Starting out in Seattle and Strategy questions

15 Replies

Hi Everyone. I have been on Bigger Pockets for a month or so. Mostly quietly but getting more active.

I was born and raised in Seattle and have spent the last 15 years working overseas for a humanitarian organization. I am working on my strategy to get out of the rat race in the next 5 years and then concentrate on real estate and other businesses (including a B&B on the beach in Jamaica)

My short and long term goals are below.

 5 year goal

To make $5,000 per month passive income from real estate by 2020 to enable my retirement from the UN at 55. Buy at least one new property per year. The long term strategy is based on buy and hold, but will flip existing property when it makes sense. Focus on small apartments (5-50 units).

All cashflow will be reinvested in real estate to continue building the portfolio, in addition of approximately $20,000 per year cash from savings.


First year goals:

  • Create real estate investment strategy based on growing portfolio every year. Purchases should combine current cash flow and appreciation potential with a cash on cash return of at least 15% and projected IRR of 50% after 5 years on overall portfolio.
  • Build real estate investment team including property management, real estate broker, mortgage broker / banker, investment partners, and other support professionals including accountant and lawyer.
  • Sell West Seattle townhouse and buy new property with at least 4-8 doors and $1,000 cash flow per month (Invest up to $150K cash) through 1031 exchange. New property to be managed professionally.
  • Learn as much as possible about the real estate industry to determine where my short term and long term niche lie and to enable utilizing my strengths to add value in partnerships.

My questions to the community:

I prefer to invest in the greater Seattle or Washington / Oregon area. Mostly as I have family who can check up on my investments and this is where I will spend at least 50% of my time once I retire. (The balance will be in Jamaica but that is another story and strategy)There is a lot of discussion on BP about investing for cashflow versus appreciation. As I usually only travel to the US 1or 2 times a year, I also prefer to travel to the NW then the Midwest or Texas. As I will not buy (or manage) sight unseen, this also brings me to the NW. What other areas in Washington and Oregon should I be considering? Bellingham? Yakima?

What are reasonable cash on cash returns and IRR based on passive investing? Is building a portfolio to return $5,000 a month reasonable investing from a distance? What is a reasonable cash flow and IRR goal of a $100,000 cash investment.

The Seattle area is very hot right now and finding cashflow deals are difficult, especially from overseas. What is a reasonable mix of cashflow versus appreciation in the portfolio?

I will be in Seattle in the last three weeks of August. I would like to meet like minded investors and potential partners team members to either pick your brains for advice and create synergies for possible future partnerships. Lunch is on me.

@Julie Macd

Your clearly very organized, and have done some great goal setting. I think it's a good exercise that some farther down the road have not done in awhile.

High value markets are very tough. Your competition is through the roof, and there is always loads of new owner occupant money to compete with you. Have you thought about areas outside of Seattle, but still within 2 hours drive?

Amazingly detailed goals, kudos for that. I'm also in the Seattle area and looking for my first investment property. So far most of the properties that are priced below market are in need of serious rehab but aren't low enough considering the work required.

There's very few multi-units and the ones that aren't 1+ million are south of DT. With so many eager owner occupant buyers a potential investor isn't left with much. I'm still saving and getting better at running the numbers while I look for something. Best of luck!

@Julie Macd - I am looking to get into the rental business within the next few months as well. When looking for cash-flow opportunities, I have turned my attention south to Kent, Auburn, Des Moines; even to Tacoma, and Lakewood. You won't find anything that hits the 2% rule, but the 1% rule is easy enough to make work with small multis. I haven't personally looked at anything larger than 5 units, I know that is out of my budget.

Originally posted by @Julie Macd :

Hi Everyone. I have been on Bigger Pockets for a month or so. Mostly quietly but getting more active.

I was born and raised in Seattle and have spent the last 15 years working overseas for a humanitarian organization. I am working on my strategy to get out of the rat race in the next 5 years and then concentrate on real estate and other businesses (including a B&B on the beach in Jamaica)

My short and long term goals are below.

 5 year goal

To make $5,000 per month passive income from real estate by 2020 to enable my retirement from the UN at 55. Buy at least one new property per year. The long term strategy is based on buy and hold, but will flip existing property when it makes sense. Focus on small apartments (5-50 units).

All cashflow will be reinvested in real estate to continue building the portfolio, in addition of approximately $20,000 per year cash from savings.


First year goals:

  • Create real estate investment strategy based on growing portfolio every year. Purchases should combine current cash flow and appreciation potential with a cash on cash return of at least 15% and projected IRR of 50% after 5 years on overall portfolio.
  • Build real estate investment team including property management, real estate broker, mortgage broker / banker, investment partners, and other support professionals including accountant and lawyer.
  • Sell West Seattle townhouse and buy new property with at least 4-8 doors and $1,000 cash flow per month (Invest up to $150K cash) through 1031 exchange. New property to be managed professionally.
  • Learn as much as possible about the real estate industry to determine where my short term and long term niche lie and to enable utilizing my strengths to add value in partnerships.

My questions to the community:

I prefer to invest in the greater Seattle or Washington / Oregon area. Mostly as I have family who can check up on my investments and this is where I will spend at least 50% of my time once I retire. (The balance will be in Jamaica but that is another story and strategy)There is a lot of discussion on BP about investing for cashflow versus appreciation. As I usually only travel to the US 1or 2 times a year, I also prefer to travel to the NW then the Midwest or Texas. As I will not buy (or manage) sight unseen, this also brings me to the NW. What other areas in Washington and Oregon should I be considering? Bellingham? Yakima?

