All Forum Posts by: Melissa Hartvigsen

Quote from @Benjamin Crowell:

Hi BP forums,

First time buyer here! I'm looking to purchase a home near the Anschutz medical campus and convert the basement to it's own 2 bed 1 bath unit with a separate entrance. I'm going to have a contractor do most of the work with me doing some of the labor of demo and installing cabinets and counter tops etc. Are there any issues doing this from a permitting standpoint or things I may not be aware of?  I know it doesn't count as an ADU with it being the same structure, I'm struggling to find info on this subject in the Aurora zoning codes if it would be allowed. Thanks for any help!

I was interested in doing something similar at my home. I live in Oregon, and reached out to the local building department for my municipality.

They were able to look up at my property specifically and let me ask my questions directly to a city planner. I came home with a very straightforward plan and understanding of what I could and couldn’t do. For more complex situations they offered something called a pre-planning meeting that will cost about $500. 

It was well worth my time, and I recommend you reaching out to the building department for Aurora.

@Matt Wells

You should do regular rental increases each year.  When you send the new rental rate to the housing authority, they will run their calculations to make sure the rent you are charging is still within their approval amount. Small increases are easily approved.

If you "bank" the increases and do a 6% all at once, you may price your tenants out of your housing if the local housing authority does not approve the new amount.

Sometimes the housing authority may be able to approve a large increase. I would not risk doing a 6% increase without first checking to see what the local housing authority considers  "Fair Market Rent" for your unit size. My local housing authority publishes the fair market rent amounts online. I am sure a quick google search for "Section 8 Fair Market Rent {YOUR CITY}" will help guide you with your decision.

You could also try the national HUD fair market rent lookup tool at:
https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2023_code/select_Geography.odn

Hello @Daniel King,

First, I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence".  It lays out a plan for how to budget, build credit, and get into real estate investing (if that is what you want), or how to set up other income streams. The appendix of this book has an excellent "to do list" and additional reading that will help you.

Next, How to get the loan:

To piggy back off of @Erin Church to qualify for a standard loan you generally need at least 2 years of steady income history, at least a 640 credit score (though the higher the score the lower your interest rate).

Or, you need to have a qualified co-signer. They must have the credit and income history the bank requires but do not have to live in the property with you.

Once you have the above, you should shop around with different lenders to find out which loan program best suits your needs. Of course there are FHA loans, and conventional loans, but there are other loans sometimes called "Portfolio" or "Private Lending". The last two may have more flexible loan guidelines, but come with higher interest rates.

How to build credit:  One way to instantly get credit is to have a responsible adult with good
credit and responsible credit card usage add you as an "authorized user" to their account. Within 30 days, this gives you a real boost on your score.

If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.

The trick to keeping your score high with your new credit card is to never use more than 30% of the available credit, and to pay the ENTIRE balance every month. Example. If you have a $500 credit limit, the maximum you should charge on that card is $150. When you go above 30% of the available credit, the credit bureau actually deducts points from your credit score.

Part of having good credit is having a mix of installment loans (like home loans) and revolving credit like a credit card.

The rest of getting good credit is built on time and payment history.

Budget for your purchase:
I tell my clients to budget for at minimum 6% of the purchase price to be ready. That is because your loan program may require 0%, 3%, 3.5%, 5% or more down. The 6% number I use is to account for closing costs and additional expenses that are not typically financed like the home inspection and appraisal.  However, as a first time home buyer doing a house hack, you may qualify for some down payment or closing costs assistance. By shopping around for a lender, you can find these programs.

Finally, if you cannot purchase as soon as you want to, do not be discouraged. Keep building your credit, income, and savings so you are ready to go.

Best wishes,
Melissa

The short answer is, yes you can charge utilities separate from rent as long as it is the allowable rental amount. 

The housing authority who manages Section 8 uses an affordability calculator that encompasses utilities and fair market rent as determined by HUD, and evaluates the tenant's need to make sure everything meets the program requirements. They look at the amenities provided, and weigh the total rental costs including utilities. In my area, the local housing authority publishes the amount they will pay for a unit based on size and zip code online. If there is a property that exceeds the amount they will pay, it does not disqualify the tenant from moving forward if the tenant can fully cover the amount above the approved rate. (That does not happen often).

Using a quick google search, I found the Missouri Section 8 information at:

https://www.hakc.org/landlords

https://affordablehousinghub.org/state-section-8-guides/missouri-section-8-housing

If you have further questions, you should reach out to the local housing authority directly. They are usually very helpful (there is always high demand for rentals and they need willing landlords to work with them).

