All Forum Posts by: Mike Nuss

Thanks @Randy Johnston for the mention. @Clare B. come check out some RareBird meetings. You'll get inspired and meet some awesome like minded people willing to share and grow together. My office is in Bridgeport so count me in on the WA Square coffee club!!

@Melissa Culpepper pointed to the very reason why my investment partner and I decided against purchasing a few properties for vacation rentals. It is a business in and of itself. Design and staging has to be right. Marketing has to be excellent. Management is a daily process rather than a passive investment like long term rentals. I have a friend that operates 16 condo units in one Nashville building as short term rentals. Her ownership point was around 12 rentals in order to hire employees and reduce her work load. She still spends a large amount of time running the business (probably mostly because of her passion for it). Running this type of an investment will take time away from niches already created so I see it as a better strategy for less active investors (house hackers fit in my opinion) with other types of income or someone so passionate for the industry that they don't mind the job they create.

@K. Marie Poe also nailed it.  Regulation should be a big concern. I believe regulation for Portland is and has been growing since AirBnB announced moving into the market place. AirBnB has been successfully lobbying for changes, but those changes are mostly around getting their income base. Along with the municipalities getting their tax revenue. Rather than short term rentals being a mostly bootleg industry, it is now becoming an out in the open industry. That should result in more inspections of properties and more policing of the industry. The recent regulations didn't change much from an owner's legal parameters. Vacation rentals were already allowed with the right permitting. The one change that would've helped, didn't come. Residential zoned property can still only be legally operated in owner occupied residences on a room by room basis. Owners operating VR out of their residentially zoned non owner occupied rentals are breaking the law. More policing will result in more fines, which would kill the only reason to run them in the first place....income.

Putting this into a perspective of supply and demand is a great way to look at this topic. Demand for the product is strong and has been since our founding forefathers. That won't change. The changes in regulation have been helping it grow in popularity and use (or more demand). As pot laws become less and less strict and more pro than con, the demand will continue to grow. Increasing demand creates value. The more demand increases, the more it will be "okay" to consume. That is going to create even more demand. 

The big rush that I posted about was largely due to a large push of demand and a limited amount of supply in terms of retail and warehouse space. Pot shops are competing in a tough retail market and they simply had to get their licenses in place for their dispensaries to have a chance. That suggests that that type of storefront demand most likely won't be sustainable. 

However, Supply is highly regulated in Portland in terms of distance from schools and distance from shops being a local requirement. That right there limits the amount of possible supply in the dispensary market. It won't be anything like the coffee market where coffee shops literally operate out of basements and food carts (liquor stores are a good comparison). On top of government regulation you're going to have some property owners that simply will not condone nor lease to a dispensary. Other owners won't because they aren't resourceful enough to find an insurance company willing to insure such a storefront. 

The warehouse market has even less supply (Portland has a small fraction of the warehouse space of Seattle, especially industrial space) so the rapid increase in demand has affected that market even more. Unlike other cities Portland simply is not going to build more warehouse space. The industrial land market is probably the tightest market in Portland. There simply isn't enough industrial land suitable for corporate warehouse space. Smart grow operators may be looking to the smaller, less util land, in order to build more, but I don't for see any large contribution on the warehouse supply side of the equation through new construction. 

One thing to consider on the supply side is that change in law has slowly allowed supply to become easier and more legal. This has already resulted in retail pot costs being cut roughly in half across the Portland market. The increase in supply and cost to create the supply has already been absorbed in the market place to some extent. Sure more dispensaries will come around and more growers are going to get up and running. But there becomes a point when shops simply won't operate if there isn't any profit. 

Demand is going to stay and most likely will increase. Right now supply is chasing that demand and at some point an equilibrium will take place with a leveling of prices and profit margins. Those prices and margins may have already been met or they may go lower. 

Most of Oregon hasn't allowed medical dispensaries yet because the state gave the cities the ability to call for a one year moratorium last April. Only a handful (6 I think) of cities allowed implementation right off the bat with Portland, Eugene and Ashland leading the way (no surprise with those 3). The other cities in Oregon are still figuring out how to correctly regulate the dispensaries and grow sites via zoning laws and regulations. That will eventually off set some demand with more supply, which would lead to lower prices and less affect. 

