Thursday, June 26, 2008

Prices Coming Back Into Line?


We gave up on our search for an investment property (Owner occupied duplex/triplex) late last year given that nothing "penciled out", and we didn't like the idea of negative cash flow, with or without appreciation. Without appreciation being more likely.

But I still run the numbers on the occassional duplex/triplex to test the market, and I just found one that is actually cash flow positive with 30% down, and only loses $400 a year with 20% down. Here's the ad, and the text from the ad:

"Portland population is projected to grow by 2-4 million over the next few decades. Take advantage of this stable, fast appreciating real estate market. It's still affordable but not for long.

Well maintained triplex in a convenient neighborhood. These units have desirable features that make them easy to rent (last vacancy had half a dozen applications from a single Craigslist ad). All have:

Hardwood Floors
Fireplaces
Air Conditioning
Seperate, Secure Large Storage Units
On Site Laundry
Off Street Parking
Close to Transportation
Convenient to PCC, Warner Pacific, Reed, Downtown

Over $2200 monthly income and rents could easily be raised 10% or more. Great tenants, great building in a nice neighborhood."
Gotta love his optomistic view of population growth, and I'm not sure how he's definign "fast appreciating" unless he's talking about negative appreciation, but this triplex actually appears to be sanely priced.

You will still only earn a 1.5% return on your investment the first year, but hey, at least it's positive!

Nope, we still have a ways to go before the market has truly corrected.

2 comments:

Anonymous said...

Factor in the amount of life you'll lose working on a rental property and the grief you'll experience dealing with tenants. Been there, done that and it's a miserable bowl of wrong.

MiTurn said...

Does the Portland area increase in desirability as the population? I think not. I think that this projection is inflated.