Why Small Multifamily Investors Are Stepping Back From Oregon's Secondary Markets

Written by:

Rudi Davis

Date:

10 Mar 2026

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Rising interest rates and elevated property prices have disrupted the economics of cash-flow rental investing. Many small investors have left Oregon’s secondary markets or shifted from short-term income strategies to long-term equity plays.

During the pandemic, small multifamily investors drove much of the activity in places like Salem-Keizer, Oregon. But that investment approach no longer works. Hannah Fouts-Sparks, team leader of Sparks Property Group at SMI Real Estate in Salem-Keizer, says the combination of high property prices and rising interest rates has made it nearly impossible for these buyers to generate positive monthly cash flow. As a result, both the profile of active buyers and the reasoning behind purchasing rental properties have shifted significantly.

“We’re not seeing as many investors as we did in 2020 or 2021, because it’s not penciling out in our marketplace,” Fouts-Sparks explains. Even with a 20% or 25% down payment, buyers cannot count on a monthly income that justifies the investment.

Why Rising Rates and Property Prices Are Eliminating Cash Flow for Oregon Investors

The core problem for investors is the gap between purchase costs, financing expenses, and achievable rents. Fouts-Sparks notes that at today’s prices and mortgage rates, even a substantial down payment on a duplex or small multifamily property often leaves the owner with a monthly shortfall. Mortgage payments frequently exceed the rent the property can generate.

“If you’re looking for short-term monthly income from that investment, we’re not seeing that right now with where rates are,” Fouts-Sparks says.

The challenge is especially acute for repeat investors who bought properties in 2020 or 2021. Those earlier purchases, often financed at rates below 4%, may still generate positive cash flow. Today’s rates, hovering between 6% and 7%, have changed the math entirely. Even as rents have risen in some markets, increases have been modest, and in many cases, rents have flattened or fallen slightly. Investors must now either accept negative cash flow or significantly lower their purchase price expectations.

“The money you’re putting in with your down payment probably isn’t going to pencil out. So it’s more of a long-term goal now, not a short-term gain,” Fouts-Sparks says.

Only a few scenarios still allow for positive cash flow. These include finding properties well below market value, acquiring units with under-market rents that can be raised, or negotiating seller financing at below-market rates. But Fouts-Sparks says such deals are rare, and most investors have stopped searching actively.

Why Long-Term Equity Has Replaced Cash Flow as the Primary Investment Strategy

The remaining investors are operating on a different timeline. Instead of seeking immediate income, they are betting on long-term appreciation. Fouts-Sparks says this approach is most common among younger buyers in their 20s, who can afford to wait for property values and rents to rise.

“If you’re young and willing to hold the property long term, knowing it will go up in value and rents will eventually catch up, you’re looking at a long-term gain,” she says.

The long-term equity strategy requires both the financial means to cover negative cash flow and the patience to wait several years for the investment to pay off. The strategy also assumes that property values will rise enough to offset early losses, which is not guaranteed in every market.

With fewer buyers willing or able to take this risk, competition for properties has dropped. During the pandemic, investors paid premiums because properties could generate monthly income. Now, buyers are far more selective, pursuing only deals with significant discounts.

How Oregon’s Rent Control Law Further Limits Investor Returns

Oregon’s rent control law complicates the long-term equity approach. Investors who buy properties with below-market rents and plan to raise them over time are limited by annual caps. Under current law, landlords can increase rent by no more than 7% plus inflation, with a maximum of 10% per year.

“You could look for a property with lower rents and raise them to market value, but with rent control, that could take several years,” Fouts-Sparks says.

If a property’s rents are 20% to 30% below market, reaching market rate could take three to five years. During that period, the investor must cover the gap between rental income and expenses, often resulting in substantial negative cash flow. This makes value-add strategies, such as buying distressed properties with the intent to raise rents, much less attractive in Oregon than in states without rent caps. Buyers need significant cash reserves to weather years of losses, further limiting the pool of potential investors.

What Oregon Multifamily Investors Can Do in the Current Market

Given these conditions, Fouts-Sparks advises investors in the Salem-Keizer market to focus on two strategies: targeting deeply discounted properties from motivated sellers, or accepting that any new purchase is a long-term equity investment rather than a source of immediate cash flow.

“If you’re looking for a cash flow positive property, we need to look for sellers who need to get out, and start writing low offers that actually pencil for you,” she says.

The approach requires patience and a willingness to make multiple offers, many of which will be rejected, since sellers without financial pressure have little reason to accept discounts.

For those willing to accept a long-term equity play, the best opportunities are properties with below-market rents that can be raised over time, even if rent control slows the process. Properties with below-market rents can deliver both rising rental income and appreciation as rents improve, but the path is slow and requires more capital.

Fouts-Sparks emphasizes that today’s environment rewards selectivity and patience. Investors who maintain realistic expectations about returns and timelines can still build wealth, but must be prepared for a slower process than during the pandemic years.

How One Salem-Keizer Investment Team Is Navigating the Tougher Market

Despite the tougher landscape, Fouts-Sparks and her husband Jordan, who focuses on multifamily and commercial properties, are continuing to expand their own investment portfolio. The couple is weighing another property purchase and plans to add an accessory dwelling unit to increase rental income and long-term equity.

Their approach reflects the advice Fouts-Sparks gives clients: focus on long-term wealth building rather than quick cash flow, and be highly selective rather than chasing volume. By adjusting expectations and strategies, investors can still succeed in Oregon’s secondary markets. Still, it now takes more capital, more patience, and a fundamentally different investment thesis than just a few years ago.

What the Future Looks Like for Small Investors in Oregon’s Secondary Markets

The decline in cash-flow-positive deals has changed who is active in Oregon’s secondary markets. Investors who need a monthly income have mostly stepped back, leaving the field to those with longer time horizons and deeper pockets. Rent control further limits the appeal of value-add strategies, requiring more capital and a longer wait for returns.

As interest rates remain elevated and property prices slow to adjust, the market is likely to remain challenging for small investors focused on cash flow. Those who adapt by seeking discounts, leveraging creative financing, and prioritizing long-term equity growth will have the best chance to build wealth, but must be willing to accept a slower, more capital-intensive path than before. For now, Oregon’s small multifamily market favors the patient, well-capitalized investor who is willing to wait for the numbers to work.