The future investment potential & risks in Portland, OR

Real Estate Agent · Portland, OR · Member since 2018 · 10 posts · 8 votes

5y

I believe Portland still has a lot of potential to grow. If anything, the homelessness problem is a lot worse in cities such as Seattle and San Francisco. People are still moving in droves to Portland from elsewhere.

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Lara Nicole

OP

Member since 2021 · 23 posts · 20 votes

5y

@Steven Tran

@Steven Tran I visited Seattle recently & it's not nearly as bad as PDX. Other cities have homelessness issues but what makes Portland worse is it's legal to live on the streets so you see tents in every neighborhood & on almost every street corner, unlike other areas.

My question is specifically about the future of Portland, not the current demand.

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Kurt Lane

Property Manager · Portland, OR · Member since 2020 · 50 posts · 39 votes

5y

I agree with @Steven Tran. I've been a rental property owner in Portland for close to a decade and have owned a property management company focusing on single-family and smaller plexes (20 unit or less) for the last few years. The issues that you mentioned - homelessness, decriminalization of drug use, etc - don't have a lot to do with larger trends in the rental and ownership markets and if anything city and state officials see rising homelessness as a direct result of the incredible strong rental market over the past decade. When the initial regulation was passed (Portland's Rental Relocation Assistance) it was a result of Portland's rents going up 11% during 2015-16 when income grew on 4%. All of the regulation in place is an attempt to check rising rents, which should tell you how the market has been faring. Anecdotally, my property management company has 97% on-time rent payments across all of our properties, has leased 100% of our single-family homes the month they went on the market since last July, and has 100% on-time rent payments for all new leases signed since last May. We operate outside of Portland as well (Hillsboro, Beaverton, Lake Oswego, even Oregon City and Sherwood), but overall the market has remained very strong, especially for SFHs. I wouldn't recommend attempting to time a market like Portland. It was the last inexpensive West Coast city, sandwiched between two of the most expensive metros in the country (Seattle and San Francisco), and has geographic constraints that will likely lead to supply outstripping demand both for sales and rentals. I would recommend looking at properties in Clackamas and Washington Counties if you would like to avoid PDX / MultCo regulation.

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Steven Tran

Real Estate Agent · Portland, OR · Member since 2018 · 10 posts · 8 votes

5y

Yes sorry @Lara Nicole I should have answered your question directly. I still think Portland has a lot of room to grow in terms of demand, I think that there will be pockets of Portland that become worse as more affluent people move in, drive up prices, and push people outside of city limits.

As an investor myself, I've purchased in Vancouver, WA and Hillsboro, OR as longtime residents are pushed out to the edges of the metropolitan areas. I don't see Portland itself getting cheaper, I think there will always be a demand for being within city limits.

I've actually lived in San Francisco and Seattle for many years and it is much much worse; the homeless and drug problems are very bad, and there are drugs/needles throughout the streets, and they are much more aggressive. I do think that the problem will become worse here as in other major cities on the west coast, and I don't really know what the best solution for that is; in my experience people just get used to it in those cities (that's why you have areas people know to avoid in those cities, like the Tenderloin in SF and Skid Row in LA).

Sorry I don't have better news for you; I've seen Portland evolve a lot (Portland native, born and raised), I see a decline in quality of life in Portland, but not the real estate market.

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Jonathan StonePro Member

Rental Property Investor · Camas, WA · Member since 2020 · 284 posts · 202 votes

5y

I agree with @Steven Tran and @Kurt Lane. As someone who has spent much of his life in the Bay Area and Los Angeles I realize that homeless population and future housing prices are not often correlated. Also I feel strongly that not only is the city of Portland going to continue to grow but Hillsboro and Beaverton still poised for rapid growth in population and housing prices.

There are only so many metros on the west coast and Portland is by far the least expensive. We can't compare climates to San Diego or Los Angeles, but pricing is substantially cheaper than San Francisco and Seattle with similar geographic advantages. The beach is 2 hours 1 way and the mountains 2 hours the other. With the primary economic drivers in the middle. To my knowledge that doesn't really exist in the South or on the East Coast.

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @Lara Nicole:

I moved to Portland, OR with the intent to buy a SFH & house hack or purchase a multi-family. However, Portland has declined substantially in terms of homelessness taking over every neighborhood, trash piles everywhere, increased crime, looting & drug use, graffiti everywhere you look & the tenant laws are very anti-landlord. I just saw a new city proposal of making camping in parks legal. This is already happening esp in Laurelhurst Park but if it passes then we will see all our lovely parks overtaken with tents, trash & more crime. Plus decriminalizing hard core drug possession is only going to increase crime & chaos.

All of these issues are increasing, not declining & I don't see the light at the end of the Portland tunnel anymore. The current & proposed laws are all in the direction of increased homelessness & liberal drug use. I do love certain aspects of the city but have serious doubts about the long-term viability of Portland.