Unit Size	Fair Market Rent
Studio	$614
1 Br	$723
2 Br	$932
3 Br	$1,218
4 Br	$1,407

Hello @Kristina Hinostroza,

For landlord forms, do not use any of the free leases available with tenant tracking software. They are general, and not updated as often as the local landlord tenant laws.  You should reach out to the local landlord association or Real Estate Investor Association (REIA) in the area where you are buying your property and join. Membership around the country is usually under $200, and the rental agreement forms are deeply discounted for members. This way you always get something that is specific to your area and is legally compliant. You also get lots of great advice by being a member.  Your posting didn't say where in South Carolina you were buying, so here are links to a directory of Landlord Associations around the state and the National REIA directory:
https://www.thelpa.com/lpa/associations/south-carolina.html

https://nationalreia.org/find-a-reia/

For everything else I use: https://www.apartments.com/

-It allows you to accept electronic rental payments. This is one of the top 5 things prospective tenants ask for as an amenity.
-It makes advertising easy, and automatically puts your listing on a couple of other sites (realtor.com is one of them).
-It allows you to accept applications and screen prospective tenants. The fee is $29 per person.
-It lets you track expenses.
-It makes the accounting reports neat and tidy, especially if you are using a CPA. (It reports income automatically if you accept electronic payments from the tenants. You will just need to manually enter your expenses).
-It is FREE to use, you just need to put in the time to set it up.

Best wishes for your investment!
Melissa

Quote from @Irving Casas:

Quote from @Melissa Hartvigsen:

Quote from @Irving Casas:

In 2020 after months of listening to BiggerPockets and analyzing deals. I focused on buying a duplex in Portland, Oregon.  On February 8th, 2021 I bought a duplex for $388,000. The tenants who were on a yearlong lease were paying $1,300.  I work as a realtor and night shift at a hospital as a respiratory therapist, I don't have my own family. Once I moved into the vacant side of the duplex, I realized I still only needed a room to sleep. I had reversed house hacked my entire adult life to save for my downpayment.  I rented the vacant room for $725.  My mortgage is $1750. My expenses include taxes, home insurance, water/sewer, 5% for vacancy and 10% for capital expenditures and maintenance. I can now save my entire paycheck and commission checks to save for the purchase of my next investment property. Even though I work quite a bit, I still find time for yoga in my backyard, snowboarding 1 hour away from my home, I'm 15 minutes from 3 beautiful rivers and 1.5 hours from the Oregon coast. Portland is a wonderful place to live. 

My tenants have lived in the duplex for 20 years and they are great. They treat the duplex as if it was their own home. 
Bigger pockets community, what advice do you have to keep a long-term tenant happy 

I think it’s amazing that you recognize the value of having a long-term tenant!  

Here’s what I do:

When I raise the rent, I keep the amount reasonable.

When my tenants sign a new lease, I usually offer them a small concession, like getting the carpet shampooed.

I do semi-annual inspections, so that I can catch maintenance items they might miss and take care of them.

When my tenants have a maintenance need that they report, I respond in a timely manner.

I usually send them a gift card to a local restaurant either for Thanksgiving or Christmas and thank them for their loyalty.

These practices have helped me keep my tenants.

Best wishes,

Melissa

 Melissa-

Thank you for your suggestions. I'm going to use your semi-annual inspections strategy. I'm going to do 2 inspections a year. I've found that as the seasons changes the home needs new upkeep for example in the summertime the bushes and grass need more attention. 

 I am happy to hear my suggestions are helpful to you! Best wishes for success!

Quote from @Felix Lilly:

I am looking to invest in real estate for myself. Currently I am 26 and am working in healthcare. I wand to begin creating equity for myself and building my real estate portfolio. I am wondering what my first properties should be for investing in. I work in Portland OR, and would like to find a property to invest in in the greater Portland area. Prices here are quite high, but I am wondering if perhaps I should invest in a one bedroom condo first using a 3% down payment. That way I can start building my equity and possibly find a roommate to help subsidize my mortgage payments. 

But again, the hardest part for me is getting started. That's why I am posting this today so I can find some answers and possibly make some in person connections with other real estate investors. Thank you for reading this posting, and thank you in advance for your time.

Felix Lilly 

Hello Felix,

You are off to an awesome start! I built my portfolio here in the Portland Metro area by house hacking, my first two purchases were condos. I held onto them for several years, and used the equity in them to trade up to properties with more units and a higher value. It increased my cash flow.

Here in Portland, it is pretty hard to cash flow on a house hack for the first few years, especially with current interest rates. It may be worth considering a two bedroom if you can afford the payments. Then you can take on a roommate and reduce your mortgage while you are there. That strategy will help you save for your next down payment.

