Buying Investment Properties

This information
courtesy of Grace Allen,
Realtor® specializing in
investment properties.

503-550-1299

I I recently read that “the lure of free land was overpowering to many families suffering from the threat of a depressed economy.

Technology and the media saturate us with information about the state of our present economy. But did you know the above was extracted from an article about the immigrant wagon trains of the 1800’s that brought original settlers to this area? I believe the passion of these pioneers transcends time and people today are also willing to take action in the hope of a better future. They go after what they know to have inherent value – land – real property.

Although we do not have wagon trains of people or this same free land today, the foreclosures and bank REOs (property that goes back to the mortgage company after an unsuccessful foreclosure auction) are bringing a wave of novice hopeful investors into the real estate market. They see the price and think they can turn a house into a rental. But they may not understand landlording issues, investing intelligently or the local market. Many people use services like property management Katy TX to take care of things such as leasing, screening tenants, and inspection to take some of the workload off themselves.

Local Market Area

Yamhill County covers 459,520 acres – or 718 of Oregon’s total 98,381 square miles. Bound by Washington, Clackamas, Polk, Marion and Tillamook Counties, the county extends from 15 miles southwest of Portland to within about 11 miles of the Pacific Ocean. Incorporated cities include: Amity, Carlton, Dayton, Dundee, Lafayette, McMinnville, Newberg, Sheridan, Willamina and Yamhill. The population of Yamhill County is 95,925 or about 2.5% of Oregon’s total. Other nearby areas include Tualatin, Sherwood, Wilsonville, St. Paul, Gaston, and the Bald Peak area.

Foreclosures

Though numbers fluctuate constantly, accessible data indicates that 1 in every 502 housing units received a foreclosure filing in February 2011. Using Regional Multiple Listing data, of the 937 active listings in Yamhill County approximately 10% of these are bank owned.

Pricing and Values

Banks are pricing their inventory unusually low which is good for the buyer though not favorable to property values in general. For example: Two adjacent homes in a newer construction neighborhood with typical home values in the $250k to $450k range were sold by real estate brokers within a few weeks of each other. The foreclosed, bank-owned home was in reasonable condition, slightly smaller and sold for over $100,000 less than the non-foreclosure home next door. Sales like these challenge the real estate community and affiliates to establish and justify value and pricing. Regional Multiple listing data for the period ending in May, 2011 indicates the average sales price in our area is comparable to sales for the period ending in May, 2005. Those looking to use their property to earn money from renting it out to prospective tenants may want to consider hiring a property management company, especially if this is their first foray into real estate.

Mortgage Money

One mortgage banker states investor activity has increased over the past 12 months (2010 to 2011) and attributes this activity to reduced home prices and low interest rates. These investors are primarily looking for inexpensive single family residential properties and are definitely interested in Yamhill County. If an investor does not have all cash, mortgage loans are available. Investors needing loans are wise to seek the assistance of a professional mortgage banker prior to beginning a search for properties.

Get Started

If you are a beginner investor or have simply been unsuccessful in the past, consider these steps:

  • Due diligence is not optional. Understand the local market for rental real estate in your price segment. Investigate local government plans for an area where you are thinking of buying.
  • Have a written plan with an entry strategy and an exit strategy, and know how long you want to hold onto a property including how much will it earn during that time.
  • Calculate all the actual costs of the property and not just the cheap price. What will it cost to fix and maintain – repairs, vacancy costs, taxes and more?
  • Consider enlisting the help of a property management company. If you own multiple properties it can be difficult to stay on top of everything so do not be afraid to outsource the management of your properties to a real estate expert.

Summary

The good news is this. Though the above may raise questions, the following does not: the lure of owning real property draws buyers and sellers into the market place – yesterday, today and tomorrow.

Contact Grace Allen at 503-550-1299 to learn more about buying investment properties.

 

Published on: Nov 30, 2012