class for how to scale up to multiple properties is in November. Send me a PM if your are interested in joining us on Zoom, and I can connect you with details.

@Chris Watkins

@Chris Watkins

Quote from @Chris Watkins:

Sorry for the acronyms, they just come out. With the large employers (Nike, Intel and others), the west side from Beaverton out to Hillsboro is a great place to invest if you have a long-term lens. 

As for STR/MTR vacancy rates, those can vary greatly depending on location. AirDNA is a good tool for looking into those specific areas and weighing the strengths. There may be some others on here with more experience in that specific area who can chime in.

I know @Melissa Hartvigsen invests herself in that area and works with investors in your neighborhood. I'd recommend connecting with her!

 Hi Patrick,

@Chris Watkins thanks for the shout out!

I have done Airbnb (short term rentals aka STR) and Midterm (aka MTR) in Beaverton.  I have two active MTR units in Beaverton.  Depending on your address you may fall into the city's jurisdiction which only allows short term rentals for 90days or less in a calendar year, or the unincorporated part of the county which does not have the restriction. For this reason, many locals do a hybrid of short and mid-term rentals. (Short term in the peak season <30day bookings, and mid term for the rest of the year >30bookings).

65% occupancy rate is common around the metro for Airbnb. Mid term is about 85% occupied. Long-term rental occupancy is 95%. Short term rental manager aka co-hosting fees are usually 20-30%, mid-term 17-25%, and long term property management fees are 8-10%.  You also have higher expenses with STR and MTR, you have all the utilities, furnishings, and consumables to account for as well.

Combining strategies with house hacking makes it easier to get to cash flow. I just helped a client purchase a cash flowing 4 plex in Portland. It isn't impossible to find a deal here, you have to get good at analyzing deals and be willing to put in work. Turnkey rentals in Oregon are harder to make work. Depending on your financial situation, negative cash flow for a couple of years may make sense (talk with your CPA).

The local REIA is a great spot to connect with other investors, there is one at Mazama Brewing every month in Orenco Station. You can also send me a DM if you want to do a deeper dive.

Cheers,

Melissa

Hi Justin,

Welcome to BP! In the Portland Metro there are several groups that meetup. The local Real Estate Investors Association (REIA) puts on several meetings a month, and covers a variety of topics. They allow you to attend two meetings before joining as a paid member. You can see all of the upcoming events at: https://www.northwestreia.com/events

Meetup, also has some other local investor meetings. Try looking up the group "Portland REI".

If you are looking for BRRR or Flips, I highly recommend finding a real estate investment mentor to partner with and help you through your first deal.





Cheers,
Melissa

Hello @Cody Rigby,

I am a local realtor and investor. Adding units at the Cedar Circle duplex could be a great value add. Forest Grove rentals are strong in the summertime when students are arriving for Pacific University. The rest of the year it takes a bit longer to fill a vacancy. In most of the Portland Metro I would say a 5% vacancy rate is safe for running numbers, in Forest Grove I would bump that up to 9 or 10%.

Start by contacting the city of Forest Grove. You can confirm the zoning (please don’t trust what is listed in the advertisement. When it was listed for sale in 2019 it was also marketed as easy conversion to 4-plex, but the current owner didn't do the conversion so I wonder why). Also, you can ask the city what the permitting fees are for adding units. If you convert the garages to studios or small 1 bedroom units, you can probably get that done for $75,000 to $100,000 per unit. The cost will go up substantially if you decide to expand the building footprint and roof. A standalone 1-bedroom unit would cost in the range of $175,000 to $200,000 to build.

Taking away the garage from the existing tenants will lower the rents on those units.

Currently they are:
4 bed 2 bath rent = $2,000
3 bed 1.5 bath rent = $1,600

I think the 4 bed 2 bath is the one with the partial conversion, and three units might look like:
3 bed 1.5 bath = Rent $1,500 (no garage)
1 bed 1 bath = Rent $1,100
3 bed 1.5 bath with garage = $1,600

Don’t be misled by the 6.6 cap rate in the listing, they are just using gross rents which is incorrect. 30% (25% expenses and 5% vacancy is standard in our market), and this is really a 4.7% cap rate. Most multifamily in our market sold for a 5.4% cap rate in 2023, and that would price it closer to $560,000.

Other things to consider for your offer: FHA financing requires you to move in within 60 days of closing. There is a tenant in each unit, and if they have lived there for more than 12 months, you must give them 90 days' notice to move out. (Oregon Landlord Tenant Law prohibits a seller from giving the tenant a vacate notice for a buyer to move in. You can only do that in single family homes). That could become part of your negotiation and offer with the seller, through offering non-refundable earnest money and having the seller make a cash for keys agreement to get a tenant out prior to closing.

