December 2021 Newsletter

2495 Stortz Ave NE, Salem, OR 97301

Single Family | $305,000 | December 28, 2021

Updated 3 bedroom single family house on a corner lot in an up and coming neighborhood in Northeast Salem. Close to shopping, restaurants, recreational facilities (Kroc Center & bowling alley).
Total Sq Ft: 1240. 3 bedroom, 1 bathroom
Lot Size: 7841 sq ft
Year Built: 1954
Property Taxes: $2277 (2021)

What I like about this property

  • Appears to be move in ready and nicely updated judging by the pictures

  • Close to the Kroc Center, Department of Transportation headquarters

  • Corner lot: possibility of building another house/ADU in the backyard and creating another driveway for additional parking.

  • Potential opportunity to add another bedroom or bathroom by converting the bonus room or garage.

  • Should be a relatively safe investment and make a good rental property - an updated 3 bedroom house in Salem for around $300k is hard to find in general

Concerns about this property

  • Some portions of the siding look worn out/damaged

  • Older house and the listing mentions only cosmetic updates so plumbing, electrical, HVAC, roof, etc, may be older so budget accordingly for these expenses

  • If it requires too much non-cosmetic repairs, I'd probably pass on it or negotiate a bigger credit with the seller depending on the issues.

Financial Analysis (if used as a rental)

My goal for a single family rental in the current market is simply to break even for now and rely on future rent increases, improvements, appreciation for better cashflow/equity.

Conservative Assumptions Made:

  • Total monthly rent $1750

  • Tenant pays for all utilities and takes care of the landscaping - $0 landlord paid utilities

  • Conventional loan with 25% down payment @ 3.75% interest rate (investment rate)

  • Property Management 9% (a little bit higher than usual since this is a single family home); Vacancy, CapEx, Maintenance: 5% each

  • Included a $5k upfront rehab cost for siding repairs and some minor repairs

2495 Stortz Ave NE, Salem

About the City of Salem

  • Salem is the capital of Oregon and is the second largest city in the state with a population over 400,000 in the metro area

  • Stable rental market with plenty of job opportunities. Major employers include: State of Oregon, Salem Health, Willamette University, Chemeketa Community College, etc.

  • Home to the Oregon State Fair

  • Amazon Distribution Center opened in 2019

  • Within 1 hour drive of many major citiies in Oregon (Portland, Corvallis, Eugene, Oregon Coast etc.)

Suggested Information to Verify (Buyer to do due diligence)

  • Inspect the home well since it is an older construction

  • Verify with the seller on all the updates that were done if possible

  • Some areas of Northeast Salem can be a bit sketchy so pay attention to the street and neighbors' houses to see if they are well kept.

  • Listing mentions a bonus room, not sure if this is referring to the 3rd bedroom or a separate room. If it is truly a bonus room, then maybe it can be a good place to add in a 2nd bathroom

  • If there is a lot of work that needs to be done, get estimates from contractors or slightly overestimate repairs because of supply chain issues and negotiate with sellers accordingly

  • Research on city permits if you want to build a new structure in the backyard or add an extra bathroom or bedroom to the existing house

Sources