Bad time to buy in Portland OR?

Buying & Selling Real Estate
9yFollow

Bad time to buy in Portland OR?

Nishant George
Real Estate Investor · Beaverton, OR · Member since 2016 · 6 posts · 1 vote

Hi,

I am a relatively new investor from Portland OR (I have one condo bought in 2012 which is doing ok now) looking to pick up a property using conventional lending (20-25% down, 30-year fixed rate mortgage) to buy and hold for cash flow. I have been focusing on single family, condos, town homes, 2-, 3- and 4-plexes. My search and analyses parameters are so: at least $200 cash flow per door after debt service and at least 7% ROI. My search includes these areas: Portland, Beaverton, Hillsboro, Gresham, Newberg and Sherwood. I have only been looking through the MLS and using a realtor.

I've been searching for at least two months now and don't see any thing that is priced so that I hit these parameters. Usually when I find a property that meets those constraints, it is usually something that's built a long time ago -- 1925-60s, and I don't think I'll have the time to devote to repairs and such.

Properties simply seem to be over priced. Nothing new there, I agree, as far as the current Portland market is concerned. But is that it? Is there nothing else I can do to improve my chances of finding better deals in this market? Obviously investors are buying in the area; are they buying just for price appreciation? Do I simply need to look elsewhere until the 'irrational exuberance' subsides? 

0Reply
47 views

Most Popular Reply

Neal Collins
Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
9y
Portland is not that kind of market and if you want to be successful you need to up your game and realize your strategy is misaligned and weak. Portland is a great value add play. There are a lot of different ways to do that. Your strategy would work if you started to hunt for properties with a larger number of units, but it doesn't sound like you want to hunt in the commercial world. Also, I wouldn't advertise that your job and your family are the reasons why you simply can't change your strategy. Start doing some networking with successful investors in the area (or any area for that matter) and you're going to realize that they could all make those same excuses but don't.
2Reply
See this reply in the discussion

27 Replies

Jump to latestLatest
  • Steve B.
    Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    you're setting the table for failure.  You are saying I want "X" but I'm not going to accept all the factors that make your desired outcome possible.  Change your criteria and get more creative or don't expect to get your unrealistic outcome.

    1Reply
  • Nishant George
    OP
    Real Estate Investor · Beaverton, OR · Member since 2016 · 6 posts · 1 vote
    9y
    I am setting myself up for failure if I invest *despite* the realization that the numbers won't work out the way I want. With my job and an infant, I simply don't have the time to get an older property and rehab it to add value, make it more rentable, etc. I understand that with additional investment of time such numbers may be possible. But the truth is that there is nothing wrong with wanting to be an investor who is more passive and wanting good returns. Also the truth is that there are other markets where such numbers can and do work out. I am essentially trying to ensure that based on the analysis that I have done, that Portland now is not the market where my type of investing can happen successfully. I am simply seeking confirmation of my analysis from the experts and more experienced investors out there. (Sorry about the duplicate discussions. The app just crashed as I hit post. Didn't realize the post had actually happened.)
    1Reply
  • Michell P.
    Residential Real Estate Broker · Portland, OR · Member since 2015 · 153 posts · 105 votes
    9y

    Unless you are very lucky and very persistent, Portland will not meet your needs.  

    0Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    You and I are in a similar boat. Young family, less time,but would like to do REI. I couldn't find a way to do it in the Portland metro area (that I was comfortable with). If you're into speculative REI the buying and holding in the belief that Portland is to become the next SF as far as rent / property value goes, then I can see dealing with low cash/door. I'm ready to sell my first home and upgrade to something larger. But am considering renting it out, even if at a break even point, just to hold the asset. There's a lot of leakage in selling property thanks to the ridiculous fees. I believe those in our boat will need to look at outlying cities, or even states. I'm looking at Salt Lake City area now since I have familiarity there. I've also looked into storage units and they seem to be lower hassle than an initial SFH would be. Best of luck!
    0Reply
  • Account Closed
    New to Real Estate · Portland, OR · Member since 2016 · 14 posts · 9 votes
    9y

    @Nishant George That's definitely going to be tough! Portland is booming and will only continue to do so, unless the cost of living in CA somehow plummets and the mass exodus North ceases. You'll very likely need to look elsewhere to meet your criteria and wait out the 'irrational exuberance', or, as @Steve B. said, you may want to adjust that criteria.

    1Reply
  • Martin Carstens
    Investor · Eagle, ID · Member since 2014 · 82 posts · 75 votes
    9y

    Kevin, good for you! I am a out of state investor. Live in Edmonds WA, and invest in the greater SLC area.  The area and state have  a long list of things going for them. Quality of life, out door activities, affordable housing and a good employment environment.  These are easy to find topics on any site. Check out the SLC airport expansion. And the fact that both KLM and Delta have started non stop service to Europe. That is a major vote of confidence in the area. 

