All Forum Posts by: Melissa Hartvigsen

Quote from @Alexander Ohmes:

Hi BP-

I am going through inspections on a duplex in Portland, OR to purchase as a house hack. I need to get a quote from a plumber regarding a leak in the crawl space. Does anyone have a reliable plumber in Portland, OR they could recommend to me?

Appreciate it!

Hi Alexander,

I am in your local market in Portland Oregon.  The going rate is usually $200 to $300 an hour plus parts. Many local plumbers are so busy they will not make a visit for a quote, but will tell you the hourly rate.

I have used all of the plumbers below on client’s transactions.

Power Plumbing 
Apollo Plumbing 
Pro Drain 
MP Plumbing 

I also have an independent plumber who used to work for one of the big companies.

Please send me a private message if you would like phone numbers.

Cheers,
Melissa

Quote from @Isaac Hemingway:

I'm 18 years old, just got my Bachelor's Degree in Business (I graduated from High School at 15), have no credit score, 20K saved up, a full-time job, and am looking to buy a home for 200K or less (I live in an area conducive to this). 

How quickly can someone as young as me build a credit score into the 700s starting from a non-existent credit score?

Or, would I be better off getting a manually underwritten mortgage that requires no credit score (from a company like Churchhill mortgage)? 

Thanks! 

The fastest 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. This imports their payment history onto your credit profile, which will give you a score right away.

You could also have someone cosign the loan for you. Your score will start building up once you have a mortgage, and after about six months of making payments, you’ll have a decent score. The other benefit to having the cosigner is it will help you meet the income requirements for the loan. Most banks are going to require that you have two years of steady payment history on the job before giving you a loan.

There is a service called Experian Boost that can help build your credit history using, cell phone payments, streaming services, and your other bills.

If none of the above are available to you, the next strategy may take six months to a year.

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.

A few things to keep in mind:

The credit bureaus algorithm isn’t straightforward so no one can tell you that you’ll have a 700 score in X amount of time.

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.

Best wishes,

Melissa

Hello @Sean Yuan,

You should start by going to the City and talking to the Building Department. They will tell you what is allowed, and how much the permitting cost will be to convert it to an ADU. If the City says it feasible, then you should run numbers.

Are you doing the work yourself? If so, make sure you over budget for everything by 20%. Most people dramatically underestimate their project costs.

If you aren't doing the work yourself and will be hiring a builder/arichtect, then factor those costs in as well and see if your plan still pencils.

I would love to see an update if you move forward with the project. :)

Cheers,

Melissa

Hello @Brandon Allenczy,

Congrats on closing 5 deals your first year!  When I was newly licensed, I built my business off of partnering with loan officers to teach first time home buyer classes, budgeting classes, and 1st time investor classes (I already owned rentals when I became a realtor).  I was doing at least one class a month alternating the four lenders that I worked with for each class.  That helped me build up a solid pipeline of home buyers (ready to buy in 3 months to a year). After the first year, the lenders started sending me business regularly.

Those relationships I developed the first year continue to pay off, and I still receive referrals from those lenders. Of course I send them clients too. I just did a client appreciation event this week with one of the lenders. We rented out a movie theater, and treated our clients to dinner and a movie.

On that note, stay in touch with your existing clients. They have also been a wonderful lead source for me over the years.  I am not referring to an auto-drip campaign that your CRM spams them with.  I send anniversary cards for the home purchase/sale, and two to three holiday cards a year. I also meet up with them occasionally for coffee or lunch.

There are plenty of other avenues like calling FSBOs and expired. Or creating relationships with divorce and probate attorneys. Brandon Mulrennin has a YouTube channel with tons of free scripts if this is something you need help with. He also offers paid coaching, but his videos give solid advice so I don't see the need to pay for the coaching.

Best wishes,

Melissa

You are most welcome!

Yes, you followed my response correctly.  Use the earnings from your rental to tackle the high interest rate. 

I think it is smart that you are also putting away money for retirement, so if paying the full 6k isn't feasible, you don't have to put the full 3K toward additional principal. Play with the early mortgage payoff calculator to see what different additional principal payments would do for you.

Question 2: whether to continue scaling or pay off mortgages depends on what your overall goal is.  Have you decided when you want to retire, and how much rental income you want in retirement? If not, I would start with that and work my way back from there. (Vanguard, Etrade, Fidelity, etc have retirement calculators that can help with this).

Hello @ Connor Umfleet,

Wow, you have made some great moves so far with your house hacking! Congrats!

One way to evaluate if it is a good financial decision is to see what you clear from your rentals and apply that money toward extra principal payments at your new Dundee house. I am assuming that the $6,000 a month mortgage is feasible.

I don't know if BP has an early payoff calculator for mortgages, so I used the one at bankrate.com, and the numbers you provided in your post. Approximate monthly funds to pay additional principal on the loan $3,065. You will have the New Dundee home paid off 100% in 12 years. That would save over $760,000 on the life of your loan and alleviates your concern of the higher interest without having to rely on refinancing. It is possible that rates may drop, and you can refinance at some point as well.

Of course, you also get the additional enjoyment of being happier in the new house. That I cannot qualify for you in dollars. :)
Here is how I arrived estimated extra monthly mortgage principal payment amount.

