Greater Seattle Rental Criteria

5 Replies | Seattle, Washington

Hi everyone - I was just curious for those who are still buying rental properties - what sort of criteria you are using when buying? I have a couple rentals that are cashflow neutral after accounting for capex, maintenance, and vacancy. However even those deals I'm finding impossible to find. Are others that much better at finding deals, or are you using different criteria? 

Thanks!

Hi Luke,

Cash-flowing properties can be found, just have to look further out. I’ll admit, they can be difficult to find since everyone is overvaluing properties in this market. 

Cash-on-cash seems to be what most people I’ve been talking to and clients I’ve been working with are using as a standard. Finding a number that works for them and moving quickly on properties once they become available is truly how it has to be done. 

Another strategy one of my clients has been doing is picking up properties at auction or really beat up on-the-market houses and fixing them to increase cash-flow. Almost like a fix-and-flip but a fix-and-rent. Now I’m talking about finding a property that needs less work than a flip, mainly cosmetic, that way the outlay of cash isn’t over the top. 

For locating properties, it’s best to have someone keeping an eye out for you, especially if this isn’t your day job. The market is moving far too quickly to drag your feet or not see a property when it hits the market. Just have to get the alerts and run the numbers I’m afraid. They’re out there!

@Luke Redford to echo what @Jake Alger mentioned, we focus mainly on cash-on-cash ROI and move very quickly when something hits the market. Admittedly our ROI standards have dropped a bit over the years but we are also focusing on better properties which have lower Cap rates. We are closing a property in Everett later this month and had it under contract within an hour of it hitting the market.

@Luke Redford I stopped looking in 2012 in seattle and went to the mid west. Note... I am busy and don’t have time to look for distressed value add deals like most people on here

Originally posted by @Luke Redford :

Thanks @Grant Fosheim - so what are you looking for for ROI? After capex/maint/vacancy expenses?

It varies based on building and location and we analyze based on proforma rents and expenses. Typically we are looking for a minimum of 8% -10% cash on cash ROI for the building.