Good Areas To Invest In Rental Properties In The Portland Area
Portland may not have the best yield as a rental market compared to other cities throughout the US. However, there are still some good opportunities for rental properties. Below chart shows what your rental income or loss will look like for different properties you buy in different areas. These numbers can vary in certain specific cases of course but the chart provides a general idea of what things can look like.
Example Investment Scenarios Worksheet
If you are looking for an investment property, its important to run numbers and work with your lender in advance to do your homework in advance. Working with a good realtor who can do competent due diligence is also very important because its easy to overlook due diligence items if the real estate agent mostly sell primary residences. Due diligence dealing with tenant occupied properties involve more in-depth planning from the beginning including rental agreements, security deposit transfers, utility meters, legal rent increase notices from the past, any Section 8 issues and more. I have experience in rental properties as a realtor so let me know if you need help.
Portland Vacancy Rates Are Low
So, youve decided you have what it takes to be a real estate investor congratulations! The good news is that 2021 will be a very good time to find renters in Portland. US Census data shows that rentals represent just under 40% of the housing units in the city, but that supply is barely keeping up with demand. In 2019, the vacancy rate for Portland was just 4%, lower than the US average 6% and almost a full percentage point down from the prior year. The lower the vacancy rate, the less likely it is that your rental will sit empty, costing more money than its earning.
Portland’s Massive Student Market For Rental Property Investment
There are more than three dozen private and public universities within 150 miles of Portland. The University of Oregon and Oregon Institute of Technology both have massive campuses here. Student enrollment for the STEM and IT programs is exploding because graduates are entering the hot tech market created by Silicon Valley refugee firms. This means there is a strong Portland housing market for students in the vicinity of multiple campuses. Compare that to places like College Station, Texas your property values and rents depend on the attractiveness of the one main school to students.
Portland Rental Market Statistics: The average size for a Portland, OR apartment is 765 square feet. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage. The decreasing rents are due to a sudden economic slowdown caused by the pandemic this year. Before the impact of the pandemic, the average rent for an apartment in Portland was $1,499, a 1% increase compared to the previous year, according to RENTCafé.
- Two-bedroom apartment rents average $1,750 .
- Three-bedroom apartment rents average $2,395 .
- Four-bedroom apartment rents average $2,980 .
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Invest In Portland Real Estate
If you have been considering buying a rental home or small plex, Portland Oregon might be just “the” place, and here is why. The Portland metro area has long been a top “move to” area, with moving companies constantly rating the area in the top inbound destinations year after year. Our geographic location just north of California with its 40m people and California’s crazy house prices also causes a constant inbound migration. On top of this, we have a vibrant young and well educated workforce, and we also are one of the top areas in the USA for job growth. Add to this we have an urban growth boundary which prevents large scale home building and causes relatively constant price increases for homes and rents.
Our current metro area poulation is just under 2.5 million and projections for population increase are for up to another 500,000 plus people to move here in the next 18 years, and to 3.5m by 2060. All of this combines to create a perpetually low vacancy rate. Whether you live locally, or are an out of state investor, you should consider our area for stable, long term growth. Please look at the charts below, check out one of the downloadable PDF pro-formas at the bottom and even see some sample homes with the links below.
Add to that continual over time increases in rent and you can see why so many people use rental homes as a part of their retirement planning both long and short range. Check with your tax advisor to find out how owning rental homes can benefit you.
Portland Real Estate Investment: Should You Invest In Portland
Should you consider Portland real estate investment? Many real estate investors have asked themselves if buying a property in Portland is a good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. For a long time, weve been hearing how the major housing markets in the Pacific Northwest have been on fire with fierce competition and a limited supply of properties. The question is whether Portland would continue to be one of the hottest markets in the U.S. for real estate investment?
Well, the Portland housing market is currently undergoing some changes. Property appreciation had slowed considerably since 2017 but the pandemic has turned things back to the fast pace of appreciation. Portland is a very ethnically diverse large city and home to around 600,000 people. However, the Portland housing market, in reality, includes more than two million people who live in the Portland Metropolitan Area or Greater Portlandcomprising Clackamas, Columbia, Multnomah, Washington, and Yamhill Counties in Oregon, and Clark and Skamania Counties in Washington.
