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Questions on buying a rental property in the Portland metro area


I am considering to buy a rental property at or around portland area and should be able to pay up to $250K. I appreciate your detailed answers to the following questions:

- What specific areas or subareas do you recommend and why?

- What should be the main selection criteria (quality of school, location of the house in the neighborhood, proximity to shops and businesses, quality of the house, lot size, demand for rental in the area, property tax, ..)?

- is it feasible/practical to buy a foreclosed property with a loan or it has to be cash?

- How can one obtain the occupancy rate of (or demand for) rental properties at different areas of portland?

- does the reputation of the builder really matter?

- At what price range, the actual return for investment is maximized and why? I mean if one buys a $200K house and after all expenses, the monthly return is $500 while the return for a $100K house is $300 which is better.
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July 15 2012 - Portland
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Answers (4)

One of my favorite areas to buy rental homes is around Woodstock in SE Portland. The homes are cheap, but the area fills up with college students and professionals that want to live close to downtown in a cultured area for a reasonable price.
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August 14 2012

Depending on your overall objective for the rental property or properties the main objective should simply be cash flow. You want to identify the highest rent areas, then compare the value of the houses in those areas to house values in areas with lower rent.

Sometimes the homes that make the most sence for a rental property are in areas you would not have guessed. Keep in mind the sole purpose of a rental property is cash flow, so that should by your main objective.

With rates as low as they are you are thinking in the right direction, and I would be more than happy to help determine the feasibility of an investment project.

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July 27 2012
While you can get more house in some Se and some ne neighborhoods as another poster mentioned, there is a reason for that and it usually has to do with the location, condition, and neighboring properties. Most of my clients have rentals in the sw Tigard, Tualatin, Sherwood, Beaverton etc and do quite well. Unless the property you purchase is trashed you should have no problem obtaining a loan against the property. In terms of cash flow, rents can typically be figured on a price/ sq foot basis which will vary from city to city. In Sherwood for instance you may get over a buck/ ft in rent whereas Beaverton you may be under a buck a foot. From there you just need tO figure what your annual expenditures may be including your monthly plan payment, taxes, repair reserves etc and see if it pen pencils out . Best of luck! Rental properties can be very rewarding investments, but the real money is earned on the purchase, so take your time if this is your first one!
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July 16 2012
I have a client who is also shopping for rentals in the same price range, so let me try to answer your questions.

For that budget, you are likely to be able to buy more home in SE or far NE than most other areas (unless you want to go to a suburb such as Gresham or Sandy)

Your primary selection criteria should be return on investment.  Most rental properties listing information includes current rents so you can calculate ROI.   Second to that are the neighborhood features that attract renters.  School proximity is good for attracting renters with kids.  Everyone these days likes to be able to walk to shops, restaurants and public transit, especially MAX. 

A foreclosed home (meaning one for which the lender has completed the foreclosure process and is selling the home almost like any other seller) can easily be financed.  If you are considering buy a home at a foreclosure auction (which I seriously discourage) that sale must be cash at the auction.

I'm not aware of any source of occupancy rate by area.  Occupancy in general is high and rents are rising all over the area.   The immediate neighborhood and the amenties are a big determinant of rent, after of course the number of bedrooms, total square footage, and quality of the unit(s).

The older the unit(s) the less the builder's reputation matters.  It probably matters not at all to renters, but may have a minimal effect on buyers.

The actual ROI is a function of purchase price and rental income, which varies too much to give you a meaningful answer to your question.  If you like I can send you 3-4 properties in each of 2-3 price ranges and you can see the comparative ROIs.
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July 15 2012
 
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