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| Below you will find a current summary of plex market conditions in the Portland metro area. Since each area of the city will have varying sale numbers we have decided to provide this summary overview.Email me for detailed information on specific areas.
"The market is mixed. Many close in sub-markets remain a seller's market with properties receiving multiple offers and moving quickly. Most suburban markets are typical slow markets. Buyers can negotiate harder in some suburban sub-markets depending on style of property. Rents are on the rise in most areas." 2/08
#1 Rule of ThumbAnnual Gross Rent Multipliers (GRM) are 10 to 24 in the metro area. I works just like you think it would - Hawthorne District and other defined fun, exciting neighborhoods are on the high end while mid county, Beaverton and other plain Jim areas are at the lower end. However, watch those very high GRM's..sometimes they're high because the rents were very very low...we know what the rents should be and can prove it to you!#2 Rule of ThumbPrice per square foot runs $90 to $280. Again, area style of property determines it.#3 Rule of ThumbAll operating expenses and vacancy estimate average 30% of the gross income on small plexes. Operating expenses do not include the mortgage payment or professional management.#4 Rule of ThumbLow down deals do not produce positive cash flow in year one with fully amortizing loans. Basically, you either make the required down payment at closing, or you make it monthly, if you can qualify for the loan.#5 Rule of ThumbYou have got to have email or a fax to get the chance to make an offer in the very fast paced and popular sub-markets. I've been doing this for 32 years and am excited to see our sub-markets finally develop. Remember that commute? You don't like it? Neither do tenants...which is why they pay higher rents for the close in properties..in our opinion, close in rents and values will only continue to rise!#6 Rule of ThumbThe market rules! You can't change it, just understand it, and stop trying to push rocks up hill.The best and most efficient way to proceed is to find the area you want to own in (be specific), and research the closed sales over the last three months to determine what the market is for that specific area.Then take these numbers ( the GRM and price per square foot) and apply them to properties for sale in that same area to see which ones are properly priced.Then take your financing scenario, apply it to one of the opportunities using 30% for vacancy/credit loss and all operating expenses and see how it comes (pencils) out. If you constantly find properties that don't pencil for you (and they are selling in that area), then you either don't have enough money, don't know the market, or are not realistic in your expectations.If you don't have enough, go find a friend and go in it together to get started. After all your research, you will know the market, and your friend will have confidence in your suggestion of a joint venture. Also, if you get yourself pre-qualified for a loan, your friend will know you can actually buy the property, and will be happy to know someone "so together" to be in business with. Loan pre-qualification is free, most of the time, sometimes it will cost you a whopping $25.Why not consider having your IRA/ROTH/401k invest in real estate? Imaging the tax deferred growth potential! Later...Email me: Jim@jllutz.com
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