Lets take a look at the number of positive things going on in the Portland real estate market which can help investors who are keen to buy an investment property in this city. And no, were not going to cite things like the TV show Portlandia or vague things like its hip and diverse!
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Portland Median Home Prices 2022
Today, the median home value in Portland is about $564,334. Local home values are the result of several years of appreciation and havent always been as high as they are. More than 10 years ago , the median home value bottomed out at around $225,000 that means the citys median home value has appreciated 150.8% in approximately one decade.
To better understand how the Portland real estate market has performed in recent history, its best to place it in context with the U.S. real estate market. At the same time, real estate in Portland appreciated 150.8% , the median home value in the United States increased 99.8%.
The citys median home value has appreciated much faster than the national average for the better part of a decade. The difference may be attributed to several factors, but the most prominent indicator appears to be availability. The Portland housing market only has about 4.6 weeks of supply, which isnt nearly enough to keep up with demand. Supply and demand in the Portland area have increased competition dramatically, and homeowners have increased asking prices accordingly.
Portland’s Better Business Climate
If you ask people and businesses why they relocated to Portland, one answer is the lower cost of living. Oregon is one of only five states in the nation that leviesno sales or use tax. State government receipts of personal income and corporate excise taxes are contributed to the State’s General Fund budget, the growth of which is controlled by State law. Oregon has property tax rates that are nearly in line with national averages. The effective property tax rate in Oregon is 1.04%, while the U.S. average currently stands at 1.08%.
Oregon is ranked number fifteen out of the fifty states, in order of the average amount of property taxes collected. It is ranked 16th of the 50 states for property taxes as a percentage of median income. Oregon’s median income is $73,097 per year. The average home price in Portland Oregon is much lower than the average house costs in nearby cities like Seattle. The median property tax in Oregon is $2,241.00 per year for a home worth the median value of $257,400.00. Counties in Oregon collect an average of 0.87% of a property’s assessed fair market value as property tax per year.
Portland metropolitan area comprises Clackamas, Columbia, Multnomah, Washington, and Yamhill Counties in Oregon, and Clark and Skamania Counties in Washington.
In Multnomah County, the average tax rate is $20.12 per $1,000 of assessed value, but the average homeowner is taxed $9.87 per $1,000 of real market value.
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What Our Clients Say
Rama
Krishna has helped me two times so far in buying a home and once in selling. All the time, his service has been exceptional and prompt. I’d greatly recommend him for your real estate needs – whether it’s buying or selling or property management services. I’m sure he and his team will provide top notch service.
Shaun
Krishna assisted me with both renting my property and eventually selling it. In both roles, Krishna provided excellent guidance and remained available to answer questions and solve problems. I would recommend Krishna and his staff to anyone.
Hima
We had a great experience selling the home with Krishna. He had valuable suggestions and advice. Even though we were in a different state during the whole sale, Krishna made the whole process very easy and we did not have any reason to fly down. Before this sale, he managed our property for rent and we had a good experience with that too. I would highly recommend Krishna to anyone who is looking to buy/sell/manage a property.
JB
SV
Krishna and his team was unbelievably helpful for our home selling, that resulted in closing on time with our new home purchase. Anytime I need to buy or sell a home, I will be reaching out to Krishna. I strongly recommend everyone to reachout to Krishna if you have any real estate transaction in Portland area.
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Real Estate Investors In Portland Or
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Portland Housing Market Trends
Portland is the largest and most populous city in the U.S. state of Oregon and the seat of Multnomah County. The Portland Metropolitan Association of Realtors® has released housing data for the Portland Metropolitan Area for December 2021. Portland is a seller’s market, as evidenced by rising prices and declining inventory. Inventory of available residential homes is enough to last for 0.6 months at the current pace of sales. Despite reports of a slowdown, the average time for Portland metro residential properties to be on the market before receiving an acceptable offer dropped to 32 days last month.
- The median sales price was $511,000, an increase from the previous year .
- The average sales price was $582,900, an increase from the previous year .
- No. of closed sales was 2,582, a decrease from the previous year .
- No. pending sales were 1,942, a decrease from the previous year .
- New listings were 1,599, a decrease from the previous year .
- Months of inventory equaled 0.6, a decrease from the previous year .
- The average no. of days on the market was 32, a decrease from the previous year .