Vancouver house: $275 a month = $475 monthly take home after paying the mortgage and planning for maintenance expenses of $200 a month. (You might go several months without maintenance issues, but if a plumbing issue comes up, that could be an $800 bill, and maybe something else in the year.) 

Dundee House: $1,165 a month. = $1,815 take home after paying the mortgage. You will have more expenses at your short-term rental than your long-term rental. You will still be paying all of the utilities ($350 to $400 a month). For other expenses, I will use my Airbnb I end up replacing sheets a couple of times a year, replacement dishes (one set every year or two due to breakage), extra cleaning fees not covered by the guests or Airbnb's host guarantee, regular supply of consumables (shampoo, toilet paper, paper towels, dish soap, laundry soap, etc. Let's say those items amount to $250 a month.

Any months you don't have a maintenance expense, stash away the money until you have a reserve account for your rentals of about $30,000. That way you will have money to address big ticket items in the future as they come up such as roof, repainting, etc.

New Dundee House $1,625 a month

$2,000 a month for short term rental, less $250 a month towards utilities, less $125 a month for replacing consumables, and miscellaneous expenses that come up.

There are lots of ways for you to see if this makes sense for you, and I hope this is a good starting point!

Cheers,

Melissa

For the current roommate situation, I would keep the fridge with the dings. Save money for a while. Then, for your conversion to a mid-term rental, if you are in an "a class or b class" property, you would want to have nicer appliances. Sometimes you can find a decent used set that looks almost new. The benefit to buying brand new is that they usually come with a 1-2 year warranty, and for a small fee you can add an extended 5-year warranty.

The 4th of July holiday is a great time for finding deals on new appliances at the big box places like Home Depot and Lowes.

If you are owner occupying a duplex, you can write off expenses for the unit that you do not occupy. If you are also renting out rooms in your side of the duplex, you may be able to expense a portion of the items.  It would be best to check with your CPA on their recommendation.

Good luck!
Melissa

I owner occupy my house and rent out part of it to mid-term renters. When things need maintenance for the mid-term portion of my house, I expense that 100%. When it is a repair or expense for my whole house, like a roof replacement, I expense only a percentage of that based on the square footage of the rental space. 

Quote from @Jonathan Buelow:

How can the broker add my prospective property income to my DTI?

I have enough for a downpayment, good credit, and no debt but my income is too low. I understood I could use 75% of the other units' rent to make up for that but, I am being told I need to have 2 years of landlord. Will any lenders look past the landlord and look at the actual number?

 Hello @ Jonathan Buelow,

When a lender/broker is using rental income to help you qualify for the loan, they will either go off the existing lease amounts, or if the units are vacant, they will use the amount the appraiser determines the rental is worth. 

I have helped several clients (first time home buyers) purchase duplexes or homes with permitted ADUs. They had zero previous experience as a landlord and were able to get a loan where the lender used rental income to help them qualify.

The two year-requirement to have history as a landlord sounds like an overlay required by the lender/broker you are talking to. It is also possible that your lender is not experienced with investment purchases.  

I recommend you interview more lenders and brokers to find someone who can do the loan for you. BP has a good directory. You can also get recommendations from your local realtors who work with investors, they will have a relationship with lenders who have successfully helped other clients in your shoes.

Best wishes for success with your first investment!
Melissa

Hello @Ian Dikhtiar,

I self-manage my properties. Before becoming a realtor, I was a property manager for a number of years. 

The best advice I can give you is to get systems in place for how/where to advertise, properly screen tenants, where to get rental agreements that are legal in your state, easy ways to track expenses, how to find good contractors and vendors, etc.

You should join the local landlord association, as this will help you with the majority of systems. It should cost less than $200 a year. They will have a ton of resources to help you along the way. My association has a "monthly mentor roundtable" where the more experienced landlords give advice to newer members. We also have a hotline where people can call for advice, a directory of trusted vendors, legally compliant rental contacts for purchase, etc. It is a great value and resource.

For advertising, rent collection, and expense tracking, try to do that in one place. There are several free platforms for this, I personally use apartments.com. I advertise here and accept applications through their platform. When I approve a tenant, it is easy to convert them to a resident and set up online payments. One of my favorite features is the phone app for expense tracking; quick input and I can take photos of my receipts. At the end of the year, it is easy to download the income/expense reports for each of my properties (just one click to excel) for tax purposes.

Good luck!
Melissa

Hello @Lydia Wright,

In my market (Portland Oregon), there are several short-term rental managers that offer furnishing the rental as an a la cart item, separate from their co-hosting fees. I have seen this range from $500 to $1,000 (depending on the size of the rental).  Larger rentals take more time to set up.

Of course, you are in a different market so prices may be completely different where you live. Try contacting some STR managers in your area and do an informational interview to find out what they charge. (You may even find it on their website).

I would also think about the time and effort it will take you.  Will your fee cover the cost of transportation or any helping hands that you hire for furniture assembly?  Furnishing a 1-bedroom unit including all the shopping for $500 if it takes you 8 hours is like $62.50 an hour for one person. If takes you two workdays (16 hours) the $500 would be like $31.25 an hour for one person. 

Cheers,

Melissa