All Forum Posts by: Melissa Hartvigsen

Hello @Rachel House,

Go UMass, my husband is an alum! :)  I practice real estate on the west coast, but think my advice will still be relevant for you.  

Host open houses for other agents' listings at your office, this is a great place to meet both potential sellers and buyers. It does not require money.  Most open houses are held on the weekends, so it will be an ideal match for when you are available.

It takes some practice to talk to prospective clients, and get their contact information. Is there is a senior agent in your office who is a rock star at getting leads through open houses? If so, ask if you can shadow an open house or two before starting off on your own. That way you don't have to learn by trial and error.

If you are going to be too busy to complete the transaction once you have secured a client, you should partner with another agent from your office and share the commission. That way you can lean on their expertise, and their availability while you are in class.

Best wishes for success!
Melissa

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Hello @Kalyan Kondapally, 

Connecting with other investors: A great place to start connecting with other local investors is here on Bigger Pockets, and by attending the local NW REIA events; some events are free so you can check them out before you pay to join. I recommend visiting the Investor Round Table and the Investors Forum. They are held regularly, so if you miss it this month you can go next month. You can see the calendar of events here: https://www.northwestreia.com/events

A note on financing: Multifamily units with 4 or fewer properties are treated differently from a lending perspective than 5 units and above. 4 or fewer are considered "residential" by lenders can use traditional financing (i.e. 30 year repayment terms, and down payments at 25% for multi-units for investors, or 15% on a single family home). 5 or more units is considered "commercial" by lenders and the loan terms are shorter with higher down payment requirements. 

Where to find multi family properties: Occasionally you will see some multifamily units listed on the MLS, so those will also show up on Redfin, Realtor.com, and Zillow. For properties 5 units and above, these often trade off market. The larger commercial brokers usually offer listings to existing clients first. Then, if no one in the existing client pool is looking to acquire a property, it may get posted on Loopnet.

An alternative: If you have trouble locating someone to partner with, or come up with such a large down payment, you may want to consider building your portfolio by house hacking. I did that, and currently live in Beaverton.  I started with a single condo, and ended up moving 5 times in 7 years. Later, I did two 1031 exchanges to use my equity and trade up from condos acquire more units.

The "hack" is you can put less money down than an investor (can be as little as 3%) and get better interest rates.  It does not mean that you cash flow right away.  You have to commit to living in the property for at least a year before renting it out in its entirety, though you can have roommates to help offset your mortgage payments while you live in the property.  Another benefit to house hacking is that you may be eligible for home buyer incentives, investors do not get this option. In Beaverton there is a $25,000 down payment assistance program for current residents. Send me a PM if you are interested in learning more about the down payment assistance and I can connect you with a lender who offers it.

Good luck and best wishes for your investment journey!
Melissa

Hi Dustin Le,

Kurt Lane @ Chroma PM is correct that House Bill 2001 affects the late rent notices and terminations.

As a somewhat new landlord without a lot of experience, I must stress the importance of making sure you do this correctly. At this point, if you have not already been in contact with an attorney, you should be. At the very least if you don't hire an attorney, consider hiring a property manager familiar with all of the Portland rules to help you navigate this.

The gist of the new bill is extending COVID protections around evictions. It requires notification of tenant rights for seeking rental assistance, and if your rental property has financing then the termination date must be 30 days after service of the 30-datermination notice for non-payment of rent (if you own your property free and clear, you can use the 10-day termination form).

These should only be used if the tenants are behind on the current month's rent. If they owe more than a single month's rent, you should have an attorney help you draft a 30-day termination notice to cover all amounts due.

Additionally in the City of Portland requires you to serve a completed PHB Rental History Form and ledger with all termination notices of any kind. https://www.portland.gov/phb/rental-services/documents/form-3001087f-rental-history/download

I also use the forms from Multifamily NW like Kurt recommended. You can read this article about HB 2001 at the Oregon State Bar:

https://www.osbar.org/public/legalinfo/landlordtenant.html

On that page, you can open the link to the full enrolled text of the bill.

Best regards,
Melissa

Hello @Federico Costa,

I built my portfolio by house hacking (holding for a while, and later using a 1031 exchange to acquire more units) here in the Portland Metro.  I have short term, mid term, and long term rentals. I love seeing others succeed, and in our market purchasing a multifamily property as a brand new investor can be challenging due to the up front cash required. It is substantially more than if you live in the property.

For example: if you buy a house in our market using the median home price of $550,000 as an investor the minimum down payment of 15% is $82,500, versus an owner occupier can do as little as 3% down payment $16,500.  In addition to your down payment you also need to budget for 1-2% of the price for closing costs. Investors also have higher interest rates.

For those reasons, you might be a great candidate for house hacking. Either you buy a single family home and rent out to roommates or rent out rooms on Airbnb while you live there (you only have to do this for a year), or you purchase a duplex and have part of your mortgage subsidized by the tenant living on the other side.

