[BortimusPrime]

So I'm basically looking for free advice, I've been googling like crazy and I keep getting bullshitty or irrelevant articles on the subject. This isn't my subject of expertise and what I'd like is a general overview of the process or at least to point out if my idea is totally stupid.

So here's the situation: I own a 2 acre plot in the suburbs near Portland, OR. Rental prices have been shooting up in recent years along with extension of mass transit lines close to me, and I'm sick of mowing enormous amounts of lawn every summer. The property itself is shaped just about right to use the front half for two strips of rowhouses on either side with a private drive running down the middle to the back where I can keep my precious collection of slightly rotted firewood and unidentifiable rusty metal tools from the 1920s.

My thought was to develop the property and either rent out the rowhouses or sell them as condo units. The economic state of the area is mostly middle class single family dwellings with apartment/condo blocks here and there.

So here are my questions:

Is building houses for rental stupid? Is it unrealistic to use rent to pay off a construction loan? Should you just immediately sell new homes and only rent property that's been run down?

Who do I talk to to get started with this process? Bank for construction loans? A contractor? The city? Zoning lawyer?

How much analysis should I have worked out before talking to a professional, and am I correct in my belief that the cost analysis is just a matter of researching the cost of similar projects and guessing based on that?

How risky is what I'm proposing to do, given that I already own the property? The main threat I see is ending up with a crooked builder that runs off with the construction funds.


If anyone has experience with any of this and can give me some tips, I'd be much obliged.

[el mechanico]

What is the property zoned for? Is it low or high? What are the impact fees if you decide to build?

City water? Septic or?

2 acres could be worth a fortune there alone. What does an acre sell for there?

[Laner]

Have a look and see about zoning for multi family residence. If there is a place in the hood that has row houses already, then the precedent is set. Good.

2 acres is huge, especially if its close to transit.

I would subdivide, get zoning for city sized lots (55' not 35') or multi family. I like your idea for a middle lane to access under cover parking for all the units. This allows you to add density which places like Portland love to hear. Density, multi family, mixed use, etc

You might want to partner with a developer. They can be on the hook for construction costs leaned against the value of the land. Again, what similar places are selling for in your area give you a good idea.

Find a developer suited to the neighborhood of 2023. They should know demographics and what not, so build for them.

You will want to sell the townhomes. Unless the developed can convince you that they can build super cheap and are willing to carry the heavy loan. Its all about cashflow.

Portland is sucking up a huge amount of Bay Area at the moment. Now is a great time to take advantage of the flight from the more central areas and give them their 3 bedroom homes.

[BortimusPrime]

(03-08-2016 08:05 PM)el mechanico Wrote:  

What is the property zoned for? Is it low or high? What are the impact fees if you decide to build?

City water? Septic or?

2 acres could be worth a fortune there alone. What does an acre sell for there?

Technically my dad owns the property, but I'm an only child and he's elderly and it's basically coming up to me to handle things.

The property tax estimate is something like 800k, including the existing old buildings. (Two buildings in the back and a dilapidated house in the front that needs to be torn down.) The zoning allows for four dwellings total, which is a low zoning for that area since there are nearby apartments that clearly got rezoned from the farmland I remember as a kid. So a zoning lawyer is necessary. The back buildings are septic, but the front has sewer. Utility access is good, there's natural gas and I've got a fiber optic line for internet.

Not sure about the impact fees. I do know the city likes to find things to throw in your way, and I am somewhat worried that neighbors would bitch about taking down trees, although I'd like to keep the ones along the property line just for aesthetics.

[el mechanico]

Whoa! Slow down 800? Existing structure? Not in your name fully yet?

[el mechanico]

One thing I've learned in life that nobody had to teach me or have ever been stung by.

Don't spend time or money on something you don't own legally 100%

And when you do .. Don't take any partners!!!!!

Yes I'm yelling at you!

I understand this is a soundboard you can plan but you never know.

[BortimusPrime]

There's just one existing structure on the front half, and I'm surprised it hasn't fallen down yet. Currently it's pulling just enough rent to pay off the property tax. The back existing structures aren't really designed as dwellings: one used to be an art studio and the other is essentially a tiny apartment on top of a tool shed.

