Tips for Oregon?

Question

Hi everyone,

I'm about halfway through the Rookie Bootcamp and trying to absorb as much information as possible. I've also read Ashley Kehr's new Real Estate Rookie book, and I'm reading Buy, Rehab, Rent, Refinance, and Repeat by David Greene and will follow that with J. Scott's Estimating Rehab Costs.

I've started looking at markets in Oregon and would love any tips anyone who has invested in Oregon has on profitable markets and what strategies work.

You will probably roll your eyes at the following statement because I'm sure all of us newbies gravitate toward it — "I've been looking at BRRRR."BUT

I'm unsure if it is suitable for a newbie as it seems to require a solid understanding (which I lack) of both buy and hold coupled with principles from a flipping strategy. Also, as a newbie with the interest rates being what they are, the margin for error on a BRRRR now seems razor-thin. Half the people I talk to say to stop reading about it and do it, and the other half tell me to hold off until I learn more.

Is there an alternate strategy to get me in the game that works in an Oregon market? House hacking is not really in the cards with my family situation at the moment.

Note: I live near Portland in Lake Oswego but am open to considering any Market within 3-4 hours away.

Nathan Gesner · Answer

What are the three most important things to consider when buying real estate? Location, location, and location!

I agree you should jump in. I disagree with jumping into the Portland market because it is becoming increasingly hostile to Landlords. Rent control, dictating when you can terminate a lease, requiring relocation assistance of $4,400 for a 2-bedroom unit, etc. These are the "locations" that can make good money, but they can just as easily take your money and make your life miserable.

I recommend starting in a state with fair laws, that protects property rights, and has a reliable judicial system. Then look for a city with a strong market and projected growth. Then pick your neighborhood based on schools, crime rates, and other demographics. Location, location, location.

Scott Bowles · Answer

I dont see an issue buying in Oregon but might be prudent to stay out of the Portland metro, everyone who thinks it is some sort of apocalyptic wasteland is not from Oregon. Just buy something in decent shape and screen meticulously. I see decent deals in Salem all the time I am looking to buy my next multi unit there or in Vancouver...

James Wise · Answer

Leave! I would rather have a brick dropped on my face than attempt to manage tenants in that horrible state known as Oregon.

Steve Milford · Answer

I think the rule should be "look at 100, decide on 1". They're is no magic formula, it is just continuously sifting sifting sifting, every property is a little different. I see a lot of investors "hoping" the numbers work, but you need to evaluate enough until your gut says go. No different than other types of investments, like stocks. Just remember, that sometimes you have to take a chance to win, and just win more often than you lose. That's where you beat analysis paralysis. Wherever you consider, be sure to look at rental code of city. Yes Portland's relocation sucks for landlords. We all want winners, but with a little skin in the game is where we learn fastest. I learn by hard knocks.

Lawrence Potts · Answer

Glad to have you here Jamie! More than happy to help you out.

It honestly depends on your long term goals. Here’s a truth: you most likely will not cashflow yourself to financial freedom, success, whatever you want to call it, in the state of Oregon with residential real estate. And that’s okay. We take what the market is giving us, play with the cards dealt to us, and we can still make it work.

Technically the BRRRR strategy has the “flip concept” built in with a few tweaks to your numbers. The rehab portion should be the point where you have two options: rent, refinance, repeat, OR flip, profit, repeat. If you are owner occupying this, it’s easier to refinance and repeat because your LTV requirements are favorable versus non-owner occupying. It really depends on the deal and your margins, deal by deal.

There are markers in Oregon that are “profitable”. But I’m assuming you’re saying profitable as in flipping? Or profitable as in cashflow? Or equity? Focus on suburbs surrounding high population growth that are following job growth. Look at Happy Valley: they exploded in the last 5-10 years. And the housing market followed. Canby is growing a lot. You could go southwest towards Newberg, Tualatin, etc. Even as far south as Salem. But identify where large job growth is happening (Amazon, HP, etc.) and housing should follow. Couple that with any areas that have severe inventory limits and are not building new (Corvallis versus Salem) and that can be a huge incentive as well.

I don’t know what your goals are so I can’t answer your question very well; if house hacking isn’t in the cards, what are your cards then? Can you owner occupy a live in flip and then refinance and move on to the next one? Can you live and flip and sell? We’d love more details to help.

You could buy, rent and hold, maybe cashflow, maybe not, but hold for a few years until you’ve gained enough equity through appreciation and principal paydown and then sell 1031 exchange into cashflow (if that’s your goal). Maybe syndicating might be better for you? Or partnering up with someone?

Hope that helps!

Jonathan Stone · Answer

Unfortunately the Portland Metro is now a speculation market like most of the west coast. Can you put enough work in/money down to cash flow, yes. Most properties are not going to cashflow in most neighborhoods without significant work or low LTV. We have been lucky enough to buy, and take our previous primary and turn it into a rental. Buy a vacation home and turn that into a rental. Those options still exist, you would still be looking at rents appreciating over 5-10 years to really make the property cash flow well but debt pay-down and appreciation could be available if the market continues to grow.

