Investing in Puget Sound + Deal Analysis

9 Replies

In my research, I am having difficulty locating properties that fit the 50% rule. Are profit margins slimmer in this area?

I am wondering if an altered 50% rule should be applied because property value is so much higher out here...

For example, consider the below property. Using the 50% rule I am showing -$188 (I am putting10% down). Perhaps my issue is that I am not putting 20%+ down?

Everything is overpriced. Feel free to buy at all time high

Originally posted by @Justin Case :
Everything is overpriced. Feel free to buy at all time high

Hey Justin, am I interpreting you correctly by thinking you are saying the entire market is overpriced and no profit-generating properties are available? That seems to be a "little" pessimistic.

I think he's just talking about your area!

If you increase your downpayment to get cashflow you're not really improving your overall return, just moving money from one pocket to another.
Is this for an owner occupied property? When you live in one of these pricey areas I think it can be worth getting into a deal like this if it's a place you really want to live and it will reduce your overall expenses quite a bit compared to your other housing options. But as a straight investment, probably not.

Jean Bolger

Chris,

Seattle area is at all time high prices I am watching people bid up SFRs and MFRs a day after they list. There are no good wholesale deals.

Washington is not Landlord friendly

There is also talks from inside government of passing rent control in the Puget Sound area.

Just shouldn't be looking in Seattle. Go North or South. I just tied up a deal that's 21.60% IRR on a conservative underwrite and 49.54% IRR on a aggressive underwrite that's within 60 miles of Seattle in a 3% sub-market vacancy.

@Jean Bolger :

Hey Jean, thanks for the reply! Yes I am planning on doing an owner occupied deal. The math makes sense in the short run since I will be living in the house, however I am unsure if it is a good longer term investment.

Ideally I would like to buy a property that I could rent out at a profit after I move on.

@Justin Case :

Interesting, this is good to know. I will keep an listening. I would be curious to hear what are the best strategies in a non-landlord friendly area. Ideally, I would like to build my portfolio in the Washington area.

Originally posted by @Zach Schwarzmiller :
Just shouldn't be looking in Seattle. Go North or South. I just tied up a deal that's 21.60% IRR on a conservative underwrite and 49.54% IRR on a aggressive underwrite that's within 60 miles of Seattle in a 3% sub-market vacancy.

Hey Zach! thank you for the reply. I am looking at any areas between Harbor Pointe and University of Washington. I did see some deals that were further away, however since I am looking for an owner-occupied duplex within commuting range, the further away more profitable properties are out of range.

I am thinking that since I am owner occupied I can roll the saved rent savings into calculating my profitability. I am probably going to do FHA with 3.5% down.

What are your thoughts on duplexes North of Seattle, East of Lake Stevens, under 300k? It is looking a bit sketchy to me.

Thanks in Advance,

-Chris

Ah, owner-occupancy is a little different especially for commute. Sorry I had missed that part. I've owner-occupied before as well, but never a duplex usually I am looking for four, sometimes three. Whatever deal pencils though!

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