All Forum Posts by: Sergey A. Petrov

Hi Ali

My short answer to your question as posed is very simple:

Questions: Is it a good idea to flip condos in Portland, OR?

Answer: yes

My answer would remain the same if you replaced “Portland, OR” in that question with anything else be it the US, UK, Germany, Vietnam, Mexico, Canada, India, or the North Pole. Comes down to the numbers, the nature of the deal, and whether or not you have experience and the right team around you to make it work.

Now I have a question too. I saw this car for sale on the way home yesterday. Do you think it would be profitable if I bought it, ran it through a car wash, and sold it next week?

Lots of tools and info on BP to get you started!

That is weird. Who appealed to begin with? You or your lender? Maybe the lender saw an obvious mistake in the original appraisal (significant square footage discrepancy, wrong address, 7 bedrooms instead 2, a huge swimming pool in the backyard vs subject property being a studio on the third floor). We are all humans and appraisers make mistakes too. Do you think the actual value is closer to $350k or $200k?

Pure speculation on my part says those programs come with two requirements - must be owner occupied and must be in first lien position. Two separate loans can’t both be in the first position. Loan 1 + Loan 2 will never equal / add up to one single Loan 3 even if both are underwritten by the same lender. I think that’s what you meant - combining two into one on a single property / deed.

You have three years to decide before capital gains taxes become a part of the equation. If you don’t need the equity, don’t mind being an investor / landlord (self managed or professionally managed), and are ok with that potential negative cash flow, keep it. If you think you can / want to do something with your equity that would generate better returns sell it at a deeper discount or get creative with seller financing, lease to own, something else. We are in a softening market. Where we’ll be in 3 years (when your capital gains come into play) is everybody’s guess! 

@James Vu - of course you’d still want to buy it, you are getting a newly rehabbed unit paid for by the insurance co 😁 it happens. Last minute fires, floods, etc (which is why it is critical to do another walkthrough the day before closing- not everyone does unfortunately). I am not familiar with CA standard forms but look for a more general provision - force majeure, acts of god, etc. Typically either party has the right to cancel. More often than not a renegotiation keeps the deal alive. Sounds like some units are now vacant. Of course the seller doesn’t want to sit on a property that is not generating revenue and wants to cancel and re-rent immediately because you aren’t yet able to close due to lending requirements and assume the ownership and everything that comes with it. There is a middle ground somewhere there that makes everyone happy. Find it and re-negotiate. You may need to pay more, release earnest money (I wouldn’t), act as a free property manager for the units that the seller will re-rent, something else. The seller wanted to sell for a reason. What does that look like today now that there was a fire. Find that, make the seller happy (make sure it makes you happy too) and you have a new deal!

When it comes to commercial, rented vs empty (ready for an owner occupant, most likely) will drive different valuations (and approaches to same) and target different buyer pools. Your experienced commercial broker should be able to run the numbers both ways using methods appropriate for each scenario and you can then make a more informed decision. Commercial is very localized where one thing here may be completely different from the identical thing a mile away.

Go for it. Sounds like you are at a point where you’ve made a bunch of smart decisions and choices and now want to reward yourself with a condo just for you to enjoy. Worth it.

make sure you do your due diligence on the condo. Make sure you can rent it at some point (some prohibit rentals, some have rental caps, etc). A big chunk of your $508/mo "HOA" likes goes to insurance, water, sewer, garbage, maybe some other utilities and short term and hopefully long term maintenance (check their reserve funding). These are expenses you'd no longer pay directly with a duplex or a single family home. And if the roof needs be replaced, it'll be paid for out of reserves vs your own pockets. Again, check reserve funding otherwise you'll end up with a special assessment for that roof

I am a pro at condos and live in that world professionally. Condos are awesome and make perfect investment sense if you know how to vet the association and then stay involved.

From a long term perspective, the"HOA fees" balance out or end up even lower when compared to expenses you would've incurred on a duplex due to economy of scale - X number of units pay for one roof vs two units paying for a roof in a duplex. Of course we've all heard of improperly run associations- that is where the bad rep comes from. Vet your association!

A full cash out refi likely won't get you more than 80% LTV so let's keep it at 80% for the purposes of my logic.

Scenario 1 - currently 50% at 2.75%. A full cash out refi puts you at say 6.75%. You just added new debt (30%) at 6.75 plus lost 4% in savings on the old debt (50%)

Scenario 2 - keep 50% at 2.75. Get new debt (30%) at 6.75. Your overall total blended rate is 4.25 (vs 6.75).

Additionally with a HELOC, it is a line of credit so you pay interest only when you draw on it. So if today you need to draw only 10% of the equity (out of the 30% available) you still pay 2.75 on your existing 50% and 6.75% on just the 10% you drew. Your overall total blended rate is under 3.5%

Hope that helps!

Keep the existing mortgage in place and get a HELOC. Some HELOC lenders will go to 80% combined LTV