All Forum Posts by: Melissa Hartvigsen

Hi Besty,

1) Most students like their lease to start about a week before classes start so they can be settled. Leases for students are typically 9 months (assuming they go home for the summer). If your students plan to stay for the summer and take classes and or work part-time, they may want a 12 months lease (this is rare). I think you should offer both options, and see what your prospective tenants say.  If you do end up with 9-month leases, charge a higher rate to offset your summer vacancy, or post the rental as a short term.

Pacific University in Forest Grove has several programs that start at other times of year (the Physician Assistants and Optometrists don't have the same schedule as the rest of the student body, so you may have a lease start at another time of year. Also these grad students tend to stay for their entire program and you can expect an 18 - 24 month stay).

2) Compare the rent for the whole house as a rental, versus renting by room. Usually you will get more rent having individual rental contracts for each room. To estimate the costs for a room rental you may want to look up the going rate for a room in that town on craigslist.org (under housing, then rooms and shares).

Oregon landlord tenant laws are more complicated than they are in other states, so please use forms vetted by our local landlord associations so you are compliant with our laws. I buy mine from: https://www.multifamilynw.org/

If you do the room-by-room option, you may want to have an attorney help you with special lease provisions. For example, how to address damages in a common area like a kitchen.  Be sure to have a landlord tenant attorney, and not a general attorney help you here!
https://www.justia.com/lawyers/landlord-tenant/oregon

Best wishes and good luck!
-Melissa

Hello Tommy!

Congratulations on finding your first rental property!

After your home inspection, you should get bids for substantial repairs. Your realtor should be able to help you with which items on your report should be negotiated.

For example, if the roof is at the end of its life and has signs of leaking, and the sewer line is cracked and needs to be replace, then I would recommend asking for those items. There are multiple ways to address it inspection items:  renegotiate a lower price, get credit toward the closing costs to offset the repairs, or require the seller pay for repairs using a contractor that you approve of (and you get to reinspect afterward to make sure it was done correctly). This last option is great if you do not have a lot of cash on your own.

If the appraisal comes in less than your offer, you have the right to terminate the contract or renegotiate the price.

You negotiation power depends on whether or not the seller received offers in addition to yours. You agent should have asked about this when your offer was accepted. If the seller has other interested buyers behind you, then they may not be as willing to negotiate.

Good luck! I would love an update when you get to closing and hope to see it on the deals page.

Melissa

Hello Jonathan,

If a tenant is in violation of the lease terms (i.e. getting a pet dog at your "no pets" property), then this is a matter that the property manager (Renters Warehouse) should address.  While you wait for your response from the PM, review your property management agreement as it should outline the process they use to deal with lease violations. Hopefully they are reputable and have that outlined for you.

In case your PM does not address lease violations as part of your contract, you might want to educate yourself about your rights as a landlord using a local landlord tenant association before taking any further steps. I pay about $100 a year to my local association and they have a member hotline and resources available. Here is a directory for your state:
https://www.thelpa.com/lpa/associations/minnesota.html

I am not familiar with MN laws, so your property manager or local landlord association will be the expert on which notice of violation or termination may be applicable.

In Oregon, we usually start with a "violation" = a warning with an opportunity to resolve the issue. If they remove the pet (which requires subsequent inspections by your property manager), then the issue is resolved. If they do not remove the pet, the next step is a notice of termination. Then, an eviction action can be brought against the tenant for non-compliance with the lease, and you will likely have to go to court to testify since you are the one that observed the dog at the property. Keep in mind that evictions can be costly, and are about getting possession of your property.  In Oregon, tenants have the right to ask for a reasonable modification to the lease to allow the animal to say under the ADA for an assistance animal (which does not meet the same standards as a trained service animal). In Oregon, the tenant can make this request after being served a violation and or termination notice and the landlord generally must make this accommodation. No deposit can be charged for assistance animals. The path of least resistance may be altering your policy, and having a damage deposit for the dog.

One of my tenants asked me to change my no pets policy so they could get a cat after being in my rental for a year. They were excellent tenants, paid on time, and kept the place clean, so I agreed to accept a deposit and allow the cat. When they moved out, the house was in great condition and I was able to return their pet deposit. If they had not been taking good care of my rental, I would not have agreed to the alteration of my pet policy.

I hope this helps!
Melissa

You are most welcome!:)

Hi Mathios,

I am a realtor in Oregon, and I have access to MLS (the multiple listing service) stats for appreciation in my market going back to the 1990s with only a click (back to the 1960s with a little more effort). Maybe you should connect with a realtor in your market and ask them to provide you the data.

