The Pine Tree State is famous for its fresh lobster and boasts more than 40,000 acres of wild blueberries, but in recent years it’s also become known as a prime opportunity for real estate investors. Average sale prices for Maine homes have shot up in the last few years, reaching 5-year-highs across the entire state across single-family and multifamily properties. These increases have occurred for several reasons: an above-average population growth over the last decade combined with low available inventory has made Maine real estate a valuable commodity. Currently, Maine only has about 2 months’ worth of housing inventory, which is lower than needed to keep up with demand, as a healthy market typically has a minimum of 3 months or greater available inventory.
While Maine isn’t a particularly large state, sitting at only 1.34 million residents across the entire area, it experienced a nearly 2% growth since 2010. This type of statewide growth is rapid compared to the average: to highlight, the average state population growth for that same decade is less than one percent. Due to the state’s overall low population compared to other northeastern states, many large national builders avoid the state due to their inability to scale. Independent builders and developers that can source their own materials and labor can thrive with new construction projects throughout the more popular areas. Fix and flip investors, as well as investors looking for rental property, can also benefit from Maine’s local real estate if they’re prepared for a very competitive market.
Asset Based Lending did the research and compiled it here to help highlight the best places to invest in property and in Maine real estate. Data of the best cities in Maine was sourced from reputable sources such as Redfin, Association of Maine Realtors, Rent Café, and local public records in Maine. Please note that these Maine investment property suggestions are based on the most recent available data as of February 2022.
The entire Portland metro area is seeing incredible growth in the Maine real estate market for the same reasons as the rest of the state- a population boom combined with low housing inventory. The city of Portland has a population of 65,645 which makes it the largest in Maine by far, with the entire metro area seeing a 5.7% population increase between 2010 and 2020. Portland and its surrounding metro market has an average household income of $71,913 which is far above the state’s median household income and demonstrates the higher level of purchasing power in the area compared to the rest of Maine. This type of stat is exciting for real estate investors, as the average home sale prices and average rent prices are heavily weighted by the local economy’s strength.
As of January 2022, the average home sale prices in Portland reached $432,500, which is slightly down from January 2021. Before you skip over the rest of this list after starting with a price drop, this slight dip in average sale price year over year is simply a market correction based on the extreme growth the city’s real estate went through during 2020 and 2021, where the average home sale prices peaked around $500,000. The current average home sale price for the area is much higher than it was in 2020 when the home buying frenzy began and has already gone through its corrections so investors can trust that their project will remain stable and continue to appreciate going forward.
Homes in Portland Maine are consistently selling for above the initial listing price, with approximately 58% of homes receiving above-ask offers. By comparison, only 2% of homes that recently sold in Portland saw a price drop from the initial listing. This highly competitive market can seem challenging for fix and flip investors since it requires quick and reliable capital to secure a project but using outside financing like hard money lenders is how rehab investors can squeeze into a strong market and find a profitable deal.
On average homes are selling in just 3 days, with especially hot homes selling for about 9% above listing price and selling as fast as 6 days. Homes that are seeing the most listing views and receiving the highest offers have features such as a finished basement, high ceilings, and an in-suite washer & dryer. Builders and developers have an advantage over other real estate investors by being able to customize their project to match the market. By using new construction loans to finance their project and include these desirable amenities in the build, they can maximize the potential sale of the property and walk away with a hefty profit.
Real estate investors looking to acquire rental property should consider Portland, as its one of the strongest rental markets in the entire state. 56% of the population rents versus owns, which means finding a tenant shouldn’t be difficult for any desirable piece of property. The average rental price is $1,577 which is currently slightly above the national average rent and one of the highest average rents in the state. Based on affordability, safety, and proximity to important attractions & venues, the best Portland neighborhoods for investing in rental property are Black Cove, Riverton, Rosemont, and Stroudwater.
Lewiston marks a much more affordable entry point for new real estate investors or those with less starting capital to put down into their project. With a lower population of 36,501, which still makes it the second largest city in Maine, and a lower average income compared to Portland, Lewiston’s lower average home sale price can benefit fix and flip investors or rental property investors seeking their next project.
The average home sale prices in the area reached $235,000, which is a 27% year over year increase and highlights a common trend amongst many Maine real estate markets: large & consistent appreciation. 35 homes sold in Lewiston during the month of January, which is 40% more volume than the previous year. It’s also important to note that homes are only spending an average of five days on the market, which is still two days less than the previous year! This type of sale frequency benefits fix and flip investors who are looking to quickly exit their project and pay back their loan immediately in order to maximize their profit. Additionally, 68% of the homes are selling above their initial asking price, which emphasizes the negotiating power that sellers have in the current market.
Right now, the average rental price is $900 a month, which is a 16% increase year over year and represents an attractive price point for renters. What’s more important for rental investors to know is that 77% of Lewiston’s population rents instead of owns, which means there’s a constant stream of potential tenants to fill any vacancies you may have. Having strong investment property appreciation mixed with low vacancy potential makes Lewiston one of the best places in Maine to invest in rental property.
Just shy of Lewiston’s size is Bangor, the third largest city in Maine and another great opportunity for real estate investors. With a population of 32,403, this city is like Lewiston as far as more affordable entry prices than Portland and with a similar growth trajectory. This is one of the strongest Maine markets for builders and developers looking to finance new construction projects, as the average sale prices continue to rise thanks to the constant demand and available land is more readily available than the previous two cities on our list.
