All Forum Posts by: Robert E Thompson

"Can't give tax advice" disclaimer, but as I understand it, based on the fair market value or adjusted basis when the property is turned into a rental - whichever is less.  But it is not determined by what the assessed value (though this can serve as a guide, if you like).  I would just make sure whatever percentage of the property that you assign to land vs. structure is defensible - how aggressive you want to be is a bit of a judgement call.

Brian, I am a real estate broker- I live nearby you in Molalla.  I'd love to get together and chat about your plans and how the process works.  

Hi, Felix!  You're excited - that's awesome.  I would love to meet up with you and anyone else who you partner up with!  I am a broker in Oregon and Washington and would love to be a resource for you.  Sounds like perhaps you're looking for people to partner up with?  

I'll look forward to meeting you!

John, 

Jay makes a good point about attorneys.  But you do need to ensure that you have proper disclosures, etc.  I, if not in the business, would probably have an attorney review paperwork, etc. to ensure all is legitimate. But you don't necessarily need an attorney to perform the entire process - depends on your time, financial situation, and your comfort level.  

Pricing correctly is one of the biggest challenges a seller-owner faces.  You don't want to leave money on the table whether or not your buyer is identified. On the other side of the coin, If that known buyer weren't to work out and you put your house on the market as a For Sale by Owner, you would need to be careful not to overprice. Overpricing isn't as dangerous as underpricing... it just slows down finding a buyer (until you adjust the price). You'll know the price is too high if there's no interest. You can have the house appraised (expensive) or just study (diligently) the surrounding market. Brokers create a CMA (Comparative Market Analysis) to help determine appropriate pricing. I would be happy to put one together for you - there is no charge - if you would like a broker's opinion.

There is a lot of paperwork and there are a lot of moving parts (inspections, appraisals, etc.). A title company and escrow officer are great resources. Selling on your own is certainly attainable. Drop me a message or an email if you'd like me to put together a CMA.

Casey,

There are any number of variations here (as there always are, of course) and of course I don't know most of the numbers or what your mom's goals are, but...

70% LTV is almost certianly going to put her at negative cash flow once taxes and insurance are added in. And that's with no additional expenses in maintaining the rental and not accounting for vacancies, etc. 50% may put her in the same position (negative cash flow) - I don't know her expenses of course. If she does the 70% LTV and sets aside the 100K, she'll end up with negative cash flow and will be using her own equity just to keep the whole thing going. Basically at that point, with negative cash flow, you're speculating on the property itself... that the money is going to come somehow in the future when values increase or that rents are going to increase enough eventually to go from negative to positive cash flow and that the future income will make up for all of this outflow now. I don't see (again, without the whole picture in front of me) this as a super great scenario, particularly if she's just looking to have a cash-flowing rental.

I'd be happy to answer things more specifically with more information and have some very good mortgage people you could run numbers by.

Luca, 

how are you?

I am by no means an expert in out-of-state investing but I am doing a lot of research into it because there is so much interest (for the same reason as yours - high prices, etc.) from my clients and contacts.  My office is in Lake Oswego (I live in Molalla, if you know it).  Would be happy to chat some time about what you're trying to do both short- and long-term.

Do you have certain markets in mind already or are you just getting started?

Message me back and let me know if you'd like to get together.

- Robert

Nate - saw your name because you voted on a response of mine.  I'm a real estate broker out in Oregon but figured I'd point out 2 things: that I am also doing some looking around at out-of-state markets - I've had a lot of client interest recently and Portland can be a hard place to invest for folks because the price point is fairly high and cash flowing can be harder.  The second thing is, in response to your fun fact, I also am a super early bird - up between 3 and 4 usually.  I love the quiet mornings with no disturbances.

Anyhow, let's try to keep in touch about out-of-state markets.

Robert

Ryan,

it sounds like you have thought a lot about this and have a lot going for you as far as beginning to invest.  If I'm understanding you correctly, you'll have 357K to invest with?  It doesn't sound to me like you'll have any problems being over-leveraged as long as you do your due diligence on the property.  I don't know the specific markets you've mentioned but I have to guess they're all lower priced than Portland (I live here too).  I would think you could probably get into a couple of properties without being overleveraged - if I'm understanding your scenario correctly.

As far as FHA, which means you'll be living in it and which means you can purchase 1-4 units with a minimum of 3.5% down (I'm assuming you'll put a good deal more down than that, from what you wrote), it's always a good thing to consider but with as much down payment as you'll have to put in, there are many other options, conventional/conforming. FHA also has a 203(k) loan which is a rehab loan - this would potentially open up more inventory and give you an opportunity at 'limited rehab'. (You do need to use contractors, etc.).

My thoughts are that you first really start doing some research about the markets you're thinking of. STR's are of course more viable in some areas than others. And it's hard to figure numbers without a price range. And then come up with where you're comfortable, financially - how much cash flow, how much in reserve for a property, etc., so that you have peace of mind.

Let me know if I can answer any questions or run some mock sceanrios for you. My office is in Lake Oswego.

Good luck!

Benson, congratulations on your license!  

I am a broker at an office in Lake Oswego (so essentially Portland) but I live down in Molalla (east of Woodburn - about 1.25 hours from Corvallis) so in between Salem and Portland - 2 different markets on 2 different MLS's. I tend to work far and wide - so Portland down to Independence right now, for one client.

As you know, you're licensed in the entire State, so theoretically you can hang your license anywhere (as long as the brokerage agrees to the distance).  So much is done online these days that, again, you can theoretically do a lot from anywhere.  But I think there are practical considerations, especially as a new agent.  One is support - the test doesn't prepare you for the position of being a broker and the day-to-day challenges.  You're going to want a mentor to whom you can ask the questions that will come up constantly.  There is also something to be said for osmosis - if you're working full-time (or where you'll be able to go into an office regularly), you can gather a lot of knowledge by just listening or getting involved in conversations around the office.  Not all offices are like this and, of course, if you won't be going into the office when people are there, it doesn't help.  The biggest factor in your success will be boots on the ground - meeting people, getting to know a market, building relationships.

Another consideration is the MLS you're in - Portland and Corvallis have primarily different MLS's (there is some overlap - but you'll miss a lot in one market or the other). You can join more than one MLS but it is an extra expense if you're not committed to an area. And, as a rule, you're the one paying these expenses.

You can partner with other agents in different markets for referrals but if your goal is learning the other market, that helps you build good will and makes you some money, but it doesn't help you learn.

I am down in Independence frequently.  I would be happy to sit down for an hour with you if you wanted to talk about your thoughts and ideas.  Message me back or call and let's set up a time.

Artie, I have been looking around in out-of-state markets.  This is an article from First American's economic center that I found interesting.  I have a few other articles running around but will have to find them.  Oklahoma City and some midwest cities are on this particular list.  I'll see what else I can track down and send it to you.