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.

Free Fall Friday - 4401 NE Grand, 12.5% off!

Here's a duplex that's just been on the market a while, and now has been reduced $50k, down from $399k $349k, a 12.5% reduction.

http://www.wellcomemat.com/home/channels/kurtzteam/9ABC91FEA1#wrapper

According to my calculations, even at this "new, reduced" price you would still pay over $1000 a year to have the pleasure of saying you own this architectural gem. The price would still have to drop another $30k before it breaks even given current rent levels, let alone turns a profit.

I'd Like Some of What They are Smoking Please?

OK, maybe I'm stupid, maybe I'm missing something here, can you folks help me see why anybody would buy this?

According to my calculations, given the current rents and this asking price, with 20% down, and esimating 5% of gross rents for maintenance and 0% vacancy, including the tax break you would LOSE $4443 per year to own this lovely duplex.

What am I missing?

(courtesy of Craigslist)

$549900 Belmont Victorian Duplex

RMLS # 8012653

OPEN SUNDAY FEB 10TH 11-1 P.M. LWR UNIT ONLY
Big, bright Victorian duplex in the heart of the Sunnyside/Belmont neighborhood.
Easy conversion back to single family home or live in one unit and rent the other. Lower unit has one large bedroom, one small bedroom, generous living room, and large renovated kitchen. Upper unit has two generous bedrooms and large living room. Each unit has off street parking and private storage. Laundry machines in basement. Current rents are $1195/1150. Each unit is approximately 900 sq ft. Great location right at the Sunnyside Sunflower. Just blocks for Zupans, Stumptown, and bus.

RMLS# 8012653 &8012652

Introductions

Hello! My name is Ian, and my wife and I recently relocated to Portland from Stuttgart, Germany. We loved living in Germany, and so far we've loved Portland even more! When we arrived here in November we decided to rent a house so we could explore the different Portland neighborhoods. We were taking the risk that home prices would continue to rise, but we figured that was better than buying a house in a neighborhood that we didn't like.

And boy are we glad we didn't buy last year!

It's been a crazy 10 months as we've unpacked, settled in and started exploring restaurants in the Hawthorne, Belmont, Alberta, Hollywood and other neighborhoods. We've surfed real estate web sites, drooled over all the beautiful craftsman houses and bungalows in town, and tried to pick one neighborhood over the other. We've also been frustrated by the crazy price increases that Portland has seen in the past few years, and wonder if we'll really be able to find a house we really like, that we can also afford.

But then a funny thing happened. As spring sprung, houses started to pop up, and up, and up and suddenly in seemed like every other house in Portland was for sale. And then prices started to fall. And then the mortgage industry imploded. And suddenly there was hope that we'd find a good deal after all. So stay tuned for my "outsider" view of the Portland market as we try to find the perfect duplex to live in for the next few years!