    Best of luck!

    1Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Martin Carstens i grew up in Magna but still visit family in the SLC area three or four times a year. I've just begun my analysis of the cities and neighborhoods I'm intrigued by. But may have to send you a message now and then to see if what I'm looking into makes sense or not.
    0Reply
  • Adam Christopher Zaleski
    Investor · Pueblo West, CO · Member since 2014 · 310 posts · 213 votes
    9y

    @Nishant George   I had an interview at Mt. Hood Community College in November. I absolutely fell in love with the real estate potential in Gresham. I didn't get the job, but I still might invest from a distance.

    I saw a couple duplexes with unfinished basements near the college. It seems like a 3 bed/2 bath duplexes rents for $1500 on each side. If you target college kids, I think you could get $1600-$1800 for each side if you have a basement. College kids love basements because they can make noise without the cops showing up. I think I saw a few duplexes for sale in the 350K-450K range. I think you can get close to the 1% rule, but probably just under.

    Cash flow is always first priority. However, now we can talk about speculation. Gresham is the farthest town away from Portland, but still connected by light rail. As Portland becomes more expensive, people will choose to live farther away from the city center. Because of the amazing public transportation, people will not feel like they are compromising. Gresham is the farthest away, but still connected, so that is where I would put my money.

    I have spoken to a few locals about Gresham and they don't like it. They consider it to be a lower class of people. However, give it 5-10 years and I bet it will be very different.

    0Reply
  • Jeff Wallenius
    Specialist · Indianapolis, IN · Member since 2014 · 670 posts · 352 votes
    9y

    @Nishant George my best advice is to expand your search to more of the outlying areas. Prices are less and rents are still quite high. I just picked up two rentals in Dallas Oregon that I was rehabbing and decided to hold. The cashflow is through the roof, and I was able to refinance and move most of my money out. You can find cash flowing properties in this area, but most of the time you have to have the ability to purchase and rehab to get in at a cash flowing price point. Happy to provide more detail if need be.

    1Reply
  • Neal Collins
    Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
    9y
    Portland is not that kind of market and if you want to be successful you need to up your game and realize your strategy is misaligned and weak. Portland is a great value add play. There are a lot of different ways to do that. Your strategy would work if you started to hunt for properties with a larger number of units, but it doesn't sound like you want to hunt in the commercial world. Also, I wouldn't advertise that your job and your family are the reasons why you simply can't change your strategy. Start doing some networking with successful investors in the area (or any area for that matter) and you're going to realize that they could all make those same excuses but don't.
    2Reply
  • Derrick Aragon
    Investor · Portland, OR · Member since 2016 · 213 posts · 60 votes
    9y

    One of your best bets I is do an Adu on your SFR.. You will break even or cash flow little bit on the main house.. Build Adu and with both units you could cash flow what you indicated, I have done it for myself and other clients.

    You want $200 a door @ 7% ROI so you want to invest $32k... You are going spend more especially if you want to put 20-25% down and build Adu.. You could get a different loan to do the buy and the construction and maybe be able to do it with that investment.

    If you find one that meats and needs fixing up get a good property manager or contractor.

    Also, look into investing as minority investor with a bigger project.

    Good luck... 

    0Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Neal Collins when you say larger number of units. Are you talking over 4? I've been looking for quads within reasonable driving distance of PDX.
    0Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Derrick Aragon how does one go about getting involved as a minority investor on a larger project? Are you talking REIT route?
    0Reply
  • Tyson Cross
    Investor · Portland, OR · Member since 2013 · 133 posts · 88 votes
    9y

    @Kevin Jorgensen find professional ownership group in the asset class that makes the most sense to you and vet them before you decide to jump in with them. There are several groups that are experienced and can provide solid returns. Depends also on what your strategy is, how long you want to tie up your capital and whether or not you will cash out or just keep rolling money. Lots of ways to do it. Let me know if you have other questions about it. OR, you can find partners, provide the equity and let them do the work for a higher percentage or return. Multiple ways to structure it. It's what I love about real estate, there are so many ways to make money. :)

    0Reply
  • Derrick Aragon
    Investor · Portland, OR · Member since 2016 · 213 posts · 60 votes
    9y
    Originally posted by @Kevin Jorgensen:

    Derrick Aragon how does one go about getting involved as a minority investor on a larger project? Are you talking REIT route?

    I personally wouldn't invest REIT, but plenty of people do.. I would partner up with a developer or syndicated.. There are also some crowd funding sites but I am not sure the default process has been testes.. You could also loan your money to a project but you typically don't get any back end upside..

    If you are interested in portland marker in would be open to talking to you.

