Portland Condo and Townhome Investment

If you go to Beaverton and Hillsboro areas these days, you'll see condo & townhome developments popping up literally in every corner. Even with a lot size of just over 15,000 square feet, you'll find brand new row houses all cramped together vying for a piece of the Portland real estate boom.

This is relatively good news for first time home buyers where single family homes are beginning to be priced out of reach. Condos and townhomes are good alternatives as starter homes. For under $200,000, you can easily find a 2 bedroom, 1 to 2 car garage, 1,500 SF condo or townhome, complete with designer paint palette, bonus room, and the list goes on. For that price, even with 100% financing, the monthly payment before tax and insurance would be just around $1,000 given today's low interest rate.

For investors with low equity, this spells trouble. This is particularly true for those who own 3-BR condos where the rent has been between $1,000 to $1400 depending on the area and facilities. The rental rate, literally, has priced itself out of the market. It's easy to see why people with that amount of cash would rather buy than rent. So the only chance of getting positive cashflow is to have almost 50% down in equity.

For those in the 2 to 3 bedroom range, there is a similar story. Investors will need to have a minimum of 30% to 35% equity in order to have the hope to break even.

What's more? If you're not into managing the property rental yourself, it's hard to even find a property manager out there who's willing to take on a condo or townhome project, with the exception of the Pearl District downtown where there's still a constant demand for space.

As far as Beaverton and Hillsboro is concerned, investors should definitely rethink their strategy. Despite that the long term appreciation gain is still solid, the short-term cash flow has been seriously affected.