Portland, OR House Hack

[Matt Koski]

Hello Everyone,

I am 25, brand new to BP and am a total newbie when it comes to REI. But after listening to BP Podcast and reading different articles for the last week I want to start with a house hack that could be a BRRRR cash flowing rental later on. Ideally I would like to be able to use a 203K loan to have low down and help with rehab costs.

I am located in Portland, and would like to find something in Portland proper if possible, but wanted to know the viability of finding something in Portland that would cashflow. Are there any specific areas or neighborhoods I should be looking more specifically at?

After looking at some multifamily options on the MLS the ones I saw didn't seem to cashflow. Is it possible to find a cash flowing multifamily property on the MLS?

Another option I have considered is a single family home that has a unfinished basement that could be finished and separated as a rental unit. Because I am married my wife is not too keen on the roommate house hacking method. Are there any specific types of housing layouts I should be looking for that might work particularly well? Or that would rent well in Portland?

Lastly I would love recommendations on how to best find a deal that would work for this kind of strategy. Is MLS viable to find a property for this strategy in Portland? Or would you recommend some other method (driving for dollars, direct mail, wholesalers) to find a cash flowing deal?

Thanks in advance for all the advice!

[Julee Felsman]

HI @Matt Koski and welcome to Portland!

What cash flows probably depends a bit on what you mean by "cash flow". When I house-hacked, way back in the day, I was happy to have supplemental rent from the other unit in my duplexes (I lived in two prior to moving to my now long-term home) that kept my net mortgage cost to something affordable.

I worked on the properties while I lived there (a couple-three years in each) and then when I moved out, i was able to (just barely) cover the loan payment, taxes and insurance with the rent from both units.

I was out of pocket when I needed to make a repair and paid the garbage and water bills myself for a while (until rents climbed a bit). For me and my budget that was fine and it allowed me to buy great properties that years no (20-ish years) are cash flowing excellently (even after refinancing to shorter term loans so that they'll be paid off when I want a bump to passive income for retirement). 

I am a lender and talk to a lot of prospective clients who want to have a net positive cash flow day one when they move out or even live nearly "rent free" with the tenant's rent covering their entire mortgage. I won't go so far as to say that's not possible -- maybe you can find a unicorn -- but in coastal markets that's going to be a pretty tough nut to crack. 

My 51 year-old self is really happy that my 25 year old self wasn't too "greedy" about what I wanted the properties to do right away. My budget allowed me to cover the costs rent didn't cover at first and time, rent increases and appreciation took care of the rest. 

The configuration of the property certainly impacts how it "lives" so you and your wife probably need to negotiate what's an acceptable living arrangement. I lived in up/down plexes and was always downstairs, so I had renters overhead but didn't have to worry too much about my Great Dane tromping around and bugging them. If I had it to do over again, I'd probably look for side-by-side properties... but you guys need to work out lifestyle issues. 

Once you hash that out, you can build your property search to filter for places you guys are both down to live in. (And remember that your loan will only require that you live in the property for a year after closing.)

Good luck!

Julee