Oregon 1031 Exchange Listings for Sale: Out of State Investor guide to higher yields

[AJ Wong]

We've noticed a very strong increase in out of state investor interest in Oregon motivated by Oregon 1031X Exchange transactions and wanted to share some insight into alternative income producing asset classes that are common, attainable and available in Oregon. 

The name "1031 exchange" comes from U.S. Internal Revenue Code Section 1031. This code allows property owners to avoid paying capital gains taxes when they sell investment property and reinvest the proceeds into another investment property through a qualified intermediary, within a specific timeframe.

For context, we support about a dozen luxury STR investors annually acquire Oregon Coastal vacation rentals with the majority of those clients originating from out of the area or State. During the past three years, a healthy proportion of those transactions were motivated by the sale of property in California or Washington/Idaho or Arizona/Nevada through a 1031 Exchange for coastal homes or multi family complexes along the Oregon Coast or I5 corridor.

For brevity, we'll assume you're familiar with the mechanics of executing a like kind 1031X transfer (if not see here) and focus on why regional investors consistently invest in Oregon for 1031X investment properties and how to search listings for sale. 

- Comparative Value : RV Park, Storage Facility, Industrial, Warehouse, 5-100 unit multi family anyone? These are some buzz RE asset classes that are all relatively affordable and on market throughout the State. From $400-500k boutique hotels, to Lake or Riverfront RV parks for $1M+ to 300+ storage units for $2M these are not institutional asking prices (as are common in neighboring States.) Most investors with proceeds from 'significant' sales from regional States are sufficiently capitalized to secure financing or seller terms on any almost any property type in Oregon. 

- Creative and local financing : As a licensed and active Real Estate Broker in Oregon and California I can tell you there is a comparitively abnormal amount of seller carry or owner financing available on properties for sale and prospective 1031X prospects in Oregon. I personally have closed on a handful of properties with owner carried financing and have negotiated terms for several million in private notes for clients. Often, even if a property does not advertise owner terms, there is usually seller receptiveness for the conversation. Additionally we've found several local lending partners with credit unions that have supported and provided funding for unconventional and difficult property types to finance. 

- Costs and Returns : In overly general terms the cost of doing business in Oregon, (especially on complex property types) is more manageable in Oregon in comparison to let's say...California? Wages, gas, taxes, insurance and overall operations costs tend to be significantly lower than our counterpart. All things being equal, the same property transported across state lines would cost significantly less to operate in OR. Now..of course.. the opportunity in California is usually greater..but it's all relative..except for sales tax. Zero sales tax in Oregon! Due to some of the aforementioned reasons, we've found equivalent capital invested can be compounded in Oregon with greater cash on cash and yield compared to properties of equivalent features or characteristics in other nearby locations. In theory 'investors get more for their money' with Oregon 1031X transactions. 

- Competition & Negotiability : If you're looking for more time to analyze deals and an open dialogue on dealmaking, Oregon has proven to be somewhat of a playground. I've secured terms for myself and clients that you usually only read about on BP. Primarily with creative terms but also general strength of buyer position has resulted in considerable discounts or investor incentives particularly with transactions involving healthy cash portions of 1031 Exchanges. 

Where to find 1031X properties listed for sale in Oregon: Investors can find commercial and income producing listings on sites like Loopnet and Crexi and experienced investor RE Brokers will generally have access to commercial MLS listings also. We created a 1031X Hot Sheet for high ROI investment properties primarily along the Oregon Coast and I5 corridor that are prime investment and income producing prospects. It helps to keep us and clients organized while they search a diverse and complex real estate asset market. We try to include assets like: storage, RV, parking, agricultural, timber, development, multi family, industrial and hospitality.

Would you consider Oregon for your 1031X Exchange transfer? Why or why not?