First RE Investment - Oregon or OOS?

Question

Hello BP Community,

I've been lurking through some of the threads on here and this is my first post. I'm looking for advice on my first real estate investment. My goal is to invest in a SFR or small multifamily for cash flow and hold it for awhile. I've got around 50k-100k I'd like to put toward my first deal. The problem I keep running into is that I live in Oregon and I may be wrong on this but it seems like most properties are overpriced and are more speculative appreciation plays, like in the Portland market. I'd prefer to invest closer to home, where I can drive and see the property before buying and make ongoing maintenance easier and all that. That being said, I've looked at properties in places like Kansas City and Columbus and they look much more attractive, especially as a new investor who'd prefer to risk less.

So my question to you is, if you were in my shoes starting out would you pay more and invest close to home in a pricier West Coast market, or build a "core four" team and invest OOS? Also, does anyone have any thoughts on Roofstock and whether you think its worth the time saved to use their platform for OOS investing?

If you're in Oregon, it'd be great to connect! I wish everyone luck in their investments.

Cory Carlson · Answer

The entry barrier for investing is pretty high in our Oregon market. The single family market even in the secondary/tertiary markets are priced out and if cashflow is your initial goal. You will be hard pressed to find something with that amount of capital that provides a positive leverage return (CoC exceeding the cost of financing).

Yes Oregon is a market that sees healthy appreciation, but from a wealth building perspective you cannot rely on that. Buying, holding and hoping is not a real estate strategy. Put your money somewhere where it is working for you with a healthy position on the yield curve.

One strategy that does work with that amount of capital is the forced appreciation play in the secondary small-plex market. To oversimply it: Acquiring a duplex with low rents and deferred maintenance. Raising rents to market, doing those fixes in theory raises the value when using the income approach. Its sort of like the soft version of a single family BRRRR. The more units you have, the easier this strategy is to forecast/project.

Consider finding a partner/additional capital and doubling your money? You're right on the cusp of capital.

Jay Hinrichs · Answer

there are plenty of opportunities in the US no doubt.

But keep in mind if you get to some of the satellite cities around PDX prices mello out.

I personally would avoid MULTnomah county as a small landlord  the new rules I dont like.

short of that.. U may want to consider Vegas..  some of the best fundamentals when it comes to risk maintenance and prop tax's in the country plus short direct flight and a fun place to stay .

Melinda McDonald · Answer

Ben -

Kansas City is a strong market and seeing good returns.  @Caleb Brown would be a great to to resource for you as you consider this market.

Please reach out to me as well.  All the best...

Melinda

Ben Barr · Answer

I'm tracking with you on the buy, holding, and hoping strategy not being the best way! I like the idea of a forced appreciation play with the duplex though.

Ben Barr · Answer

Deal! Added you.

Sharon Beatty · Answer

@Ben Barr I've been struggling with the same question. I live in Portland and am not finding anything that cash flows even in the greater area including Vancouver and heading down to Salem. With that said I only have about 30 K to invest so you're way ahead of me there. Please keep me posted on what you decide to do and I'll let you know what we decide on. Deal?

Mike D'Arrigo · Answer

@ben barr

Start by clearly identifying your objective and criteria. If it's cash flow, how much cash flow do you want and what ROI do you expect? Portland is a fairly high cost market so if you're goal is cash flow, it won't work for you. I don't know if any of the satellite cities work but if so, they probably won't have the appreciation that Portland does and all you may be doing is compromising both. Personally, I'm a believer in picking a market that best fits your investment objective regardless of the location. The other thing to consider is that with $50K-$100K down, you can afford to buy 2 or 3 properties in more affordable markets like Kansas City, Indianapolis or the Quad Cities in IA. Having a portfolio protects you when things go wrong, and they will at some point, by spreading the risks over more properties. The most important things to look for in any market are growing populations, growing jobs, modern economies with a diverse employment base, business friendly climate, low property taxes and favorable landlord tenant laws.

Kendall Short · Answer

I agree with Melinda. I suspect many more OOS investors to focus on Kansas City in the coming years. The ROI is extremely attractive compared to the coast, your money can stretch further, and the forecasted appreciation is going to make investors lots of money!

Shoot me a message with any questions.

Brad Hammond · Answer

Hey @Ben Barr, congrats on getting the real estate investing bug!  For that amount of capital, you are better off investing out of state.  If you were to invest locally, the property would likely need lots of work and probably not be in an ideal area.

Caleb Brown · Answer

@Ben Barr

Good part about markets like yours is the strong appreciation which you can use to invest OOS. Happy to chat on KC

First RE Investment - Oregon or OOS?

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