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Real estate investments can be in the form of rental properties typically held for long term cash flow, or flips typically held for short term capital gains. Sometimes a property can straddle both categories. I’m always looking for investments that make sense for my clients (and for myself). As I looked at today’s available properties, I ran some numbers and here is my analysis.
A classic rental property is at 6007 SW Karla Ct, Portland, OR 97239 www.redfin.com/OR/Portland/6007-SW-Karla-Ct-97239/unit-6009/home/26472481 This property is listed at $620k. After the 20% down payment the loan is $490k. Assuming a 2.9% loan, with the 2020 property taxes of $8,263.79 and $1200 for homeowner’s insurance we are looking at monthly payments of $2,853.15. The actual gross income is currently $30k/yr., or $2500/month. This does not make sense. We would need 35% down to bring our monthly payments under our gross income. This may make more sense looked at as a flip. Most investors would not be happy with parking $217k, or the 35% down payment, in an investment with no cash flow. As a flip though, this could ultimately bring appreciation.
A classic flip is 10940 SE Salmon St, Portland, OR 97216 10940 SE Salmon St, Portland, OR 97216 10940 SE Salmon St, Portland, OR 97216 | MLS #21625655 | Zillow This house is a foreclosure so the risks involved there are not for every investor. For the sake of this discussion, we will assume the best case. The sales price of $285K is a bargain. After 20% down, the monthly payments on a loan of $228k with 2020 property taxes of $3202.53 and insurance run $1324.22. This makes marginal sense as a rental property, but the flip possibilities are exciting. Similar homes run $550k to $590,900.
Let me know what interests you and we can find the right investment for you.
