Suggested REI-friendly areas in Washington State?

Washington Real Estate Q&A Discussion Forum
8yFollow

Suggested REI-friendly areas in Washington State?

Daniel O.
Seattle · Member since 2018 · 29 posts · 6 votes

Hey folks,

I live in Seattle and therefore am not looking to buy any rental real estate locally. For that reason, I've mostly been doing my research in out-of-state areas like Pittsburgh or The Triangle in North Carolina.

Before I go all the way out of state, however, I wanted to see if there were any good investment opportunities in-state. I'm already doing this the hard way, painstakingly combing through city by city, town by town, looking at gross metrics and trying to dig in. That said, I figured that I might get some good feedback from all of you to save me some trouble or at least help me narrow down the field!

Any of you have any luck getting a good return consistently and with any potential for scale inside Washington State? Where in the state should I start looking? I'm looking for reasonable B+ to C neighborhoods, not warzones, not slumlording opportunities. I'm happy starting out with either SFR or MFR, but would appreciate a market where I can grow into MFR. I'm looking for an area that has solid industry that is not at risk of mass-obsolescence in the next decade. Ideally, I also find an area where tenant laws aren't insanely anti-landlord.

Eager to hear what you think. Thanks!

1Reply
125 views

Most Popular Reply

Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
8y

Daniel, things have really gotten expensive around here; you might look at Bremerton If you want closer to Seattle, or north of Seattle. I only invest one hour max from home so Bremerton is one of the areas I have been looking at. Not a lot of properties; but stuff does pop up from time to time. Eastern Wa seems to offer many possibilities, but I am not familiar with the area. You would do well to join the Wa LL association and attend the BP events too. Look forward to meeting you at one of those.

2Reply
See this reply in the discussion

29 Replies

Jump to latestLatest
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    8y

    Daniel, things have really gotten expensive around here; you might look at Bremerton If you want closer to Seattle, or north of Seattle. I only invest one hour max from home so Bremerton is one of the areas I have been looking at. Not a lot of properties; but stuff does pop up from time to time. Eastern Wa seems to offer many possibilities, but I am not familiar with the area. You would do well to join the Wa LL association and attend the BP events too. Look forward to meeting you at one of those.

    2Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    @Bjorn Ahlblad, thanks for the tips!

    "WA LL assoc." is available at https://walandlord.org/, right?

    One of these days I'll make it out to an event, and when the day comes I look forward to seeing you there :)

    0Reply
  • Jake Alger
    Real Estate Broker · Bellevue, WA · Member since 2017 · 172 posts · 107 votes
    8y

    Hi Daniel,

    Opportunities around the greater Seattle area do exist, it all depends on your strategy, criteria and budget.  I work with local investors and have been able to find them opportunities.  The key is moving fast when they deals show up as they don't come along every day.  There's a ton of investors looking in our marketplace still so good properties sell extremely fast.

    What neighborhoods have you targeted or researched so far in WA?

    - Jake

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    Hey @Jake Alger!

    As far as strategy/criteria:

    • I'm primarily looking at buy-and-hold SFR/MFR rentals.
    • I'm not opposed to doing extensive rehab as I grow/learn but I'd like to start with a simpler, lower-risk rehab on property #1.
    • In that vein, this is all a toe-in-the-water / experiment for me. Experiment budget is currently set at around $50-80K total up-front cash outlay (i.e., combined pool for downpayment, rehab, professional services, etc.).
    • On that note, I'd assumed I would use leverage and have estimated 25% down, but I'm open to interesting cash plays.
    • I 100% insist on using property management, and all of my planning includes that cost.
    • Ideally I'd like to hit ~8+% cash-on-cash return after all is said and done (taxes, payments, repairs, insurance, PM fees, capex, professional services, estimated cost of vacancy and turnover, etc.). Is that realistic? I think I'm setting the bar nice and low on this first trial. The goal here is to learn as much as possible without taking epic risks.

    That said, I'm pretty open minded.