Another benefit to house hacking is that you may be eligible for one of the many first-time home buyer incentives available to Oregon residents with can offer you (depending on the program) money for the down payment, closing costs, or a below market interest rate. None of these programs are available for investors. Here are just a couple of examples:

Gresham Welcome Home - offers up to $40K in down payment assistance

Oregon Bond w/ below market interest rate or cash grant for closing costs.
Rate Advantage 6.125%, Cash Advantage 6.75% (also gives up to 3% of purchase price for closing costs). Normal rates on Friday were 6.98% without the Oregon Bond.

Our local NW REIA has meetups for investors, and even if you don't join as a member you can attend some events for free. I recommend the "roundtable" so you can meet with other experienced investors. https://www.northwestreia.com/events

Send me a PM if you are interested in being connected with a lender that talk to you about first time home buyer programs.  Also, if you wanted to meet up for coffee I can share some local market insights.

Melissa

Hello @Kyle Kamna,

I would like to give you some feedback on your calculator but need more context.

For example, to see if you are on track with your ARV, I would need to know:
How many bedrooms and bathrooms are there now?
What is the square footage?
Do you plan to add any bedrooms/bathrooms?
Are you remodeling the kitchen and bathroom(s)?
Are you doing this on the cheap? Ex for a kitchen remodel are you going to paint cabinets and get new appliances, or mid range like refacing cabinets, replacing light fixtures and hardware, and buying new?
What are projects are you anticipating for the $75,000?

It looks like you completely skipped the selling costs. I think you should also factor agent costs for when you sell your flip as well as closing costs.  It is customary in our market for the seller to pay the commission for the listing agent as well as the buyer's agent. In our market the going rate ranges between 5% and 5.5%. Closings costs covers property taxes, title and escrow fees, and are typically 1-2% of the sale price.

-Melissa

Hello @Tyler Crist,

In my market you can call the local utility provider and give them the property address. They won't be able to give you specifics, but can usually tell you what a bill is in high season versus low season. Other utility providers might give you an average bill amount. 

A quitclaim deed is not the most secure way to pass title because it does not come with any guarantee of the seller's ownership status like a general deed would. Quitclaim is usually used to transfer property ownership within a family. An example is when an elderly parent adds a child to title, or a couple that is divorced removing the person who moved out from title. Another reason someone might use a quitclaim deed is to correct a typo on the title.

Cheers,

Melissa

Hello @Eric Thompson,

For my personal portfolio (5 units spread out over 3 properties) I use apartments.com. The expense and income tracking features are user friendly and intuitive so the learning curve is less than learning Buildum. (I used that professionally and it was clunky). Since you have a property manager you won't need the advertising and tenant screening portions.

You can manually enter payments from the tenants, and manually enter your expenses. For income statements where you can customize the dates or select a specific tax year. I love the phone app for expenses, I just take a photo of the receipt and upload it right away. The expense report are easy to filter: by category of expense, or you can also isolate expenses by the property type. That way you can choose to see all of your expenses across all properties, or just specific properties. 

Since you are paying a property manager it seems like a lot of extra work for you to manually enter everything.  Have you tried asking your PM for additional information so you get what you want without you having to use Buildium's portal?

If they can't give you what you want, would you consider hiring another PM?  Going this route, I would recommend asking the prospective PM to show you a demo of their platform and the reports they provide to their clients.

Cheers,

Melissa

Hello @Michael Valle,

In my market the average cost for a detached ADU including permitting and bringing in utilities runs from $220,000 to $240,000. It is about $30,000 cheaper on an attached ADU.

There are a few local builders that do pre-fab ADUs and deliver in the Pacific NW. I did a consult with Wolf Industries. Wolf is based out of Battle Ground WA, and serve the whole west coast. They deal with the permitting offices regularly and were able to accurately estimate those costs for me. The consultation was helpful for me to properly calculate the costs for a detached ADU.

If I were in your shoes, I would evaluate each of your ADUs (the attached, and detached) like you would any other investment property. BP has the rental property calculator where you can factor in your loan cost, rent, expected income, etc. Then you can see when you would break even, and your future potential earnings based on the time frame that you plan to hold the property once your ADU builds are complete.

Cheers,
Melissa

Hello @Troy Welch,

1031 exchanges in the tax code are designed for tax deferral on investment properties though a like-kind exchange, and not personal residences. Generally (assuming the assets are eligible) the exchange must be set up prior to acquiring the new property and disposing of the old property in order to qualify for any exemption. The IRS does not let you do this after the fact.

Gains from the sale of your personal residence may be eligible for a capital gains tax exemption up to $250,000, or $500,000 if the property is jointly owned with your spouse and you file taxes jointly. The IRS has length of ownership rules for meeting this exemption. You can read more here https://www.irs.gov/taxtopics/tc701 and should consult with a CPA if you have further questions. 

Cheers,
Melissa