Portland’s real estate market is not bad. Buyers of investment properties need to take advantage.  Want a competitive edge?  Better be on top of the new listings.  Most websites offer automatic email functions.  These can often be set to send immediately as new property listings become available but some only send once per day.  Only looking once per day may not cut it when competing for hot properties around Portland Oregon neighborhoods.

How can buyers have first shot at the good deals?  Reality is that 99.9% of real estate transactions happen through Realtors.  Hook up with a good one.  Agents working with investment property buyers need to stay on top of new listings and do market research immediately as houses become available.

What’s a good deal for investors?  Take a look at Portland’s west side for example.  Beaverton homes and Hillsboro neighborhoods often offer better cash flow than those found elsewhere.  When looking at the home purchase consider what sort of expenses are attached directly to PITI (principle, interest, taxes and insurance) and what neighborhood rents are.  Entry level homes offer much more bang for the buck than higher end, rental wise.  Rents on a 1200′ 3 bedroom 2 bath detached Beaverton home are running around $1100/mo at the moment.  Figure a good price for such a property might be $175k.  Compare that with cash flow on a $350k home where rents may be $1600/mo.  You do the math.

Competitive nature of investors.  Being first to the table with an offer is key.  It’s almost better to shoot first then aim in this market, you’ll have opportunity to bail out later.  I’m referring to red hot bank dumped properties here and not average run-of-the-mill real estate.  Hot properties like ones priced at $90 sq. ft. vs. the neighboring ones selling around $150.  These will be bank-owned foreclosures in Portland and surrounding areas, and they’re marketed through agents just the same as any other property.  I’ve seen several in the last few months around Beaverton and Hillsboro, they do exist.  Jump on them the same day they hit the market.

Sitting on the fence. At any given time there are a ton of buyers who say “wow, that was a good deal.  I’d have bought that one… if I’d known about it.”  The only reason buyers don’t know about it is because they (and their Realtor) are not paying attention.  Countless would-be investors sit on the fence analyzing a particular property while another savvy investor snatches it up.  That way the little kid mentality can kick in; That guy wants it, now I really want it.  Not all properties listed in RMLS are still available, some are awaiting bank paperwork before listing a property as “pending” in the system.  Dilly dallying doesn’t pay!

What’s a good real estate investment?  Depends upon who’s doing the talking.  It never ceases to amaze me how many Realtors comment on what great cash flow their particular listing is producing.  I’m convinced many are not investors.

Here are 3 factors to consider when evaluating overall return on investment:

1. Look at the surrounding area. Portland Oregon has many neighborhoods and surrounding cities like Beaverton, Tigard, Hillsboro, and Lake Oswego.  Within each city are well-regarded and not so well-regarded locations.  This can be seen by driving a couple city blocks in one direction.  How does the subject area compare?

Real estate investing should be viewed as a long term event, more than 3 years.  Google.maps.com has an awesome tool for helping evaluate neighborhood condition from your desktop.  Use the “street view” button to pan up and down the street taking not of vehicle and yard conditions as well as house curb appeal.  Look at aerial views to get an idea too.  More trashed and dead looking vehicles may mean that community involvement is seriously lacking.  A sign of real estate future values.

2. Look for upside potential through remodeling. Buy the worst house in the nicest neighborhood.  We’ve heard that one before.  Beaverton and Hillsboro offer some of the most cost effective real estate investment for single family homes.  When looking for future returns think about what can be done through simple upgrade.

Take a 1970′s original house in Beaverton.  With current Portland real estate prices it’s ease to pick up a great deal around the $200k price point.  This will be a three bedroom 2 bath ranch style house on a 7000′ lot.  Very easy to update and with a little sweat equity can be done well for $10k.  Upside potential for rent is now there as well as resale.  A wise use of $10k.

3. Evaluate cash flow. Much of newer construction and higher density housing is subject to HOA fees.  Property management, repairs, maintainence, vacancy are key factors to consider.  In the above example we refer to Portland investment property, specifically Beaverton.  There’s a good balance of cash flow here, possibly more so in Hillsboro.  House prices are becoming more attractive all the time in many neighborhoods.

Single family nvestment homes provide a minimum amount of expense after remodel.  There’s not much to break, also one of the benefits of purchasing newer homes.  Tenants pay for all utilities.  I also mention in my website additional tips on having tenants take care of small repair, this minimizes cash loss.  If possible, manage property yourself.  Management fees will run 7% every month.

There are a ton of good informational tips on my site www.MaxwellSinclair.com.  Please feel free to call and discuss investment ideas and tips of your own.  David Somerville 503 789-7633