Good area for buying investment rental property? (Seattle, Snohomish: real estate, apartments)

[AlexaNW]

We have been playing with the idea of buying an investment rental property. We live in Snohomish, but would be open to any place in the Seattle area.

I have called several Property Management places and asked for advice in what type/size/area of rental is consistently in good demand and what kind of places they'd recommend that would at least get us close to not having to feed to much money into the property to cover the difference between what's coming in in rent and what we have to pay.

The strange this is that nobody ever seems to call me back or send the material they promised etc.????

I honestly am not sure what I'm doing wrong here...are all the property managers so busy and rolling in the dough that they don't need extra business? I figured since we don't have a place yet, I may as well look into purchasing what is in demand, but I must be missing something here.

So, if anyone can point me into the right direction and let me know where I can start to educate myself in the "new landlord" area, I'd appreciate it!!!

Alexa

[bmsea]

I wouldn't recommend you buy a rental that has negative cash flow. It defeats the purpose, and particularly with so many unknowns in the direction of property values, why would you invest in something with negative cash flow?

Your best best is to start close to home. Do your own research and don't rely on property management firms or realtors to tell you what is going on. Look in the newspaper want ads and craigslist and see what rental prices are in different areas, then check the mls for what real estate costs in those areas. Visit some of the major apartments and walk through to see what kinds of amenities are being offered, and how they compare to rentals you are considering purchasing.

My experience has been that if you find an area with consistent turnover, you'll have better chances of filling a rental, but will have to go through the motions every year. If you find a more stable neighborhood, you will have to take longer to find the right tenants, but they may stay longer.

I have a friend who specifically invests in rentals near military bases, and targets active duty military, because they get a housing allowance, and if they don't pay, you can contact their CO. I think being near the University and targeting students is also a safe play. This all assumes that you do your homework, find a property that is priced appropriately, and know what the rents are going for.

If you are looking at a bigger investment, (like a multifamily building in the price range over $1M+), be sure to look at the commercial brokerages.

Remember if you decided to use a property management firm rather than doing the work yourself, you'll pay anywhere from 5 - 15% of your gross rents in management fees. That needs to be considered in your aquisition as well.

Good luck!

[AlexaNW]

Thank you for the response. Yes, ideally the rental income will cover the expenses and that of course is the ultimate goal, but if we find the right place at a great market value that has instant equity in it, we'd be willing to cover a bit for a while.

I guess I am a bit nervous going without a property management group since it's our first time, but I have friends that do it all on their own and haven't had too many issues, I guess it all depends on the bottom line!

I've been trying to look at the "want" ads, but it seems like if you go by that everyone wants a 1800sf house in a nice neighborhood for $850 or something unrealistic, that's why I thought a property management place would have more accurate idea of what is in demand at what price.

Thanks!

[allforcats]

Originally Posted by AlexaNW

The strange this is that nobody ever seems to call me back or send the material they promised etc.????
I honestly am not sure what I'm doing wrong here...

Well, Alexa, you're not doing anything wrong. What's happening is that you are contacting people who consider you potential competition, obviously not their favorite environment. PLUS I'm guessing you're unknown to them, you're not a "networking" contact of some sort, right? So they're not eager to teach you, a complete stranger, how to take business from them. Make sense?

There are many many books available on smart, wise ways to make income property work for both the owners and the tenants. Since they're usually written by people who have experience in the field, if I were in your shoes that would be my next avenue of research.

Don't fault the people who didn't help you. Just realize they were teaching you that competition is probably strongly felt in that industry. Don't be scared -- do your homework, so that you have a solid foundation of knowledge and basis of comparison. Don't make any decisions until you feel "centered", calm. Then you will make decisions that are right for you. Have fun on your path!

[mthomson]

I look for rentals near colleges. Around here, U of Puget Sound and Pacific Lutheran, but I'm sure there are some nearer to you. Property managers are a great idea. I like rentals, I don't have any desire to be a landlord. Most management companies here charge 8-10% of monthly rent...well worth it to me.
Colleges are nice because you can get lots of people to rent (4bd, 2 ba house = 6 renters easily). $350 per month per renter won't phase most college kids, and that works out to a pretty good monthly rent.

[Kenneberry]

Hello Alexa,

It is too bad that you have had so many bad experiences with some of the Property Management places. I do know that real estate and property ownership is a very worth while pursuite. Have you thought of getting in touch with a realtor? mod cut: language removed

[AlexaNW]

Thanks for the responses...I guess I am just very naive...since we are seriously looking into doing this through a property management company, I never thought that they would see us as competition, but rather as a potential client. Oh, well...

I have a realtor friend that specializes in investment properties, I'll check with him to see what he has to say about this.

Sooner or later I'll piece together the info I need, I guess!!

Alexa

[StealthRabbit]

I have done both residential and commercial / industrial investment props.

I personally hope I never have to own another residential rental, the commercial (retail, office, medical, light industrial) is SO MUCH easier, (you are just renting the shell, tenant does improvements and inside repairs + pays your taxes AND any increases) Commercial props seem to have better bargains and good resale. There is a risk with economic downturn, but be wise when you buy ANYTHING... location is critical for rental and resale value. Buy stuff at least 30% undervalued, then fix it and get it rented and cash flowing. Don't buy stuff that is 'generic' and will be tough to sell. Be financially prepared to hang on to it for awhile, 5-10yrs.

[Sandy Nelson]

Alexa,
I've also tried property management companies and was not impressed. I now manage my own rental properties, and therefore think it important to have them located within a comfortable driving distance. If you're a first-time investor, you might want to check out this site:
Real Estate Investment - National Experts, Hundreds of Articles, Tips
The Real Estate Investors Club offers discussion forums and has local chapters that meet regularly to discuss strategies and exchange ideas.
I hope this is helpful.

Sandy

[relocate to nw]

Alexa, you are smart to look into this..and especially now with it being such a great buyers market. Also, buying a property with a negative cash flow is in no way a bad idea-unless of course you plan to keep it for a short amount of time. The tax benefits alone make it worth while. mod cut: Where are you looking?