I like the growing suburbs as mentioned above. If you are playing the long game, strong school districts with reasonable commute distances to the economic hubs in the area, just like most other metros.

Cory Carlson · Answer

The BRRRR method in our market is really a capital/equity play. The reality is, when you're all done and in the refinance part, single family properties are underperforming at their current value and recent rise in rates. Round numbers scenario of buying a property for $250k, fixing it up, renting it out and its new higher current value has allowed you to pull your money invested back out. The problem is following a refinance at 75% LTV the debt service is likely to kill any opportunity for cashflow. The good part is you now own a property, the bad is it underperforms from a buy/hold perspective if you're using a realistic expense load. Many clients I have worked with were okay with this knowing this is how you get started building a portfolio and operating with this margins then to exchange out of the portfolio into a larger higher yielding property. If you're open to any market within a few hours of LO (Go lakers), consider Salem. The rental market is strong and I am finding a bit less competition then the Portland metro.

Account Closed · Answer

Hello,

As you mentioned, BRRRR requires a solid understanding of both buy and hold and flipping strategies, and it can be challenging to execute successfully without experience. Additionally, with current interest rates, the margin for error is indeed thin, which adds another layer of risk for new investors.

You asked if there is an alternative strategy that can help you get started in the Oregon market, and I would suggest looking into turnkey rental properties. This strategy involves purchasing a property that has already been renovated and is ready to rent out. You can typically find turnkey properties in up-and-coming areas that offer good cash flow and long-term appreciation potential. The benefit of this approach is that it allows you to get into real estate investing without having to deal with the headaches and expenses of rehabbing a property yourself.

Another option you might consider is partnering with an experienced investor who can help guide you through the process and provide support and advice.

I live in salem and plan on buying multi-families here because of the research trends and its close to my day job.Heres a quote from my AI Chat GPT report about the salem market

"Salem, Oregon is the capital city of the state and is home to a diverse range of industries, including healthcare, government, education, and agriculture. The real estate market in Salem has been experiencing growth over the past few years, with new developments and investments being made in various areas of the city. In this report, we will examine the market trends in Salem's real estate industry, focusing on the past five years.

Market Trends:

The real estate market in Salem has been experiencing growth over the past few years, with increasing demand for both residential and commercial properties. According to Zillow, the median home value in Salem is $356,000, an increase of 18.6% over the past year. The median rent price in Salem is $1,765, which is higher than the national average of $1,650. The market has been trending towards a seller's market due to a shortage of inventory, which has led to higher pricing and a lower percentage of listings receiving multiple offers.

Homelessness:

Salem, like many cities in the US, is grappling with homelessness. According to a point-in-time count conducted in 2021, there were 1,673 individuals experiencing homelessness in Salem. This is an increase from the previous year's count of 1,562. The city has been working to address the issue through a range of initiatives, including the development of more affordable housing units and the expansion of services for homeless individuals.

Key Industries and Major Players:

Salem's economy is diversified, with a range of industries contributing to the city's growth. These industries include healthcare, government, education, and agriculture. The city is home to several major players in the real estate industry, including:

• Coldwell Banker Mountain West Real Estate, Inc.: Coldwell Banker is a leading real estate company in Salem, with several offices throughout the city and a large team of experienced agents.
• John L. Scott Real Estate: John L. Scott is a real estate company that has been serving the Pacific Northwest for over 85 years. They have a team of experienced agents in Salem and offer a wide range of real estate services.
• HomeSmart Realty Group: HomeSmart is a technology-driven real estate company that offers a range of real estate services, including buying, selling, and financing homes.

Growth Rates and Notable Shifts:

Salem's real estate market has been experiencing growth over the past few years, with increasing demand for both residential and commercial properties. According to Zillow, the median home value in Salem has increased by 18.6% over the past year and is expected to increase by another 8.8% over the next year.

One notable shift in Salem's real estate market is the increasing demand for affordable housing units. With the city's growing population and limited inventory, many individuals and families are struggling to find affordable housing options. The city has been working to address this issue through the development of more affordable housing units and the expansion of services for low-income individuals and families.

Rental Rates:

The rental rates in Salem have been increasing steadily over the past few years, with the median rent price being $1,765, which is higher than the national average of $1,650. This increase in rental rates can be attributed to the growing demand for rental properties in the city.

Vacancy Rates:

The vacancy rates in Salem have been relatively low over the past few years, hovering around 5%. This indicates that there is a high demand for rental properties in the city, which is driving up rental rates.

Property Taxes:

Property taxes in Oregon are based on the assessed value of the property, which is determined by the county assessor's office. The property tax rate in Salem is around 1% of the assessed value of the property. For example, if a property is assessed at $300,000, the annual property tax would be around $3,000.

Bob B. · Answer

Hi @Karen Chow !

Go to the "Learn" tool dropdown.

Then click on "Events".

Filter by Location: "Portland" and you'll see the events I'm helping host. Educational!

Karen Chow · Answer

Hi Bob. Where would the events page be? I'd be interested in coming. I live in West Linn and work in Wilsonville.

Tips for Oregon?

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