Portland Lacks Room To Grow Which Drives The Home Prices Up
One of the beautiful things about Portland is its proximity to the ocean and the mountains, while much of the area is covered in protected forests. The downside of this is that the city lacks room to grow the way many inland real estate markets do. Developers could tear down older buildings and build skyscrapers, but thats expensive compared to going five miles down the highway and building a new suburban neighborhood.
Relative to the strong migration and income-driven demand, the supply is lagging in the entire Portland MSA. New housing permits have been among the slowest recovering economic indicators in the Portland MSA after bottoming out in 2012. Not only is the Portland MSA producing new buildings at a relatively slow rate, but also fewer homes areavailable for sale than ever before.
The relative lack of room to grow keeps rents high in the Portland real estate market for both residents and commercial firms. While Portland residents complain about the rent, Silicon Valleys insane rents are pricing firms out of San Francisco Bay Area, and enough have moved north to get the area called Silicon Forest. Googles moved both people and jobs here.
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Should You Invest In Portland Real Estate
Quick Hits: If you’re planning to buy a home, do it now before prices go higher. If you’re thinking of buying a rental property as an investment, be careful how much you pay. Investments in housing developments will do well in the next couple of years, especially apartment projects. Mortgages written now will be protected by rising prices for a year or so, but will be riskier after that. It’s a good time to invest in retail businesses, especially in Clark County.
The local economy leans heavily on Nike, Intel, and international trade and for many years has grown much faster than the US average. Dependence on a computer chip manufacturer is a vulnerability these days but right now the high wages support a strong real estate market. International trade, especially with Asia, could be more volatile in the future as political opinions about imports change with the upcoming elections.
Even though population growth has been modest, home prices rose sharply in recent years, 34 percent since 2012, partly because of speculation in foreclosed homes. You can bet they’ll keep rising near that pace for the next few years, which means you’d better buy the home you’ve wanted now rather than next year.
The metro area is growing at an uneven pace, with the fastest growth now in Clark County, across the river. I expect 10,000 new homes built in Clark County over the next three years, and 8,000 new apartments. In much larger Multnomah County I expect 10,000 new homes and 13,000 apartments.
Despite Increasing Home Prices Real Estate Investors Have Numerous Opportunities In Portland Or
The Portland, Oregon, metro area is on pace to become one of the most expensive markets in the country when it comes to finding housing.
The real estate market in Portland was competitive for years prior to 2020 and 2021, but the past year marked a new milestone for the city: the lowest inventory reported in 30 years. Compared to November 2019, the average sales price was up 12.7% in November 2020 and agents reported an unusually high number of bidding wars and cash offers.
From January 2020 to January 2021, Portlands median home price increased 13% from $406,000 to $460,000. In January 2020, homes were selling for an average of 98.82% of the listing price. In January 2021, that number jumped to 103.9%, according to Regional Multiple Listing Service.
Portland is experiencing a tight housing inventory like most markets across the country just to even greater extremes. Portlands housing shortage has created a highly competitive market to buy for those who can afford to do so. As home prices in Portland continue to increase, current renters and would-be buyers find themselves in a precarious position. They can afford to pay the increasing rental rates, but they cant afford to buy a home.
So some investors are looking to the suburbs, both in Oregon and across the border in Washington.
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Mistake #1 Not Treating Portland Real Estate Investing As A Business
The first mistake that many inexperienced Real Estate Investors make every single year is not treating their real estate Investments as an actual business. Sadly, some Real Estate Investors look at real estate investing as a hobby and this the primary reason why they never are able to see stable returns, or consistent passive income, from the rental properties on a monthly basis.
Before getting started in real estate investing you should commit yourself to viewing your real estate investing as an actual business. This means taking the time to dedicate a work space in your home where you will commit yourself to manage your real estate investments like you would manage a real business.
Once you commit yourself to treat your Portland real estate Investments as an actual business like it deserves to be, the next thing you should do is write down a business plan and establish things like what type of properties you plan on buying, the locations that you want to purchase properties in, and how you plan on financing these properties.
Besides having a business plan that details the items that we mentioned above, your business plan should also detail other aspects of your real estate business like your goals for real estate investing, how much time you plan on devoting to your business, and most important of all you should stipulate in your business plan if you plan on hiring a property management company to manage your rental properties or not after you purchase them.
