Investing in Seattle WA area (Tacoma, Bellevue: rental, condo, mortgage)

[cal_superken]

Hello,

I am from San Francisco Bay Area and learning more about Seattle RE market. I am trying to establish some rental history in growth areas like Seattle before I purchase my own home in Bay Area when the crazy RE market gets some sanity back somewhere down the line -- I'm sure the sky high prices in Bay Area will come back to earth at some point, just a matter of when. I am hoping some knowledgable local folks could help dispense some of their wisdom on here.

Basically I would like to know which Seattle neighborhoods to invest in for rental property market for long-term hold. Some areas with excellent schools and high-tech jobs would be ideal, as long as cash flow is not too upside down. My target budget is around $500-750K. I am targeting areas where high-tech job growth is happening. And also would it make sense to wait until winter time for the prices to cool down a bit?

Thanks a bunch!

[cal_superken]

By rental property, I mean single family homes and town homes suitable for rental for a few years. Since I also work in high-tech industry, Seattle high-tech scene is very attractive to me and I may just get tired of high COL in Bay Area and may decide to just move to Seattle at some point. So the neighborhood should be safe and something that makes sense to raise a young family.

[misscross]

Start by looking at a map and note where the Microsoft, Google, Facebook, Uber, Expedia, Amazon, Adobe, Tableau tech campuses are located (hint" Redmond, Kirkland plus Fremont, Seattle, Bellevue - moving to Seattle, South Lake Union area, Fremont area, Kirkland) and see what towns are in commuting distance of multiple tech companies.

the list above is not exhaustive but should give you a good idea why investing in say Federal Way, Tacoma, or Marysvilled is not a good idea particularly if you might end up moving here yourself.

[Blondebaerde]

Originally Posted by misscross

Start by looking at a map and note where the Microsoft, Google, Facebook, Uber, Expedia, Amazon, Adobe, Tableau tech campuses are located (hint" Redmond, Kirkland plus Fremont, Seattle, Bellevue - moving to Seattle, South Lake Union area, Fremont area, Kirkland) and see what towns are in commuting distance of multiple tech companies.

the list above is not exhaustive but should give you a good idea why investing in say Federal Way, Tacoma, or Marysvilled is not a good idea particularly if you might end up moving here yourself.

Thinking might be abstracted one level (or several) further than just proximity to tech hubs.

Certain areas are growing faster than others, with higher demand, since most of Seattle and Eastside is now "unaffordable". I've read an article or two on the fast-est growing areas, which at that time were on the perimeter, not the core. OP can research that further.

So: does one invest in a mature area, like Kirkland, with limited room for growth for single family homes, other than tear downs? I'm watching what they're doing in NorKirk: scummy older homes are being bought-out and flattened or refurbished, one at a time. Then, replaced with places starting at $1.5M. Yep, really. One by one, they fall. I walk the 'hood, it's a nice stroll to downtown and I see half-dozen or so of these in-process at any given time. This year, last, and several prior: always the same. They sniped two within several blocks of my house recently, with a bulldozer on one just last week (leveled it, no refurb). Sometimes that's the better play.

There is no more land (or precious little), so that's all they can do based on zoning laws. I have no idea how to invest in refurbishment companies, there are many. That's one angle.

Places in Kirkland like NorKirk, Houghton, Everest, and Market are "probably" solid investments, looking at long-term trends and given the proximity to schools, transit hubs, and amenities. I'm sure Redmond, Issaquah, Bellevue, Medina, and Clyde Hill, and Mercer Island all have similar neighborhoods that are steady long-term growth from say 1996-current. That data is out there for analysis.

Or, do you look at properties in Maple Valley that had big losses during trough of the Great Recession? That were "affordable" and may/may-not have gone to subprime buyers? A place that is booming mostly because it's one of the few affordable satellite neighborhoods left? I wouldn't deal with that commute from MV to anywhere north of Renton on a bet, but thousands do and like it just fine.

It's a multivariate math question, end of the day, based on past performance and projections of future trends in industry growth and buyer demographic, and if the higher-end properties are in a "bubble" or not. And, of course, absolute availability of investment properties at both low and higher end. Not just seat of the pants proximity to Microsoft, Google, and etc. prior to writing off Puyallup, Marysville, Tacoma, etc.

[leastprime]

really nice new builds TownHouses at ~$550-700K. If you can pay cash and do a rental to cover mortgage for a few years. ...

We bought a condo in Eastlake last fall. Seller was motivated to move back to SLC. He did make a nice profit for 1 year holding, but he had overpriced and had to reduce price twice before we bought in October. Had he held on for 5 more months...Zestimate +25% on our purchase. We got lucky. Rental acts as a value placeholder until we decide to move to be closer to son.

age 66/69. own. retired. Etc.

[leastprime]

If you only need a value place holder, I'd look at Tacoma or areas near SeaTac with Link access.

[mkarch]

$500k is close to land value for a lot of single family homes, so the rental yield isn't going to be great. Town homes are probably a better bet as much more value is in the structure, hence better rental yield at that price range.

[mhays25]

The two biggest growth engines are (1) Amazon centered from the north end of the CBD to Lake Union and (2) Expedia which will move soon to the Pier 91 area with room for a five-figure workforce. Amazon has been factoring into prices for years, but Expedia isn't.

[kaday]

Originally Posted by mhays25

The two biggest growth engines are (1) Amazon centered from the north end of the CBD to Lake Union and (2) Expedia which will move soon to the Pier 91 area with room for a five-figure workforce. Amazon has been factoring into prices for years, but Expedia isn't.

Interbay, North Queen Anne.

[mhays25]

Or Belltown or Lower Queen Anne. Right between the two employers.