What are reasonable cash on cash returns and IRR based on passive investing? Is building a portfolio to return $5,000 a month reasonable investing from a distance? What is a reasonable cash flow and IRR goal of a $100,000 cash investment.

The Seattle area is very hot right now and finding cashflow deals are difficult, especially from overseas. What is a reasonable mix of cashflow versus appreciation in the portfolio?

I will be in Seattle in the last three weeks of August. I would like to meet like minded investors and potential partners team members to either pick your brains for advice and create synergies for possible future partnerships. Lunch is on me.

Great clean and clear concise goals! I love the Pacific NW seattle area, and know the huge potential there. Just a bit harder to get the cash flow and IRR you are wanting to achieve. Not saying its impossible, just more limited to areas. Though, I have similar desires to own multiunits in the pacific northwest, I invest in the midwest for cash flow. I'm not selling on city or strategy, but there is ample amount of properties to achieve $5,000 a month cash flow quicker,cheaper, and easier. Best of Luck. Maybe one day we can partner on a West Seattle Apartment :-)

@Julie Macd i have a biased opinion but Bellingham has some nice opportunities.  King County is fantastic but very, very expensive.  

one thing though, that whole 2% rule can be thrown out the window for these areas.  

[email protected] | 360‑927‑0959 | http://www.patbritton.com | WA Agent # 120557

@Julie Macd to answer some of your questions, I work with 100% passive investors and they are earning anywhere from 8-12% cash on cash in Everett  depending on the age and condition of the property. These are typically 4plexes in the $350-500k range.

Give me a shout when you get into town. I can give plenty of insight into the Everett multifamily market.

@Grant Fosheim - If you are active in the Everett market, I believe it might be good to have a conversation with @Doug M. if you haven't already. I know he was interested in investing in that area.

@Alex Chin thanks for the mention! 

@Grant Fosheim  if you can use detailed Snohomish geodata, let me know. 

@Julie Macd  drop me a line if you'd like; we can grab a bite when you get to WA...

Street of MF Dreams, Everett - 2015

@Doug M. Great picture! I can see a couple of my places there and a few more that are on my wish list. Gotta love Rucker Ave!

Thanks for all the replies. I have worked hard setting the goals trying to be realistic. Now to get moving on them.

@Alex Chin I prefer north of Seattle to South, but I think it is mostly what I know. I am not as familiar with areas south of West Seattle for real estate, just that they are more touch and go. But I am open depending on the opportunity.

@Patrick Britton I love Bellingham and area. Plus I have family up there. I will give you a shout when in town as I would like to get some perspective on college housing and other opportunities.

@Grant Fosheim   @Doug M.

 I bought a house in north Everett in all the wrong places back in the 1990's. Though I know a lot has changed since then (though not where that house was). I will link up with you when I get to Seattle. I would like to hear what may be possible up there.

@Mike Carino I am looking into the surrounding areas of Seattle as well. I just do not want to spread myself to thin if I do not have to. It is not always easy to get across the ocean, an d most certainly not in a hurry. Never know, maybe we will invest in the perfect property together, Seattle or elsewhere.

As others have mentioned it's nice to see how seriously you've taken goal setting and visioning. The most paramount piece of advice I would recommend is ensure ample time for due diligence. The riches are in the niches, and within each one of your goals there are niches upon niches (let's not forget the large, pink Jamaican elephant in the room!)

One thing about the areas that you're looking at is that there are some very strong, sophisticated players that you'll be going up against. They are capitalized and have active teams. There is a big difference from a 4 unit to a 50 unit in the world of finance, and you'd be surprised at the difference between financing a 4-plex to an 8-plex.

It's going to be a great ride for sure. Don't discount how important boots on the ground are to truly understand your target area(s), build your teams, and become familiar with the landscape. It'll be challenging to get going if your strategy will be to scour on-market listings from abroad. Leverage your condo sale but be sure to buy right! No need to trade out of one unit that is gaining equity and riding appreciation only to buy an overpriced asset in it's place.

If you are ever in the Portland area let me know. I was working abroad in the same sector before moving to the West Coast. It'd be great to hear about your work. Cheers!

Medium logo stacked badge r web  1 Neal Collins, Latitude Realty & Property Management | [email protected] | (503) 974‑6633 | http://www.chooselatitude.com

Neal C.

 I know I am fighting an uphill battle, but if one does not take the first step you get nowhere.

I will not put the townhouse on the market until I see a realistic deal in sight. I do not want to get rushed into something just to make my 1031 work to avoid taxes. And first I need boots on the ground. Kind of hard to manage when I never know when I may have to travel.

I will give you a shout out if I make it to Portland in August.

Hello to all you young ambitious smart investors,

We have a 5 unit multi-use building in west Seattle we are thinking of selling. We have owned it for about 14 years. Long term tenants, 2 bedroom apt, so livein owner occupied is perfect. All the major work has been done. CAP is around 4-5; GRM around 13-14. Not much to compare to this one. This building has been very good to us, but it is time to move on.

Any interest, give me a call for more info.  Please don't waste our time with No money down scenarios, BUT we are open to holding paper if circumstances work for us.  We are retired & looking for steady income stream.

Thanks

Joseph Q

206-992-5663

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