As we stand now, the demand for housing is off the charts with buyers overpaying due to low interest rates, but what are your thoughts on the housing market & Portland's health as a whole 5+ years from now?

Do you see the demand & appreciation for single family homes declining in the near future? I think as the homelessness increases as with the wacky laws & the lack of police officers we will see a major decline in 5+ years. Thoughts?

IMO you have to be INSANE to buy in Portland.

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Jonathan StonePro Member

Rental Property Investor · Camas, WA · Member since 2020 · 284 posts · 202 votes

5y

@Cody L.

I’d like to hear why you think you need to be insane to buy in Portland.

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Travis Athougies

Member since 2019 · 7 posts · 4 votes

5y

I think it's telling that the only people encouraging you to buy in Portland are those that stand to make money from more REIs in the area (a property manager, a contractor, and an agent). The one voice saying not to buy is a Real Estate Investor from San Diego.

For me, as a recent Portland transplant as well (moved for family), looking to get into real estate investing, I was hoping pre-COVID to get into the market locally, but now I'm thinking I may start looking in the outer suburbs, perhaps north of the border in Washington), or in other states completely. Portland is a trash heap right now, and it's not looking good. All my colleagues are attempting to move to states like Tennessee, Florida, Texas, and Arizona.

I would buy in Portland if I felt the prices were low enough and that the market was underpricing the potential uside, but right now it seems that the market is overvalued if anything. You cannot honestly tell me that a mediocre house located next to a stinking trash heap is worth 500k+. That's insane.

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @Jonathan Stone:

@Cody L.

I’d like to hear why you think you need to be insane to buy in Portland.

Over priced (thus no short term cash flow)
Social decay (IMO - thus poor future prospects)
Adversarial government (laws are all in tenants favor. Current or upcoming rent control, eviction moratoriums, taxes, 'business man = evil oppressor', etc)

I see no upside to what would be poor day 1 numbers.

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Jonathan StonePro Member

Rental Property Investor · Camas, WA · Member since 2020 · 284 posts · 202 votes

5y

Originally posted by @Cody L.:

Originally posted by @Jonathan Stone:

@Cody L.

I’d like to hear why you think you need to be insane to buy in Portland.

Over priced (thus no short term cash flow)
Social decay (IMO - thus poor future prospects)
Adversarial government (laws are all in tenants favor. Current or upcoming rent control, eviction moratoriums, taxes, 'business man = evil oppressor', etc)

I see no upside to what would be poor day 1 numbers.

Appreciate the feedback Cody. I have been looking primarily outside of the City of Portland and Multnomah County specifically for some of the reasons you mentioned. However I would ask if the city of San Francisco and Los Angeles don't also have similar concerns but over time have worked well for investors.

I also see your point of if it doesn't cashflow now then why invest in this market. I think all investors need to find places to invest that work for their goals and having positive cashflow is often a defensive technique that allows us to invest in a downturn.

Given the currently very tenant friendly laws what do you think of the possibility longer term of more neutral laws in Portland and how that would affect the housing prices and desires to invest? Say in 5 years the rent increase caps were removed and relocation allowance removed? Would that not be a boon to investors who owned in the area over that period?

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Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

5y

Originally posted by @Jonathan Stone:

Originally posted by @Cody L.:

Originally posted by @Jonathan Stone:

@Cody L.

I’d like to hear why you think you need to be insane to buy in Portland.

Over priced (thus no short term cash flow)
Social decay (IMO - thus poor future prospects)
Adversarial government (laws are all in tenants favor. Current or upcoming rent control, eviction moratoriums, taxes, 'business man = evil oppressor', etc)

I see no upside to what would be poor day 1 numbers.

Appreciate the feedback Cody. I have been looking primarily outside of the City of Portland and Multnomah County specifically for some of the reasons you mentioned. However I would ask if the city of San Francisco and Los Angeles don't also have similar concerns but over time have worked well for investors.

I also see your point of if it doesn't cashflow now then why invest in this market. I think all investors need to find places to invest that work for their goals and having positive cashflow is often a defensive technique that allows us to invest in a downturn.

Given the currently very tenant friendly laws what do you think of the possibility longer term of more neutral laws in Portland and how that would affect the housing prices and desires to invest? Say in 5 years the rent increase caps were removed and relocation allowance removed? Would that not be a boon to investors who owned in the area over that period?

I've seen nothing to suggest that laws there would become more LL friendly. The place has been drifting politically left for a while and with that tends to come a more business unfriendly government.

I wouldn't invest in LA or SF for the same reasons. But that's just me. I'm sure you could find people that invest in LA, SF, portland, etc that do awesome. I've found my own little niche that's served me well in Houston and I'm sticking to it :)

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The future investment potential & risks in Portland, OR

The future investment potential & risks in Portland, OR

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