Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
I picked up three properties in the past five years that, due to the great prices I got them at, cash flow very well.
Of course now that the market has recovered, the price to rent ratio is not favorable. Not even outside Seattle, like Tacoma, etc.
It's frustrating as I would like to buy a few more properties but this area is a crap shoot for rentals at the recovered prices. Eventually I plan on moving to Florida where I will retire, not only because of the weather, lack of state income taxes, etc. but the excellent price to rent ratio. I can buy a house for 1/3 the price of the houses here and make 3 times as much money there cash flow wise.
Is anyone else giving up on Seattle real estate and looking elsewhere? Trouble is, I'm not sure about turn key rentals as I've seen some experienced investors like freedom mentor (Phil P) try them and get out of them, recommending that you be within driving distance of your rentals.
First, never give up. We change our strategy as it usually comes full circle (natural market cycles).
I would recommend looking at Spokane. It's sorta like its own little island with regards to economy and market. Good rental market.
Are you managing them yourself? I ask because out of our 40 or so rentals, only a small few are in Washington state. There are definitely other areas in the US that have stronger rental markets.
But if wanting to stick to WA, I would go further south, farther north, look to Bremerton, Spokane, tri-cities.
Shhh! The eastside of the state is our little secret Brian! Just because it's like our own little midwest where prices are low and rent ratios are high, and still within driving distance.
First, never give up. We change our strategy as it usually comes full circle (natural market cycles).
I would recommend looking at Spokane. It's sorta like its own little island with regards to economy and market. Good rental market.
Are you managing them yourself? I ask because out of our 40 or so rentals, only a small few are in Washington state. There are definitely other areas in the US that have stronger rental markets.
But if wanting to stick to WA, I would go further south, farther north, look to Bremerton, Spokane, tri-cities.
I'm finding SFRs in Bremerton now. But it takes awhile to build your team of qualified repairmen, and the smaller the economic region the fewer your opportunities are to find reliable "team". Caveat emptor.
I suggest finding one area and focusing on it, so that you can get leverage out of your knowledge and network.
I'm in another market but having the same problem as you. Went to a an open house today property sold to an all cash buyer over list price within 10 minutes of the open house. People have been saying there is no way there could be another bubble because these are cash buyers. That being said these people that are overpaying for properties are earning such dismal returns. Its hard to imagine this upswing is as sustainable.
I see this bubble as much more regionlized bubble as the 2008 bubble. I don't think its correction will be sudden drop but more of a slow tapering as inventory is added and interest rates rise. Its a supply side issue.
Like some of the forum members have mentioned there are opportunities in any market. Just need to get creative and work harder to find them. Personally I have been looking in other surrounding cities and rural areas. I've considered starting a marketing campaign but not sure how I will juggle calls while working my job.
I am not an experienced investor, but I feel that there is still great opportunity for cash flow investment with the added potential for strong appreciation as a bonus. The easy pickings are gone, but there are plenty of opportunities for adding value through renovations to justify rent increases.
I would actually also look to Snohomish County, I feel that the area has some solid potential and I am looking with strong interest at the area.
im right there will @Alex Chin i think there is a great potential for Bremerton with inventory issues in the Seattle area and more people buying the new downtown complexes, i personally know of multiple buyers waiting to get into the BLDG 400 because of the closeness and another client wanting a nice little tiny house for 200k which is awesome for most places in america for a home that you could pick up for 60k it just has got to be close to the ferry and rehab. But with more parking and a larger devolopment of downtown Bremerton will be the only real way i see any improvement in equity building. Also their needs to be those more carring neifhbors to bring up values as well like port townsend and alot of other areas in north kitsap up north of silverdale. Its where you can find a deal. I see them all the time arou,d here. People just arent capitalizing yet but the city is on board to fix things up i would definitly say invest wherever but its about grinding it out and finding the deals and freakng snatching them up and making them kickass and bring in buyers.
If anybody knows anyone that wants to build a parking structure that would be bomb money close to the military gates and with inreased traffic and increased ability to sell to large crowds more people will come and build up. Military is very stable right now. Get it will the gettings good and get out when you hear a whisper of PSNS shutting down or of a die down of military presence. If it is able to aupport higher density nice places the property arou,d it has got to go up as well. What do yall think?
