All Forum Posts by: Oscar Cardenas

@Caleb Webster Sure thing! Purchased straight off the MLS after its 2nd sale fail. I loved the town, but this one in particular was in a very good spot. It is in a secluded dead end street 2 blocks from active downtown.

Duplex with 2bed 1 bath 960 sq ft units with a large office in each unit. semi renovated.

listed at $289,900 multiple offers in 2 days. Think it was 3-4 offers but I cant remember. I won at 315k with 9k seller paid closing on the 3rd day listed. After doing my own inspection and found dry rot even though there was an inspection done before that did not call it out, I negotiated it down to $293,400 and $13,500 in seller paid closing costs and switched it to an FHA 203k rehab loan.

Thought I would take advantage and do some value add so I included a conversion from office to bedrooms (just a closet and smoke alarm), Ductless AC, an extension of the carport to allow 2 large cars each unit, fenced yards, paint, cabinet paint, Shower tiles, ect. Total renovation was 60k and approx 7k in fees associated with the 203k loan. so I currently owe about 360k. Appraisal came in at 395k after renovation.

I now rent the other side for $1515 with great credit, income, and stability. I have a $2160 PITI.

Summary,

Purchase price: $293,400 with $13,500 seller paid closing.

Renovation budget: 60k renovation and ~7k fees.

Total debt: ~$360k owed with a total of ~$35k equity.

Out of Pocket: 3.5% down payment but I used my realtor commission as a down payment. So my total all in was approx $6.5k in the difference.

Gross Income: ~$3030/month when I move out.

Expenses: ~$500/month considering vacancy rate, capex, and maintenance . I self manage. $2160/month PITI.

Cash Flow: $370/month, which makes that $4440/year so that means a this is around a 68% return on my initial investment of ~6.5k. Not counting appreciation, debt paydown, tax depreciation, yearly rent increases, ect. That would make the IRR huge lol.

Has a everything new from the floors, to the AC, to the toilets, ect so I shouldn't see a capital expense for a while. Alot of these are rough numbers, but pretty close.

@Jacob Lamar

I have 70k in student loans. I would say it depends on your interest rate per student loan. You can check each semesters loan and pay each one individually. I would get rid of any of the loans in the 5%+ range first to reduce your overhead with the best bang for your buck.

Then you can be abit riskier and invest. Not sure why so many on here are so anti debt, but when you invest in rentals, as long as your monthly cash flow while considering maintenance and capex and property management, is a better return on investment than the interest you are paying on your student debt then you are fine. Especially considering appreciation, debt pay down, tax depreciation, and rent increases will be bringing your net worth higher in the background.

Just make sure you don’t just add the cash flow to your monthly income for spending. Save it to invest more or reduce debt.

I did evictions and foreclosures in a law office during the crash so I know what over leveraging can do, but as long as you did your investments correctly you should be fine. Having too much debt shouldn’t be scary if it makes you good secure money.

Jeez lets hope that doesn't pass, doubt it will. Crazy things get proposed all the time so I wait to get mad until it gets close to passing haha.

Hello everyone! My name is Oscar Cardenas and I am an investor and Realtor in Oregon. I currently own a duplex in Silverton, OR and am in the process of acquiring my next BRRRR in Albany, OR. I am here to introduce myself and give some nice current info that hasn't seemed to hit a lot of people yet.

First a bit of background. I have been listening to the podcast for a while but only recently started coming to the site.

I started my Real Estate journey straight out of High School right as the crash was hitting hard in 2007 with my first job being an administrative assistant in a real estate law office mostly handling evictions and collections. This being in San Bernardino, CA which declared bankruptcy. At the time this small office was handling 1000 evictions a month... fun... even had a guy come up to the office with a shotgun once.

after 3 years of working there I started College and was majoring to get an associates in Real Estate. A semester before finishing I switched to Robotics Engineering thinking I could get a nice wage as an engineer and invest on the side. 2 semesters before getting my B.S in Mechatronics in Cal State Chico, I got forced out of school due to financial aid being cut because undocumented students had a time limit of 2 years with financial aid that I did not know about in California. I had a 3.6 GPA at the time. 

Having my future career taken away, I started car washing to support my wife through school while she got her Masters in Electrical Engineering and B.S in Physics. She graduated a year later and we moved to Oregon in Jan 2018.

She now has a good job and I got my realtors license about a week and a half after starting the course since I knew so much about Real Estate law from my previous job and had studied Real Estate during my engineering school days. So I became a Realtor approx a year and a half ago. About 6 months ago I became a US citizen. About 4 months ago we acquired our first Duplex in Silverton, OR. about 1 month ago I got braces to finally fix my teeth (important since I come from bad poverty). I am in the process of getting my second rental. I have now specialized in being an agent for investors and hope to work with you all!

