June 2021 Newsletter

3890-3898 Hawthorne ave NE, Salem OR

4-Plex | $589,900 | June 24, 2021

Affordable 4 plex in Salem - 2 duplexes on one lot. Each unit features an attached single car garage and its own washer and dryer hookups

Unit Mix: Four 2 bed/1 bath units

Total Sq Ft: 3256 (814 sq ft per unit). Additional 576 sq ft of garage space per duplex

Lot Size: 0.38 Acre

Year Built: 1966

Recent Updates: New paint and windows

Property Taxes: $5,013.09 (2020)

What I love about this property

  • 2 duplexes rather than 1 building with 4 units - units only have one shared wall (garage) so plenty of privacy for the tenants and the units should be able to rent like duplexes.

  • Single car garage for each unit - may be able to convert the garages into additional bedrooms for more rental income

  • Low maintenance yards

  • Close to restaurants, restaurants, shops, city bus, etc.

Concerns about this property

No property is ever perfect and it's up to the investor to weigh the pros and cons of a property, assess the risks and make an informed decision

  • My biggest concern for this property is noise - it is situated on a busy road and close to the interstate (I-5)

Financial Analysis

Conservative Assumptions Made:

  • Total monthly rent $5000: each unit rents at $1250/month

  • Landlord Paid Utilities $400 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

  • Conventional loan with 25% down payment @ 4% interest rate

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

  • Note: the numbers do not include up front rehab costs (unknown) and assumes the purchase price is the listing price - depending on competition, it may be sold at significantly higher than listing price

Hawthorne 4-plex June 26 2021 Calculation

About the City of Salem

  • Salem is the capital of Oregon and is the second largest city in the state after Portland (population around 200,000)

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

  • Amazon Distribution Center opened in 2019

  • Family friendly, close to local farms and vineyards

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.

Sources