The supply side of the equation is still figuring itself out and responding to the large change in demand over the past few years. No one has a crystal ball and can see what is going to happen. However, opportunity to create more income has presented itself. Some are going to take advantage, some already are and some will continue to discount it. None the less, legalization has already affected the Portland market and it has been measurable by the property owners participating in the supply side of the industry. 

@Matt R. it sounds as if Northern Cali is going more regulated rather than less regulated. There is so much rural dense land that it may not be a big issue in Northern Cali, but I would imagine a ban on outdoor grow operations would lead to more demand for warehouse space. Portland is such a different place that regulation is going to and has already limited supply. So I think there is will be longer lasting affect on Real Estate here, than you have seen in your area. 

Wow, this got really long, sorry for the long post. That's what happens when I start thinking long and hard about supply and demand. The sad brain of an entrepreneur....  

This thread has had a lot of good comments. It only really affects your cash on cash return. Your post makes it sound like the one bedroom units were legally built and are currently recognized by the tax roll. The appraiser did not include them in the value, but they obviously bring value you to you because they bring you an income stream. The thing to ask yourself is do those units bring value to other buyers in the market place. Does this property conform to the neighborhood. Otherwise there are no real concerns here. Appraisers are human. They have a set of professional practice standard many people do not understand. Also, their clients can also affect what their end results are.

I've been an appraiser for 17 years. My appraiser mind fights my investor mind all the time. I would say that the investor mind has won most of the time and I think a lot of that has to do with the appraiser typically looking backwards or with a narrow perspective. 

@Matt R. 

Portland saw a large run on medical retail space last February as the first state required registration date was on the horizon. Vendors were fighting over each other cash in fist desperately trying to lease an address they could put on their application forms. It didn't matter when they would be allowed to open, it was all about obtaining a physical address meeting locational parameters and being as close to the first application in line as possible. Property owners saw increased demand, rent and values. As well as longer leases with cash owners typically prepaying one to five years at consummation of lease. 

I don't know how small markets like Brookings will be affected, but Portland has green cross (the medical marijuana sign) signs all over the place. There will be a very large revenue stream created once recreational laws are implemented in Portland. Property owners, shop owners, shop employees, electricians, warehouse owners, warehouse managers, security companies (both guarded and monitored), carpenters and HVAC companies are just a few industries that will benefit from the increased demand. 

@Keith K. send me your email address and I can put you on our notification list for meetings and events, if you would like. 

I do get more specific. I discuss the the property (mention certain key features) and what about it brings interest. This way they know I've already seen the property from the street and have an idea of what it's like. I also state that I did walk by. 

Hey @Keith K. great start. Boots on the Street is my favorite investment activity. Taking the time to invest in street knowledge is critical in my opinion. I do many things when out in the neighborhoods. First you're always hunting for properties that show signs of opportunity. I'm also looking for activity in the neighborhoods. See a rehab? Pull up Portlandmaps, find who bought it, how much they paid, what permits are they pulling and keep tabs on the project. Next time your in the neighborhood take a look at the marketing of the project. What did they list at? Sell at? DOM? etc.

Call all the FSBO signs you see. Go in all the open houses you can. Pay attention to list prices in your neighborhood. Keep a redfin app or something similar on your phone. Get to know the bottom range of value and the top range of value in your neighborhoods. Call every for rent sign to get an idea of condition and interest in the unit. I talk to other landlords all the time. It's a great way to stay connected to the community. Don't be afraid to knock on doors and start conversations with people in the neighborhood.

As for info on the homes....I'm a big proponent of knowing the history of your markets. Pay close attention to year built. You'll see housing styles change with the change in past economies. Soon you'll know what era built a home is just by looking at the outside.

You said you're cold calling. I would also start a direct mailing campaign. Direct mail works in Portland. Our best purchases have come from direct mail.

Side note, what neighborhood are you walking? Portland is a fun city to investigate. 

@Jeff Wallenius thank you!!! We do have an email list, send me your email and I'll put you on it. Look forward to meeting you in person. 

All REO's are different. This statement "She said that he would accept" leads me to think that the seller is not a normal bank. 

Could this be a private financier that had to foreclose on his client? Most likely the home is not financeable and that's why "he" will not accept anything other than cash or rehab loan. 

Look the property up on portlandmaps.com. Click on the assessor tab. That page will show you the owner of record (which may or may not be right given the time frame of the foreclosure) and their mailing address. 

If it is a private fancier you may be able to make an offer with seller carry (expect expensive terms though).