Friday, February 13, 2015

CNN Money: Why Is Everyone Moving to Oregon?

by Spencer Marona, Managing Director

And, how are multifamily owners preparing to capitalize on this?

There is a buzz in the Pacific Northwest and I am not talking about Boeing nor the construction work on Amazon's campus. The buzz that I am referring to is coming out of the state of Oregon--the number one state in the country transplants moved to in 2014, according to United Van Lines.

At the epicenter is the Portland/Vancouver/Hillsboro MSA. There are a number of underlying market driving forces causing the mass wave of in-migration. Portland and all of Oregon is known for its beauty, zero sales tax law, and outdoor recreation. In addition, it is arguably the last major MSA on the west coast with a reasonable cost of living and thriving job market. One group riding this wave and capitalizing on the impact--apartment owners.

Axiometrics, an apartment market data and research company dubbed 2014 "The Year of the Apartment". Multifamily investors spent approximately $1.3 billion on purchases in Portland's MSA in 2014. According to Chief Economist and Senior Vice President, Victor Calanog, PhD., with Reis, Inc., Portland's apartment vacancy rate is forecasted to drop to 2.9% in 2015. This number will go up as developers finish construction on new projects, so expect more supply than demand following the typical trend of a 10 year real estate cycle in the next 18-24 months.

If you own one or more multifamily properties in the greater Portland market and haven't recently considered whether you are getting the most of the return on your investment, you probably are leaving money on the table. Achieving a desired ROI for your property depends on what your initial and current investment goals are. As a result, there are four strategies an owner should take into consideration before a purchase, during the hold period, and when exiting. These include:

  • Sell and do a 1031 Tax Deferred Exchange (into 1-3 other investment properties)
  • Sell and pay capital gains ("cash out") 
  • Hold the property and refinance (while interest rates remain historically low)
  • Hold and improve operations (generate more cash flow, position for a sale in the future, etc.)

Many ownership groups have different investment goals than another. Whether your goal is to achieve more cash flow, build equity off of long-term appreciation, diversify your portfolio, create passive income, or a combination of these and more, it boils down two important factors. 1 - Is your strategy aligned with your investment property goals? 2 - Are you working with a team that specializes in multifamily sales/acquisitions and advisory services? 

We can help. Contact an HFO broker to see how our team can advise you with your strategy in 2015 and beyond.

Why Is Everyone Moving to Oregon? (Additional video by