I live in Eugene, OR home of the Oregon Ducks. Can I make any deals here?

Question

Hello,

My name is Nate Hollembaek. 29 years old in Eugene, OR. Its population is about 157,000 with a metro population of 350,000. I'm sure plenty of you are familiar with this town since it is the home of the U of O Ducks football team.

I have lived here my whole life after a short stent of being away when the economy tanked and jobs were almost non-existent.

Since 2012 I have moved back here and started an air duct, chimney and dryer vent cleaning business. I am a licensed contractor with a specialties contractors license. If I did have to move, I do have a trustworthy employee that I could leave to work the business while I work it remotely. I don't want to give up my main source of income. I don't really want to GC real estate projects, I have not expertise in that field. My business is quite profitable but is still in its start up stages and I haven't saved much money at all for big down payments on real estate investments.

I have been scouring the market, driving for dollars, looking at craigslist, you name it looking for deals. I am starting to wonder how I am going to break the barrier to entry to find my first deal.

My outlook at this market is that it's very inflated and very limited as far as opportunities to make money. Where I see others finding four-plexes for $119,000 I am finding four-plexes for $400,000 to $500,000. I just don't see how you could ever make money unless you had a huge down payment or wanted to buy and hold and hope for appreciation many years down the road.

The positive aspect about this town is it seems to be quite stable, real estate has leveled out and is actually turning around here quickly. I actually read in an article that it is one of the fastest recovering markets in the country.

I would like to hear opinions from you all, what kind of strategies you would recommend. Should I move somewhere where there's more inventory, lower price points, etc? I am not a believer of "grass is greener on the other side" theory, just not sure how to pursue real estate investing as a start up investor in this market.

Thank you for your time! Look forward to reading your replies!

Stephen Sudirgo · Answer

Hi, I'm new to both BP and Portland area. So far I have been owning SFH only, but thinking seriously of getting multi-family homes. With higher cost of multi-family homes in Portland/Eugene areas, do you still get a good ROI? It seems like the rental prices are higher as well. It seems to me, if the ROI is at least equivalent or better than other area, putting higher down payment is justifiable. Thoughts?

Seth B. · Answer

if you are looking for a buy and hold rental, Portland and Eugene are not good options. Mainly because the cost of real estate is so high. Example: Fort Worth TX---2007 duplex, 2100 sqft, 3 bedroom 2 bath each side costs $85,000 and total rent is $1,550/month Portland/Eugene OR--2007 duplex 2100 sqft, 3 bedroom 2 bath each side costs $380,000 (maybe closer to $430,000) and total rent is $2,400/month. So for $380,000 you could buy 4.5 duplexes in Fort Worth with total rents of $6,929.00/month vs $380,000 in this are with total rents of $2,400/month. This is a difference of $54,348/year in rent. So if you tried to argue Eugene real estate might appreciate faster than an area like Fort Worth TX (which it might) it would have to appreciate more than the TX property by $54,380 each year for the length of time you own the property. Which is just not going to happen. Fort Worth is just one of many cities where the numbers for real estate buy and holds work. But in the Pacific North West, not so much. But if your goal is to flip real estate or wholesale, Eugene OR could be a good option.

Nate Hollembaek · Answer

Thanks for the reply! Thanks to BiggerPockets and making some connections. I feel much more confident about my local market. So thankful this site found me and am very excited to start networking and getting things going!

Eric W. · Answer

@Nate Hollembaek I am in the Portland area so I do not know the Eugene market extremely well, but I do know enough about it that I think it is a fairly stable market for buy and hold investments because of the fact that it is a college town as well as an attractive city for people to live in long term. Not to sound too cliché, but you should probably get connected with a local real estate investors association there. It would actually benefit you in two ways (learning about investing opportunities and techniques, AND promoting your current business with the other investors and property managers). There is probably a landlord association too that could benefit your current business. Also, instead of looking at 4-plexes right off the bat, you may want to look for a single family rental that may be more affordable for you to buy. Or maybe a duplex that you could live in one unit and rent the other. Just a few thoughts, but there is always the possibility of partnering to get the bigger deals too.