Portland, Oregon for Cash Flow?

Question

Hey BP! I'm a new investor that just moved to the Portland/Beaverton area and want to invest in RE. Though I'm noticing a trend that the market up seems tricky.  Prices are really high and after analyzing deals, I notice that I wouldn't make cash flow with a traditional down payment of 20%.

I had an agent create an automatic email alert from the MLS when deals become available. which has been my main source of analyzing deals.  I wanted to know what others in the area have seen in terms of the market.  Are most of the 'good' deals coming from pocket listings or by nontraditional ways?

I had been looking at multifamily houses, but perhaps for the area I should focus on different properties- thoughts?

Thanks,

AJ

Omid A. · Answer

It's hard to find cash flow in the Portland metro, but it's possible. You'll need to look for off-market sources of inventory. I just recently closed on my first rental in Hillsboro that I'm doing the Buy, rehab, rent, refi strategy to pull all of my money back out (80% LTV) with a solid amount of cash flow still remaining. So that goes to show you it's out there but it's a grind to find them no doubt about that.

Steve Moody · Answer

It seems like the only way to go in this area is to find a very good deal off- market, renovate, then either sell to one of the suckers who thinks rent just barely covering the mortgage is enough, or keep it and rent it out yourself. I've looked at multifamily on MLS on and off for a year and have only seen a couple deals that might be workable if you get it at discount and have the resources to do a full reno. Most people listing on MLS want $380k for a duplex that pulls $600/month in rents. But hey they're all "below market rents" yet they're selling instead of raising rent? :-D

I think most people who find deals (real ones are out there) do it off-market either in their own or through a wholesaler

Nicholas Cook · Answer

@AJ Singh, Portland is a tough market to make things cash flow, especially at retail prices. Some plexes with and multifamily does, but the rates of return can be pretty low. Cap rates are in the 4%-5% range.

I would consider looking at surround areas outside of Portland as an alternative.

Steve Milford · Answer

My 2 cents.

I don't know other markets so I have nothing to reference to on that end. Likewise, if you are comparing this market to others - the numbers might not make sense, based on what you are used too.

Regarding finding deals here? Just remember, if you shop on MLS then most properties are going to be retail mostly. Want something off retail then look elsewhere or look long and hard. I have found some great deals on the MLS and to me is the best ROI based on sourcing costs and time involved.

Derrick Aragon · Answer

@aj

@AJ Singh how much money do you have to invest? Why not get together with someone that is doing larger multi family. Get a friend or 2 and go in on a deal?

AJ Singh · Answer

@Omid A. Great to hear you found something in the area.  Yeah, it seems like only off-market deals are worth it at this point.  Thanks, it gives me hope that some deals are still out there.

Anna Kampa · Answer

@AJ Singh Yep, pretty much how it is here! Everything I've looked at so far is unable to cover my portion of rent completely, and would cash flow about $100 (or $50/unit) once I move. Either that or it has negative cash flow once I moved out. Haven't been looking long though, or searching anywhere but the MLS. So my view is pretty narrow!

AJ Singh · Answer

@Steve Moody Yea, I've seen a lot of comments regarding 'below market rents' and I keep thinking why wouldn't they do it.  So have you stayed the course on multifamily or gone another route?

@Anthony Varela Actually my primary focus was to house hack, but with a FHA loan you get hit with PMI, which usually turns that cash flow negative (so it's no longer even paying your portion of the rent).  It seems like the only thing that makes sense would be 4 units minimum.  I've looked around Hillsboro, but I see the same trends.

@Anna Kampa On a regular MLS listings around this area I've been seeing usual cap rates 4-6% and the price per unit anywhere from $150k-$300k.  About the same in Bend? Yeah, apparently the PNW is a hot place to be right now.

@Nicholas Cook Thanks for the advice Nicholas.  As a new investor, I wanted to make sure I wasn't missing something about the Portland area.  It seems like the consensus is clear though and I should start looking outwards as well.

Anna Kampa · Answer

I'm just outside of Bend, Oregon and it's about the same here. Most people I have talked to are house hacking, just as I plan to do!  I plan to use an FHA loan with 10% or less down and live on one side.

We live in the state apparently everyone wants to be in! Although I can't blame them. :D

Anthony Varela · Answer

Hi AJ,   Living in Beaverton/Portland myself and wanting to get into RE investing too.   Have you thought about FHA / owner occupancy loans?   It's true our market is really high right now and buying off the MLS at 20% down is sure to kill any cash flow.   I'm a total novice, but it seems like the place here in the Portland area is either through house hacking, i.e. buying a duplex and living in one side for 5% down, or buy and hold for long term gains through equity.   Following this thread as I'm very interested to hear what others are up to in the PDX area.   Also, have you looked at surrounding areas?   Hillsboro, Salem, Tigard etc?

Portland, Oregon for Cash Flow?

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