Buying SFH or Duplex in the JBLM area (Seattle/Tacoma)

16 Replies

Hello all,

I am a fairly new real estate investor (in the process of closing on my first Triplex with my brother up in Wasilla, Alaska).  But my question relates to an upcoming move and decision.  I am in the military and will be moving to the Ft.Lewis area (Tacoma, Roy, Puyallup, Bonney Lake, Lakewood) and have myself in quite a pickle.  As a new investor, all my wife and I can think about is the best investment options for that area.  We have made contact with a man (who seems to be a good reference for home purchases in the area - Phil Sharpe)....  He says that single family homes are a better investment in the area due to a good market and forecast for appreciation (given the downward movement of business out of Seattle south).  I'm not seasoned enough yet to know whether he is right or wrong, but have always thought a multifamily home would be a better fit.  The problem is, the duplexes in/around Ft. Lewis aren't really big enough to have my family of four living in....We will likely be in the house/area for 3 years before moving somewhere else.   So here are my questions for anyone that is a seasoned investor in the area:

1). What is the best investment south of Seattle (SFH, MFH)? And can you justify why you think so?

2). What is the market doing right now as far as real estate?  How do you find the best deals in the area? 

3). Does anyone recommend a really good realtor in the area?  I have thus far gone off of Google, which doesn't inspire a lot of confidence.

4). I would also like to meet some more seasoned investors once I arrive, so any recommendations for mentors or group meet ups in the area would be very helpful. 

5). What areas would be more/less desirable for an investment property in the area?  Which areas around Ft. Lewis will continue to be profitable even if something were to happen to the base in the future (downsizing, etc.)? 

I am an open book at this point and welcome ANY suggestions or input into my decision making process.  I am extremely happy I found this website and hope to network with lots of other passionate investors.

Thanks for your time!

David

David,

That is a laundry list of questions, to which you'll probably get a combination of answers.

The quick of it is this... JBLM is always a strong investment area for rentals--it's a military base. However, they have also just let go of something like 25k personnel from that base this year. What adjustment will the area experience??? Ask some of the local investors.

The area itself has been in growth mode, but so is most of Seattle, and the NW in general. Look at the market. Study the economics of the area. 

Short of that, just start making some calls to realtors. I wouldn't take just one, or even two, persons word for what is happening around here, and then let that direct what you both should do.

Look forward to meeting you in the area.

Best to you!

TM

@David Pierce - Good morning David! I am also looking into small-multifamily property in the JBLM area, Tacoma, Auburn, Kent. I am very new to real estate myself, but I can try to answer your questions and let more experienced investors also chime in.
1 - Multi-family. As a new investor, I want more control over my investment than what the market has dictated. Multi-family property presents the opportunity to "force" appreciation through updates and rent increases as well as added amenities.

2 - I am networking with local investors and practicing by looking at deals on the MLS.

3 - can't help you too much there.

4 - Hey @Troy Fisher - who is the meet-up contact for the Lakewood area again?

5 - My prediction, as Seattle continues to increase in price and push business further south, is that Kent, Auburn and Tacoma will at minimum keep up with inflation in terms of appreciation, with potential for solid gains as the ports become more active.

  1. 1) The best investment is going to be the one with the best cash-on-cash returns. We are finding and negotiating under contract off-market four-plexes in Tacoma.
  2. 2) Been investing in Seattle and 2000 and have never seen the market hotter as a sellers market. Most areas have less than 1 month of inventory. Most mls properties that my team has negotiated for clients are facing 10 to 20 multiple offers. Also, hedge funds are buying everything with a 5% cash-on-cash (based on 85% LTV non-recourse financing they obtain from the bond markets at 1.75%) under $500 k. Bottom line is that you highly highly unlikely to find any deals on the mls here in seattle.
  3. 3) I have a team of 8 agents at Keller Williams and we sold 153 houses last year, and so I believe that I can the credentials to say that you won't find deals using a realtor. In addition, realtors generally know very little about investing. Rather than working with a realtor, my other company wholesales 15 to 20 off-market properties a month and that will be the best way to find investments. If you still feel you need a realtor to do CMAs and list homes, PM me and I will refer you to my partner Scott Crouch who would be great at that. As far as finding deal, I woud not rely on an agent
  1. 4) Join the local REIA or REAPs.
  1. 5) As you know, real estate is cyclical. I think there are five years to still buy here in Seattle. We will probably hit a stock market crash in 1-3 years that may affect the local market here if tech stocks dip. The market reminds of the market in 1997. Maybe a 2000 correction and then a crazy real estate bubble after.  I'll sell everything I have here in Seattle and out-of-state (including Houston in your state) in 5 to 7 years. 
  2. Some investors say the market is going to crash in Seattle but I don't think they've been around the last 15 years. Wave 1: The market starts getting hot in Seattle first like Fremont, Wallingford, Ravenna, Bellevue, Kirkland and Ballard. Wave 2: Then it gets overpriced in the suburbs like Renton, Bothell, Shoreline, Everett, Lynnwood and Mountlake Terrace. Wave 3: Then it gets overpriced in the further out suburbs like Kent, Federal Way, etc. Wave 4: Then it gets overpriced in the rural suburbs like Bonney Lake, Lake Stevens, Sultan, Puyallup, Federal Way, Monroe, Marysville, etc. Wave 5: The war zone areas get hot like Tacoma, Spanaway, etc. 
  3. When the Warzone areas get way overpriced, then I'll believe a crash is coming. We're in Wave 2 right now.
  4. Good luck and welcome to Seattle!

