Which area has the least financial risk to buy and then rent out? I want to buy a house in Portland, Oregon

Asked by MissTessi, Seattle, WA Sun Mar 9, 2008

and then rent it out. I used to live in Portland 20 years ago, and I am a fish out of water.
I saw a question that was so great; I am going to ask a similar question that Eric from Memphis asked:

Which area has the least financial risk to buy and then rent out?
So many new areas already became bad (with a lot of ignored lawns, for sales signs everywhere...) while construction is stilling going on.

Areas change so fast, prices keep dropping, the more I look, the more I get confused. If future RENTABLITY is the most important factor, where should I look? My budget is only in the 200’s.

Thank you very much for your expertise and time.


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Wendy Boso, Agent, PLTD, OR
Mon May 5, 2008
Rentability is something I know TONS about. I have 1 rental in SE Portland and by the end of the year I will have another in NE. I would say this.......Work with a realtor that has a rental or works comsistantly with clients purchasing rentals. WIll you be moving to Portland for a bit? The reason I ask is because NON-OWNER OCCUPIED LOANS are about 1% more than owner-occupied. I would suggest going in with the INTENTION of moving here to work on the property for a bit (6 mo at least) then renting it out so you can get an owner-occupied loan. It will save tons! If you are a cash buyeror have already secured financing then here are some good tips to follow:
PUBLIC TRANSIT- be close to a busline
Rent is about 1100-1300 a month for a 2 bedroom house out to 82nd or so depending on sq. ft and updates. Closer in to the city will obviously be more but then your housing costs will also rise.

Good Luck!
Web Reference:  http://www.fedupfsbo.com
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D, , Oregon
Fri May 2, 2008

If you are planning on purchase a property for investment purposes right off the bat then I suggest looking into financing options before making an offer. Unless you plan on having a significant down payment, investment financing has had a major guideline reconstruction. And many are finding that even though their loan is approved, the private mortgage insurance company (pmi) are not willing to insure the loan. So you really to work with someone who is keeping on top of it all.

I would suggest purchasing a home for you to live in for one year and then turn it into a rental. This way you will obtain a better interest rate and higher financing. If you plan on staying in the home for 2 years then you would have another 3 years you could rent it out , sell it and still not pay capital gains but I strongly suggest verifying that information with your tax consultant as each individual's tax situation is different.

Call me with your scenario and I'll put together some options for you free of charge. It helps to know what to expect. You can email me at crystal@ambientlending.com or call me toll free 877-777-9763. We lend within the entire State of Oregon. http://www.ambientlending.com
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James White, Agent, Tualatin, OR
Wed Apr 23, 2008
Foreclosures are a great way to get a good price on a property and minimize your potential financial risk. Several areas are good rental areas, but SW portland has proven good , and SE Portland with the new MAX line being constructed in the Lentz area should create a hot rental market. The Banks want to unload the properties right now, nationaly they have taken a big hit and are agressivley trying to move these properties. Sure you may need to make some repairs, but you can net positive cash flow. Recently, I have sold several distressed/foreclosed properties. Visit my website or give me a call 503-539-3819, I'd be happy to help!
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Tony H. Rahn…, Agent, Portland, OR
Fri Apr 11, 2008
I suggest to stay as close as possible to downtown area and mass transit system.
Appreciation is good and better rental market since it is close in.
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June Lizotte,…, , Portland, OR
Wed Apr 2, 2008
One of the most difficult things with a question like this posed to Realtors is that we are bound by rules and ethics not to steer you toward one neighborhood or another. It can cost us our license with the Real Estate Agency. And of course we would be presumptous to try to guarantee you'll do well in one area over another. We can provide information to you that helps you to investigate to determine if a neighborhood meets your expectations, such a resources that will allow you to check specific neighborhood statistics like crime stats, growth and zoning changes, locations of registered offenders, history of sales comps etc.

With that said, a search criteria can be set up within certain areas you would consider and you could receive automated emails of listings matching that criteria. As properties are posted you could be made aware of them within minutes of them being posted to the RMLS via my web site. Feel free to go there and set up a Home Finder or email me via my web link below and I can set up a search for you. A quick action is what you need once the right property comes up. Are you prequalified with a lender or will you be paying cash? You can answer that in your email if you choose to go to my site. Either way, best of searching for your deal.
Web Reference:  http://www.junelizotte.com
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Chris Courtn…, , Eugene, OR
Tue Mar 18, 2008
I agree with Elisha Joyce in having just sold a condo in SW Portland within 3 blocks of Burnside in the low $170's and having a 1 bedroom amenity (versus studio offering)....however, keep aware of HOA dues which can inflate your principal/interest/taxes/insurance payment and keep aware of HOA budgets for impending improvements.

