Seattle/Tacoma rental market

26 Replies | Tacoma, Washington

Hello BP Investors!

I'm a new investor looking for rentals in the Tacoma/Seattle area but using the criteria that the experts recommend it seems like nothing is a good deal. I have been looking at multi-family homes (some single family as well). So far it seems if it's on the MLS it's not a deal. Starting to wonder if I should be looking at other real estate strategies (or other geographic areas)?

Any tips from local investors on how to make this work? 

Hi @Collin Wisdom - what is your strategy? I have a few MFH in Tacoma that are cash-flow positive, buy and holds. There are still deals to be found in Tacoma and down south, I'd say. Do you have a realtor?

Hi Christen G,

Well my current situation is that I live in Seattle (Ballard area) and I am looking to move south to Tacoma into a home that will be a good rental property. Either multi-family or single family would possibly be fine. I would like to buy and hold with this property and occupy it for a year or so and move on to another to build a portfolio. 

I have a pretty good chunk of capital and access to VA loans. I am working with an agent currently and we have been looking for about a month now. I am trying to be patient obviously and looking for the right deal.

The Tacoma market is a lot hotter than I was expecting. I suppose everyone is getting priced out of Seattle. 

@Collin Wisdom I lived in seattle the last 14 years and only invested there from 2009-2014. After 2012 nothing on the mls made sense so I went out of state for cashflow.

Hello @Collin Wisdom - By MFH, I assume that you mean 2-4 units? If so, I can say from recent experience that there are still deals to be found. Even though Tacoma is hot, I just closed on a Triplex today in Tacoma and after some repairs and properly managing the property, we will be well over the 1% rule. I suggest building relationships with realtors and others that have access to off market properties. Best of luck!

@Jesse Kindra That is awesome congratulations on your deal. Yes 2-4 units would be ideal at this time for me. Your success is encouraging I think you are right about building relationships. RE Investing is a team sport as they say. Thank you for your response!

Originally posted by @Collin Wisdom :

Hi Christen G,

Well my current situation is that I live in Seattle (Ballard area) and I am looking to move south to Tacoma into a home that will be a good rental property. Either multi-family or single family would possibly be fine. I would like to buy and hold with this property and occupy it for a year or so and move on to another to build a portfolio. 

I have a pretty good chunk of capital and access to VA loans. I am working with an agent currently and we have been looking for about a month now. I am trying to be patient obviously and looking for the right deal.

The Tacoma market is a lot hotter than I was expecting. I suppose everyone is getting priced out of Seattle. 


I also live in Seattle (downtown) and have 3 properties in Tacoma (duplex and 2 triplex's). If you need a realtor recommendation, let me know. There's definitely deals to be had there that will seemingly meet your goals.

Hi @Christen G. ... how are you finding your MFH props in Tacoma? 

Are you using the MLS? Because the properties that we've reviewed (sent by our Realtor) haven't passed the 1% rule! (Total rent should equal 1+% of the purchase price)

Or are you getting them off-market? 

Originally posted by @Tess Robinson :

Hi @Christen G.... how are you finding your MFH props in Tacoma? 

Are you using the MLS? Because the properties that we've reviewed (sent by our Realtor) haven't passed the 1% rule! (Total rent should equal 1+% of the purchase price)

Or are you getting them off-market? 

I found the most recent on Redfin - but we previously had analyzed and offered on a few others that our fearless and aggressive agent brought to the table. They weren't all in Tacoma proper but most were or were the same drive time. I will say, too that *my* numbers didn't always "pass the 1% rule" either, but Aaron provided insight (rents, upgrades, comps, etc...) to some of those places which helped us make aggressive offers that would make the properties work for us. Also, I could be wrong, but I don't think the 1% rule is hard and fast on multis....

@Christen G. Are you using a property management company for all of your properties? Any pitfalls for rentals in this area you've encountered? Thanks again for sharing all of this I really appreciate it. 

I have seen nothing close to the 1% rule personally. I am putting an offer on a single family home today that is an easy fixer that I can get some equity out of and I think will be a successful rental in the future (successful meaning cashflow beyond the mortgage and expenses) however its not really close to 1% rule.