NOW FOR THE NEW INFO!! Tips.

-Oregon coast is very affordable. Partially due to a lot of the coast being in a tsunami zone waiting for "the big one". Oregon had laws restricting the building of certain government facilities like fire stations, schools, ect in tsunami zones. Some lenders had trouble lending there since some insurance had trouble insuring there. Well, as of Juneish 2019 Oregon has opened op construction in Tsunami zones! The moment that was announced Oregon State University announced an expansion of their facility in Newport or. a 60 million dollar facility! Great potential for appreciation on the Oregon coast! Include me in any deals you have here haha.

- Oregon recently (julyish 2019) passed a law to allow duplexes to be built in Residential zoning of towns with over 10k people. Heck, I dont know for sure but I hear Portland will be allowing 4plexes as well. Salem only recently started allowing ADUs be built and they were paying for utility hookups for a limited time! think that time is over thouhg. I dont know what affect this new duplex law will have on things, but I am excited to see!

-National Association of Realtors recently passed rules (about a month or two ago) forcing realtors to list on the MLS any pocket listings 1 day after advertising it (to like an email list, a sign, ect). This means we will most likely not see nearly as many pocket listings where a realtor can provide off market deals. I predict this means you need to have a closer relationship with your realtors now to get off market deals. I don't know if they consider calling past investor clients about the pocket listing as "advertisement" so we will see. I don't believe Realtors should be holding onto pocket listings anyway since that has so much potential for breaking fiduciary duties going after both commissions unless the seller strictly states they want to stay off the MLS.

- Now about specific cities. I invested in Silverton, OR because I believe it is now very desirable and will be even more later. This city has access to things that are Anchors and provide tons of value. Oregon Gardens (largest botanical garden in the Salem area) and Silver Falls (the "crown Jewel" of Oregon).

-Towns to look out for. Independence, OR is one for sure. Independence has an attached city Monmouth. There is a very long history with the two. Monmouth is a college town and was a dry town until very recently. Independence was essentially the place to get booze and do crimes for the longest time lol. Very recently though, both cities have started redoing infrastructure. Independence started growing and the Downtown will essentially be twice its current size in the next 3-5 years. This was my first choice in investments, but sadly no deals popped up since Independence and Monmouth rentals are snatched up the second they appear.

Anyway, I can go on forever. Nice to meet you all and hope to meet some of you in real life! If you pass by Independence, my office is downtown!

Check home values. Ask for a CMA from a realtor and try to get an After Repair Value from them as well.

Break down your repairs list and get quotes if you are newer to determine your rehab cost.

Call a property manager to give you info about the rental market and how much they think your property will rent for. 

Once you have those numbers and post them here, we might be able to help a bit better with strategies.

Based on what you are saying about a virtual model I am assuming you are trying to wholesale? That depends on your negotiation skills for off market deals, EMD can be anything. For MLS deals you have to ask an agent of the area, my area tends to be $1k EMD minimum.

If you come across low EMD, be happy. Also, be careful with actually knowing the rules since you didnt know about EMD. Been hearing about uneducated wholesalers starting to get sued. Wholesalers work in the gray areas of legality so that means you should know what your limits are before wasting a distressed sellers time or an investors non refundable EMD as has been more common now.

Give specific parameters. We always have investors and wholesalers thinking they can get on top of a Realtor's list with a "keep an eye out for good deals". Investors are generally a lot more work for a lot less pay so making it easier for them helps. 

Stay in contact. The more you stay in contact, the more likely they are to think about you when a deal pops up.

Be friendly. Realtors are people too so a friendly face and voice tends to put you straight to the top.

Be wary Investors, not many people know this but Pocket Listings will soon be a lot more rare due to the NAR recently passing a few rules forcing realtors to put a pre listing on the MLS 1 day after advertising (to groups, email lists, signs, ect)

Now more than ever a 1 on 1 relationship will be important since I believe many realtors will start to only give info about a pocket listing if they are asked directly to avoid starting the 1 day rule.

Well, a few terms need correcting.

Cap Ex = Capital expenditures. That is a term to signify large expenses like a roof replacement, furnace, ect.

I believe you mean Cash Flow. Cash Flow is whats left after paying PITI , expenses (like utilities and HOA), vacancy rate, cap ex, prop management.

As for where you should invest, both potential appreciation and cash flow are important. Some investors put more importance into one than the other. In your case you are comparing a townhouse to a duplex which will just naturally have different cash flow numbers even in the same area. Try speaking to a local realtor to see about the market in the small town. Sometimes it will surprise you how much small towns appreciate.

Welcome!

If they are on here I would hope so lol. Then again, I have met many non investor realtors at meetups for local REIA clubs. You have a much higher likely-hood of meeting investment knowledgeable agents here but I would still vet any agents you call and ask if they have done any personal deals and what experience they have working with investors.