On my first condo I paid about $100 a month to the mortgage the first year it was a rental. I was okay with that because eight years later I had over $180,000 in equity to get my next property.  It is important to remember that the hack is your down payment savings. If you were a strict investor, you would have a higher interest rate and would have to put 15% down on a condo.

We have some amazing first time Home Buyer programs in Oregon Bond (has an option for a below market interest rate, or money for closing costs), Flex up to 5% for down payment or closing costs. I can connect you with lenders who offer those programs if you send me a private
message.

The other benefit of connecting with a lender is that you will know what loan programs are available to you, and what your payments will look like.

I am happy to chat more about my local experience if you are interested.

Cheers,
Melissa

Quote from @Irving Casas:

In 2020 after months of listening to BiggerPockets and analyzing deals. I focused on buying a duplex in Portland, Oregon.  On February 8th, 2021 I bought a duplex for $388,000. The tenants who were on a yearlong lease were paying $1,300.  I work as a realtor and night shift at a hospital as a respiratory therapist, I don't have my own family. Once I moved into the vacant side of the duplex, I realized I still only needed a room to sleep. I had reversed house hacked my entire adult life to save for my downpayment.  I rented the vacant room for $725.  My mortgage is $1750. My expenses include taxes, home insurance, water/sewer, 5% for vacancy and 10% for capital expenditures and maintenance. I can now save my entire paycheck and commission checks to save for the purchase of my next investment property. Even though I work quite a bit, I still find time for yoga in my backyard, snowboarding 1 hour away from my home, I'm 15 minutes from 3 beautiful rivers and 1.5 hours from the Oregon coast. Portland is a wonderful place to live. 

My tenants have lived in the duplex for 20 years and they are great. They treat the duplex as if it was their own home. 
Bigger pockets community, what advice do you have to keep a long-term tenant happy 

I think it’s amazing that you recognize the value of having a long-term tenant!  

Here’s what I do:

When I raise the rent, I keep the amount reasonable.

When my tenants sign a new lease, I usually offer them a small concession, like getting the carpet shampooed.

I do semi-annual inspections, so that I can catch maintenance items they might miss and take care of them.

When my tenants have a maintenance need that they report, I respond in a timely manner.

I usually send them a gift card to a local restaurant either for Thanksgiving or Christmas and thank them for their loyalty.

These practices have helped me keep my tenants.

Best wishes,

Melissa

Quote from @Josiah Horn:

My current home (SFH) I am splitting into a temporary "duplex" as the master has a private bath and separate entrance. I will be renting the remaining 3b1ba as an apartment until I save enough for my next property in approx 6months-1yr.

I would like to just rent it out as a standard apartment rent + utilities as to avoid wasteful practices with heat/electric. However as this is temporary can I just have them pay all of the utilities even though a heat vent goes to the in law suite and electric will be all on one meter. 

If you are receiving the benefit of electricity and heat, you should be splitting the cost with the tenants. I have a similar set up at my house and I rent out part of it. I split the bill based on the square footage I’m using, and have the tenants reimburse me for their portion.

I have seen other people split it up bills by percentage based on number of bedrooms. Which ever formula you decide on, it’s the one that you should stick to you for the duration of the tenancy. The important thing is that tenant shouldn’t be paying for all the utilities if you’re using a portion of them.

Cheers, 

Melissa 

Hi Ryan,

I have found that some people recommend a realtor because they are a friend/family member and not due to their experience. I don't have any referrals in your area but do have some questions you should use when interviewing realtors that will help you find someone with investment experience.

1. Do you own a home? If so, when was the last time you personally, did a real estate transaction? 

2. Do you invest in real estate and what is your strategy?

3. Do you work with investor clients? What type of deals to you help them with?

4. Do you have good contacts for lenders, wholesaler, contractors and other referral partners?

5. What is your availability to show me homes, and what is the best way to reach you? If they "do not work weekends or evenings", they may not be a good fit with you and your work schedule.

6. Will I be working with you, or is there a team? If there is a team, who is my primary contact?

7. How many transactions have you closed in the last 12 months?

8. Do you have referrals that I can contact?

9. May I have your license number? (Look up their license to make sure there are no open complaints or disciplinary actions against them.)

10. How many clients do you have actively searched for a home now? (If they have more than 3 buyers, and do not have a team, they may be too busy to give you the help you need).

11. If the seller does not pay your regular commission, will you require a payment from me?

I am sure you may have some questions of your own, and just wanted to give you a good start to finding the right fit for your investment journey.

Cheers,

Melissa