As far as ownership goes, it's either manage it on my parents' behalf now or do it myself later. No siblings so no fights over inheritance, and I have a good relationship with my parents.

[BortimusPrime]

(03-08-2016 08:50 PM)el mechanico Wrote:  

One thing I've learned in life that nobody had to teach me or have ever been stung by.

Don't spend time or money on something you don't own legally 100%

And when you do .. Don't take any partners!!!!!

Yes I'm yelling at you!

I understand this is a soundboard you can plan but you never know.

That is excellent advice.

[el mechanico]

(03-08-2016 08:58 PM)BortimusPrime Wrote:  

There's just one existing structure on the front half, and I'm surprised it hasn't fallen down yet. Currently it's pulling just enough rent to pay off the property tax. The back existing structures aren't really designed as dwellings: one used to be an art studio and the other is essentially a tiny apartment on top of a tool shed.

As far as ownership goes, it's either manage it on my parents' behalf now or do it myself later. No siblings so no fights over inheritance, and I have a good relationship with my parents.

Sounds like a dream!! Like my dreams I'm always falling into either homeless usually in or on the Ohio river or getting some great place in the Sierras.

How bad are the buildings that exist? Are they in a desireable area if they were fixed up? Building new means new codes and a bunch of dick haters breaking balls.

[BortimusPrime]

(03-08-2016 09:04 PM)el mechanico Wrote:  

(03-08-2016 08:58 PM)BortimusPrime Wrote:  

There's just one existing structure on the front half, and I'm surprised it hasn't fallen down yet. Currently it's pulling just enough rent to pay off the property tax. The back existing structures aren't really designed as dwellings: one used to be an art studio and the other is essentially a tiny apartment on top of a tool shed.

As far as ownership goes, it's either manage it on my parents' behalf now or do it myself later. No siblings so no fights over inheritance, and I have a good relationship with my parents.

Sounds like a dream!! Like my dreams I'm always falling into either homeless usually in or on the Ohio river or getting some great place in the Sierras.

How bad are the buildings that exist? Are they in a desireable area if they were fixed up? Building new means new codes and a bunch of dick haters breaking balls.

It'd be a great place to live if it were still rural and in that case I'd just keep the space for myself and buy a pony. Right now I've got an apartment complex behind me.

Fixing up the front house is possible, but it's still a very little house on a lot of space. And one thing I've learned about rentals is that tenants are congenitally incapable of performing yardwork. I'd guess $1200/mo rent at best after a lot of expensive remodeling. It would be possible to develop one quadrant of the property without tearing anything down though, and a thought I had was to do that first in order to limit the risk compared to doing everything at once.

[Laner]

Sounds like you are a bit more rural than suburb. I would never give renters too much space, they will fill it with old camaros and throw them on blocks and turn your place into a junk yard. Even tenants with the best intentions will do this.

But being further out, you can't choose the ideal tenant.

Stick with townhouses for sale if you can get the financing. If they have built apartments within your memory, then it will go that way eventually. Keep a small portion of them rental pool so you can ride the value of the places up and then sell them at a later date for a better price.

[BortimusPrime]

It's solid suburb now. About 10-15 min drive to downtown Portland.

[wi30]

Do some research over at BiggerPockets. It's the go-to blog and forum for real estate. If you make an account and post your questions over there, I guarantee you'll get a few detailed and personalized answers. The experienced posters love helping out new members. They hang out there like we do on RVF.

I don't have an account but signed up for the mailing list and enjoy reading articles that are relevant to my situation. I started listening to the podcasts while I drive as well. The two guys know their shit and bring on guests all the time but are annoying and sound like pussies. If you can get through the "let me ask my wife first" kind of jokes, there is some valuable knowledge.

[Kona]

Try to find a consulting firm, or a Realtor that knows what's what in your area.

They'll all to you your 2 acres is too small for them, but they'll take you anyway. Remember, that its all about negotiating and grandstanding with every one of those people, but in the end they all love the commission.

I wouldn't go blindly into, planning and permitting, environmental crap, zoning those things all need professional advice.

Aloha!