March 2016

across the country where he can deploy his investing team.

be tough, selling those properties quickly to highly qualified buyers has been the easy part of the flipping formula in Portland, according to Grubb. He said most of his buyers are using cash or conventional financing — as opposed to FHA financing with a small down payment — evidence those buyers are at low risk for default down the road. “I haven’t sold a property to an FHA buyer for a long time,” he said, adding that many of his buyers are flocking to Portland from further afield. “I get a lot of out-of-state buyers, I get a lot of California buyers, but not all California.” In Multnomah County, where Portland is located, 27 percent of all single family home and condo sales were to all-cash buyers in 2015, up from 26 percent in 2014, according to RealtyTrac data. So far in 2016, the all-cash buyer share stands at 29 percent. “About 30 percent of them are cash; I’ve seen that reflected in my business. And a lot of investors out there,” said Sue Pantages, principal broker at Summa Real Estate Group, New All-Time Price Peak

Flipping Profits Squeezed

RealtyTrac data shows that while home flipping increased as a share of all sales in Portland in 2015, the average gross flipping profit declined as investors like Grubb were squeezed on the property acquisition side by the imbalance between supply and demand. Homes flipped in Portland in 2015 on average were purchased at a 19 percent discount below estimated full market value — well below the average purchase discount nationwide of 26 percent — while flipped homes in Portland sold at a 4 percent premium above estimated full market value — also below the average 5 percent premium nationwide. The shrinking spread between purchase discount and sale premium added up to a shrinking average gross return on homes flipped in Portland: 36 percent in 2015, down from 47 percent in 2014 and below the average 46 percent gross return on homes flipped nationwide during the year.

Sue Pantages Principal Broker Summa Real Estate Group Beaverton, Oregon “ If you can’t afford to spend 20 or 30 or 40 thousand more on a house (above listing price) than we’re going to have to go down in price to meet that standard. … If you want $200,000, we have to start looking at $175,000 homes. ”

While acquiring properties at a discount may

A Profitable Portland Flip

Continued Next Page

AFTER: Bulldog re-sold after rehab costing $26,406 in 90 days for $310,000 for a profit of $100,843, not including costs other than rehab.

BEFORE: Bulldog Capital Partners, a real estate investment firm, purchased this Portland prop- erty in zip code 97206 for $182,751.


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