    So far I've poked around in Bremerton, Wenatchee, Ellensburg, Yakima, Mt. Vernon. I'd like to poke around Eastern Washington more (e.g., Spokane). I'm really just starting to look at Washington.

    0Reply
  • Julie MarquezPro Member
    Investor · Skagit County, WA · Member since 2016 · 1k+ posts · 807 votes
    8y

    @Daniel O. Welcome to the wonderful world of real estate investing! As far as Skagit County goes, take a look out east in Sedro Woolley where there are better prices, Mount Vernon has skyrocketed the past couple of years. Are you able to house hack? That's where the low risk option is available

    2Reply
  • Rachel Luoto
    Lake Oswego, OR · Member since 2015 · 174 posts · 115 votes
    8y

    @Daniel O. I live and invest in Bremerton, if you want to find out more about the area and meet local professionals I suggest going to the kitsap REAPS meeting. With a max cash outlay of $80k at 25% down, that gives a $320k property with no repairs, which could definitely buy a single family B class or small duplex C class in Bremerton - but would need more repair. If you’re flipping, hard money may roll the rehab costs into the loan. Good luck! 

    1Reply
  • Michael Liddicoat
    Real Estate Consultant · Tulsa, OK · Member since 2016 · 56 posts · 33 votes
    8y

    @Daniel O. I'd suggest you connect with Kayla Spain in Yakima. You can find her through our facebook group: Central Washington REIA. She was our speaker last month and she's flipping houses in this market with on market deals her realtor is finding.

    1Reply
  • Ryan Hopkins
    Architect · Raleigh-Durham, NC · Member since 2016 · 76 posts · 47 votes
    8y

    @Heather Hopkins

    0Reply
  • Heather Hopkins
    Real Estate Agent · San Francisco Bay Area · Member since 2016 · 29 posts · 13 votes
    8y

    @Daniel O. Hey! I am from Seattle proper originally and my family has been investing in RE in the area for decades. Have you checked out White Center, South Point, Burien areas? You should be able to get something in the B- / C+ range in those areas. Also happy to help as we now live and invest in the The Triangle. 

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    @Julie Marquez thanks for the tip about Sedro Woolley! As for house hacking, I have no need. I've had a great house in Seattle for me and my family for a good while now.

    Just to clarify what I mean when I say risk, I'm talking about total financial risk (which is why I'm limiting exposure to a tolerable $50-80K in cash outlay and will be looking closely at liability issues) and the risk of biting off way more than I can chew from a time, logistics, and experience standpoint.

    @Rachel Luoto thanks for the tip re: Kitsap REAPS meetings! I'll look into it.

    @Michael Liddicoat thanks for the connection to Kayla. I'll check it out.

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    @Heather Hopkins oh wow! How fortuitous :) I'd love to pick your brain all day, but I'll try not to bother you (much) until I have something to offer in return.

    0Reply
  • Heather Hopkins
    Real Estate Agent · San Francisco Bay Area · Member since 2016 · 29 posts · 13 votes
    8y

    @Daniel O. Haha! I appreciate the kind thought. Wanna swap houses?! I'd move back to Seattle in a heartbeat. Message me anytime, happy to help. 

    1Reply
  • Robert Freeborn
    Real Estate Agent · Bellingham, WA · Member since 2017 · 427 posts · 182 votes
    8y

    @Daniel O. As was mentioned earlier, Sedro, Burlington, Anacortes and Mount Vernon are solid growth markets.  There are tons of opportunities out there, even on the market.   Give me a call if you'd like to explore the market up here.  

    @Julie Marquez Hi again!  

    2Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    @Robert Freeborn will do, thanks!

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    Ooooh, one more question:

    For those of you working within Washington State, do you have favorite tools/venues to find off-market opportunities, or do you do it the "usual" ways (research, hunting for "motivated" sellers, driving for dollars, building up connections with people in the know, etc.)? Are foreclosures a viable angle around here?

