Are there any "2%" markets in Western Washington?

28 Replies

I've been searching the MLS for a couple months now looking for my first rental investment in Western Washington, but so far haven't found anything close to the suggested 2% rent to purchase price rule.

Does anyone have suggestions on which areas fit the mark? If not, then what percentages are other REI's typically realizing when purchasing SFR and/or 2-4 unit properties in King, Snohomish, Pierce counties.

Thanks in advance for any/all feedback.

Look in rural areas well away from i5 in the sound.  I'm doing more like 1% but I like my nieche. :)

  Take a map and draw a two hour drive circle from your place and start working the edges in towards the center.  You will find plenty.  It anit sexy but the 2% play is all about cash flow.

If the above fails there is always detroit...

I'm rural and along I-5 and getting only 1%.  It's tough on the west coast.  I've been reading Buy and Hold Forever and am wondering if something cash flow break-even in a high appreciation area would be a better plan.  Or, diversification with a mix of high and low.

@Michele Fischer  

  for sure you want some appreciation plays  I know its a big argument here on BP but that is really were the big dollars are made with smaller portfolios.. its just hard to amass weath at 200 a month positive cash flow unless you can buy 100 to 300 units in a fairly short amount of time.

@Juan Silva  as for 1 or 2% you can do that in some of the little dead and dying towns around W Washington think Aberdeen  Ocean shores   Long beach... CAthlamet... town across from Astoria... Castle rock  and some of the little towns or properties between Olympia and castle rock and the Cascades.. Also Oregon you can find them but don't count on any value add in those areas to speak of.

Ilwaco. Jay how can you not remember the metropolitan Ilwaco area!  :)

@Eric B.  

  I thought I was doing pretty good for a California boy.... I landed at the little airport there in Illwaco once but usually went to Hoquiam for my 200 dollar burgers... That whole coast line from Illwaco  Nacelle  Long beach etc etc is some of the least expensive quasi Ocean front in the entire north American continent

If you go east side I kind of like the Okanogan valley  one could probably get 1% or better there. and of course I love Wenatchee and Chelan...

@Eric B.  

  Yakima area might hit those numbers but there is some rough areas there

@Juan Silva  Dude look a little further north. Snoho and Whatcom have some sweet deals.  and this whole 2% rule is far too simplistic quite frankly.  every region has their own little "quirk" to them that cannot be assessed with a single calculation.  

BTW, you're going to get more bang for your buck with multi-family vs. SFR.

@Michele Fischer I'm not glad to hear you're finding 1% to be the norm, but at least I'm thankful for you validating my findings thus far. 

@Eric B. I'm thankful for you validating my findings as well. I also appreciate the Detroit lead, but considering most of the town lost power/went dark today and I'm just getting into REI, I don't think I'm courageous enough to take on an urban jungle like that :-).

@Patrick Britton   I'm definitely looking in Snoho County (Everett, Marysville, Arlington) and concentrating on multi-family as well. I've looked at a few in North Everett, but the numbers either didn't work or the neighborhoods were pretty suspect. I've also connected with @Grant Fosheim who's been investing in Everett for a while, so hopefully an opportunity will present itself soon.

BTW did you attend a Snoho Meetup a few weeks ago? Presuming so, I believe we met briefly on your way out the door for your 2hr trek back to Blaine; bonus points for being such a road warrior.

@Patrick Britton Forgot to ask one more question. As a lender in Blaine can you refer any investor friendly realtors that can help find good multi-family deals in Whatcom County?

@Jay Hinrichs   Never heard of or been to the places you mentioned, so thanks for the recommendations. Any insights into what the vacancy rates and/or tenant quality might be in those areas?

Also, do you have any knowledge of the Bremerton, Silverdale, Poulsbo markets? As a former Navy guy, I'd potentially be interested in those areas if the numbers made sense.

Hi @Juan Silva I'm an investor in Bremerton, Silverdale, Poulsbo area and I'm also an investor friendly Realtor. Feel free to PM questions if you have any. I rarely see 2% properties on the MLS in Poulsbo and Silverdale, but I do see 1.5%-2% properties in Bremerton. 1% is a dime a dozen. Port Orchard is also good.

