Please Help: Want to purchase a duplex or triplex...but where? Oregon, Washington??

Question

Hello Everyone,

This is my first post and I could really use some advice. I want to purchase a duplex or triplex but keep running into issues when I try to identify WHERE I might want to make the purchase. I would GREATLY appreciate your advice/recommendations.

Here are some details/background information:

1) I have never owned a home. I have always rented in very beautiful, expensive areas that I loved living in but financially were out of my reach to purchase a home.  I currently live in Laguna Beach,CA but previously lived in Boston, Cambridge, London and Paris.  I cannot afford a home in Laguna Beach (teardowns are over $1 million here) so I am looking to invest elsewhere and most likely out of state.  While I want to purchase real estate as an investment I am finding it hard to figure out WHERE I could afford that I would also want to live someday.  I know the ideal is to purchase near where you live but the places near me that I could afford are not areas I would want to live in.

2) I would like to purchase a duplex or triplex so that when I "retire" in 10 years or so I could live in one unit and have income from the others.  I have enough money for a downpayment (and I have excellent FICO scores) but when I think about WHERE to buy I keep being drawn to areas that already are, or are becoming, very expensive.  For example, I am from the East Coast originally but have decided I want to purchase on the West Coast so have been looking at Oregon for a variety of reasons.  (I will most likely remain in California for my work and move to the area where I purchased real estate when I retire.)  I like Portland but knew it was increasingly expensive so I started to research other areas in Oregon.  I found a nice place in Lake Oswego and Manzanita (places I had never heard of) but when I researched those towns it turns out they are expensive too.

3)  Some things that are important to me:  Turn-key because I don't have the ability to be in Oregon overseeing a renovation.  No ugly looking houses.  I typically like renovated Victorians, Craftsman or quality-built modern, "green" homes.  Good schools (I don't have children in school but I want the people I rent to to have access to good schools for their children).  Low Crime. Low Vacancy rate.  Nice, walkable neighborhood with interesting shops. Oh, yeah, and a GAS stove.  What is it with all the electric stoves in Oregon???

4) What should I do?  I have been reading all I can on this wonderful site and I have been listening to the podcasts, too, which are great.  I think I am scared because this investment is something I need to help me have an easier retirement scenario so I need to be very smart about what I do.  Can you advise me on where might be good areas for me to look?  I haven't had time to research Washington yet but the same things that are important to me in Oregon would be important to me in Washington.  I will probably qualify for a mortgage of $500k but it makes me nervous to have so much debt so I would want to make sure the investment is truly a good one that covers the mortgage, expenses and cash flows.  I will be going to Oregon at the end of May to look around in different areas that might be good for investment and also attractive enough environments that I would want to live there.

I apologize in advance if I am sounding too unrealistic.  I appreciate any and all advice or recommendations.

Thanks, for your time and consideration.

Michele

Michell P. · Answer

Researching a place to retire online is a nice way to spend the day, but probably not a good realistic strategy.  You need to go on a road trip and visit all the places in Oregon / Washington that hit all the checkboxes on your needs list.  You don't really want to settle on a place that looks good online only to find out it just doesn't vibe with you.

I'd suggest looking into Tualatin, Woodburn, Milwaukie, and maybe even Corvallis / Eugene or Hood River.  So basically, come on up the 5 and detour down the Columbia River for an hour or so.  Each place has it's own little personality and pos/negs for investing.

Goodluck!

Account Closed · Answer

@Mimi Essie,

Is your bank pre-approval for an investment property/second home or primary residence?

In the Portland metro area (not Lake O) you could find a listed 3bd/2ba duplex for $300k+ in a C+/B- area that is "turn key".  Rent will be $1000-$1300 a month per side and will not cover your operating costs (unless all cash purchase), especially when you need a property manager.  If you were "house hacking" from the start you would have better financing (primary residence) and you wouldn't take as big of a hit on your cash-flow if you tried to rent both sides with property management.  Or you could find a wholesaler and buy an off-market unit that needs signification rehab.  If you go that route, financing will be difficult if you are not going to live there, hence the original question.

@Joseph C. is right about networking and creating a team as soon as possible and is also right about property management companies.  Kind of like no one will watch/care for your kid like the mother would.

@Adam Ng has a good point about cash-flowing investments a little closer to home and would be the rout I would go if I lived in the area.  But it sounds like you are looking for a place to retire in the area.  If this is true then you may be tempted to ignore the numbers like most do with there primary residence.

Randy Johnston · Answer

@Mimi Essie

I agree with Michell P., there are many beautiful locations in the Pacific Northwest, but you're not going to find them online. It sounds a road trip is in your future.

I'm partial to the Portland Metro Area . . . my wife and I love walking around Downtown and the Pearl, as well as Northwest. I live on the West side and though the properties are not as expensive as close-in, it's still tough to cash-flow. But that said, vacancy rates in the Portland Metro are in the 2% - 3% range, so it'll be easy enough to find tenants.

Darin Knight · Answer

@Mimi Essie,  I don't know the rules as I'm new and I'm not an agent, I have no skin in the game, but given your post, I would search for the property below.  Triplex at $775K.  It's the type of location with walk-ability that would work for you.

2349 NW Hoyt St, Portland, OR 97210

I've been looking in Vancouver WA as there is nothing in the $300K price range that I'm looking for.  Not sure there is anything with walk-ability in PDX under $500K.

Darin Knight · Answer

@Mimi Essie, you sound like you want a duplex in NW PDX around 23rd street.  Rents have been doing quite well, and vacancies very short as you'll have a line of people waiting to rent.  Problem is, I don't think your $500K budget will get you what you want.   Conversely, you could have the nicest duplex in downtown Vancouver WA for under $500K.  My interpretation of your post is that you want a retirement home.  Don't beat yourself up on the analysis or the profitability.  Find the location you love first, then secure the deal second.

Mimi Essie · Answer

@Joe Mercer, @Joseph C., @Adam Ng, and @Daniel Nebergall thank you all for your input and suggestions. I have pre-approval for an investment property.  It's true because I am thinking of retiring in the Pacific Northwest I would like to purchase in an area that I would also like to live in (hence my difficulty in identifying an affordable area.)  HOWEVER, I know it's important to NOT ignore the numbers as @Joe Mercer so wisely points out and I keep trying to remind myself of that but every time I seem to really like a house, or an area, it tends to be in an expensive area that would not be a good investment.  I guess I am looking for a "happy medium" if such a thing exists.  I want to be smart about this which is why I am reaching out to knowledgeable people like yourselves.

Are there recommended areas in the Pacific Northwest that would be good investments for me, that are beautiful, and that I'd also like to live in someday?  That is what I am trying to figure out.  Thank you for your help!

Daniel Nebergall · Answer

Lake Oswego is the wealthiest city in Oregon! I would think looking at other suburbs of Portland would be a little more reasonable.

Joseph C. · Answer

Hi Mimi,

Investing out of state is not in it self un-realistic. I would make a trip or 2 to the areas you are considering to investigate the area. It sounds like you will need a good team to help you manage the property. Do your homework and gather background info on realtors, management companies, handy man, and contractors. Make sure that you get a solid team together. Speaking as an investor that invests out of my living area, a bad team / team member can wreck your investment and cause you undue financial stress. If you can not find a solid team in that market move on to another market.

Even if you chose to go with full management, I would still manage the management company. No one will care for your investment like you!

Hope this helps you out.

Please Help: Want to purchase a duplex or triplex...but where? Oregon, Washington??

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