Cheers,

Melissa

@Melanie P.

 Tenant is in their first year of tenancy. You should read the posts more carefully. There is nothing wrong with giving the tenant a sob story and an option to leave early, with pay. The lease is ending either way at the end of the 12th month. 

I read your post and am aware that the tenancy was less than an year. My issue with your advice is that you advised to LIE and say "my mother is sick and we need a place for her to live so she can receive in-home care and see her grandkids a few more times".

Since there is less than 1 year of occupancy the tenancy can be terminated without providing a reason to the tenant. Lying could still land you in court.

I provided the rest of the information because the law is not clear to everyone else reading the thread.

I have had rental properties in Oregon since 2014, and have never had this come up. @Nathan Gesner has a good point, I think this would be a violation of code due to preventing escape in the event of a fire.

Contact the Portland Rental Services office, they can confirm what is required. Linking their site below so you can grab their phone/email. [email protected]

Please do not follow @ Melanie P.'s advice here! The Oregon rules are extremely strict. If you falsely tell the tenant you are moving in a family member, and then list the property for sale you could be subject to owing the tenant 3 times your rent amount, plus legal fees and damages. Ref. ORS Ch 90.427.

For your 1st question: 1) Willing to offer a financial incentive for them to leave. I'm
thinking of $1500/ (property rented for $2800/). Is this too much or reasonable?  Too little!

If you want to buy them out of their lease early, I strongly encourage you to engage an attorney.  Also consider that the entire state has a relocation fee = 1 month rent, if the tenant has resided for more than 12 months and you have 5 or more properties (including your personal residence, and any property owned outside of Oregon as well). Even if you don't own that many properties, most tenants know this and would expect your offer to be at least their rent amount or more.  I have seen "cash for keys" deals end up being above $10,000.

Otherwise, wait until it is closer to the lease ending date and issue the no cause since they have occupied less than 12 months. Bethany is in Washington county and follows the state
rules. Minimum of 30 day notice issued prior to lease end date (make sure to account for mailing time and add 4 days) If the current terms ends on 8.31.2024 for example, you would want to deliver the notice no later than July 29, 2024.

For your second question: 2) If they decide to take the offer and move out in April, does that override the 90 day notice needed (see below)? 90-day is not applicable in a cash for keys agreement. Both parties are choosing to accept terms other than what is specified by landlord/tenant law. You can mutually agree upon any move out period. In my experience I have seen that range from 30-60 days (could be more, could be less). It really depends on how quickly the tenant can secure a new home.

Best wishes,
Melissa

Hello @Rachel H.,

In Oregon the rules are not in your favor. This is no exemption based on the number of rental units you own. You can only deny a request for an emotional support animal for a few reasons:

1. It poses a serious risk to your property or other tenants. For example, if you check a rental reference and the previous landlord says the ESA (dog) bit another tenant, then you can deny the request.

2. It would cause an undue burden (financial). If accommodating the request required an expensive alteration, you could deny the request.

3. It would cause an undue burden (affecting operations). Example, if you had shared furnace ducting in your rental and your existing tenant in the main house has severe pet allergies, and allowing a ESA for a new tenant would cause issues for the current tenant, you could deny the request.

You can always call the Fair Housing Council of Oregon Hotline, 503-223-8197 Ext. 2 and ask for their guidance. (They are ultimately the ones who enforce these rules along with BOLI). 

If you accept the tenant, and the emotional support animal causes noise disturbances then you would address this with a lease violation. Think of it like a loud party.

Good luck,

Melissa

Hi @Adam Davis,

While you may not qualify for a conventional loan, there are non-qm loan options that can go off of your bank statements and credit score without having to verify your tax returns.

Your thought of getting the loan and only paying when the house sells is not an option. Hard money lenders will either lend up to 85% on the loan to cost (acquisition and rehab), or 70% of the ARV (after repair value). They will always go off the lower number, and you will need to bring a down payment and closing costs (the standard title and insurance fees for escrow, as well as document and origination fees). Then you will be making monthly payments on the interest amount (currently I have seen that in the 11-12% range). With these carrying costs most people are looking to exit the hard money loan in 6 months or less.

There are hard money lenders that will work with first time flippers, and if you need some recommendations send me a private message.

Cheers,

Melissa

Hi Hayden,

Our local REIA does a "Deal Deep Dive" once a month and while it isn't visiting a property in person, they are good at walking you through the math. Each month there are new examples, so one time it could be for a flip and another time it could be how to wholesale a deal.

The next one is virtual and is on Thursday, February 8, 2024 from 7:00 PM - 8:00 PM. Here is the calendar link if you want to sign up:  https://www.orreia.net/Calendar.aspx

Cheers,

Melissa