Bellevue Washington Estate prices are way to inflated. What now?

Question

So I've read a few books and watched a lot of bp videos. I search the local market in Bellevue Washington only to see people want 600k for a house I wouldn't spend more than 200 k on. I guess my lack of knowledge here just surprised me.  In a lot of the examples they use 100 k as the examples so I was thinking maybe here in Bellevue they were around 200 k no biggy... lol these guys want like a million dollars a square foot like its California or something.  I guess I should be selecting a better location with in an hour or two from where I live? Do 100 k houses exist in Washington? I will need to start investing small as I have nothing saved up.

Alex Chin · Answer

@Catherine Barnes - Tell me about it. When I put a Hilltop unit up for rent last month, I decided to start at what I thought was the high-end of what I could get in rents and work my way down.

Got 12 responses within 4hrs., 3 of which met all the qualifications I wanted, (3x rent, 680 credit score, minimum 12-months at same work place, 2 solid former landlord recommendations, $1000 security deposit, etc.) and had it leased out within 7 days.

To be honest, I probably should have pulled the ad and pushed the price up, but whatever, I'll just remember that for the next unit I open up.

Ryland Taniguchi · Answer

If you're looking for 1% rule+ cash flow, I think even $100 k houses are too high. You're not going to find 1% rule + cash flow in Renton, Kent, Lake Tapps, Bonney lake, Puyallup, and Sumner type areas. These areas historically will also go through depreciation when the markets crash and so they make no sense from either a cash-on-cash or appreciation perspective. I made this mistake in these exact areas when I started off with the recommendation of an agent that did not understand cash flow. Stick to your 1% rule and don't listen to people that don't understand this.

Best advice. Don't work with agents as there is nothing on the MLS that will hit the 1% rule. I ran a team of 30 agents at Keller Williams and have yet to find an agent that knows how to find a 1% rule BRRRR deal in this seller's market because they these deals don't exist on the MLS right now. Trust me.. We scour the MLS everyday and it is like fishing for tin cans. You will have to find 1% rule deals off-market.

You need to find houses between $50 k and $75 k and gut them out and out $60 k of rehab to find consistent cash flow. I found 9 of these BRRRR deals this year and only in Tacoma, Lakewood, Lacey, Tumwater and Olympia. To my own surprise, I have been getting $1500 to $1600 a month in rents. I originally penciled out at $1395/month. I believe these numbers exist also in Mt Vernon, Arlington, Oak Harbor and Sedro Woodley but I am not up there because I don't have a construction team in those areas.

Sandy Suschana · Answer

You can find homes to flip in any price range.  Just remember that HML's may require 20 to 30% down on the loan - but provide 100% of the rehab.  There's all sorts of programs out there....but the standard is normally 20 to 30% down.  On a 500k property...that's a lot of dough hanging around to tie up into just one property.    I found lots of good flips back in the day in Maple Valley and also Tacoma.  You could buy them cheap there at one time...and make a killing with the transition happening in that area.    Look for areas in transition.  Or...look for the worst house in the best neighborhood.  Also...consider buying tax lien properties.

Catherine German · Answer

There is a major shortage of rentals right now so if you are a landlord you are in a sweet spot. I have people calling me daily for a home to rent and no inventory. So if you can find anything from Puyallup to Olympia to buy and hold, you will have no problem finding a renter.

Shoshawna Merten · Answer

@Ryland Taniguchi

That is great advice. I am new to investing and only know the market really well as an agent. I will keep that in mind when I purchase as well.

Shoshawna Merten · Answer

@Kenneth abbott

@Kenneth Abbott

I have been a local broker for 12 years full time working with buyers. I travel Island, Snohomish, kitsap, pierce, king and Snohomish counties. I know this area very well. I live in Graham which is right next to Spanaway. Spanaway is good as a rental area because it is close to the base. I would not flip in Tacoma myself. Prices are good but not a largely desirable area. However Tacoma is the only place down south with homes still around 100k. If you can go higher say 160-200 I would focus on Renton, lake tapps, bonney lake, Puyallup and graham. You can still get something affordable and these areas are much more desirable. I have worked with buyers all these years I know what areas they want, why they want them. If you are doing a flip and want it to sell quickly buy in those areas. If you are buy and hold and renting then there are some other areas around seattle that are good for that. Feel free to message me, I am happy to give you advice.

Kenneth Abbott · Answer

@Guillermo Silva thank you for the info I'll check that location out.

Guillermo Silva · Answer

keneth spanaway is an area that is growing there is a lot of new construction there in the past years also is close to Ft lewis and that is a flow of tenants. I am looking in tacoma as well but i am focusing on multi family. We'll see how that works. Since i am using a VA loan, zero down but not every one takes it.

Kenneth Abbott · Answer

@ Eboni Allen thanks for the feed back. Tacoma looks like it would be a growing area in certain spots where values could go up. If nothing else maybe it can be my first house hack area to create some equity. This would give me time to further research and learn while saving money by simply paying my rent. This part sounds awesome. Then maybe I could simply move into a second house and rent the first one out. If not Tacoma what other near by areas do you think would be good? In the same price range that is.

Bellevue Washington Estate prices are way to inflated. What now?

Most Popular Reply