All Forum Posts by: Melissa Hartvigsen

Hello @John Chapman,

I can recommend @Cari Sweet. She manages properties for a couple of my real estate clients. She is one of the few who is really in tune with all of the Portland specific rental rules. She is the owner/property manager for 

Peace By Lease LLC

(503) 708-7907
[email protected]

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

Cheers,

Melissa

Hello @Bradley McVay

Congratulations on your graduation, and your upcoming engagement! 😊

BP is a great place to learn, and in addition to all the things you mentioned, I would suggest getting comfortable with the calculators (found under “tools”). You should evaluate several properties that interest you, (for practice to start). The calculator results will help inform your decision on which path will make the most sense for you.

I built my portfolio by house-hacking in the Portland Metro, first with condos that I later traded into larger properties after holding onto them for several years. I still house hack at my primary residence by renting out part of it to travel nurses. Many clients have pivoted to buying single family homes or condos and renting them for market rent when they leave due to the local price point and currently high interest rates.

Holding and trading up later will likely be the strategy you take because of how the interest rates impact your monthly payments. Substantially increasing your down payment will not have a large impact on your payments, so I would focus on the lowest price point you can.

For example, if you purchase a single-family home in Portland using a 3 beds 2 bath house currently on the market: https://redf.in/wpES9K

$425,000 price, $42,500 down payment and at 7.5% interest your payments would be appx $3,325 including principal, taxes, insurance, and mortgage insurance. Changing your down payment to $60,000 only saves $135 a month. The challenge is that you can rent an equivalent house for about $2,500 a month as a long-term rental. You may be able to get about $3,000 a month renting room-by-room. You would hold for a while, before rents catch up, or if rates go down for a refinance. This is where the BP calculator comes in handy for you to see what the return looks like if you hold this house for 25 or 30 years.

Stepping up in price to a 3 bed 3 bath house; https://redf.in/1OxC2K:
$565,000 price with $60,000 down payment at 7.5% interest your payments would be appx $4,615 a month including principal, taxes, insurance, and mortgage insurance.

Regarding buying a multifamily and raising rents: In our market that presents many challenges.
1. Our statewide rent cap would prevent you from raising rent more than 10% in a single year for any existing tenant.
2. There are only 4 legal reasons you can have a tenant move out. You or a family member are moving in, the unit will be converted to something other than a rental, you are doing a substantial renovation, or you are selling the property and a buyer who is going to owner occupy is going to move in (SFR only you cannot do this on multifamily). If you have the tenant move out so that you can renovate and charge more rent to the next tenant, you may have to pay a relocation fee. (Portland does not matter how many units you own, there is no exception to this, and it ranges from $2,400 to $4,500 depending on the number of bedrooms in the unit. The rest of the state the relocation fee is equal to one months rent if you own 5 or more properties).
3. Most of the multifamily units I see in our market have rents grossly below market, and lots of deferred maintenance that the current seller has not factored into their pricing.

For your “live in-flip”, find a realtor who does a lot of volume locally. They can help you estimate some of your repair costs. For example, if it is a small townhouse, I can tell you from experience the going rate for a new 30-year roof if $8,000 to $9,000, and a roof on a medium sized house is $12,000 to $13,000. If something doesn’t need a new roof, cleaning the roof and gutters is about $280 to $300. During your inspection period you can bring in contractors to get estimates to help you figure this out as well, good realtors have referrals to cover most jobs.

Other considerations for this option include:

With your plan to force appreciation, you may want to talk with a lender about a rehab loan option. That way you can keep some of your money in your pocket and finance the work that needs to be done.

I would also look at the cost of pulling money out, a HELOC rate right now is somewhere between 9-10% and the pay back period is usually 10-15 years.

These are all just starting points. I am happy to continue the conversation if you have more questions.

Cheers,

Melissa

Hello @Mark Garcia,

For an owner occupied residence, the lender is going to require that you show enough steady income to repay the mortgage. If it is a w2 job, the general rule is that they require two years on the job. That doesn't sound like your situation. Maybe they can count some income from your t-bills? This is a question for your loan officer. 

If your investment income isn't enough to qualify you for the loan, my first thought would be to find a close friend or family member with steady income that you can ask to co-sign.

Did the loan officer you spoke to offer tips and a realistic timeline on how to get to your goal? If the answer is no, I would look for a different loan officer.

Good luck,

Melissa

Hello @Andrew Rellinger,

In Oregon, if the seller hasn't completed the work the time the buyer's review period ends there would be a couple of reasonable options (please check with your realtor on the remedies available in your state):

1. Both parties agree on a new date for the work to be completed, check the permits, and have the buyer review completed. Your realtor should be able to help you with an addendum for this.
2. You the buyer can terminate, and receive their earnest money deposit back since the seller would be in non-compliance of the contract for not getting the work done.
3. (I don't advise this), just accept it as is and take on the mold remediation after closing.

