Pros & Cons of Buying a vacation home in Bend, Oregon
Bend, Oregon, actually all of Central Oregon, is a popular tourist destination. So wouldn’t it make sense to own a vacation rental here? Rental property in Central Oregon could be a fantastic source of income, but, like any investment, it has pros and cons. Today I will walk you through a few pros and cons of owning an investment property in Central Oregon.
Starting with the good parts:
1. Real estate is an excellent investment because it appreciates over time. While there are occasional market fluctuations, the appreciation rate generally far outpaces annual inflation if you buy at the right time. Ten years ago, in August of 2012, the median sales price in Bend was $250,000. Last month, in August of 2022, the median price was $717,000. This is an increase of 186% over ten years or an average of 15.5% a year. Now, past performance cannot guarantee future performance, but if you invest long term, your investment property should appreciate.
2. Owning an investment property has unique tax benefits that allow you to depreciate the value of the structure. If you want more specifics, you should speak with your tax adviser.
3. Rental properties provide steady cash flow! Cash flow provides ongoing, monthly income that is mostly passive. This allows you to spend time working on other things or doing the things you enjoy.
4. If you invest in a short-term rental, Central Oregon is a popular tourist destination all year round and should generate income year-round.
5. Real estate builds equity. While your renter pays the monthly mortgage, you increase your net worth and pay down an asset that you can continue to rent or eventually sell and make a profit.
Now for the cons of owning real estate:
1. Owning real estate requires money. You’ll need funds for a down payment, repairs, and updates, as well as regular maintenance, expenses, insurance, and property taxes.
2. There’s a learning curve that comes with owning real estate. It is essential to know which properties are suitable investments and how to manage them after purchasing. Working with a real estate agent and a property management company that understands the area is key.
3. Investing in real estate also comes with its own set of risks. If you have a mortgage on your investment home * and something unexpected happens, will you be able to afford that mortgage payment for a while? Unforeseen repairs and events could arise, and you don’t want to be forced to sell.
A real estate investment is a fantastic chance to provide steady cash flow, substantial appreciation, and tax advantages - making it a sound investment. Just make sure you’re ready to consider the critical factors at play. If you are interested in learning more about investing in a short-term rental in the Bend area, be sure to check out my next blog, 5 Tips for Buying a vacation home in Central Oregon.