Bob Nelson – Apartment Ownership

In this episode we’re going to talk about the apartment market. What’s it like to own an apartment? Thanks so much for tuning into the Real Estate Today Podcast.

I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.

Bob Nelson: I’d like to deal today with the apartment market. What’s it like to own one? What’s it like to attempt to build one? What’s it like to attempt to sell one?

This is an interesting market, and I refer to the Willamette Valley primarily, but then again if you consider the population west of the Mississippi, the vast majority of the population is within 15 miles to either side to the I-5 corridor, and we are smack dab in the middle of the I-5 corridor, somewhere between San Francisco, Portland, and Seattle, and we’re an interesting … in Eugene and Springfield, we’re a fairly small market, 360 or so thousand people.

We have a market base that’s a little larger than that, that if you consider Eugene and Springfield, you’re really only tipping about 225,000, and then the perimeter, those outside, make up the difference. It’s an interesting market in that the Portland market, rents have started to subside, but then again, they were sky rocketing to begin with, very, very high. $1,160 for a studio unit? That’s pretty amazing.

Now, a lot of that comes from new construction, where they do have very, very small mini-apartments, very small apartments, and the rents are fairly high, but then again, that rent stays fairly high across the board for other units. As an example, a two bedroom one bath is about the same price. A three bedroom is $1,507 for an average overall unit in the Portland market. That’s lower in the Eugene market, that’s lower in the Salem market.

Now, it’s still a fairly decent rent opportunity. If you’re a tenant, you’re getting a lot of apartment benefit, apartment amenity for your dollar. Not quite so in Portland, but that’s starting the change. The rents have started to decline, but then again, new construction is also increasing, which causes even a greater pressure on vacancy factors. I’ll be dealing more on that topic in our next show.

I’m Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments.

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