Jon Beechham owner at JB construcion in Seattle is the man you want to talk to for Bremerton area remodeling. He would love work over here with someone serious or wants quality and will pay ONTIME. Runs his company is Seattle cause the works not here. so email him if you want so he knows whats going on.
Having condos as rentals is worth considering. Yes, they do have HOAs, but HOAs help you maintain the building and generally pay for water/sewer/garbage which you pass on to your tenants.
I have been investing in condos personally for a few years now and have seen prices skyrocket. By constantly purchasing units that are at the lower end of market prices (ignore the condos with huge planned special assessments), you can almost manipulate the markets. The truth is there is a very limited amount of cheap condos out there.
For example, the cheapest 1 bedrooms (South King County), I have seen earlier this year were in the $40k price range. Now, they are in the $70k price range and selling very quickly. That's more than 50% appreciation in a mere 6 or 7 months! But at $70k, they still do cash flow! Rents for 1 bedroom condos if move-in ready don't usually go below $850 or so.
At this time, there are good 2 bedroom deals under $100k and you can likely get $1000-1200 in rent from those. Even factoring in HOA and property taxes, you got some pretty good cash flow and lots of potential for appreciation because the condos in the lower end price ranges become great entry level homes for first time home buyers.
Likewise, if you look at duplexes, triplexes and four-plexes, it's gonna be hard to find deals under $100k a door. They are usually priced at a premium compared to condo units in the neighborhood.
Would love to hear what your thoughts are on this topic as well!
First, never give up. We change our strategy as it usually comes full circle (natural market cycles).
I would recommend looking at Spokane. It's sorta like its own little island with regards to economy and market. Good rental market.
Are you managing them yourself? I ask because out of our 40 or so rentals, only a small few are in Washington state. There are definitely other areas in the US that have stronger rental markets.
But if wanting to stick to WA, I would go further south, farther north, look to Bremerton, Spokane, tri-cities.
Shhh! The eastside of the state is our little secret Brian! Just because it's like our own little midwest where prices are low and rent ratios are high, and still within driving distance.
I have briefly looked into Spokane, there are numerous properties at low prices at the moment. I just don't know if the supply is there...any thoughts? They have built up the Valley over the past few years and there where a lot of housing developments and apartment complexes which went in during this building craze. Any thoughts from investors in this market?
Consider changing strategy such as sandwich lease options or vacation rentals. I see cash flow deals in Tacoma all the time, but I don't buy those because I only want B-class areas and not C and D areas.
I've been buying out-of-state in Phoenix, Houston, Memphis and now Kansas City and Birmingham. But cap rates are compressing in all these areas as well. Real estate prices are going up across the country.
@Jack B.Seattle is like many markets where prices have been driven up to high to cash flow and give a good ROI. The problem is that is you're only willing to invest within an hours drive, that precludes everyone in any of the several high cost markets from investing in real estate. I'm a believer that real estate should be treated as any other asset class and decisions based on financial returns and performance rather than geographic proximity.
I refocused my efforts in Tacoma where I have a rental currently (paid off). While I would have liked to by in King County due to appreciation, the cash flow just isn't there. The places I'm looking at today (3) should be good. One is in North Tacoma and looks turnkey.
The others are occupied but at the right price and modern enough that they need little work once empty.
@Adrian Chu If you have any off-market SFR deals in the Seattle area, please PM me. I took a look at some of the deals you have done. Definitely interesting flipping non-core condo properties, but don't transaction costs grind you down? Much more tax efficient to wait at least 2 years and 1033 exchange...
@Adrian Chu If you have any off-market SFR deals in the Seattle area, please PM me. I took a look at some of the deals you have done. Definitely interesting flipping non-core condo properties, but don't transaction costs grind you down? Much more tax efficient to wait at least 2 years and 1033 exchange...
Will do. 1031 is tax efficient but so far, in this market, you make the money when you buy. If you have the resources to keep on buying, then that is the most ideal case.