Buying an Investment Rental Property in the Portland area: Duplex vs Single Family House vs Townhouse

Buying a rental property is a great investment to prepare for one’s retirement. The idea is to pay off the mortgage one day and enjoy the monthly rental income when you are no longer working in your retirement. Portland real estate market has been appreciating so much in the last few years that home prices are way too high to justify a good return in some saturated inner city areas. Gross rent multiplier (GRM) can be easily over 20 in areas that won’t provide a positive monthly cash flow. In good areas, GRM can be as low as 13-15 but may not rent as quickly as areas with higher GRM. The key is to find a good balance and buy a property in an area with lots of potential so that you can buy cheap now and absorb some of the risk of it not renting out as quickly now but it will in a few years.

Additionally, there seems to be an economic cap on how much one can charge for rent on a property. Most renters have no problem paying $1,500 for a two bedroom apartment but if the rent is over $2,000 or $2,500, they’d rather buy a home than to rent out unless there is a special circumstance. So it’s good to buy a property where you can keep your rent in a reasonable range for most middle pack renters. You can buy a million dollar home and try to rent it for $5,000 a month but good luck with finding a renter who can shell out $5,000 on a monthly rent, not a mortgage.

Buying your Retirement Home vs Buying a Cash Cow

Many real estate investors have different goals when buying a property. Some people look for a property where they can live in as a retirement home one day whereas others purely want the best rental profit to run the operation. If you are looking to live in the home one day, you will need to consider whether the benefit of having that home ready one day for you instead of buying your retirement home at the time outweighs the benefit of having a better cash flow. It’s a bit of a romantic notion but the fact is that you can always pay off on a house and use the equity to buy a different house in the future. You can either pull the equity out or you can sell it. If you sell, you may have to pay for realtor’s fee when selling that cash cow for your dream retirement home but run a calculation to see whether having a better monthly cash flow for the next 15 to 30 years can be a much better deal for you than having to pay 5-6% commission. Also consider how rentable the property is. Your dream retirement home may not be as rentable. In either case, I think it’s usually better to go with a property that produces more income than buying your dream retirement home 30 years out to rent out.

Buying a Duplex as an Investment Property

The best case scenario is to invest in a duplex rather than a condo/townhouse or a detached single family property unless you can find a unique opportunity for instant equity. Of course you can find a triplex or multi-unit properties if you can afford it but the way they are financed are different. If you buy a duplex, you have an option to get an owner-occupied mortgage with cheaper rates and lower down payment rather than an investment loan. Some people purchase a duplex to live in one unit and rent out the other unit. When purchasing a duplex that has one unit already rented out, you can use the rental income from that unit to qualify for a mortgage so you may not need too much income to qualify for a duplex after all. Additionally, after one year, you can legally move out and rent your own unit out and still get to keep your low rate financing you obtained as an owner-occupied property.

One downside to buying a duplex versus a detached single family home is that a duplex can be a poorer choice compared to a single house for a short term investment. If you buy a house expecting its value to appreciate significantly in a few years with a plan to sell, a detached single family house is a better option as there is a big demand for it in the market. Duplex is more for a longer term investment.

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.

If you are looking for an investment property, it’s important to run numbers and work with your lender in advance. Working with a good realtor who can do competent due diligence is also very important. Call us today to get started!

(Courtesy of Peter Park…)

How to Perfectly Pair Your Décor With Your Home’s Architectural Style

Finding a home requires trade-offs, whether in the house or neighborhood. And though it’s not easy to change your neighborhood, you can certainly change the way your home looks and feels. From mid-century to Victorian, these expert tips will help you create a cohesive look outside in.

America’s Most Popular Architectural Styles

What architectural style do Americans love most, and where are they most likely to find those homes? A surey of more than 2,000 Americans age 18 and older asked and found that the top home styles Americans cite as their favorites are craftsman (43%), ranch (41%), and colonial (36%). However, this varies by age. Millennials, age 18–34, were more likely to favor craftsman-style homes (52% vs. 36% of those age 55+), while older adults, age 55+, were more likely favor ranch-style homes (52% vs. 28% of millennials).

Despite the overwhelming popularity of craftsman-style homes, ranch homes are much easier to find on the market. Among all the for-sale home listings, the most common architectural styles are colonial, ranch, Cape Cod, Victorian, and mid-century. Though, state by state, it definitely varies.

There are local surprises as well. Although brownstones are practically synonymous with New York City, colonial houses are actually more common in the city. Similarly, although art deco is Miami‘s best-known architectural feature, mid-century homes are by far the most common throughout the city. And if you’re looking for a ranch-style home, Colorado Springs, CO, has the highest proportion of them in the country.

Given the five most common architectural styles in America, the ones that buyers are more likely to find, the Trulia Design Panel offered their tips on how to decorate for each type of home. Here’s what they suggested:

Colonial

Try augmenting your home’s classic style with textured, woven baskets of natural materials like rattan, sisal, or water hyacinth. Houseplants, including dramatic palms and ferns, are also good options to create this effect.

You can also add nodding to the colonial style’s spartan take on neoclassical grandeur. Collect handcrafted wooden bowls and ladles, and seek art that involves the crude human figures of the colonial period.