Originally posted by @Collin Wisdom :

@Christen G. Are you using a property management company for all of your properties? Any pitfalls for rentals in this area you've encountered? Thanks again for sharing all of this I really appreciate it. 

I have seen nothing close to the 1% rule personally. I am putting an offer on a single family home today that is an easy fixer that I can get some equity out of and I think will be a successful rental in the future (successful meaning cashflow beyond the mortgage and expenses) however its not really close to 1% rule.

Sure, anytime - that's what we're here for, right. Self-managing as of now - with 8 doors. I have a partner in these buildings, so there are 2 of us. That being said, property management is factored into every budget at 10%. I'm not personally a fan of the long term SFH unless you're holding it for a back up to live in down the line.

While the 1% rule is tough to find, it does exist. One way is to create it in this market such as finding a property that is not necessarily financeable and bring cash and then fix it up. Also, there can be opportunities to increase value by creating/adding more rooms or finishing a basement for living space or even utilizing a basement to add storage units, and coin operated laundry. Also, a detached garage or carport can be added and rented out for additional revenue. Others have done this and many more creative things!

Happy hunting.  

@Christen G. Have you been financing these properties with a traditional loan or using the BRRR strategy they talk about on BP? Also do you have any tip on handling that many units at once? I was looking into different online services that you can use to collect rents. What do you prefer?

Collin,

I own property in the Seattle area and did before getting on bigger pockets. These are my thoughts about their rules.

1% rule- although I have hit it on every property I have purchased I don’t think it is that important. There is a balance between cashflow and appreciation. Properties in good cashflow areas don’t appreciate well. The opposite is true. Seattle is an appreciating area.

50% rule- I have never been close... not even remotely close to this rule. If you are buying 10k-50k homes in the mid west and south than I am sure that 50+% works for cap ex. No way does it work in the Puget Sound. I am not dropping 10k a year on home improvements on rentals. This is another over generalization that is thrown around on here.

^^^ both the rules above are so inaccurate that I think they are almost completely worthless for just about anyone, anywhere. Know your market, track it well enough to know you are getting a good deal, and pull the trigger when the right property comes up.

Originally posted by @Collin Wisdom :

@Christen G. Have you been financing these properties with a traditional loan or using the BRRR strategy they talk about on BP? Also do you have any tip on handling that many units at once? I was looking into different online services that you can use to collect rents. What do you prefer?

Yup, traditional loans, 25% down. We haven't yet BRRR'd any places - as that wasn't our strategy. I do not have a cadre of contractors (yet) so I don't feel like we'd be super effective trying to do that right now. As for collecting rents...folks on here talk a lot about a few different free services - we insist on digital payments/ach/bank transfers and charge $25 if they want to pay by check. I'd eventually like to streamline to venmo - but it's not a priority right now.

@Collin Wisdom - IMHO Cozy.co is by far the best online property management platform for landlords with less than 50 units. My wife and I own and self-manage a portfolio of rentals in the Western Washington area (some BRRRRs and some traditional 25% down conventional financing) and use cozy to manage all of our tenant sceening, online rent collection, etc. 

Cozy is FREE, which is huge because if you own <50 units, you do not have the volume or margins to warrant paying up for a more robust system. It is also pretty straight forward and easy to use. I recently had an opportunity to speak with their CEO at a local real estate conference; he noted they are planning to integrate several additional features with the platform which should only improve the user experience. 

Best of luck with your property search! Let me know if there is anything I can do to assist! 

Tacoma is still a good area to look for rentals, SFR needing rehab is wise. I'd also recommend Kitsap and Mason county for rentals. I've bought several multi-family in both counties and was surprised at the ease in getting good tenants at good monthly rent. Of course SFR in Kitsap and Mason is easier to find...but still getting a 3 bed 1 bath home for 150k works out well in Bremerton. Check out the auctions too.

Hello Local WA folks - anyone know of some wholesalers specializing in Pierce/Thurston? Looking to rehab some properties now! Thanks!

I would agree with @Patrick Moynihan that Kitsap County is a great place to find properties fitting the 1% rule. We have a contract available to assign that beats the 1% rule, but needs an all cash buy in and would need to be a long term rental. Please PM me if you would like more info.

Thanks!