All Forum Posts by: William Sing

Hi @Rhea Jeong,

The situation you're describing is actually pretty common, especially for first-time investors looking to maximize their purchasing power.

You're correct that some lenders will consider a portion of the rental income when determining how much you can borrow, typically in the 75-80% range especially for FHA loans. For FHA loans with 3-4 units you do need to satisfy the 75% rule which can be harder in more expensive markets. Lenders might also require a history of rental income on the property or at least a market rent analysis to support the numbers.

Given that you’re also looking for down payment assistance, which typically comes with its own set of lender requirements, your options might be a bit more limited. But don’t lose hope—there are lenders out there who specialize in working with investors and understand the nuances of rental income. It’s worth continuing to shop around or even speaking with a mortgage broker who can connect you with a lender who might be more flexible with these terms.

Also, keep in mind that every lender has different guidelines, so it may take a bit of persistence to find one that aligns with your needs. It might be a good idea to discuss your specific goals with a few more lenders from the approved list to see if they can work within your parameters. Some local banks or credit unions might have portoflio loans that might be helpful too. 

Feel free to reach out if you want to dive deeper into this or if you have any other questions. Likley if you find an agent who specializes in this, they will have better lender recommendations. Good luck with your search!

Cheers, Will

Hi @Candice,

Great question! Navigating Portland's tenant-friendly landscape can definitely be a bit tricky. Here’s how I would approach your situation:

If you’re in the early stages of buying, you'll likely need to take the vacant unit due to existing lease agreements and oregon laws. In Portland, once you inherit a tenant, you’re bound by the lease terms in place, so unless the lease is close to expiring, asking the current tenant to move out would typically involve negotiating a “cash for keys” deal. This can be a bit of a pickle, especially if you’re tight on cash reserves and both units aren't rented for a period.

If you’re considering cash for keys, there are various ways to approach it, depending on how open the tenants are to the idea. Additionally, I’d strongly recommend offering the tenants an estoppel to confirm the terms of their lease and any verbal agreements they've made with the previous landlord. While you can't force them to complete it, it’s a helpful document to have.

If you’re looking for more landlord-friendly areas, you might want to explore options in Clackamas and Washington County, outside of Portland proper. These areas tend to offer slightly more flexibility, and depending on the size of the property you’re looking for, you might find larger units than in Portland.

Also, as Scott mentioned, increasing rents in Portland can be a slow process, especially with the 10% cap or 7% + CPI limits, whichever is lower. It's always a good idea to have a clear strategy for lease renewals—I usually recommend a 90-day notice to stay on the safe side, though you have a bit more leeway outside of Portland.

Feel free to reach out if you want to chat about more options or if you have any other questions!

Cheers,
Will

Hi @Joaquin Reyes,

It sounds like you've already moved over to a month-to-month situation with your tenants and have an appointment set up to discuss renewing for another year. That's great! 

In Oregon, the lease typically converts to a month-to-month automatically if the renewal isn't signed, which seems to be the case here. Since you're outside of Portland, the 90-day rent increase notice isn’t as critical, but I still recommend using it as a standard practice. It gives everyone enough time to make decisions and reduces the chances of any misunderstandings. Oregon has capped rent increases at 7% + CPI (10%) max for future reference as well. 

For resources, I'd suggest looking into forms and information provided by either Multifamily NW or the Oregon Rental Housing Association. They offer some great oregon-specific forms that can help you stay compliant and organized. Whether you're drafting a new lease or just need a 30-day notice template, these organizations are a solid go-to.

I also recommend setting up a consistent process for handling lease renewals. By establishing a clear timeline and communication strategy, you can avoid last-minute scrambles and ensure that both you and your tenants are on the same page. The one I typically use is:
- 90 days out from lease renewal - Send rent increase notice
- 60 days out from lease renewal - Ask if they are looking to stay or leave. 
- 45 days out - Make sure if they are staying to get the lease signed ASAP. If they do sign, setup the billing. I usually use Innago since its relatively cheap and fairly customizable. If they are leaving, setup a walkthrough to figure out what you need to do to turn the unit and provide notice form for them to offically say they will be vacating.  
- 15 Days prior - Setup a time day to do final walkthrough and transfer keys. 
- Day of, change locks. 

Good luck with your meeting, and feel free to reach out if you need any more advice or resources!

Cheers, Will

Hi @Tana B.,

I'm sorry to hear you're feeling distraught about your property's market value. Let me try to shed some light on this for you.

First off, property value and market value are often used interchangeably, but they can mean different things depending on the context. Market value typically refers to the price a property would likely sell for under current market conditions, while property value can sometimes be an assessed value for tax purposes or an estimate by an online tool.

