Thanks for checking out the Real Estate Today podcast. Let’s find out where we are on the investment side of real estate.
Bob Nelson: I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments.
Marcia Edwards: I’m Marcia Edwards, residential broker with Windermere Real Estate. I’ve had my turn. Last program we talked about the residential market and how there is almost a perfect storm for a little activity on the fourth corner as we’re going into September. Tell me about investment real estate. I know you know the whole scope and all the food groups of investment, but what about housing, like apartment, multi-family?
Bob Nelson: The multi-family market is a rather interesting one. Let’s not look necessarily at what a tenant is seeing, but instead if you wanted to buy a rental property, residential rental property, or you wanted to sell a residential rental property, what’s happening? Starting from the most basic situation, very few properties of this nature are purchased all cash. Typically a mortgage is used. The lenders require a 25% down payment, and a 75% loan to value ratio is the standard, although they take a look at what’s known as a debt service coverage ratio, which is much more sophisticated that just a loan to value ratio. Interest rates are still extremely low. Low 4% interest rates, higher 3% interest rates, pretty amazing.
Marcia Edwards: What you’re saying is money’s cheap …
Bob Nelson: Money is very cheap.
Marcia Edwards: … So I want to buy an apartment.
Bob Nelson: Yes, and you want to lock in interest rates for as long as you possibly can.
Marcia Edwards: How can I buy an apartment? Do I look in Eugene, Oregon or do a broader scope, price point, how do I start?
Bob Nelson: I think it’s overall a strategy that you want to be involved in. Some would say that the Eugene market is too small of a market. They don’t want to become involved, so they’re going to look to the Portland market or the Seattle market, San Francisco, Los Angeles. If you’re thinking West Coast, those are the dominant primary markets. Secondary markets are a little bit … Portland is still considered a secondary market and a tertiary market is anything other than …
Marcia Edwards: Is Boise?
Bob Nelson: … In the state of Oregon. [crosstalk 00:02:08] Boise is still a secondary at least. Certainly not a primary market.
Marcia Edwards: Can people call you about those regions?
Bob Nelson: Oh yes. Let’s put it this way. A real estate investment broker that’s worth their weight in salt will absolutely understand national and regional trends as to availability of properties, cap rates, prices, et cetera.
Marcia Edwards: I’m Marcia Edwards, Windermere Real Estate.
Bob Nelson: I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments.
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