You can take a more counterintuitive approach, pairing modern light fixtures and furniture with your home’s traditional architecture. “I find the juxtaposition between the two styles to be endlessly intriguing and interesting.”

The colonial style emphasizes wood tones and handcrafted elements. You can keep those features feeling fresh with dramatic bright or dark paint choices on walls or furniture.

Ranch

Embrace the rustic inspiration behind the ranch style with Western-flavored elements like cowhide and leather ottomans, rugs, and pillows. Wood elements like floating shelves, trays, and coat racks also help.

Ranch style emphasizes social space and natural light. To capitalize on those elements, they recommend using neutrals with no heavy patterns and grabbing a bar cart and serve-ware for entertaining.

Make modern statements on the style with elements like cement floor tiles, light floor stains, and minimalist trim and molding.

The ranch looks best when you embrace its modern simplicity. Stick to clean-lined furniture but adding personality through rattan accents and an eclectic mix of metals.

Cape Cod

Take a nod to the Cape Cod style’s East Coast origins with vignettes of nautical items or vintage hardcover books. Accent your home’s cozy simplicity with white or light bedding, sofa slipcovers, and pillows.

Emulate the simplicity and function of architectural style in your décor. Try painting walls in “tried-and-true” neutrals.

Embrace the unexpected and keep original moldings and details while adding aesthetic surprises, such as modern tiling, windows, and furnishings.

Take advantage of a Cape Cod’s charming, symmetrical exterior by focusing on curb appeal with floral boxes or large planters.

Victorian

Hearken back to this architectural style’s namesake era by choosing lace, ribbon, or embroidered linens in neutral or white for tablecloths, curtains, and bedding. Mismatched antique furnishings are also a good look.

Paint baseboards dark espresso or high-gloss black to mimic the dark wood elements that were popular in the era. To add personality, follow another Victorian tradition and fill a curio with collectibles.

Victorians enthusiastically embraced patterns, but try modernizing by wallpapering one feature wall while keeping others neutral. An ornate furniture piece can also make a nice accent.

Mid-century

Start simply and inexpensively by swapping out the legs on your existing furniture for the tapered legs characteristic of the mid-century style. A low-profile sofa or arched floor lamp are other easy ways to achieve this style.

The right furniture is crucial, but price can be an issue. Don’t go for original. Instead, find modern designers and stores whose products mimic the style of the time period.

Give your a mid-century home an update with a new paint job. White always looks fresh, or consider a dramatic, dark tone paired with medium wood accents.

(Courtesy of Trulia…)

Top 5 Portland Home Buying Worries

For all of the excitement of buying a home in Portland — especially if it’s your first one — it can truly be a stressful experience. In fact, a recent survey of buyers found that home-buying was the second most stressful event of their lives, after a divorce!

Some people just don’t like talking about money, others would rather not have the argument with their spouse about how many bedrooms they really need. But for most home buyers, the most stressful things about home buying are pretty consistent. They’re like landmines — hopefully, once you know where they are, you can watch out for them and have a low-stress Portland home buying experience!

1. What if I don’t get approved? Financing is a sensitive topic. Getting approved for the kind of loan you want (amount, interest rate, etc.) can be a nail-biting process, and it’s known to dredge up worries about one’s self-worth. Planning and getting pre-approved (not just pre-qualified) far in advance of your home search is the easiest way to diffuse this stress-bomb.

2. Drowning in paperwork. Real estate transactions are notoriously clutter-intensive, from the moment your agent hands you a flyer for a home to the final closing. Dam the flood by creating a filing system now, electronic and or paper. Then get organized with all the paperwork you’ll need on your end to make the home sale go off without a hitch. That includes all the documentation around getting approved for the loan (divorce decrees, recent tax returns, paystubs, etc.), home and neighborhood information, and offers submitted.

3. What if they don’t accept my offer? Buying a home in Portland in the middle of summer is a lot like gambling. You might have a great hand — submitted a great offer — but you never know who is waiting with a trump card. There’s no getting around it — this is truly the stressful part! A good real estate agent will help you avoid getting caught up in the heat of the moment and making a counter-offer you really can’t afford. Remember, there will always be another perfect house out there, you just might have to wait for it.

4. Buyers’ remorse. After the offer is accepted, it’s very common to wake up in the middle of the night thinking, “What have I done?!” The best way to deal with this problem is to think logically back to the source of the panic. Was it a doubt expressed by a friend or relative? Are you worried about something that came up in the home inspection? It that’s the case, you may have the right to cancel the offer, but talk to your real estate agent before making any big decisions.

5. Closing in confusion. The home closing is the time to meet with the title company and others to review all the final documents. A lot of buyers show up anxious to get the keys to their home, and don’t take the time to review the paperwork thoroughly. This can lead to stress down the road, so don’t do it! Know what documents you’re signing — a lot can be obtained and reviewed in advance of the closing. Have your real estate agent explain anything that you aren’t clear on. Mistakes do happen at this point in the home buying process — so it might not be your imagination of something looks off.

The number one way to avoid stress when buying a Portland home? Call the Twin Team today! 

(Courtesy of Real Estate Agent PDX…)