The Top Five Cities and regions to invest in Multi Family Property in Oregon

[AJ Wong]

Oregon covers a vast territory but the optimal areas for Muti family property investment is fairly concentrated.

In the past two years we've supported about a dozen multi family investors (primarily from out of State) acquire assets throughout Oregon. A handful of duplexes and a handful of 5+ unit properties utilizing a variety of creative financing solutions. 

From my experience, here are the top five areas in Oregon I would focus on for high value, high potential with upside for multi family investment in Oregon:

- Eugene/Springfield/Junction City - In my opinion the heart of the State (at least for MFR RE growth and development) Anchored by the University, lifestyle and affordability, in some places it reminds me of Boulder 15 years ago. The city of 200K+ people is very favorable to ADU development. Duplexes generally have high interest and begin in the $200-250k/door range. Quadruplexes are in the $700+ rage and 5+ Units can range from $100-200k per door depending on the layouts and condition of the units. As you drive north and around the Eugene airport (with exceptional accessibility and cheap flights to most west coast cities) there are several of the largest homebuilders such as Lennar developing communities as I type..I read an article last week that had Eugene in the top 5 cities that millennials were purchasing homes. Come to think of it..my last buyer there was actually Gen Z.

- Albany/Corvallis/Salem - Continuing north along the I5 corridor and also anchored by Oregon State University are the areas between Eugene and Salem. I had a client invest in Albany, and ended up liking it so much they moved into one of the units for a period of time. The market is slightly less competitive and offers 5-10% more value, the last Triplex we sold in the area was for $500K and a recent duplex in Salem at $420K. 

Coos Bay/Northbend- The largest city on the Oregon Coast, Coos Bay has its history. Primarily a logging town, it has gone through economic ups and downs but has recently seen significant investment and revitalization. There's even a new Starbucks in town.  It offers one of the West Coast's deepest water ports and there has long been proposals to develop the facilities and capacity. Larger complexes typically range in the $85-100k per door range. Triplexes can often be acquired in the low $400's, prime duplexes in the low $400's as well. We sold a 7 plex two years ago for $800k-. There's an 18 plex on market for $1.8M 

The Oregon Coast- Inventory is generally limited but when you can find it, beyond Coos Bay there is always demand for long term coastal housing. It's not quite California demand, as the area supports a much lower economic and demographic profile, however there is still a robust economy and community in most cities and with remote work, increasingly, young families and individuals moving to the coast for value, lifestyle and opportunity. I work with a friend that moved from Las Vegas to Brookings Oregon...I'd say from Florence north to Warrenton and Astoria are all prime regions. We sold a large 3/2 X 2 duplex in Warrenton for $550K+/- and helped several clients acquire duplexes with views in Astoria around the same mark. In the Lincoln City/Newport area there is a lot of hidden potential for MTR or medium term rentals (furnished 30 night+) as there are medical and coast guard professionals that need long term, convenient housing. Probably the best example of value we've participated in was six detached units, walking distance to the beach around $650K. 

Bend - I'm personally not super active in Bend outside of luxury Sun River STR's but the place is booming. Definitely a higher price point for investment with Duplexes in the $600k-800k+ range. Larger footprints don't come to market very often and generally command high interest. There are also frequently multiple homes on the same lot or that offer dual living potential.

Bonus - Portland Suburbs. Portland certainly has its fair share of problems, but the real estate market there is still very active. The areas surrounding Portland offer refuge from the city and generally speaking offer higher rents (compared to other parts of the State) and reasonable acquisition value. There are some really charming areas in all directions within a short 30-60 minute drive of PDX. I've had my eye on a detached four plex south of Portland asking $450k 

BonusBonus - Grants Pass/Medford/Ashland. No list would be compete without Ashland. lol It's a really charming city that you normally won't pass through unless you're looking for it. East of Grants Pass at the Southern Tip of the I-5 corridor is a region that can offer some very affordable entry points for rookie or lower price point investors. 

Creative financing is also an incentive that can be found fairly frequently on multi family portfolio properties in Oregon. A healthy percentage of higher density multi family properties are open to seller carry or owner financing. Typically terms are negotiable but reasonable. We've coordinated several in the 20-25% down range at 5-7% interest only on a 2-3 year balloon. In general if sellers are looking for a larger down payment we try to introduce them to local credit unions or lenders that can utilize compensating factors for qualifying on more favorable long term financing solutions. 

Low operational costs are also attractive for West Coast buyers. Utilities and insurances are typically much lower than California or Washington and quality Property Management typically runs from 8-10%. 

Oregon does have tenant laws that need to be taken into consideration (more on that later.) As with many areas, current rents can be below market rents and take some time to maximize cash flow (especially with interest rates where they are today.) We put an emphasis on vacant prospects, those with separate meters and realistic balance sheets which when combined with the right financing terms and management can still produce a healthy and safe addition or anchor to a portfolio. 

Of the two multi family transactions we've assisted so far this year; one went pending in one week and the other had a back up offer, so timing and preparation are definitely critical to execution. 

*Development opportunity for multi family in Oregon is ripe. There is a genuine housing shortage for both rentals and investors. 

**Increasingly lenders are expanding their investment and DSCR programs to 5-10 units. At the moment the interest rates aren't great, and the appraisals usually aren't cheap but they can get done.