july 2021 Newsletter

1435 Summer (-1455) St NE, Salem OR

Triplex | $555,000 | July 28, 2021

Triplex near downtown Salem that consists of a house + duplex with alley access and off street parking

Unit Mix: 1 detached 3 bed 2 bath house and 2 duplex units 2 bed 1 bath each

Total Sq Ft: 3860. Main house is 1358 and duplex units are around 600 sq ft each

Lot Size: 0.28 Acre

Year Built: 1956

Recent Updates: Windows, kitchen, bathroom

Property Taxes: $3960 (2020)

What I like about this property

  • Easy access from the main street and alley

  • May qualify for a FHA loan for a buyer who wishes to owner occupy and have most of their mortgage paid for with the rental income

  • Walking distance to elementary school/park, coffee shop, restaurants

Concerns about this property

  • Condition of the duplex - no pictures, however, this is quite common with rental properties as the seller may not want to disturb the tenants.

Financial Analysis

Conservative Assumptions Made:

  • Total monthly rent $4000: Main house rent at $1800 and duplex unit rent at $1100 each

  • Landlord Paid Utilities $300 a month for water and sewer ($100 per unit) - this water bill may be billed back to the tenant if desired or option to charge the tenants a flat monthly water fee

  • Garbage fee of $800 (annual)

  • Conventional loan with 25% down payment @ 3.25% interest rate (FHA loan with 3.5% down payment may be possible as well)

  • Property Management 8%; Vacancy, CapEx, Maintenance: 5% each

  • Included a $20k upfront rehab cost for cosmetic updates to get maximum rent

1435 Summer (-1455) St NE Triplex

About the City of Salem

  • Salem is the capital of Oregon and is the second largest city in the state with a population around 200,000

  • Home to the Oregon State Fair

  • Major employers include: State of Oregon, Salem Health, Willamette University, Chemeketa Community College, etc.

  • Amazon Distribution Center opened in 2019

Suggested Information to Verify (Buyer to do due diligence)

  • Always do your own research and analysis on properties!

  • Gather information about current rents and lease terms. Current tenants are likely paying below market rent.

  • Research on the Oregon Landlord Tenant laws including Covid specific restrictions or consult a real estate attorney

  • Verify who pays what utilities. It is likely that the owner pays for water/sewer bill because most multifamily homes bigger than a duplex do not have separate water meters. Owner may also be responsible for landscaping and trash pickup.

  • If the buyer is purchasing this as an owner occupied property, find out if the owner is willing to give notice to one of the tenants to vacate. This is usually a 90 day notice under current Oregon Law. Note that if you are using an owner occupied loan, the unit does not need to be vacant at the time of closing, you just need to move into the unit within 60 days of closing under FHA requirements.

Sources