Sunriver is a popular vacation destination in Central Oregon and a great place to own a second home. There is always something fun to do in Sunriver, whether it’s skiing in the winter or golfing in the summer. Besides the amazing recreation that brings so many people to Sunriver, investment property return should also play a role when deciding to purchase a second home. There are four factors to consider when purchasing a Sunriver investment property: home value, rental income, financing cost and personal use.
Home Value Appreciation
Appreciation is a great place to start when thinking about your Sunriver investment property. Let’s look back 24 years to 1998 when the average home price in Sunriver was $243,000. The average home price in Sunriver for Q4 of 2022 was $1,031,507 giving you an appreciation of $788,507. The rate of return between 1998 and 2022 was 6.209%.
Rental income is a great way to maximize your return on a Sunriver investment property. It is very common for owners in Sunriver to put their homes on a nightly rental program. In Sunriver, you can get a 5 bedroom home for around the average sales price of $1,031,507. The gross revenue for a 5 bedroom home averaged $50,124 in 2020, $77,309 in 2021 and $69,972 in 2022. This gives us a three year average of $65,802. If we take 30% off as a management fee and $10,000 for taxes and expenses, then that puts our net revenue at $36,061.
Financing costs will play a factor in your Sunriver investment property. If you’re a cash buyer, you’re paying upfront for the ability to generate a higher take home rental income and realize all the appreciation when you go to sell. If you’re planning on buying with traditional financing, you’ll want to include that into your calculations. For our example, let’s put 20% down on our $1,031,507 home and finance the remaining $825,205. The monthly payment for a mortgage at a 7% rate would be $5,490 based on our mortgage calculator. The yearly mortgage cost will come to $65,880.
As you know, when you’re thinking about purchasing a second home there is more than just the financial calculation. You will likely plan on using the home for vacations, holidays and quiet fall weekends. A second home in Sunriver can not only be a great financial investment, it can be a great place to make memories with family and friends.
Let’s start with the numbers and say you bought a 5 bedroom house in Sunriver for $1,031,507. If you assume an appreciation of 6.209% over the next 30 years, your home would be worth $6,321,652. Your 30 year net rental revenue with a 2% year over year growth would be $1,462,925. Your total mortgage cost comes to $1,976,440. If you sold on year 30 after paying off your mortgage, your profit would be $5,808,137 ($6,321,652 – $1,976,440 + $1,462,925). This calculation gives you an idea of how your money is working for you when you purchase a Sunriver investment property.
The emotional component of the equation plays an equally large part of purchasing a second home. If have fallen in love with Central Oregon and Sunriver, give us a call and we can help you find an investment property.
** These financial calculations are based on past data and may not be reflective of the future.