@Juan Silva  lol - yeah i was at the Snoco meeting a few weeks ago.  you're from Boston right?  and i confused your accent with that of a New Yorker...opps :) 

yes, i can make some realtors recommendations.  i'll respond to your PM.  cheers! 

I love posts about washington as a newbie and need all the help I can get. I love how you guys  help each other and share ideas. Keep up the good work and keep the WA ST posts coming please lol. Also any help at where meetings are held? 

@Stephanie Dupuis   thanks for reaching out and I'll send you a PM to connect further.

@Aaron Sal   although it might be a bit farther north than you'd want to travel, here's a link to a Snomohish County Meetup group you might want to consider joining.

http://www.meetup.com/SnoCo-Connected-Real-Estate-...

I'm sure there are other Meetups down south, and if/when you find them, please share the links :-)!

@Patrick Britton  glad you were the person I remember meeting. I'm originally from Rhode Island (about an hr south of Boston), but have lived in lots of different places so my accent isn't what it used to be :-). Appreciate the PM you sent as well.

Thanks @Juan Silva. I haven't found any more south. I have only heard of the one you mentioned and another person said they do some in bellevue. If I find any I will post em. Thanks for the info and help. 

And I thought your Tri-cities market would have better valuations than here in the Wenatchee Valley!  I'm lucky to find 1% here.  2% is tough about anywhere.  I find when I'm swinging for the fences, I miss a lot of solid doubles and singles.  I would check my backyard again!

From what I've seen, not in the Tri-Cities...but I think 1% or a little better is doable for sure. For example, Richland has a lot of duplexes...somewhere around 1,700+ and most of them are the exact same 2 floor plans. The "A" style duplex (3/1 each side) sells for anywhere between 160-180K retail and rents for 800-950 each side. The "B" style duplex (2/1 each side) sells between 150-170K on average and rents are 700-850. Both of these floor plans originally had unfinished basements, so you can often find one that the basement has been finished with extra bedroom/bath. The downside to these is that they were built between 1943-1950's and often need serious updating if it hasn't been done already.

But, being that 2% is only a guideline I think it's also important to look at the other positive factors of low vacancy, lower taxes, and strong local economy.

Originally posted by @Juan Silva :

@Eric B. I'm thankful for you validating my findings as well. I also appreciate the Detroit lead, but considering most of the town lost power/went dark today and I'm just getting into REI, I don't think I'm courageous enough to take on an urban jungle like that :-).

When people say Detroit most of the time they are not speaking of the city of Detroit.  Ther Detroit Metro area is great for  1.5-2%.  I have properties in area's around Detroit and never lost any power.  That only happened downtown.

Please stop confusing the inner city of Detroit with the whole area.  Plenty of us are finding deals and making money in this area.  We don't live in the urban jungle and live in very safe area's of the metro area

Oak Park, Warren, Eastpointe, Roseville, Redford, Livonia, Lincoln Park, Dearborn Heights, Farmington Hills, Clawson, Southfield, Southgate, Trenton, Wyandotte and on and on and on.

Detroit has lost half of its population.  Where do you think they are moving to????????/

@Scott K.  

  they are moving to the South  FLA GA AL  SC NC AZ NV CA OR   etc etc.  :)

but I hear you on folks that live there abandoning the inner cities for safer environs.

In Portland we have the opposite the Inner city is RED HOT ... Same with a few other cities around the country.. But we never had a war zone or Ghetto to start with... You would laugh out loud at what an Oregionian calls a war zone  :) they have no clue.

Originally posted by @Jay Hinrichs :

@Scott K. 

  they are moving to the South  FLA GA AL  SC NC AZ NV CA OR   etc etc.  :)

but I hear you on folks that live there abandoning the inner cities for safer environs.

In Portland we have the opposite the Inner city is RED HOT ... Same with a few other cities around the country.. But we never had a war zone or Ghetto to start with... You would laugh out loud at what an Oregionian calls a war zone  :) they have no clue.

Jay many of them just moved 3-4 miles north or west and went to a safer place.  Many of them still have jobs and close ties with family in the area.  Just think of how many properties have been bulldozed and will never return.  Hell they are planting a damn fores on the eastside.  Younger white hipsters are moving downtown.  But many of the working class folks.

People need to understand just how huge of a city Detroit is

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