What’s the most important feature of a real estate investment property? It’s location of course. That’s why a successful real estate investor looking to make money through rental properties should always be on the look for the best real estate investment locations. If that’s what you are doing, Portland, OR might be the answer to your search. Portland has been and remains a major housing market as well as rental market in the US. So, let’s see which the best neighborhoods for Portland real estate investing are.
Related: Why a Portland Investment Property is a Great Choice in 2017
How is Portland real estate doing?
Currently the Portland real estate market is definitely a seller’s market. Available real estate properties for sale are few, and any new listings disappear quickly. Property buyers are quick to make an offer as soon as a new property gets listed. Most newly listed homes are gone within less than a month. While this doesn’t sound like the best place to buy a real estate property, it actually is. This means that the Portland real estate market is a hot one, and it is likely to stay like this for a while. The reason is that the Portland economy is reaching full employment, so more and more previously unemployed people are now finding jobs, and wages are rising. This is good news for Portland real estate investors and landlords as the local population will be able to afford more and better rentals.
To be more precise in our analysis of the Portland real estate market, it is important to use a rental property calculator. Mashvisor offers an excellent investment property calculator. Using traditional and predictive analytics, it predicts rental income and expenses in order to compute all major profitability measures including cash flow, CoC return, and cap rate. Moreover, these are all divided for traditional and Airbnb rental strategy. So, here are the numbers for the Portland real estate investment market at the moment:
- Median Property Price: $497,000
- Traditional Rental Income: $1,990
- Traditional CoC Return: 1.7%
- Traditional Cap Rate: 1.7%
- Airbnb Rental Income: $1,660
- Airbnb CoC Return: 2.0%
- Airbnb Cap Rate: 2.0%
Related: Is Life Even Possible Without a Rental Property Calculator?
As you can see, while the median property price is not particularly low, the rental income for both traditional and Airbnb is relatively good. Airbnb is slightly more profitable in terms of CoC return and cap rate than traditional renting. You should note that the CoC return and cap rate computed by Mashvisor’s rental property calculator are the same because this real estate investing tool assumes investment properties are paid for fully in cash.
What are the Airbnb rules for Portland real estate rentals?
Before you become a Portland real estate investor, you have to know the local legislation related to short-term rentals. Even if you favor the traditional rental strategy, it is best to be prepared to rent out Airbnb style as well in order to keep up with the newest trends in the US rental market. So, you’d be glad to know that Airbnb rentals are legal in Oregon. However, some strict rules apply. In specific, any Airbnb host has to apply for a short-term rental permit to rent out his/her real estate property for less than 30 calendar days. Also as the host, you have to occupy your residence for at least 270 days a year. Before you can rent out on Airbnb, you have to notify your neighbors and undergo an inspection by the City. Thus, if you decide that Airbnb is the way to go for you in your Portland real estate investments, make sure to check out all Airbnb laws and regulations in detail before you start out. That’s the only way to avoid problems with the local authorities.
What are the best neighborhoods to invest in in the Portland real estate market?
As a real estate investor, you know that location is a major factor determining the viability and profitability of any real estate investment. Location is not only the city but also the specific neighborhood where your rental property is located. So, let’s have a look at the best neighborhoods for Portland real estate investments according to forecasts from Mashvisor’s rental property calculator:
1. Northwest
- Median Property Price: $350,000
- Traditional Rental Income: $2,550
- Traditional CoC Return: 5.3%
- Traditional Cap Rate: 5.3%
- Airbnb Rental Income: $3,130
- Airbnb CoC Return: 7.2%
- Airbnb Cap Rate: 7.2%
- Airbnb Occupancy Rate: 57.5%
If you are looking for relatively affordable Portland real estate investment properties, Northwest might be the right neighborhood for you. The median property price is well below the city average, while the return on investment is high – both in terms of CoC return and cap rate – especially for the Airbnb rental strategy. But if you want to go for traditional renting, you could also buy an investment property in Northwest.
2. King
- Median Property Price: $385,000
- Traditional Rental Income: $1,950
- Traditional CoC Return: 2.9%
- Traditional Cap Rate: 2.9%
- Airbnb Rental Income: $2,850
- Airbnb CoC Return: 5.6%
- Airbnb Cap Rate: 5.6%
- Airbnb Occupancy Rate: 69.8%
King is another top neighborhood within the Portland real estate rental market, according to computations by Mashvisor’s investment property calculator. Airbnb is definitely the better rental strategy here.
3. Sunnyside
- Median Property Price: $575,000
- Traditional Rental Income: $2,340
- Traditional CoC Return: 1.8%
- Traditional Cap Rate: 1.8%
- Airbnb Rental Income: $3,950
- Airbnb CoC Return: 4.7%
- Airbnb Cap Rate: 4.7%
- Airbnb Occupancy Rate: 51.4%
#3 in our list of the best neighborhoods for buying and owning a rental property in the Portland real estate market is Sunnyside. However, it’s more expensive than the previous two neighborhoods and offers slightly lower profitability. If you opt for an income property in Sunnyside, you should definitely go Airbnb, according to Mashvisor’s rental property calculator.
4. Boise
- Median Property Price: $645,000
- Traditional Rental Income: $2,110
- Traditional CoC Return: 1.2%
- Traditional Cap Rate: 1.2%
- Airbnb Rental Income: $3,160
- Airbnb CoC Return: 3.1%
- Airbnb Cap Rate: 3.1%
- Airbnb Occupancy Rate: 63.5%
Last but not least, you could consider Boise, but you have to be ready to pay more than $600,000 in order to buy a rental property here. Once again, Airbnb is the way to go in Boise.
Related: Investing in the Right Neighborhood
If you are looking for a top location for your next investment property purchase, you should have the Portland real estate market on your radar. It is a top choice for any real estate investor. When you are ready to take on the exciting journey of buying a rental property in Portland, you should use Mashvisor to find the best investment property in the city.