Noting that there’s lots of interest in multifamily property for sale in Eugene, René reports on what means for both property owners and investors.
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Patrick: Today I’m speaking with René Nelson, CCIM, a well-known multifamily expert and commercial real estate broker. René, you mentioned there’s lots of investors looking at multifamily for sale in Eugene right now, so what’s the good news for multifamily property owners in Eugene?
What’s the good news for multifamily property owners in Eugene?
René Nelson: Well, Patrick, the good news is it’s not too late to get into the market. Apartment investing should remain strong in 2017. Right now we have a shortage of inventory, and that’s creating a little bit of a heated market, but there’s still some great deals out there. We’re seeing some bidding wars on the nicer, newer properties, and frankly even in the lower quality properties that we refer to as B or C quality. These are properties that might have been built in the 70s, two story, and haven’t had much updating done. But here’s the great opportunity about these units: you can put a little money into them and then raise the rents, and you’re not having to pay top retail prices to get into them.
So, René, is that why investors are willing to be so aggressive on those lower quality properties?
René Nelson: Absolutely. Investors feel that they can get a much better cash flow out of those B and C or older properties. I’m going to give you an example. Properties in the Portland market right now, multifamily, are selling around a four and a half to a five cap rate. But in the Eugene market, you can find that similar property for a six to a six and a half cap rate. So what that equates to is that’s about $300,000 more in purchasing power in the Eugene market.
Why are you so optimistic about the Eugene market right now?
René Nelson: Well, there’s lots of reasons to be optimistic, but one of them is there’s lots of money on the sidelines. And lots of investors want to get into the multifamily market, even with the compressed yields compared to two or three years ago—right now we’re seeing lots of investors that want to get into the multifamily at almost any price. Portland was just ranked as one of the top cities for the most desirable to move to. So when people want to gravitate across the US and move to Portland and they’re renters, they can’t find any housing options because there’s a waiting list and a shortage of housing, then those people are gravitating to Eugene. As a result, what we’re also seeing is our tenant pool is going up in quality of tenant, so ultimately the investors are then the winners because they’ve got great tenants that’ll move into their properties.
Patrick: Thank you, René. That’s great information for our listeners. Folks, to get more information go to eugene-commercial.com or call René at 541-687-5871.
With all the activity and interest Eugene-area multifamily properties, René is committed to keeping the investor community up-to-date and informed. Be sure to regularly follow our blogcast series right here!