More NICKELS for your pocket.

Hey Oregonians!
Are you tired of your garbage and recycling bins looking separated by what is considered trash, recyclable glass, and recyclable for cash?

Ever had a ton of these in the waste of money pile?

Well now there is a new bill that will include juice, tea, energy drinks and many other types of glass, plastic and aluminum drink bottles to the original bottle bill that has changed our state, and cleaned up many other states that have adopted and adapted to this ingenius bill.

Sure we pay for it at the pump, per se, but we get it back with a little effort.  And it ensures and enforces recycling and helps eliminate the temptation of littering. 

The Bottle Bill is nearly 40 years old, and just like any good idea needs to keep up with the times.  So far it has passed the state house, and on to the state senate.  Hopefully it will be approved and adapted in the next couple of years.

http://www.bizjournals.com/portland/news/2011/05/04/oregon-house-passes-bottle-bill-update.html

The solution to your real estate problem.

Here's a chronology that we are all too familiar with:

1. You bought real estate and it went up in value
2. You found a renter that covered your expenses
3. Time goes by, things are smooth, but your rate went up
4. You begin the pain of negative cash flow, but you live with it
5. You want to refi and you discover you CAN'T because you lost value!
6. Your tenant just informs you that they are moving out
7. You want to sell and cut your losses

Daily I run into this problem with random clients, my past clients, or even myself.

I don't blame people that want to sell. It's in our human nature to flight to safety.
If you put in a down payment, you want to get some of it back before it's too late, right?
Holding on to an investment that everyone says will just keep going down in value, with no exit strategy is just insane. Everyone wants their strategy to be, "buy low and sell high." But if you bought in the last 5 years, and want to sell 2008 or 2009...You are doing exactly the opposite.

So, if you take a look back at an investment and realize you bought high. SELL HIGHER! Don't sell low.

Didn't I say I had a solution?

The solution lies in holding on to the asset, gaining more income, but at the same time, putting the actual plan of selling into action.

The Lease Option.

What is it?
A renter that pays a premium rent with the intent to purchase your home.

Why does this work?

1. Lease-Option Tenant pays more rent. This lessens your cash flow problem. In some Lease Option agreements, the rent is increased by a much higher level, and that rent is given back to the tenant in the form of price reduction, or down payment, or closing costs. Whichever is the norm in that market.
2. Avoids Vacancy. Whenever you sell, it should be vacant. Buyer's do not enjoy looking at homes that are tenant occupied. And in today's market, it will take a lot longer to find a buyer than a renter. But a Lease Option Tenant will live in the unit until they buy it. No sell vacancy period.
3. Sells the property at future value, not today's loss. Tenant will sign up to buy the property at the value you want today, but not until tomorrow.
4. Reduce Realtor Fees. This is almost a guarantee in every market. You can do this yourself, if you have the time to find a renter. You just make an amendment to your rental agreement. Most Property Management companies can do this as well. They will charge extra, but it's heck of a lot cheaper than 2 Realtor commissions.

The pickle that most people are in, where this solution may not work for, are the ones where the loan has gotten out of control. Rate is adjusting 2pts every time, or the loan has a balance due, or the Neg Am is at recast (if you don't know what this is... good :-))

If you fall into this category, a loan modification can solve that problem for some people.

If you are facing $400 negative output every month on your investment property, all you have to do is Lease Option for $200 more than your current rent, and Loan Modification for $200 off your current payment.

Now you are breaking even again. I am not going to tell you that it is easy. But losing $50,000 is not easy to swallow, either.