A number of my posts lately have focused on how now is a good time to buy a rental home in Central Oregon. Two big reasons to think about owning a rental right now are that prices are low and the demand for rentals is high. But where should you buy? In Bend or Redmond? Is one city better than the other? How much house can you buy? For the sake of comparison I found two houses that just came on the market today and are priced at about $100,000.
The photo above is of the house in Bend on Heavenly Drive. It has 3 bedrooms, 2 baths, is 1108 square feet and sits on .20 acres. This single level home was built in 1994 and is in a pretty good location. It’s very close to the hospital, grocery store, Costco and schools. The list price for this house is $99,900. I don’t know why so many houses in Bend were built without forced air heating but this is one of them. It is heated by cadet heaters in each room. Taxes are $1748. This house is already rented but I’m not sure what the tenants are paying. Becky and I agree that it could easily rent for $925 a month. Someone buying this house as a rental would expect to have to put 20% down ($19,980). Assuming an interest rate of 5.5% on a 30 year loan of $79,920 the principle and interest payment would be $451.70. Adding taxes ($145.67/month) and insurance (approx. $50/month) the total monthly payment would be $647.37. Cash flow of $277.63 a month with little or no work required. That’s pretty good. Update: This house sold in October 2011 for $106,550.
The house above is in Redmond and also has 3 bedrooms and 2 baths but sits on a slightly smaller lot (.15 acres). At 1797 square feet it is almost 700 square feet larger than the house in Bend plus it is six years newer. This bank owned home is listed at $102,900 and property taxes are $2054. Unlike the house in Bend, this one has forced air heating. It sits in a nice residential neighborhood but isn’t quite as close to shopping, schools and the hospital. However, there is a nice little park a couple blocks away. I would expect this house to rent for $950 without a problem after the yard was cleaned up and some of the bolder colors were painted over inside the house. Assuming the same variables as I used for the Bend home, down payment would be $20,580, principle and interest $465.27, taxes $171.17 and insurance $50 a month. The total monthly payment would be $686.44 which would produce a net cash flow of $263.56. Update: This house sold in December 2011 for $97,900.
So which house is the better investment? You can buy more house for your money in Redmond. In our experience it isn’t any more difficult in one city or the other to find a good tenant and get a home rented quickly. Especially if the rent is priced right. When it’s time to sell it might be a little easier to sell in Bend just because there are so many more people who want to live there. Ultimately, the decision is up to you. There are so many variables for each situation that it is important to have a good Realtor® who can present you with all the facts and can answer any questions you may have.
Update: Here we are two years after I wrote this post and home prices aren’t what they used to be. Take a look at the homes for sale in Bend and Redmond for under $150,000 and you will see what I mean. However, that doesn’t mean that there aren’t deals to be had in either city. Preferred Residential can help you find them.
Copyright BuyBendOregonHomes.com, all rights reserved.