OPINIONS on the Seattle real estate peaking?

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OPINIONS on the Seattle real estate peaking?

Blake King
Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
Ive been listening through all of the bigger pockets podcasts from newest to oldest and I got to episode 188 today. If anyone remembers this episode they talked a lot about market cycles and all that. I am 20, just graduating college, and very interested in real estate and investing. After listening to this episode there were a lot of valid points regarding our area reaching its peak. The fact that houses are selling in days, and that everyone and their mother seems to be wanting to invest, being two of those. Do you guys think, as a young investor wanting to start, it would be better to focus on purely saving up cash, in anticipation for the bubble to burst, and then in however many years, have cash on hand to start scooping up some properties? I am eager to get started, but don't want to get crushed so early on. I would appreciate your opinions and thoughts on this! I know nothing is certain, so just thoughts and opinions :) Thanks everyone!
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Natalie KolodijBusiness Member
Moderator
Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
9y

@Blake King 

I feel like the answers you received got a little off course. 

I am actually in the same position- where I'm looking to do a live in property for my first investment in Snohomish county. I'm on the fence between MFH and a live in fix/flip. 

  • Washington has a first time home buyer's grant that allows you to purchase a property with 0% down. It rolls your down payment into your mortgage as a second mortgage at 0% interest. You must attend a 5 hour course to qualify, but the course was really helpful and it at least gives you another option. 
  • I do actually think we are fairly close to the peak in this market. I don't think we'll drop any where near 2008, and historically we've gone up overall 3% annually, but I don't think 1-2 years from now we'll be in as hot of a market. This summer the average Days on Market was about 2 weeks. I think we'll still have a good market, just not necessarily that hot- which if your plans lays in a flip, may be a consideration. 
  • We don't have a ton of multi family in this area, and a lot of it is 100+ years old. Make sure you take that into account when calculating if the property will actually cash flow. Properties this age tend to require more capital expense budget. 
  • Also, I love Everett and work here actually- but there are still very much pockets of super high crime right next to gentrified areas. You've got to become really familiar with it on a block-by-block basis almost. It switched over fairly quickly. 
  • If you find something in the city of Snohomish the W/S/G will be much higher than outside of the actual city. 
  • I my self am looking at anywhere in Snohomish county for Multi family- but Monroe and Marysville seem less untapped than Everett. They're less developed as well, so likely won't appreciate as quickly. 
  • If you're looking at doing something like a live in flip or BRRR strategy instead, I'd just make sure your profit margins are great enough that if the market cools a little it would still be profitable. If in today's market your comps would net you $15k...I'd walk away because if we do cool down a little it may not be profitable at all when you sell. However if it will net...$50k....you will likely still be okay.

That's my .02 for what it's worth don't feel free to hesitate to reach out. 

Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
Kolodij Tax & Consulting
WebsiteView Page
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  • Blake Hansen
    Residential Real Estate Broker · Kent, WA · Member since 2016 · 11 posts · 0 votes
    9y

    Hello @Blake King I am a property manager in Renton and I have talked to many young people about this particular issue. Considering this will most likely be your first place, I recommend doing a 10% down 30 year loan with the goal of renting out the house. I think a buy and hold investment is the most stable option for someone just starting out. The 10% option is usually only available for primary residences when it comes to conventional loans with low interest rates, so investors will probably be happy to go on this venture with you as a silent partner.

    0Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Hello Blake Hansen ! First off great name! Are you talking about a house that I would personally live in, and also rent out? Or what are you meaning here. I have only been on bigger pockets for a couple weeks now, and still have much to learn, so please excuse my lack of knowledge! Thank you for the reply, and I look forward to hearing what you have to enlighten me!
    0Reply
  • Blake Hansen
    Residential Real Estate Broker · Kent, WA · Member since 2016 · 11 posts · 0 votes
    9y

    @Blake King I recommend renting out the entire house. Another option is you probably have made connections while at college, so maybe they need a place to stay? Renting out rooms can be a more profitable option, especially if it is near a college.