For rental property not more than $200k, I suggest the location where $200k real estate exists and that, with a 20% down payment assumably, a monthly debt service on $160k is at minimum equal to your rent...which is about $1,200-$1,300. Depends entirely on your qualifications financially to purchase...so no matter what other advice your are given...it's all about numbers simply. If you have $40,000 down maximum on a $200,000 purchase, your lien is $160,000. And with taxes & insurance, you are looking at $1,200 to $1,300 monthly debt service (less with interest only loan..check out CrownMerit.com)....so, go for the numerous bedroom home (4+) and locational appeal first! (Hawthorne, Belmount, Sellwood, Multnomah Village, etc...)

Let me know if I can help, which I know I can.

Regard, Chris@HouseNow.com
State Certified Residential Appraiser
Residential Investment Specialist
Principal Broker

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0 votes
Jennifer Mon…, Agent, Charlotte, NC
Tue Mar 18, 2008
Hi MissTessi... I'm going to keep it simple and to the point. In your price range, I would strongly recommend the inner SE neighborhoods (no further than SE 82nd Ave), being careful to find properties that are similar in era and design, but that appear well maintained and in mostly owner occupied neighborhoods. These in-demand homes are typically older, well-built, and are attracting first time homebuyers. They are appreciating in value, and we are still seeing bidding wars when priced attractively. A wise investment, in my opinion.
Web Reference:  http://JennifersPdxHomes.com
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Charles & Je…, Agent, Portland, OR
Tue Mar 11, 2008
Every Realtor will have their own opinion of what makes the best investments. Our practice what you preach method has been single family houses in up and coming neighborhoods. We have four single family rentals of our own. The second key is that the house is in tenant-ready condition, not showroom which you will pay a premium for.

The difference in a $200,000 house and a $299,999 house in Portland is HUGE so depending on what "in the 200's" is largely going to answer the location and size house (I think minimum 3 bedrooms for a good rental and hopefully but not necessarily one and a half bath).

That's the short answer. I've talked about it a lot more on http://www.PortlandRealEstateBlog.com
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Elisha Joyce, , Portland, OR
Sun Mar 9, 2008
If you're looking to spend less than $200K I would say pick up a condo in NW around 23rd or the downtown area. (NOT the Pearl... just outside of the Pearl.) These areas offer you exceptional walkability, many buildings are secured (which is great for you as an owner if you're out of town), and you can rent either by the week or long term. Your market will be for urban professionals, college students, parents of college students coming into town to visit, people coming to Portland that want to be downtown for the art scene. You can get great bang for your buck, have low maintenance, and this is a GREAT time to find condos under $200K. However, if you want a house, something under $200K will be hard to come by... unless you significantly compromise your location to downtown Portland and head out to Hillsboro, Gresham, etc. Average home prices in the close-in urban areas go from about $275-$400K these days - and those are 'exceptional' deals in many instances.

So... I go back to suggesting a condo in a really HOT area versus a house in an area that takes you outside of Portland metro.
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Dirk Knudsen, Agent, Hillsboro, OR
Sun Mar 9, 2008

Great question. Here is your answer. Follow the Jobs! Pick a low crime area where there are good schools and hardly any new homes being built. That is the key.

For my money I would head out to the West Side into the Silicon Forest. Rents are up and JObs are still coming in. This is the area where Intel, NIke, Columbia Sports Wear, Google, Yahoo, Solar World, Genentech, etc.... are all locating thousands of jobs. These communities would include Beaverton (West and North), NE and NW Hillsboro, Orenco, Bethany, and Cedar Hills.

Rentals are HOT up here and new construction is lacking. You should be able to find a Rental in the MId $200's or even a Condo in the Mid $150's. These areas also feature good schools, low crime, and almost no new apartments. Rentals are getting harder to find up here.

This is a great question and this is a perfect time to pick a home up!

Best Wishes. Visit my website and check the MLS for a list of homes.

Thanks again;

Dirk T Knudsen
Re\Max Hall of Fame
# 1 Rated Re\Max Team in Oregon
Web Reference:  http://www.nwhomecenter.com
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