Newbie Cali investor learning about Seattle market

20 Replies | Seattle, Washington

Hey Seattle investors or real estate professionals. I am a newbie investor living in California and I'm taking my first steps to getting into the Seattle market. I decided that 2016 is the year I purchase my first rental. I have family in Seattle that will be helping me manage my rentals from a distance so I already have some boots on the ground which I've heard over and over again is very important.

I've been doing my research on a few neighborhoods and I was hoping to get some feedback about what I have found. I'll also be visiting the area soon to get a better feel for the market there.

I've done some preliminary research on Shoreline, Edmonds, Lynnwood, Everett, Renton, Burien and Seatac. So far I've compared them on their Price/Rent ratio, population size, population growth trends, monthly SFH sales trends, SFH inventory trends, unemployment rate trends, building permit trends and crime rates.

Right now I am liking the numbers I see in Renton and Everett. These are the largest cities of the group and they show the strongest numbers in all the metrics. They both have good population growth with Renton's population exploding in 2009. My guess as to why that happened is many people moved into the more affordable area of Renton when the market collapsed. Between Renton and Everett, Renton seems like it has more room for growth and according to my family living there the area south of Seattle is an up and coming area. Of course all this is just from looking at some data. I still need to visit these cities and drive around to see what they are like.

The one thing that worries me the most about Renton and Everett is that Boeing is by far the larges employer by an order of magnitude. But I figure the risk that Boeing collapses all of a sudden should be pretty small. I think if I keep an eye on the company I should be able to see trouble coming and exit that market if necessary.

I'm actually looking to invest in multifamily but so far I haven't found a good source of data for metrics on those. I'm hoping to learn more during my visit this weekend.

So for those more familiar with that area are there things I should look into or learn more about? Does my reasoning about Renton and Everett make any sense?

I'm going to be in the area from Jan 15th till Jan19th. It's short notice but if there are any investors that want to grab coffee to talk about their experience investing in the area I would be really interested and grateful to hear your stories.

Thanks!

Hi @Yohannes Kifle ,

I am investor in the Renton area and it's certainly great area to buy rentals. The market is great. The one thing you mentioned about the population growth is that Renton has annexed a lot of communities lately and will also in the near future. 

Good luck.

@Jiri Vetyska Great to here Renton is working for you. And thanks for the insight about their population growth. I'm flying out there today and I'm hoping to get much more familiar with the area. If you know any good realtors I can talk with in the area I'd love to connect with them or you if you have time this weekend.

@Yohannes Kifle Hello Yohannes! I am a realtor in Renton WA. I can drive you around the area tomorrow if you like since I live in Renton too.  I love the area. 

I'm in Cali and I haven't invested in this market in years. Yes, it's possible to make some money here but the market is super hot, a lot of investors here have extremely deep pockets and the demand is out stripping supply by a wide margin. This summer was crazy here, so I invest anywhere but here. 

Not saying people can't make money here but why buy one SFH for 700k+ here when you can buy two or three somewhere else.

But that's just my opinion. 

Hey @Ryland Taniguchi that is a good point. Since my main objective right now is to build passive cashflow I thought it would be much harder to find good cashflow deals in California so I looked out of state. I agree that there is a lot to know about this market before jumping into it and I am hoping having family in Seattle will let me leverage their knowledge of the area to help me make smart moves.

@Steven Stokes I think you are right that this area has definitely been hot. I'm hoping that by looking in cities further south like Renton or Auburn I'll be able to find better deals with slightly less competition. I don't think it will be easy to find a good deal but I will do my best to find them. I believe this area has good population growth so I'm hoping that translates to growing demand for rentals. One thing I am worried about is that the rate of development of new houses might outpace the demand for rentals. I'll need to ask some landlords what their vacancy rates have been.

@Yohannes Kifle  couple of things about Everett.  some streets are good, others just a few hundred feet away aren't.  it's a very localized market.  so looking at the numbers from 30,000 feet might not be as useful as you'd like.  

