Make sure you pull permits

Never take shortcuts--or allow your contractor to take shortcuts--when it comes to pulling necessary permits for work done on property.  The small amount of money you may save upfront often creates a huge headache for you when you go to sell.  You must disclose to the next buyer of the property if you know of any work done without permits.  Even marking "unknown" by this question on the sellers' disclosures may send up a red flag to the new buyers.  To avoid losing a sale--or opening up walls and spending even more money in an attempt to save a pending deal--do it right the first time around.  To find out if you need to pull a permit for your Portland project,
go here.

Protect your assets

Treat your new investment endeavor as a business.  And as a business with your money and personal assets at stake, consider protecting yourself by incorporating.  Your accountant or attorney can give you advice on or walk you through how to set up your business and properties in LLCs, for example.  After you've done your research and determined how to set up your business, you can register online with the State of Oregon by going here.

Know your city and county resources

Whether you'll be buying and selling fixer properties, doing lot confirmations (creating new tax lots from existing ones), doing land divisions, or building, you and the City/County are going to become fast friends!  Zoning resources, building codes, and review requirements can all be found online.  I've created some zoning links for the City of Portland as well as the entire Metro area.  You can find out more about the City of Portland's Development Services Department online here, or take a trip downtown to the City of Portland at 1900 SW 4th Ave., Suite 5000, Portland, 97201.  Ph: 503-823-7300, email: bds@ci.portland.or.us

Set up a pro forma

Estimate your costs in purchasing, rehabbing, dividing, and holding property.  You'll have acquisition costs such as loan closing costs, reserves for taxes and insurance, title insurance and other escrow costs.  You'll have holding costs--utilities, insurance, taxes, mortgages, and maintenance.  If you'll be dividing land, you'll have city/county costs, as well as surveyor and arborist costs, etc.  Consider rehabbing costs and build in time for contractor delays.  Selling costs will include title & escrow costs and selling commissions.  Consider setting up a pro forma that will allow you to plug in your estimated costs upfront for each property you're considering buying.

Plan for your worst-case scenario

Have you set up your pro forma and are you committed to tracking and analyzing your costs?  Do you have a back-up plan should the market shift or you lose your day job?  Can you rent your property in the meantime or hold on?  Do you know which improvements make financial sense? A smart investor takes risks--but calculated ones.  Your first investment is inevitably a learning experience.  The path to great success comes when you push through failure.  Make sure you minimize those failures by planning and getting help from your team! 

Consider your final product

Who is your buyer?  What are they looking for?  What is your competition offering them?  You should be constantly asking yourself these questions as you're buying, rehabbing, dividing, and selling your investment property.  If you don't know or aren't sure, by all means--find out!

Know your market

Know the pulse of the Portland market at all times.  Inventory, days on the market, sales prices, renewal areas, are just some of the things you need to be in tune with.

Develop your team

Who is going to help you start and grow your business?  Smart business people surround themselves with other smart people who are experts in areas they want--or need--to know more about to be successful.  Attorneys, accountants, other investors, contractors, title and escrow, and real estate professionals are people you should look to for help in getting your real estate investment business off the ground.  Prioritize.  Know what you need to focus on, find out what you can delegate to others, and know when you need professional help so that you can continue growing your business!  Don't cut corners by trying to do it all on your own.