Currently the average home sale price is $217,000, which is a 32% increase year over year. 38 homes sold during January, marking a 23% increase from the previous year, and highlighting the activity of Bangor’s real estate market. Approximately 48% of homes are selling above listing price, with the average time on market being 21 days. The affordable entry point and fast-moving nature of Bangor real estate is a boon for fix and flip investors, as they can put minimal capital down on their project and quickly exit once their work is complete.
For builders and developers planning their next project, it’s important to note what home buyers are looking for in Bangor. Homes with these features are selling faster and at much higher average sale prices than homes without them: outdoor deck, fenced yard, and extra storage. Building to meet the market’s demands is advantage new construction investors have over every other type of real estate investor.
The average rental price in Bangor is $788, which is a 15% increase year over year. With less than half of the population renting their property versus owning, it’s a slightly less stable rental investment opportunity than Lewiston or Portland but if you’re looking to diversify your rental portfolio using the BRRRR strategy, then you could potentially find affordable rental properties throughout Bangor.
Saco is a small but mighty town for Maine real estate, boasting a population of 20,849 which has grown nearly 13% over the last ten years. That kind of population growth over a decade is far above average and helps represent why the Saco real estate market has become so strong for investors. The town rests along Saco Bay and Saco River, so the potential waterfront and water-adjacent properties immediately adds value to the local real estate market that can’t be found in totally landlocked areas.
The town’s average some sale prices are like Portland as far as seeing very slight dips in the recent months as a means of market correction. Currently the average home sale price in Saco is $362,500, which is a small decrease from the previous year but still a five-year-high compared to 2020 and before. Homes are selling in 31 days on average, with 63% of homes selling above their listing price. These stats are important for fix and flip investors to understand, as it helps to highlight that the bargaining power is in the hand of the sellers.
The most desirable homes can sell for above 10% listing price and sell as quickly as 5 days on average. Right now, the top home features in the area include walk-in closets, working fireplaces, and cathedral ceilings. Since the most sought-after homes are selling so fast and so much higher above asking price, builders should consider including these amenities into their new construction projects. By using hard money loans for new construction, a builder or developer could make sure they have the capital needed to include these features and increase the value of their project by upwards of 10%!
Saco’s average rent price $1,726, among the highest in the state, although it’s important to note that only 34% of the population rents versus owns. Once again, it’s a smaller renter population compared to other cities on the list, however investors looking for rental property should consider utilizing the waterfront properties as short-term rentals. These short-term rental properties, sometimes used as Airbnb or Vrbo stays, are consistently high performers for ROI when they have prime locations, such as being along a body of water. Real estate investors should consider using short-term Airbnb loans to finance their Saco rental property strategy.
Old Orchard Beach
Finally, we have Old Orchard Beach, a small coastal town that could be considered a hidden gem for Maine real estate investors. It’s the smallest town on the list, with only 8,862 residents, although that number is up by 3% over the last ten years. This tight-knit community has pricier homes along the water, or more affordable price points further inland, offering options for investors based on their starting capital and desired exit strategy.
The average home sale price in the area reached $372,500, which is 27% increase year over year. Homes are spending an average of 31 days on market, which for such a small town is an incredibly fast turnaround time. Highly desirable homes in the town can sell for approximately 7% above listing price and sell as quickly as 5 days from the initial listing price, benefiting fix and flip investments that need to be fast with their project and move on to the next one ASAP.
This town’s most attractive home amenities according to listing views and final sale price are a fenced-in yard, in-suite laundry, and local country club. While developers can’t change the location of the local country club, it helps give an idea of the type of buyer looking to become an Old Orchard Beach resident and can plan their project to those specifications. Understanding the type of home buyer in the area you’re investing in helps you strategize and maximize your final sale price.
The average monthly rent is $990, and Old Orchard Beach has a below-average full-time renter population. However, short-term rentals such as Airbnb and Vrbo perform well in waterfront towns, and the lower entry price point for these rental properties could make them valuable for investors looking for rental property. Like Saco, the waterfront properties can be a great investment for traditional rental property but could be especially lucrative for short-term vacation rentals. Investors looking to use short-term rental loans to start or expand their rental portfolio should consider Old Orchard Beach as their spot.
Maine is currently one of the most stable real estate markets with strong appreciation potential throughout the entire state. While some prices have come down from the previous year, this is due to market correction rather than a downturned market, as evident by the much-higher average price points than Maine thought was possible as of five years ago. Despite those slight dips, most of the state is continuing to see large growth spikes that have not slowed down for half a decade, making The Pine Tree state an excellent opportunity for real estate investors.
Asset Based Lending is the premier hard money lender for real estate investors across Maine, providing loans for fix and flips, new construction, cash out refinancing, and loans for rental property. With loan approval as fast as 24 hours and average loan closing in just 10 days, we deliver a five-star loan experience from start to finish. ABL uses flexible underwriting to ensure our borrowers receive the best possible loan for their project, whether they’re looking for lower interest rates, maximum leverage, zero points, or something else. Contact us today if you’re looking to finance your next successful Maine real estate investment.