If you're seeing a significant drop in your property's value, I’m guessing you might be using Zillow. One of the major issues with Zillow is that their Zestimates often rely heavily on a price per square foot basis, which can be quite inaccurate. They don't always account for differences in finishes, location nuances, or other unique property features. Even Zillow acknowledges their Zestimates can be off by as much as 10% (you can read more about this on their site).

The online valutation isn't done by any malicous intent. Usually these systems are using sold data. If you are in a market where you don't have a lot of sold data, a couple distress homes could tank the valuation. A data set of 10 will be far more effected than a data set of 1000 of a couple low sale prices. 

For a more accurate valuation, I'd recommend reaching out to a local realtor or hiring a professional appraiser. Realtors can provide a comparative market analysis (CMA), which looks at recent sales of similar properties in your area. An appraiser will give you a detailed report based on a thorough inspection and analysis of comparable sales, market conditions, and other factors.

Remember, price estimates can vary and everything is an opinion to some extent. It’s best to get multiple perspectives to understand your property's true market value.

Feel free to DM me if you need any realtor recommendations or further assistance.

Cheers, 
- Will

Hi @Justin Fairfield,

Welcome to the BiggerPockets community! It's great to see your enthusiasm for real estate investing. Here are some local meetups and groups in the Portland Metro area that you might find helpful:

• Local REIA Group: A solid place to start for networking and learning as mentioned by Melissa!
• Investor Lab Events: These events tend to have a cost. Great for meeting a variety of investors and industry professionals though and Mike has a ton of great knowledge. https://investorlab.com/events/
• Meetup.com: Search for real estate investing groups in Portland for various local events and gatherings.
• Landlord Association: Another valuable resource for learning and connecting with experienced landlords and investors. They have free events from time to time and is a good place to learn about local laws. https://www.oregonrentalhousing.com/events

Getting involved in these groups will help you build your network and gain valuable insights. Feel free to reach out if you have any questions or need more advice. Good luck!

Hi @Derrek J Hooyman,

I’d recommend Innago. I did a lot of research, and it’s the cheapest and best option I’ve found. It’s free and offers great features for rent collection, which makes it perfect for managing a few units and scaling up as you grow.

Before Cozy.co was bought out by Apartments.com, it was a good option, but now it has limited features, especially with billing and handling utility changes consistently.

Venmo is another option, but for staying organized and efficient, Innago is definitely worth a look.

Hope this helps!

Cheers,
Will

Hi @Chris Lindemann,

Welcome to the BiggerPockets community! Your situation sounds like a classic investor's dilemma, and it's great that you're considering all angles before making a move.

First off, it's worth considering what the "rip cord" would be for your investment—essentially, what's your financial breaking point where you need to make a decisive move to avoid further losses? Given that you've been carrying the property without a tenant for four months, you're already feeling the strain, so let's break it down:

Long Term Rental vs. Short Term Rental

Long Term Rentals: They offer stable and predictable income once a tenant is in place and generally appreciate over time, adding to your equity. They also require less day-to-day management. However, the current vacancy is hurting your cash flow, the paused refinance poses challenges, and ongoing capital expenditures can be significant.

Short Term Rentals: These can generate higher monthly income and offer flexibility to adjust rental rates based on market demand. They align with your long term goals and can potentially accelerate your investment strategy. On the flip side, income can be less predictable due to seasonal fluctuations, they require more intensive management, and are subject to varying regulations.

Key Considerations:

• Financial "Rip Cord": Determine your financial threshold for continuing to float the property without a tenant. How long can you sustain this before it severely impacts your finances?
• Market Analysis: Conduct a detailed market analysis for both long term and short term rental markets in your target areas. Are there strong indicators for occupancy and rental rates?
• Property Condition: Consider any repairs or updates needed for either scenario. Short term rentals typically need to be furnished and maintained at a higher standard.
• Tax Implications: Understand the tax benefits and implications of both strategies. Short term rentals might offer different deductions compared to long term rentals.
• Risk Tolerance: Assess your risk tolerance. Short term rentals can be lucrative but come with higher variability and management needs.

My Take:

It might be beneficial to consider a mixed approach—drop the rent slightly under market value to secure a tenant and stabilize your cash flow, while simultaneously exploring the short term rental market. This way, you don't rush into selling a property that still holds potential and you can gauge the viability of short term rentals without fully committing yet.

Additionally, talk to a few local property managers or even consider different marketing strategies to attract tenants. Sometimes a fresh approach or minor property improvements can make a significant difference in securing a tenant.

