All Forum Posts by: Isaac Frost

I've been offered 50% of profits on deals in the past. When I do that math on estimated rehab and ARV, the 50% of profit doesn't even equal the 20% mark up of construction costs that I should be getting paid to run my business. So in a busy market like Portland I'm better off just taking another job with standard MU and no profit split. Always run the numbers. 50% profit split may sound good, but the numbers have to work.

As a GC myself I find there is a HUGE dichotomy on what your read as best/fair practices from the perspective of Contractors and RE investors.  If you read books and take course to learn how to run a successful remodeling or construction company, they are often the exact opposite principles of what I read in blogs on this site and others about hiring a contractor.  I do agree that for all parties a fixed price estimate is best (you need to know how to estimate properly).

To be successful as a GC, things like getting a large deposit, making sure you are always staying ahead on billing and are spending clients money and not your own, marking up all costs at least 20% to cover OH&P, billing appropriately for change orders, not to mention staying up to date on latest building methods and continuing education, are the minimum requirements to last in this business.

Of course you have to keep construction costs as low as possible when you are rehabbing a real estate project.  And maybe you will be lucky and find that rare gem of a person who does really good work and will work for peanuts.  A rare find indeed.

I have bid on some projects for other investors and find that I'm always higher than what they are used to.  My question is; if you are constantly looking for new contractors because the cheap ones are always screwing up, maybe there is a correlation there.  A fair price, shared goals and trust is what I look for in my relationships with my subcontractors.

Hello All,

We have a new property that will become our primary residence. I am building a new house on the property from a cash out refinance on two SFR rentals we have. We currently borrowed money for the property (land) with no payments until the house is complete (from family member). Upon completion I would like to owner finance with a down payment and 30 year AM with the family member.

My question is; How is this reported on title documents or credit agencies etc.? In an ideal scenario it would appear that we own this property free and clear and I could get a larger HELOC against the appraised value and leverage that cash on other rehabs/flip projects.

I would expect there are some safeguards to prevent someone from sucking too much cash out of an owner financed property and getting upside down to a bank AND private lender.  From my perspective it seems like a great way to reduce debt to credit ratio and open up some other creative financing options.

I thought it was pretty common to transfer the ownership to an LLC after obtaining the mortgage. This helps protect the owners from the tenants being able to look up their home address and personal information.

Is this not possible to do on Oregon?  What are other folks doing?  I'm guessing that most folks didn't pay cash for their rental properties. 

We are refinancing two rental houses right now in Portland and then wanted to transfer ownership to an LLC in 6 months to a year.

Thanks @Kory Thaut.  Our client is going to drive from downtown to LO today at 5 pm so she can get a taste of what the commute will be like.  I know mondays are a bit light typically.  What's to going travel time from DT to central LO these days? 40 min plus?

So we're looking for a rental property for an out of town client, but I also am looking for data to assist in purchasing our next rental house for us.  Is there anywhere that has statistics on average rental price and vacancy rates by neighborhood in Portland metro area?

Maybe some of you can chime in on your current favorite areas.  Client wants LO or other higher end neighborhood, but we are advising to stay closer in where rentals are snatched up quickly since there is a high desire for the urban experience and older neighborhoods.

When we show them places like Irvington, Alameda, Hollywood they look online and say "there was two shootings near there in the last year," which is true but they are also some of the highest desired areas in town.  I get the whole mantra of looking for the best schools, lowest crime rates (like LO or Dunthorpe) but I feel like getting long term tenants and quick turnover is harder in those areas.  Maybe I'm wrong.  That's why I'm looking for data.

Thanks much!

We locked in in May with the last lender. We ended up going with Vertex at 3.75. Paying 5k in lender fees and title in order to get a better rate. Escrow is adding about 2800. So we're at about half the cost of Umpqua bank with a lower rate and P&I savings of over $100 dollars a month. @Jessica S. Thanks!! I totally took your advice and pulled 4 other loan estimates. Umpqua wouldn't match so I bailed. Lost $700 in appraisal but saving 5k and $1300 a year in interest. You guys should come check out the 480 SF turd box we bought in Cully 😀

@Scott Radetich@Corby Goade

Thanks for the info on Consumer Direct.  Been talking to them yesterday and today.  The fees and rates are significantly better than what I was getting.  Love this community.

@Scott Radetich, Thanks.  We have 2 rentals so this may work for us.  I'll check it out.

@Jessica S. Thnks Jessica!  I was considering that strategy. Although I wanted to close fast so I could get the funds needed for this next project, it's not worth giving away that much cash. I was shocked when I got the final numbers.