@Yohannes Kifle  

Welcome to BP, I'm also and investor and agent in the Seattle area. I definitely prefer the Renton area over Everett. I simply think it's a better investment opportunity and an area that's going to keep growing. Although prices are getting fairly high in that area as well. I'm very familiar with the Renton area, if you have any questions or need any help feel free to PM me. 

@Patrick Britton I just finished up a weekend of driving around Everett and I definitely get what you mean when you say the numbers from 30,000 feet might not be enough. I think I have a better idea now where in Everett I would want to look for properties in. And when I do find a potential deal I can ask some family that lives there to take a look at the specific property and see what kind of street it is on. I'm hoping that should be enough.

@Lucas Pinto I also like Renton better than Everett for now. I think both areas are growing but Renton has more established neighborhoods and communities with great schools. It seems that Everett is just in the beginning stages of growth. And according to people I talked to who work in the area, Everett is poised for good growth in the long term. I'm going to keep an eye on both cities for potential deals. I'll let you know if I have any questions about Renton.

Thanks to both of you for the reply. I'm really appreciating all the input you all are giving me. As a new investor it really helps to hear all these suggestions.

Tomorrow I'm going to get pre-qualified so I have a better idea of what I can afford. Then the daily search begins! I really need to stay disciplined though. I've already caught myself trying to massage the numbers on some properties to work better cause I am itching to get my first deal.

@Yohannes Kifle  yes, asking someone who lives there is always a good idea :)  when i am not familiar with an area and don't know of anyone who lives there, i've taken the time to knock on some doors, both residential and commercial.  although the opinions are typically slanted towards the "good" (after all, no one LIKES to admit they live in a war zone) it's pretty easy to tell who's truthful and who isn't.  :)

Hey @Billy Au-Yeung . Thanks again for showing me around. It really helped me get a better feel of Renton and Auburn. I'd love to hear your thoughts on Renton and Everett. 

From what I saw and heard Renton is in the middle of some great growth. It feels like a much more developed city than Everett. And it also seems like the prices in Renton reflect that. They are definitely more on the expensive side though not to crazy. Everett seems like it is just starting to see good growth. And from what I have heard Boeing is growing faster there than in Renton. Much of what I saw in Everett was undeveloped land up north with some smaller residential areas in the south. I also saw lots of construction happening there so it seems like things are picking up.

Based on all this to me it looks like Everett is a riskier but potentially more lucrative long term appreciation bet and Renton is the safer but not as rewarding appreciation bet. In both cities I think it is possible to find good cash flow deals based on the price to rent ratios I see. So I'll be looking in both cities for properties, probably favoring Renton.

And I just got pre-qualified for a $300,000 or $375,000 loan. I thought the pre-qualification processes would tell me what my max loan amount is but the loan agent from Chase basically just ran the $400,000 and $500,000 prices I gave him with 25% down for each. He said I definitely have wiggle room on the house price though so I'll be shooting for a property with a value of $500,000 or less that cashflows at least $200 per door. The search is on! 

@Yohannes Kifle

Welcome to Bigger Pockets and to investing in Washington State! Understanding Landlord-Tenant Law in Washington State is easy when you have the right tools. We're buy and hold investors in Southwest Washington with over 20 years experience as landlords here.

I find the L-T laws in Washington are reasonable and are landlord friendly or at least evenly balanced. Our local rental association in Clark County publishes a great tool called "State of Washington Residential Rental Laws" that puts into one place all of the RCWs (RCW = Revised Code of Washington) regarding residential rental property and includes a helpful summary. PM me if you are interested in that.

The tenants union is very active in Seattle and King County. They are reaching out statewide now, so it's important to keep up with what they are doing. Their name changed from Tenants Union of Seattle to Tenants Union of Washington State, a reflection of their new focus.

http://www.tenantsunion.org/en

The Washington Rental Owners Association has the most powerful lobby in favor of landlords. They recently changed their name from Washington Apartment Association to Washington Rental Owners Association to be more inclusive. They are doing good work on our behalf. They are key to keeping legislators up to date on things that impact our industry and are protecting our interests. Worthy of our support!

http://waapt.org/

Good luck!

@Jiri Vetyska  @Billy Au-Yeung   @Ryland Taniguchi   @Patrick Britton   @Lucas Pinto