Ultimately, aligning your strategy with your long term goals while managing current cash flow is key. If short term rentals are truly where you see your future, making a calculated shift might be the right move, but ensure you're not jeopardizing your financial stability in the process.

Hope this helps!

Cheers,

Hi @Michael Soukup,

Great question! Here’s a quick breakdown based on my experience:

Building new construction gives you full control over the design and materials, allowing you to incorporate the latest energy-efficient systems. You also benefit from warranties that can reduce initial maintenance costs. However, the initial costs for land, labor, materials, and permits can add up. Building is a lengthy process that requires coordinating multiple aspects, which can be time-consuming.

On the other hand, buying an existing property is generally cheaper upfront and offers the advantage of immediate availability, so you can move in or rent out quickly. Established neighborhoods often come with more mature landscaping and amenities. However, existing properties may need updates or renovations, leading to potential additional costs.

Key Considerations:

• Market Conditions: Fluctuate, impacting whether buying or building is cheaper. It would be worth seeing how much the in-law apt would add in terms of value since appraisers in different areas value them differently. 
• Long-Term Maintenance: Older homes may require more repairs. Thus, it'd be good to expect a higher capex in the long term. 
• Appreciation: Can vary widely based on location and property. This might be a huge value add in some areas and not so much in others depending on price point, etc. 

Personally, I find that buying is usually quicker and cheaper upfront, while building offers customization but requires more time and coordination. It’d be a good idea to talk to a few builders to get a better idea of costs per square foot. Since I’m not sure about the size and other major factors, take this advice with a grain of salt.

Good luck with your decision! 

Cheers, 

Will

Hi @Yichu Zhou,

Welcome to the exciting journey of real estate investing! It’s great that you’re taking proactive steps to build a solid foundation for your investment strategy. Based on your questions, here are some insights that might help streamline your financial arrangements and improve your system:

1. Separate Banking Accounts for Each Property Using a separate banking account for each rental property is indeed a good practice. It simplifies bookkeeping and ensures clear separation between personal and rental property finances. While your property management companies provide monthly statements, having a dedicated account will make it easier to track transactions, verify statements, and manage cash flow. This also reduces the risk of mingling funds, which is important for both clarity and legal reasons, especially if you decide to form an LLC in the future.

Potential Issues with Personal Checking Accounts:

• Audits: Using personal accounts can complicate things during audits. Clear separation helps demonstrate that rental properties are business activities.
• Bookkeeping Accuracy: It’s easier to reconcile and categorize expenses when they’re all in one place, reducing the chance of missing deductible expenses.
• Professionalism: Separate accounts show a more professional approach to managing rental properties, which can be beneficial if you seek financing or partnerships.

2. Organizing Your Financial System You’re on the right track with your CPA handling your tax returns and receiving 1099-MISC forms from your property managers. Here are some steps to improve your system:

• Automate and Centralize Records: Use property management software like Buildium, Stessa, or Innago. These platforms can integrate with your bank accounts, track income and expenses, and generate reports, simplifying your record-keeping.
• Regular Financial Reviews: Schedule monthly or quarterly reviews of your finances to ensure everything is in order. This helps catch any discrepancies early and keeps you informed about your properties' performance.
• Budgeting and Forecasting: Create a budget for each property, including expected income, expenses, and reserves for maintenance or vacancies. This helps in planning and ensures you’re prepared for unexpected costs.
• Consult with Your CPA Regularly: Have periodic check-ins with your CPA to review your financial strategy, tax planning, and any changes in tax laws that might affect your investments. This proactive approach can optimize your tax situation and ensure compliance.

Starting with these steps can create a strong, organized system for your real estate investments. If you have more questions or need specific advice, feel free to ask. Best of luck with your investing journey!

Cheers,

Hi Sam,

Congrats on forming your LLC! I've been down this road before, and I've got a couple of tips that might help you out with your address situation.

First, head over to your local UPS store and rent a mailbox. It's important to note that this isn't a PO Box; it's a mailbox that provides a physical street address. This can be a great workaround because many states require a physical address for your LLC, and a PO Box won't cut it. The cost varies from place to place but I've seen anywhere between $50-100/month, and it's a solid investment to keep your personal home address private.

Second, consider having your lawyer act as your registered agent. This way, their address can be listed on your articles of organization instead of yours. Alternatively, you can use a third-party registered agent service. There are plenty of these services available, and a quick Google search will help you find one. They’re typically quite affordable, so pick the one that fits your budget best.

Using these strategies, you can maintain privacy and still meet the legal requirements for your LLC. Good luck with your investment journey!

Cheers, Will