Additional concessions: Check with your lender. There is likely a maximum seller credit that you can ask for in a deal. If you are already at the maximum credit, then see about an escrow holdback for having the work done after closing. (This is something that will require an addendum, a specific contractor that has agreed to do the work, and involvement from the title company since they would be releasing funds for the repairs).

Hello @Todd Wood,

Here's my take on your choices:

Option 1. Keep the property, and have your attorney help you negotiate a cash for keys agreement to get the tenant out. Then, you can get more money in rent. (Market rent, even in the lowest rent neighborhoods in Portland for a 3bed 1 bath SFR is at minimum $1900.  Your current rent of $1,380 is well below market, and with our rent cap, it will take you years to get even close to market. The going rate for a property manager is 8-10%, though I have seen it as high as 14% in the City of Portland due to the extra layers required for managing a property.)  Even if you come in with $5,000 out of pocket that would take you 10 months to break-even if you continue managing or about 15 months (if you pay a PM 10% a month).  This option removes the "headache" of you dealing with the day to day operations and keeps the property in Portland. 

Option 2, sell and buy in another market. If you are financing the deal it would be hard to make anything pencil with the appx 9-10% interest rates for investors. Make a forum post in BP to ask for recommendations on markets and do some research.

Option 3, consider using a 1031 exchange and acquiring a DST (Delaware Statutory Trust). This will allow you to keep the cash flow coming in, and remove the day to day operations of managing the property. Forbes has a good article on these: https://www.forbes.com/sites/forbesfinancecouncil/2023/08/22/understanding-the-delaware-statutory-trust-full-cycle-event/?sh=4a52b0641236

Option 4, as you stated, you can just sell and take the tax hit. You would still have money in your pocket to invest elsewhere.

Personally I use on calculators to see the "financial opportunity" before I make a decision. BP has a rental property evaluation calculator under tools. If you are considering non-real estate options you could try the "investment calculator" on calculator.net.

Best of luck to you!
Melissa

Hi Melanie,

Please send me a private message and I can send you recommendations for both.

Best regards,

Melissa

Hi Susan,

If you or your PM pays a pro photographer for the 3-d Zillow tour, they get a link that they can embed into the advertisement. (Flat fee one time).

Thanks for providing the link to your listing. Your PM just filled out the basic bullet points, and they are using a boiler plate description that they probably use on all of their properties.  They say:  "*Here is your opportunity to find your dream home! Properties are renting quickly; we encourage you to apply before viewing, to be first in line. To increase your chances of getting approved, be sure to gather and submit all your documentation at the time of your application. If you have any questions, please don't hesitate to call our office for assistance.*"  No offense, but Zillow counts days on market...42 days and 11 contacts doesn't say this house is renting quickly.

How come they didn't write a unique description of your home? At minimum I would expect a few sentences highlighting the benefits of your home.  I know your community and they could do a better job of highlighting the GYM, Pool, and proximity to the Villa Sport as well as the restaurants in Cedar Hills. There should be photos for these items...missed opportunity!

In addition, since there is no yard and we are in the off season, I would expect this to rent for $2,500 to $2,550.  Currently they are priced at $2,699.  (You may have gotten that $2,700 in summer when families were moving, but not now). $2,500 rented for 12 months is $30,000 gross (rented fast). $2,700 rented for 10 months (factoring in your lost time on the market) in the same 12 month period is $27,000.

I hope that helps!
Melissa

Hi Shaozeng,

Send me a private message, and I can send you several local recommendations for property managers.

Melissa

Hello @Jack Marrs,

Estimating rent on a furnished unit can be done in many places.  Start with the Bigger Pockets Tools (they may limit you to 5 analyses unless you pay for a pro account).
-Airbnb

-Rent Estimator

You should also look at the listings for your competitors on Airbnb, VRBO, Vacasa, and Furnished Finder. Don't just look at the photos; you must read the descriptions to make sure you have comparable amenities. Then open their calendars to check availability.  Someone who doesn't have any availability for the next three months is getting bookings with their pricing. Someone who has an open calendar has priced incorrectly.

Other links to try:

Short term rentals: https://www.airdna.co/

Mid Term rentals: https://www.furnishedfinder.com/stats

Long Term rentals: https://www.rentometer.com/

If you are using a property manager to deal with your furnished rental (Short or Mid Term), then you are most likely paying the property management fees in the range of 20-30% in the Portland metro market.  Property management for unfurnished long term rentals runs 8-10% (plus 1/2 a months rent to advertise and execute the lease).

Cheers,
Melissa