Hi David,

That is a great recap of the Seattle market by Ryland and referrals to the local Real Estate groups. I have been investing in the greater Tacoma market since 1996, have over 50 properties with 100% occupancy. You can still find MLS properties here, however working the wholesaler network is a great way to find deals too. I prefer single family homes due to higher occupancy rates, low turn over, ease of management, no common area maintenance, this will make your life easier if you move on and want to rent the property out in the event you leave the area. I own several multi-families as well just depends on how good of a deal you can get and your desired lifestyle. Do you really want to live next door to your tenant? There are a number of neighborhoods I would avoid, but many provide a good balance of value, rental return and relatively decent area. Tacoma is a much improved and benefits from the migration of people priced out of King County. In addition to my rental business I am building in Pierce County as well, with homes typically under contract before completion.

You need a representative that has a lot of local knowledge and has skin in the game, ask them to show you their rentals, if they do not own investment property find someone that does. I am a broker however only represent myself these days. Before you get serious gain a lot a local knowledge... I made my share of mistakes when I moved here 20 years ago.

1).

Either single family or multi family can be a great investment down here. I personally think if you can get into a duplex you definitely should as rent prices have gone way up over the past year which will obviously help paying the mortgage and have future income potential.

2). 

I have purchased my last 2 properties off of homesearch.com which were both pretty good deals. Multi family properties are not on there very often so you'd have to check the MLS, but with such a competitive market right now the MLS is very slim on good deals. However once schools start back up the competition will drastically decrease and deals can be found again starting in October.

3). 

My wife is a realtor and she has worked with multiple investors. She is comfortable in that world. I can provide you with her contact information if you would like. Send me a PM if you are interested. I would recommend interviewing several realtors and finding one that you are comfortable with. Again MLS deals right now are very hard to find at least until October.

4).

I am new to bigger pockets so I cannot give too many details for this.

5). 

I like investing in A and B areas so I focus in the Puyallup, Sumner and Bonney Lake area. If I were going to recommend an area near the base, it would be to look in Spanaway where I Have seen some well priced properties. You will need someone to help in that area as there can be some sketchy locations, but it is convenient to the base and improving as an area.

1). What is the best investment south of Seattle (SFH, MFH)? And can you justify why you think so?

Ooof, I think this is the wrong question.  The correct question and answer is, what investment fits my investing personality better.  There is no secret sauce to niches that always win.  Most investors are more comfortable with class a single family homes that they can put on auto-pilot.  Especially a lot of Military Investors I've met.  Because when you get your next deployment orders, how are you going to handle a property that is out of state? @Elizabeth Colegrove is killing it in Class A Militarty Housing on Autopilot from out of state.

2). What is the market doing right now as far as real estate? How do you find the best deals in the area?

 The Market is hot, and I am not familiar with things that far south. Asking the great question on BP helps you locate some indicators, but I'd call 5-6 or even 10 Realtors in the JBLM area and ask them about which zipcodes are great for families of military personnel.

3). Does anyone recommend a really good realtor in the area? I have thus far gone off of Google, which doesn't inspire a lot of confidence.

There are a couple BP'ers in the Tacoma Area that are also Realtors: @Troy Whitney , @Adrian Chu and @Kyle Parks to name a few.

4). I would also like to meet some more seasoned investors once I arrive, so any recommendations for mentors or group meet ups in the area would be very helpful.

