All Forum Posts by: Oscar Cardenas

ah, you are bringing up the small landlord exception for 60 day no cause. That is definitely proof you do these house hacks as most people don't know about any of these laws. That exception was my initial go to but after thinking carefully the law specifically states 

"Landlords who live on the same property as their tenant (owner occupied, 2 units or less) may still use a nocause eviction at any time."

Well, these buyers are trying to terminate a tenant on a property they do not currently live on so the exception seems to be void. After I asked an attorney he agreed. Lawmakers might have meant something else but that is how its worded and with the punishment for messing up being so harsh I stick to the 90 day buyer move in.

Still though, you brought up an exception that I have almost completely forgot about but is actually fixing another problem with Oregon small multifamily that I didn't mention. I am sure you noticed that most rentals here are very much under market rent, that exception gives a househacker the opportunity to evict a low market rent tenant which a regular investor cant.

As for your comment about small multifamily going thousands into the red I completely agree. It seems to have started just a few months ago that small multi here is appreciating at close to 10k/month for some strange reason. I went from seeing 270k for an average duplex to 320+ in a matter of about 3 months. At this point, I cringe when a realtor puts "Cash flowing" into the description when even if its brought to market rents, its in the red after expenses lol.

Definitely avoiding Portland lol. That 90day termination is now Oregon wide sadly. Damn Portland spreading their crazy laws!

Hello Oregon BP,

I am an agent in the Salem surrounding cities and tend to get a lot of house hacking clients. The issue is that not many agents do these in the and they all think the process is easier than it actually is. Particularly starting 2019 it became more complicated.

Here are the current issues with being competitive at buying small multifamily for house hacks in Oregon right now.

-FHA is usually the only choice as it sticks to 3.5% down while conv jumps to 15% for most lenders on a small multi. Although I know a portfolio lender willing to do a 10%.

-My biggest problem is that they have to terminate a tenant during the transaction. Due to the 2019 landlord/tenant laws, tenants living for over a year must be given a 90 day termination notice for buyer move in. The termination cannot be started after closing because owner occupied loans require a 60 day move in. This makes house hackers ALOT less competitive when buying... not only do we fight vs cash buyers but now a basic buyer is more competitive. The extended closing date doesn't seem to bother sellers much, but the starting of a termination does. I have previously suggested starting termination after appraisal, then closing 35 days later so the sellers don't lose a tenant to a random buyer but that still deters sellers from accepting.

-The Buyers are generally newbies and tend to be less educated in the purposes of the different investment techniques. It takes a long time before they realize living in one side of a duplex with 3% down payment is not even going to get close to living for free. I see the purpose of a househack as an opportunity to grab an investment property for an extremely small amount compared to what a regular investor would pay. Just got to be careful that it cash flows on paper... that's the other issue, newbies think it should cash flow WHILE they live in one side. Most buyers so far are avoiding rent by the room single family homes so that is why I am specifying multifamily.

Anyway, the FHA issue isn't too much of a problem for me considering the availability of escrow holdbacks for repairs and whatnot. The newbiness issue just takes a while for them to see it with their own eyes to start trusting more.

The main issue is how to be competitive with Oregon's 90 day termination in relation with the Owner occupant loan 60 day move in rule. 

Anyone figure a way around this? 

One of your main issues is as you have mentioned. Finding good build-able lots in the right zones is tough work. I would suggest reading up local zoning law exceptions. Like in my county in Oregon, any residential corner lot can have multifamily.

Second thing is that loan programs differ between 1 unit and 2-4 unit and 5+ unit. Be sure to get that cleared up since at 5 units and up its considered commercial property and has vastly different loans. at 2-4 unit you can still get residential loans but down payment might increase.

Third thing is that clear up how much a new build would cost. Different contractors have vastly different estimates.

Other than that the plan sounds reasonable. New multifamily builds do seem to be a good option considering how much small multifamily properties cost.

Oh man lol. Highly recommend hitting up an attorney on this one because its so specific.

Fairly certain the attorney will tell you that stolen/sold are one in the same thing and therefore its still a civil matter but like I said, Check with an attorney. 

I would also recommend finding a local lender. 

Most likely what you are coming across is a section seeing where you want to refinance. I noticed a lot of these apps do a very terrible job separating whether you want to refi or buy. Many of them actually use the same online application program lol.

Oh man, great story.

Hey Jimmy, its me haha. Closing costs vary based on timing of within the month and the year because its mostly based off of property taxes and interest pre paid. I would suggest when you find a good property to buy that you have your lender calculate approx closing costs then have the seller pay those closing costs so you have more reserves when you own it. 

Your other costs would be approx $500-600 for a duplex property inspection.

approx $900-1200 for an duplex appraisal. some lender add that to closing costs but most will charge ahead of closing to make sure they don't lose if you back out.

As others have mentioned, 75% of the current rents in the units you will NOT be living in the 2-4 unit multifamily you are trying to purchase should get included to offset DTI.

Second comment might be a great idea.

"You can take out a 401k loan (doesn't count against your DTI) and pay off another loan (thus exchanging loans, but 401k loan doesn't count against DTI). "

Now, I would be very careful about doing a lot of these ideas. DTI requirements are there for a reason. Have great reserves because you hacking past DTI requirements pretty much means you cannot afford the place you are buying in case there are any issues like a bad tenant who doesn't want to leave.

Doesn't hurt to start to get connected with a few different types of lenders to know what they need.

These are hard to find because many agents don't even know what it is but try asking around for a portfolio lender. 

Check with a local credit union.

Connect with a Mortgage Banker

Lastly connect with a Mortgage Broker

Portfolio lenders keep the loans given out so they tend to have unique programs and access to an underwriter.

Mortgage bankers do traditional loans that anyone can access but mortgage bankers have access to an in house underwriter since they sell the loan after.
Mortgage brokers simply broker the loan so their company never becomes the owner. They do not have direct access to underwriters but can potentially get best rates.

This task is hard to do but its well worth knowing one of each. 

Try asking if they are a portfolio lender. if not then do they have an in house underwriter?