    0Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    8y

    Off market deals really depends on who you know and how much they like you. Depending on the area you will rarely get a realtor that will just give you first dibs at a property unless you have a prior relationship with them. Either personally or professionally. Foreclosures are still an option but becoming very rare, especially in todays market. Though with the next down turn in the market (whenever that is and how bad is a role of the dice) foreclosure rates will go up for sure. But again who knows. 

    Biggest thing is to start making those relationships. 2011 is a thing of the past where you could find killer deals on Zillow.

    2Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    8y

    @Nik Moushon roger. Thanks for explaining.

    0Reply
  • Dana Ogan
    Ellensburg, WA · Member since 2018 · 5 posts · 1 vote
    8y

    Ellensburg is ridiculously high like Seattle too! We’ve combed through the central wa markets too and Tri Cities is probably your best bet! Good luck!

    1Reply
  • Eric Thompson
    Member since 2018 · 14 posts · 5 votes
    7y

    Daniel O. any learnings from the past couple months? I'm in the same boat you are. Would love to invest locally but seems pricey for the first go around.

    0Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    7y

    @Eric Thompson not really. I've since gotten all my ducks in a row and am poised to strike if the opportunity arises. I've been devoting a lot of energy to Kitsap county (Bremerton specifically), but haven't seen anything amazing yet. Based on @Dana Ogan's point I may start looking at Tri Cities.

    What about you? Any amazing epiphanies/opportunities on the horizon?

    0Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    7y

    And just to clarify, by "amazing" I mean "anything that's roughly competitive with the stock market." For that matter, I have yet to see anything on the MLS (I haven't found a good source of off-market opportunities yet) with a cash ROI above a 10-year treasury bond (once all costs are taken into account).

    I'm already heavily invested in other non-RE assets (stocks, bonds, etc.) so for me to go in on a property that needs rehab, management, etc., it better be worth the extra hassle.

    0Reply
  • Eric Thompson
    Member since 2018 · 14 posts · 5 votes
    7y

    @Daniel O. I haven’t found an “area” that is producing what you want via the cap rate. Myself, I’m looking for forced appreciation properties that start at just a tad over cash flow neutral. Now I’m not an expert but I think these will get me where I want faster as I’m looking to stack up to a large cash flow property. (I’m not going to turn down cash flow if it shows up) 

    In the meetup section there is a listing for a discussion on investing in Spokane. I have had some people point to across the state as a good area. You might want to check that out. 

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    7y

    @Eric Thompson, very interesting. I'll have to check it out indeed. Thanks!

    Oh, definitely not in terms of cap rate. That'd be pretty incredible! I was talking about cash-on-cash return, but TRUE cash return (e.g., including things like the reserve fund for each property that's just sitting there, amortized cost of legal, accounting, insurance, etc. for the overall business, inspection, loan fees, closing costs, rehab, holding costs, etc.). Things start to look better if you consider estimated total return (e.g., considering loan paydown, depreciation, appreciation, etc.), not just cash return, but that starts to get a bit speculative.

    To be clear, I'm sure the answer is that I'm not looking in the right places, or perhaps not analyzing accurately. The fact that the old guard seems to be doing just fine (albeit with a bit more effort) suggests that this is probably newbie error :)

    1Reply
  • Andrew S.
    Bothell, WA · Member since 2018 · 20 posts · 16 votes
    7y

    If you guys are brave, consider that the King County Housing Authority pays rates in some areas that are well above market. And, before you run off scared, consider linking up with a local organization that helps victims of domestic abuse or veterans find suitable housing. The demand is high, often with good quality candidates, and you are providing a valuable service to our community. 

    KCHA simplified the SEC 8 system by assigning rental rates based on zip code. To check rates, just enter the zip at https://www.kcha.org/landlords/rent-utilities/

    Feel free to PM me for more information. I am glad to share what little I've learned from my experience in S. King County.  

    1Reply
  • Daniel O.
    OP
    Seattle · Member since 2018 · 29 posts · 6 votes
    7y

    @Andrew S. super interesting. Thanks for the link!

    Any recommended reading to learn more about this approach? To be honest, I'm a little worried about investing in King County in general.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free