Also, Redfin has appreciation statistics. Select "Buyer Resources", then select US Market. You can search for you Zip code there, but keep in mind they only go back 5 years.
https://www.redfin.com/city/5413/OH/Dayton/housing-market

Best wishes,

Melissa

Hi there,

I don't do this, but have followed this channel on YouTube for years. They have a full playlist of videos on rental arbitrage, and a Facebook Group where you can get advice. Sean is one of the best content creators I have seen in this space:
Your Introduction to Presenting to Landlords, rental arbitrage - YouTube

https://www.rakidzich.com/

Good luck!

You are welcome!

Thanks for clarifying the joke! Sometimes it is hard to pick up on jokes just reading a post. :)

2 units do not have the self-sufficiency requirement that exists on 3-4 units. (In my market finding a 3-4 unit that meets self-sufficiency requirements is like finding a unicorns).

Personally, I haven't taken the leap to invest out of state yet. I am considering it after I referred a client to a broker in Peoria Illinois (the largest local employer there is Catepillar, and there are several hospitals/medical centers). Their cap rate is about 8% which is better than the 4.5% cap rate in Portland Oregon where I am from. Properties in Peoria don't appreciate greatly in value, but the cash flow is pretty good there. My portfolio is entirely local and built by house hacking. It is all about appreciation in Portland as cash flow takes many years for new investors here.

It depends on where you are looking for the out of state investment.  I know that David's strategy has shifted, most people had to. The pandemic did a number on markets all over the country, and any good investor will continue to educate themselves and shift with the market.

Bigger Pockets has a lot of wonderful calculators, but one thing I have found they are lacking is a long-term hold calculator that highlights property appreciation, rent appreciation, and cash flow. I use this one:
https://www.calculator.net/rental-property-calculator.html

I hope you find the calculator helpful in your future deal analysis.  

Melissa

Hello Alban,

You live in one of the move expensive markets in the country, and that makes it harder to have any cash flow for the first several years of your investments.

1) I do not recommend this. If you get caught, mortgage fraud will mess up your future investing plans. How about looking at a multi-unit property? With up to 4 units you can get a FHA residential loan with 3.5% down payment, owner occupy and have rental income subsidize some or all of your mortgage. (Need some actual numbers to comment further). FHA maximum loan amounts in your area: $828,000 for 1 living-unit homes to $1,592,350 4-unit. 

2) Your $850K option, when you look at the monthly payments compared to the market rent in your area for this type of home is it close to breaking even? If so, this could be a great play for appreciation, just know that you will see very little cash flow. Yes, you have one property to deal with, but as you scale up, your portfolio will be in multiple locations. For ease of management and maintenance the 2-4 unit option has an advantage.

3) Will the housing prices increase more over the next 12-15 months in your market? Then it may be possible for you to use a home equity loan on your primary residence (taken out before you move on) to help you fund the next purchase. 

I think one thing you are overlooking is investing in a cheaper market. While you may forgo appreciation, the early cash flow will be higher and that may allow you to scale your portfolio faster.  I just started reading "Long-distance Real Estate Investing, How to Buy, Rehab and Manage Out-of-state Rental Properties" by David Greene. I think you should add it to your reading list. :)

Melissa

Hi Madalyn,

Please do not use the free lease generated through Appfolio. They are not up to date with all of our Oregon specific laws and using it could get you into trouble. I think you would spend a big chunk of money having an attorney review the documents, and then draft amendments to make it state compliant.

Instead, I recommend buying your leasing forms from one of the landlord tenant associations (the forms will cost you less than $150). The local landlord associations have a team of landlord tenant attorneys familiar with local regulations and update the forms as soon as new legislation passes. My top two recommendations for forms are through 
https://www.multifamilynw.org/ or 
https://rhaoregon.org/

I did a google search, and it looks like you have a local Assocation in Salem. 
https://salemrha.com/
Give them a try as well, there may be rules specific to Marion County that are different than the Portland Metro where I am based.

Also, if you join the association, they have a resource hotline for landlords where you can ask questions.

Best regards,
Melissa

Hello,

Responding to your request to property management recommendations.

The Clark Group 
http://www.clarkgrouppm.com/

Real Property Management Solutions, Dan Hayes
https://www.realpmsolutions.com/

Peace by Lease
6501 S Macadam Ave Ste A, Portland, OR 97239
https://www.peacebylease.com


The going rate in the Portland metro ranges from 8-14% of the gross rent, and the lease up fee (new tenant placement) ranges from ½ to a full month's rent. 

Best wishes for you with your house hack now that you are to the rental phase! : )

Cheers,
Melissa