New to investing in real estate, should I sell my place?

Question

Hi everyone!

Newbie investor here. I've been educating myself for the past few months about real estate investing through books, podcasts and bp.com of course. I've always loved real estate but like in Brandon's book my parent's were not keen on the idea so I unfortunately listened went to undergrad then went to professional school.  My husband and I live in Portland, Oregon and bought a small condo there last year. Like many other young professional we thought buying a place a soon as possible would be the best thing we could do with our hard earned money. It's in an up and coming neighborhood so I did have the idea of renting it out in the future or selling it for a profit. If only I had found BP before!! While crunching the numbers, our current property would provide little if any cash flow if we did end up renting it out even if the property appreciated in value due to high HOA fees.

We've managed to save up to 50k to put into another property but can't decide which way to go. I keep going back and forth between MF and SF but the calculations don't seem to work in our favor. As Portland is a pretty saturated market (thanks portlandia) we're thinking of going elsewhere to invest, maybe vancouver. We were thinking of selling our current property and maybe getting 40-50k from that and adding it to our saved funds as this property is probably not the best to have in the long run.

I'm trying my best not to get discouraged and fall into the group that all these podcast/books/video say talk about, the ones who just never end up doing it because of fear. It can get very daunting though and worry I would not make the right choice. I've been learning from the podcast about investing in properties in different states. Not sure if that would be a better option. Any advice or stories of hope!! Thanks

Lisa Thoele · Answer

Hello Sarah!  I'm a little late on this post but I agree with everyone above.  Unless you can find a terrific off market deal the numbers really don't work in Portland.  You just need to go outside of PDX probably really not too far and there are still deals to be had.  They talk about this a lot on the podcasts - I think pick some areas you are comfortable driving to and start exploring those.  Don't be discouraged just expand where you are looking.  I don't know Vancouver or Camas at all but it sounds like people are finding some good deals there!

Christine Johnson-Sundby · Answer

Hi Sarah,

I'm not sure I'd just sit on the sidelines and wait for the market to "get better."  I found 2 properties off market in Camas and Vancouver and the numbers work!  You just have to do your homework and figure out how to find a distressed property.  DVD, yellow letters, craigslist, etc.  I'm happy to help if I can!

Christine

Sarah G. · Answer

Thanks @Nick G. and @Austin Youmans for your helpful advice I really appreciate the help.

Nick G. · Answer

Hi @Sarah Godil - I don't know your market, but typically I've found that the best advice is just to sit tight in your position. You need a place to live no matter what, and I can't imagine rents are very cheap in Portland, so you're usually better off at least having the benefits of a little tax writeoff and mortgage paydown while you own, plus being able to paint the walls the colors you want, etc.

I'd hang tight if I were you, see if your market goes up a bit more over the next few years (which I personally believe many will, just my professional opinion,) and try to refi and dump your mortgage insurance (assuming you have it) as soon as possible.

In the meantime, hang onto your $50,000, keep growing it, and wait for the right deal. While you wait, spend a lot of time and energy learning your market and its history so you know exactly what a deal looks like (or whatever market you want to buy in. Brandon and Josh always say, you can usually find a pretty cash flow-friendly area within two hours of any major city.)

Lastly, try joining your HOA board, lay low for a while and learn, then see what you can do about lowering HOA fees. It's not always easy, but you can bet that the homeowners will back you. Worst-case scenario, you can still keep an eye on things :)

I personally would not go out of state unless I had once lived there for a good while and still knew it well, but that's just me.

Austin Youmans · Answer

Hi @Sarah Godil,

I would go multi family as it provides safety in numbers and generally more cash flow. You can also get an owner occupied loan on up to 4 unit property. Let me know if you have any questions as I am in the vancouver market.