Great, @Kevin C. hosts our Southside Pacific NW Real Estate Meetup group which meets in Lakewood.  And there are a handful of JBLM guys who invest @Dustin Little springs to mind.

5). What areas would be more/less desirable for an investment property in the area? Which areas around Ft. Lewis will continue to be profitable even if something were to happen to the base in the future (downsizing, etc.)? 

This is a question I don't have the answer too, the best would be to look for an area that is not so reliant on the base, but then is that going to be at odds with your investing style?

Thanks for the mention @Alex Chin !

Hey guys,

Wow, lots of great information in such a short amount of time! I guess I feel like I'm in a bit of pinch (atleast with this deal). My wife will be returning to the area prior to me (due to my daughter having some medical issues that need to be addressed at Seattle Childrens Hospital). That being said, we aren't going to have a ton of time to "look for the great deal" this time. Which makes me lean towards a SFH at the right price. I would like to spend under 250k to keep the figures realistic (I will also be taking advantage of the VA loan). I did see one duplex for sale in Bonney Lake I liked, but I wasn't sure how realistic that would be for long term rentals (given the location - seems a bit off the beaten path). Spanaway seems to have the best deals for new, nice, SFH (there is a surprisingly large amount of homes for sale in that area, not sure if this is good or bad)?

I live in Bonney Lake so I can easily speak to that area.  It is a desirable area with excellent schools, desirable shopping (Home Depot, Lowes, Target, Walmart etc) and is growing fast. It has the fastest growing community (Tehaleh) in the nation. I manage 3 rentals in Bonney Lake and they rent quickly and easily.  

The Duplex in Bonney Lake, is it the one in Lake Tapps for $375k? I toured that one 10 years ago when I purchased my first property. If I recall it is a well laid out plan on a quiet part of the island and would rent for about $1400. It currently has renters in it and can't view it unless you have an accepted offer. Travel time to Fort Lewis would be about 40 minutes in the morning. 

In Spanaway the closer you get to Canyon road in Puyallup the better. The closer you get to Highway 7, the worse it gets. There are parts along Steele Street that I like as well. Another thing that makes Spanaway desirable is that they are going to take 176th all the way to fort Lewis and I-5 in the next couple of years which will make the commute much better.

@David Pierce - That's BP for you, especially the local area forums.

Even with a compressed time-line, I would say you still have strong opportunity to find a great deal, unless that you're measuring in weeks instead of a few months to when you need living space by.

When there are a lot of new homes for sale in an area, that should be considered a positive for you as the buyer, more inventory creates downward pressure on price and puts you in the driver seat.

Lots of great information here already posted, but as a local agent near JBLM I just want to add that the market in the south Seattle area and even north Pierce Co. area is vastly different than the market in south Pierce and north Thurston near JBLM.  It really depends upon your commute and how far you want to drive from the base. The housing market near the base have been driven by the influx of military families moving to the area over the past 15+ years. We've seen huge growth in the Lacey, Dupont and Lakewood areas from the military which has driven home prices up and vacancy rates down. With a downsizing of the military it will likely have an impact on the desirability of those areas close by the base particularly for selling but even with the downsizing there will still be families and individuals looking for rentals.  An area with a lot of new homes will be a benefit buying as mentioned above to drive down price, but it also may mean some saturation for renting or selling later on. For under $250K you can still find a decent SF home in an area close to base that is desirable to rent out - consider University Place or look for a location near good schools that will support your investment long-term.  

my husband is active duty while I am all about getting a good deal we buy everything off the mls. We buy class single family that make good investments. Yes our numbers aren't as great but it works for us. We have 7 houses, 6 rentals that we have built over Babysteps. We do everything virtually and it works great for us.

I guess my dilemna is I want to have a decent place for my family while I am there, but also a place that is located in a town that wouldn't be totally devestated with large military downsizing......I don't mind a 30 minute commute, but much more than that makes it difficult......Spanaway (eastern side) seems nice with lots of good options, but without the military would anyone live there?  Any other advice would be great! Thanks all

Have you considered Steilacoom? I don't know the market or anything but I've been stationed here almost three years and a lot of officers I know bought land in that area. 

@David Pierce

Maybe your agent isn't looking at the perspective that having a tenant is going to assist you with paying a portion of the mortgage on a monthly basis. Maybe he is only looking for appreciation, not the whole picture of looking at the rental income in the meantime. VA loans are great and allow for 100% financing and 4% sellers concessions towards closing costs...... You can't beat that.

@Alex Chin  

Has a great response. 

@Account Closed seems to be an agent that knows the area well.