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    9y

    @Nishant George Hi, I am a little south of you in Eugene, and have pursued investing out of state that is relatively passive. If you are looking primarily for cash flow, and not appreciation there are any number of markets, primarily in the midwest and southeas,t that can a passive investor can purchase property fully rehabbed and fully managed with very decent cash flow and low entry points. You do have to be very careful about who you choose to work with, and I always advise visiting the market. For something even more passive, that also spreads out risk over multiple units, I started investing in a CF platform that offers interests in portfolios of 10 SFR that are co-owned by the managers for aligned interests. Now they just posted their first apartment building as they begin expanding into the multi universe. Anyway, I wrote about my investments here on BP in

    Have I Found the Holy Grail of Passive Real Estate Investing?

    1Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    9y

    Agree with Larry.  I have a sister in law that lives in Portland and is in the same dilemma.  I would leverage BP and you're own market research to find areas of the country that still offer opportunity from a solid growth economy, diversified industries standpoint and that you can cash flow.  These markets are seeing both cash flow and have attractive upside.  I personally like San Antonio from a small MF entry point.  I have contacts there if you need them.  I recently sold duplex and fourplex opportunity to a CA investor that they should do very well in.  If accredited and no time or interest to develop on ground teams to support your goals, take a serious look at syndication where sponsors can get you into good cash flow markets and value add opportunities (i.e apts) in markets far from your home and let them do the work for you. 

    1Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Larry Fried thanks for the reference to the CF you came across. I happen to be visiting my in laws in Eugene. So I'm sending you a virtual high five for sharing your story about the CF for us to follow along with.
    0Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Tyson Cross yes, I'd be i retested in learning more about the professional groups. Could you PM an intro? I'll likely have a few questions.
    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    9y
    Originally posted by @Kevin Jorgensen:

    Larry Fried thanks for the reference to the CF you came across. I happen to be visiting my in laws in Eugene. So I'm sending you a virtual high five for sharing your story about the CF for us to follow along with.

     Thank you, Kevin!  I have actually been on the Coast all day.  Just got back a bit ago.

    0Reply
  • Tamiel Kenney
    Investor · Dallas, TX · Member since 2016 · 168 posts · 195 votes
    9y

    @Kevin Jorgensen @Nishant George  Syndication is very common.  We syndicate deals in Dallas and Atlanta with 1750 apartment units currently.  Syndication allows people to pool together money to buy a larger investment that is otherwise unobtainable, by teaming up with people who already have experience and other investors who just wish to have passive income. This being said, you definitely want to do your research on the lead investor/syndicator, know the kind of return you are looking for an investment and study the markets that you are interested in investing.  The Real Estate Guys say "Live where you want, but invest where the deals make sense."  

    Markets that we look at have the following:  population growth, job growth, landlord friendly, low cost of living, city investment/re-development... 

    We like Texas as a whole (we live in Dallas), but Houston, San Antonio are great markets...Austin is great, just higher priced.  We also like Atlanta, GA and have been looking in Tennessee as well.  I know some syndicators are doing well in OH and OK too.

    You could find a local REIA (Real Estate Investing Association) and attend their meetings. Research BP on syndication to learn what you can about it before you decide to invest your money with someone else. Also, if you want to learn more about Apartments (not just the small multi-units)...research the forums on Apartments. There is a lot of great information on BP to get most of your questions answered.

    If you decide to get involved as a passive investor with a syndicator, feel free to reach out to me.  We can send you a list of questions that you can ask a syndicator. 

    Good Luck!

    2Reply
  • David Thompson
    Investor · Austin, TX · Member since 2013 · 933 posts · 1k+ votes
    9y

    Nishant,

    I posted this  blog on BP on vetting a deal sponsor.  Hope this helps in your search.  Like Tamiel, we are very active nationwide but especially in Texas.  If I can be of any assistance in your understanding, feel free to reach out.

    https://www.biggerpockets.com/blogs/9145/53959-vet...

    1Reply
  • Bill Manassero
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    9y

    @Nishant George

    Welcome to my world.  Born, raised and live in So Cal.  Would love to invest here but not the best place to invest in buy 'n hold.  So, I have investments in GA, TN & IN and am more than happy with my return and equity growth.  Some of my properties are even pulling $300 plus per door.  The greatest thing about investing out-of-state is that you can research and find the exact market to meet your needs.  But you also have to be prepared for out-of-state investing.  It definitely has its pros and cons.  You definitely need to spend most of your time on building winning teams in each area.  80-90% of your success hinges on your team,  Once that's in place you can realize significant cash flow.  If you want to chat or ask questions, please feel free to PM me.  Best, Bill

    0Reply
  • Kevin Jorgensen
    Beaverton, OR · Member since 2016 · 55 posts · 10 votes
    9y
    Hi Tamiel Kenney that would be great to see that list of vetting questions!
    0Reply
  • Brian G.
    Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
    9y
    David Thompson can you share some numbers on small multi in SA (2-4 units)? Price range, class type, rent ratios, etc. Curious. Thanks.
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free