February 2022 Newsletter

278-280 Oak St NE, albany

Duplex | $325,000 | Feb 8, 2022

Duplex in Albany close to the freeway, retail (Costco, Lowe's, Target, shopping mall etc.), and walking trail/park

Unit Mix: 2 bed 1 bath each
Total Sq Ft: 1536 total (768 sq ft per unit)
Lot Size: 7405 sq ft
Year Built: 1976
Recent Updates: Windows
Property Taxes: $3480.02 (including discount)

What I like about this property

  • Tenants pay all utilities, which I assume includes water/sewer which indicates that the duplex has separate water meters

  • Very convenient location, close to I-5 and lots of retailers (including big box stores) and restaurants nearby

  • Residential neighborhood, looks like mostly single family homes according to Google Maps

  • Garages, patio

Concerns about this property

  • Roof looks a bit worn out from the listing pictures

  • Units are small, tenants tend to like bigger units but this might be fine as long as it has a good layout and flows well

  • Property is very close to the Willamette river and appears to be right next to the flood zone (see Fema map) which should be okay for insurance purposes but the buyer should verify any flood insurance requirements. It might be a good idea to get flood insurance anyway for additional protection.

  • Close to the railroad - probably not a big deal for a rental property

Rentometer Report: Rent Analysis

Link to full Rentometer report

Financial Analysis

Highlights

  • Monthly Cashflow: $256.07

  • Cap Rate 5.34%

  • Cash on Cash Return 3.19%

Conservative Assumptions Made:

  • Purchase price $335k ($10k over asking, I feel that the listing price is too long and there's been a couple of 2 bedroom duplexes in Albany that have been sold to Cash buyers for much higher although this duplex is on the smaller side)

  • Total monthly rent $2600. Each unit rents at $1300

  • Landlord Paid Utilities $120/month for lawn maintenance

  • Conventional loan with 25% down payment @ 4.25% interest rate

  • Property Management 8%; Vacancy, CapEx 5% each, Repair/Maintenance 7% (a bit higher because it's an older property)

  • Numbers include a $5k upfront rehab cost for some minor updates

  • Changed annual appreciation to 3% (used to be 5%) because the housing market is projected to slow down

Link to Financial Analysis Spreadsheet

About the City of Albany

  • Current population: 56,472 (2020 Wikipedia)

  • Very convenient place to live with good schools, parks, shopping (Costco, Walmart, Target, Home Depot, shopping mall, etc) and close to Interstate I-5 for an easy commute to surrounding cities

  • Major employers include: ATI Metals, Samaritan Health Services, Greater Albany Public Schools, Linn Benton Community College, Target Distribution Center

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.

  • Verify utilities and any fees that the landlord is currently responsible for (e.g. lawn maintenance, garbage)

  • Verify with the lender that the property does not require additional flood insurance

Sources