    0Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Blake Hansen ok awesome. I wasn't sure if the 10% down was one of the special loans or programs you can do as a first time homebuyer that maybe requires you to live in the property. Thank you!
    0Reply
  • Tatiana Gershanovich
    Real Estate Investor · Seattle, WA · Member since 2014 · 156 posts · 141 votes
    9y

    It does require you to live in there, but, as Blake pointed out, you can rent rooms to other people (if you are ok with a living situation like this). It will allow you to either pay very less out of pocket for your mortgage and in some cases even live for free

    1Reply
  • Matt Gragg
    Flipper/Rehabber · WASHINGTON State · Member since 2015 · 179 posts · 67 votes
    9y

    @Blake King I personally would not save and wait in hopes of a better deal. I would get in while everyone wants a piece of the pie. There are some really great deals out there to be had! 

    If I was going to do a first time home buyer loan. I would buy a 4 plex!

    2Reply
  • Matt Gragg
    Flipper/Rehabber · WASHINGTON State · Member since 2015 · 179 posts · 67 votes
    9y

    @Blake King I know of a great property in Marysville 5 bedroom 2 bath (frank lloyd wright house) 

    0Reply
  • Jack B.
    Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    The market appears to have much more up side. Other than the occasional slow down, it should be fine, and although it's good to be thinking about where we are in the cycle, you rarely lose when you buy for cash flow, and consider appreciation a bonus. I own a number of SFH's in the Seattle area and always bought primarily for cash flow. Much less risk if the market turns against you and you're still making 10K a year per property from rents...

    A way to mitigate your risk is to just consider it an investment in free housing. Buy a four plex with 3.5% down and rent out four units, live in one. You should still see appreciation for years to come, but even if not, living for free and making money off the side as inflation raises rents (beware Seattle rents have been down 12% this year) and your profit increases despite your expenses staying mostly fixed (taxes and insurance will go up, as will maintenance costs).

    Feel free to PM me with any questions.

    2Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Thank you all so much for the help! I think the 4-Plex idea for the first home (only 3.5% down) is just too good of an opportunity to turn down. Thank you all! Tatiana Gershanovich Matt Gragg Jack B.
    1Reply
  • Matt Gragg
    Flipper/Rehabber · WASHINGTON State · Member since 2015 · 179 posts · 67 votes
    9y

    Anytime @Blake King I can share some insight with you on the Everett area if you would like.

    Feel free to pm me any time 

    0Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y

    @Matt Gragg I would absolutely love that. Everett is my all time favorite area. I have grown up in marysville, but living in Kirkland the last 2 years for school. Would love to start in the Everett area! I will pm you for sure.

    0Reply
  • Adrian Chu
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    9y

    Everett is a good area to start. Not too expensive, but not too far. I've bought and sold properties up there over the years. 

    0Reply
  • Alexander Zurn
    Lender · PA · Member since 2016 · 214 posts · 140 votes
    9y

    @Blake King Patience is a virtue and you certainly do not want to rush anything. BP has proven to always provide answers and help when I need it so stick the forums for sure!

    The 3.5% down (owner occupied) is tough to pass up, especially just starting out. Something else you should consider is the state of Washington First Time Homebuyer Programs. It appears they offer MCC's (Mortgage Credit Certificate's), which essentially allows you to keep more of your paycheck from taxes so you can make the mortgage payment each month. They also offer DAP loans (Downpayment Assistance Programs) which, depending on the state, can range from forgivable loans (over a 5 year period) to a 2nd mortgage that is a small reasonable amount each month on top of your primary mortgage. Using one of these programs you could get into a house for as little as 1-2K down (depending on closing costs), which is less money out of pocket to keep saving as you progress in your real estate career.

    They generally are great programs and are meant to help the state's homebuyers. However, they are only for FIRST time homebuyers so you should consider this moving forward.

    Take a look at the WA website I found. It shows the programs specific to the county and state. Good luck!

    0Reply
  • Alexander Zurn
    Lender · PA · Member since 2016 · 214 posts · 140 votes
    9y

    Washington First Time Homebuyer Program 

    0Reply
  • Jack B.
    Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Adrian Chu:

    Everett is a good area to start. Not too expensive, but not too far. I've bought and sold properties up there over the years. 

    Adrian, are you still focused primarily on condos? What has been your experience with condo HOA's. I have an HOA for one of my SFH's and they suck. Glad I backed out of buying another place in an HOA.

