Hey Kerri,
I feel your pain. This is a challenging time in the market cycle. Debt is easy to come by and still great rates, but of course the market prices are high in the areas you are familiar with which makes cash flowing the properties difficult.
In looking at the options you are considering, I’d definitely steer away from taking on debt to stockpile cash waiting for the market to turn. If you had a plan to put the borrowed money to work earning a net gain then that would be a different story. Your mention of becoming a hard money lender could be an option to this end. It would allow you to invest in some short term notes, maybe with builders, to keep your money earning a net return while only being committed for a short time frame. This would allow you to reasses the market as each note comes due and decide if you want to lend again, or if the market conditions are right for investing. Make sure you understand this business model well and the associated risks if you entertain this path. Lots of risk as the market turns with this one. Rates are also lower now as there is so much money looking for a good home. I’m building now and there is plenty of hard money available at 8%.
Other thoghts to consider. You mention options of buying and holding properties which is a long term strategy. You also then are considering using a HELOC for funds to employ a long term strategy. In my book, these two don't tie together well. I know some banks are doing fixed rate HELOCs now, but I don't know how long the terms can be with fixed rates. Make sure your rates are fixed and make sure the term will work with your strategy. It is no fun to be caught holding property in a down market with escalating interest costs or notes coming due with your only options being expensive loans or selling at the wrong time. You might be better off paying more in fees to get a cash out refinance so you can fix your rate and term to match a long term investment approach.
Buying in solid cash flow markets could be a good option if you can find the right team. I’ve considered this, but have yet to come close to feeling comfortable with this option. I’ve heard way too many horror stories.
It sounds like you are busy building another business so another thought could be to partner with someone you trust who’s full time business is investing. This would allow you to focus on your business. I know my partners feel comfortable knowing that I’m looking after their real estate interests like my own because they are one in the same. There are so many ways to partner with someone. It is critical to find a structure that works well for you. If this interested you then you can start by reaching out to your network and look for referrals. If you want to keep your investments in the Portland area I can recommend some people with high levels of integrity to connect with. Feel free to PM me for info.
One last thought with regard to vacation rentals. We own some in Bend and I’d agree you hit the nail on the head with cleaning staff and turn over being a challenge. I’ve lost count of the cleaning staff we have gone through over the years with our rentals. It is one of the most challenging aspects of the vacation rental model. Bend specifically is also challenging because of the newer laws making finding a well located vacation home difficult. If you consider buying a vacation rental in another market, make sure you understand the laws associated with short term rentals. Many markets are implementing changes.
Best wishes in figuring out your path. Happy to help with additional input or get on the phone if that helps. I’m back in the country July 7 if you want to PM me and set up a call.
Cheers - Craig
