Investing near MAX and Streetcar Stations in Portland
You've heard the old real estate adage "Location, Location, Location" and it's never more relevant than when you're looking for a multi-family property as an investment. There are a couple good rules of thumb that investors follow to help keep their property rented, like buying near a hospital or a campus (lots of employees and students, and lots of turnover). Since Portland has one of the best mass-transit systems in the country we'd like to add a third rule: Buying near a MAX or Streetcar station. This isn't a "get rick quick" strategy, but more of a good long-term strategy that aligns with Portland's urban growth patterns.
Why Station Proximity Matters for Portland Renters
I've found as an investor and as a broker who helps multi-family investors that there is a big segment of potential renters who actively search for a house that allows them to commute throughout the city without a car. Walking to a transit station is one of the biggest "wants" many renters have, and for more and more it's becoming a "need." Many Portlanders don't even have cars because the cost of gas, insurance and the cars themselves are cost prohibitive, especially in a city with a good mass transit system.
How Station Proximity Benefits Investors
For investors their first thought is often "I can charge more rent because my duplex is near a MAX station." However this isn't always the case. What I've found is that owning near a light rail station translates into a deeper, more focused tenant pool that helps properties lease faster and stay leased. These properties tend to retain tenants longer and add more stability for the investor. Nobody likes having to clean up and re-rent their property every year. Also when it's time to sell the property you may be able to sell at a premium because you show stable tenants and good ROI from lower vacancies. So even though you may not be able to charge significantly more rent you could benefit from a higher sales price down the road.
Which MAX Stations Should Investors Focus On?
I get asked that and it's a tough question. For single unit properties like condos I'd look near a Red Line station like at The Civic high-rise, or some of the smaller condo buildings in Lloyd Center or Goose Hollow. Keep in mind though that condo investing is tough to cashflow unless you can pay cash for the unit. For multi-family I'd keep an eye on what's around the Streetcar stations on the Inner East Side which is always popular and easier to rent. Gresham is starting to become a popular place for multi-family investors, and if you can find something near a Blue Line station then all the better. On the North side you can usually find a good variety of properties around the Yellow Line stations for commuters to get to downtown or students to get to PSU. And keep an eye on properties along the Blue Line for reverse-commuters who work in Hillsboro and Beaverton but prefer to live in the city.
Any Disadvantages?
Like everything in life there's good and bad about investing near these transit stations. Some of the busier stations that service multiple lines can be noisy with many trains rumbling by. What's near the station can influence who's riding the train and getting off at the stop as well. There's a helpful crime map you can use to see what's going on around each station. I'd suggest spending some time around any station you're considering to get a feel for the average rider, traffic and noise level. Would you comfortable walking there at night? Would you comfortable walking there with kids? If the answer is no for you it's probably no for a lot of your potential tenants too.
To sum up, investing around Portland's MAX and Streetcar lines can be a good strategy for long-term investors. Portland is investing more and more in mass transit and it's good to align your strategy with the city and how it wants to function. And if you're patient you may be rewarded by more stability, less vacancies and good long-term value near these stations. Is it right for you? Contact me and let's discuss your objectives to find out.
Photo Credit: Steve Morgan
