STR/MTR Seattle-Tacoma Good or bad?

Question

I am a new investor looking to start an STR within the Seattle Tacoma area, I was looking through the thread and to my surprise there were few to 0 threads within the seattle tacoma area. I understand that New york is one of the cities banning STR's and was curious if the seattle-tacoma area is a good area to even invest for a newbie.

Matthew Kwan · Answer

If you are planning to do STR/MTR, you want to reconsider the location of the house. There's definitely a lot traction when Spring/Summer kicks in. I even hear when T-Swift was here last year, all the AIR BNB skyrocketed.

@Albert Bui @Carlos Valencia

Michael Baum · Answer

Hey @Jeremias Rodriguez, it is a great area if you are OK with your home being hijacked by non paying guests. Or maybe have a squatter coming in on a down week and taking over.

Or maybe you like dealing with folks sleeping in your back yard or having a derelict RV on the street in front of your house.

I am being a bit hyperbolic of course, but our area isn't owner friendly at all and it is getting worse.

I won't buy in western WA or WA in general. I might consider it if it is in a solid vacation area and is a good deal. Otherwise, look elsewhere.

Christopher Price · Answer

Hi Jeremias,

Seattle does have regulations surrounding STR’s in the city. There are areas around that have adopted some of these regulations as well, but regulations aren’t necessarily a bad thing. I wouldn’t want to purchase or manage STR’s in an area that is unregulated because there is a higher risk associated with the laws changing and then you’re SOL with your investment….take NYC for example or Dallas.

I’ll start by saying that there are a lot of STR’s in Seattle currently(6k+), which has been increasing over the last few years if you look at the numbers being listed. With this you have a higher competition for the same people that are planning to come visit. Imagine having an RV park in a secluded area and anyone that wanted to come nearby would have to use your RV park. You are doing really well with all of your stalls rented each month. Then more and more RV parks start to pop up around. You start loosing some guests to them and then your revenue dips. Then other fancier RV parks start to pop up and more guests are lost to them. Then “oversaturation” happens and the only way to get your guests back is to improve your property so it stands out against the rest.

This is kinda what has happened in general in the Airbnb market. A lot of people were making money listed their vacation home or cabin in the area and then the gold rush happened. Whats happening now is that the some people are not making the same amount of money on their property and therefore are turning back to long term rentals or what not…these people that were just renting out their vacation home or their RV park and don’t continue to improve the property or add amenities that others do not have will fall off and not do well as an investment.

So…with seattle as an owner you can only have 2 listings-your primary and one other that is an investment. There are definitely areas that do better than others but you have to do your research on who is visiting the area and design and market to these guests. You have to find out what others are doing in that area, and do better. Once you do that then in any area 3 things will determine if you will have better revenue and better results than your competition. 1-design 2-Photographs 3-listing optimization.I just had a client purchase in seattle a few months back and the listing we created is the best one in the area and is on pace to do better revenue wise than the others because we did those three things and made the listing stand out.

Just make sure you do your research and always underwrite conservatively AND in my opinion underwrite it that if you can’t make it as an STR that you make sure the numbers will as a long term rental.

Best of luck!!!

Brandon Vukelich · Answer

@Jeremias Rodriguez  I own a 3-unit STR/MTR in Old Town (neighborhood) of Tacoma. We've had it since 2020 and have been renting the front two water view units as STRs and the rear studio as MTR. The STRs don't fall under WA LT law and we have heard much discussion from the city on restrictions. Our MTR does and we run the risk of Measure 1 issues, someday. But all of our MTR guests have been steady and great. That being said, we are considering to sell and invest in something less management intensive. Running a STR is like running a mini hotel, you are more in the hospitality biz. Best wishes on your RE journey! Reach out anytime.

Christopher Price · Answer

What makes an STR profitable is more than just finding a good area. Looking at Airdna and Profitmaps and other data, there are properties that do really well in certain areas revenue wise. These properties are managed by operators that have the knowledge and experience and constantly learn how to optimize the listing to rank higher and overall bring in more revenue. That is the key! There are 6,000+ properties in the area and you have to stand out.

I would ask this. What are you purchasing for? High COC numbers? Better Cashflow? is your goal to offset your W2 taxes and take advantage of doing a cost segregation? Or are you looking more long term and focusing on appreciation?

Lastly - Find a broker that understands this and is even an STR investor themselves because not every broker is the same.

Dilip Ra · Answer

@Christopher Price @Jeremias Rodriguez - Would you still recommend a STR(lots of competition) /MTR(unfavorable owner protection) for a new investor in Greater Washington area and are there any good areas to consider?

Sarah Kensinger · Answer

Connect with Christopher Price! He's in the Seattle area and can help you with all the info you need.

STR/MTR Seattle-Tacoma Good or bad?

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