Buying Portland Investment Property: 5 Things to Know in 2021

portland investment property

From market conditions to zoning rules and rental restrictions, here are five essential facts for potential Portland investors. 

1. Real estate investment is not for everyone

At its most basic level, the idea of becoming a landlord and receiving, on average, a 9% return on your investment, seems like a no-brainer. However, successful real estate investors take the job pretty seriously. They calculate how much the property is going to cost them (up front and ongoing), versus how much they’re going to earn on the rental, before they even make an offer. They also take personal stock of their skills in management, home-maintenance (there’s going to be a lot of that), and legal processes. Do your research, read a book or two on real estate investing, and talk to some landlords you might know before you make the decision to pursue this investment option. If you don’t, you could lose more money than you earn, and it will be a very large headache!

2. Portland vacancy rates are low

So, you’ve decided you have what it takes to be a real estate investor – congratulations! The good news is that 2021 will be a very good time to find renters in Portland. US Census data shows that rentals represent just under 40% of the housing units in the city, but that supply is barely keeping up with demand. In 2019, the vacancy rate (percentage of unoccupied rental units) for Portland was just 4%, lower than the US average 6% and almost a full percentage point down from the prior year. The lower the vacancy rate, the less likely it is that your rental will sit empty, costing more money than it’s earning.

3. Many rental configurations are on the table

Most investors think of an “investment property” as a home or apartment building separate from their current dwelling. But an investment is any property you buy to generate income; your primary residence can function just as well. Many beginning real estate investors take advantage of first-time home buyer programs, including a low 3% down payment and bundled construction loans, to purchase a property that has any of the following features:

  • An Accessory Dwelling Unit (ADU)
  • Buildable space (basement, backyard) to place an ADU
  • Duplex or could be remodeled as a duplex

With new Portland zoning rules in effect in 2021, up to two ADUs can be built on a property, and nearly any residential home can become a duplex or multiplex. 

4. Short-term rentals are restricted in Portland

With the ability to charge higher rents and none of the legal responsibilities of long-term tenancy, buying a home to rent out on AirBnb may seem like a good investment strategy, but get to know the regulations in Portland before you move ahead with this plan. Entire homes can’t be used as a short-term rental for more than three months out of the year. ADUs can be used for AirBnb, as long as you live in the main house, but building an ADU for this purpose is going to be much more expensive. Read more about recent changes to Portland short- and long-term rental laws here on our blog

5. Start looking now

If 2021 is your year to buy an investment property in Portland, contact our top 1% buyers’ team. We can help you identify which Portland neighborhoods are ideal for rentals and find you the very best deal possible. Also check out our investor-friendly property search platform, a site designed to help you find the right deal on any investment property. Winter is a great time to buy a home or investment property, before the traditional spring rush of buyers on the market. 

December 14, 2020

Stephen FitzMaurice

Stephen FitzMaurice, Realtor is a top 5% real estate agent in the U.S. A Principal Broker in Oregon, Managing Broker in Washington, he has been licensed since 2003 for residential real estate sales. Call his team in Oregon at 503-714-1111 or in Washington at 360-345-3833.

4% max to sell a home in Portland and SW Washington.
4.5% max to sell a home in Salem and Bend.
Over 2,000 homes sold.