    0Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Thank you Alexander Zurn I have been looking for some information on our state specifically, because I always hear of certain programs but am never sure what is actually offered here.
    0Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Speaking of that, does anyone have any good books to recommend for our state specifically? Or just any books really. I read some of david Bachs books a few years back and loved it, and now that I am just starting out I am reading Rich dad, to kind of get a taste for everything, so maybe a more real estate specific book next? Thanks in advance for any suggestions!
    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    9y

    @Blake King 

    I feel like the answers you received got a little off course. 

    I am actually in the same position- where I'm looking to do a live in property for my first investment in Snohomish county. I'm on the fence between MFH and a live in fix/flip. 

    • Washington has a first time home buyer's grant that allows you to purchase a property with 0% down. It rolls your down payment into your mortgage as a second mortgage at 0% interest. You must attend a 5 hour course to qualify, but the course was really helpful and it at least gives you another option. 
    • I do actually think we are fairly close to the peak in this market. I don't think we'll drop any where near 2008, and historically we've gone up overall 3% annually, but I don't think 1-2 years from now we'll be in as hot of a market. This summer the average Days on Market was about 2 weeks. I think we'll still have a good market, just not necessarily that hot- which if your plans lays in a flip, may be a consideration. 
    • We don't have a ton of multi family in this area, and a lot of it is 100+ years old. Make sure you take that into account when calculating if the property will actually cash flow. Properties this age tend to require more capital expense budget. 
    • Also, I love Everett and work here actually- but there are still very much pockets of super high crime right next to gentrified areas. You've got to become really familiar with it on a block-by-block basis almost. It switched over fairly quickly. 
    • If you find something in the city of Snohomish the W/S/G will be much higher than outside of the actual city. 
    • I my self am looking at anywhere in Snohomish county for Multi family- but Monroe and Marysville seem less untapped than Everett. They're less developed as well, so likely won't appreciate as quickly. 
    • If you're looking at doing something like a live in flip or BRRR strategy instead, I'd just make sure your profit margins are great enough that if the market cools a little it would still be profitable. If in today's market your comps would net you $15k...I'd walk away because if we do cool down a little it may not be profitable at all when you sell. However if it will net...$50k....you will likely still be okay.

    That's my .02 for what it's worth don't feel free to hesitate to reach out. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    3Reply
  • Ruth Bayang
    Investor · Kent, WA · Member since 2015 · 624 posts · 274 votes
    9y

    I'm with @Matt Gragg ... 4 plex and live in one of the units!
    20 years old? Oh how I wish I had started then ...


    As far as books to read, check out the Education tab, Books & Resources (any of Brandon Turner's stuff ... he lives and invests in WA state in case you didn't know)

    2Reply
  • Blake King
    OP
    Investor · Seattle, WA · Member since 2016 · 156 posts · 34 votes
    9y
    Thank you everybody for your thoughts! The 4-plex idea is something I'm not going to pass up! Now I just need to find one in our area! I feel like we don't have too many around here!
    0Reply
  • Jared Carpenter
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Alexander Zurn Hi Alexander - could you provide the link to the website you were referring to in your post?  Thanks!!

    0Reply
  • Alexander Zurn
    Lender · PA · Member since 2016 · 214 posts · 140 votes
    9y

    @Jared Carpenter posted just below my comment as well.

     Should be good
    0Reply
  • Jared Carpenter
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Natalie Kolodij Hi Natalie - using the first time home buyer's grant, are you sure this is possible to be used with a MFH or only SFH? Also, do you need to live in the property in order to qualify? From your comment it sounds as though you have gone through the process, is this the case?

    Thanks!!

    0Reply
  • Jared Carpenter
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    Thank you @Alexander Zurn

    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    9y
    Originally posted by @Jared Carpenter:

    @Natalie Kolodij Hi Natalie - using the first time home buyer's grant, are you sure this is possible to be used with a MFH or only SFH? Also, do you need to live in the property in order to qualify? From your comment it sounds as though you have gone through the process, is this the case?

    Thanks!!

     The gal was following up on if there is any way for it to be used on MFH - but from the general information, no you can not. 

    And yes, you must live in it. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    0Reply
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