Is now a good time to invest in real estate in Seattle? (Tacoma: homes, purchase)

[Botev1912]

Originally Posted by pnwguy2

Everett is the next boom area.

Some people say Tacoma has the potential.

[yasureoktoo]

Buy it before they invent the PC.

[tommy64]

It's out of the scope of Seattle forum, but there are good rental markets in other states.

I travel to the Midwest a lot and I always take a bike with me. I bike the areas and as a long time smallish investor, I can't help but analyze everything I see.

Spokane has very cheap single family houses that'd bring an easy 12%+ cash-on-cash. There are a TON of apartments going up in Missoula, Mt. Lots brand new duplexes as well. The same can be said for Butte, Mt. The price-to-rent in Bismarck, ND is pretty attractive.

These areas are low-crime, stable income. Doubtful that Amazon is coming soon to transform any of these areas into a booming economy (although AMZN is building a huge operation in Spokane), but the stable income would be worth the trouble.

The day of the traditional small-timer who buys cheap houses to hold for rental income are over in Western Wa. The off-market deals that are being done are by flippers who're just churning cash. The supply of single family houses for rent is evaporating. Investors are even selling to developers, who bulldoze the building(s) and cram 2 townhouses on a 5000 sq ft lot. That's where the money is.

But if a guy wanted to go where the deals are, there is still a lot of money to made as a mom-pop rental operator in some of the more obscure markets.

[flyingsaucermom]

Originally Posted by tommy64

It's out of the scope of Seattle forum, but there are good rental markets in other states.

I travel to the Midwest a lot and I always take a bike with me. I bike the areas and as a long time smallish investor, I can't help but analyze everything I see.

Spokane has very cheap single family houses that'd bring an easy 12%+ cash-on-cash. There are a TON of apartments going up in Missoula, Mt. Lots brand new duplexes as well. The same can be said for Butte, Mt. The price-to-rent in Bismarck, ND is pretty attractive.

These areas are low-crime, stable income. Doubtful that Amazon is coming soon to transform any of these areas into a booming economy (although AMZN is building a huge operation in Spokane), but the stable income would be worth the trouble.

The day of the traditional small-timer who buys cheap houses to hold for rental income are over in Western Wa. The off-market deals that are being done are by flippers who're just churning cash. The supply of single family houses for rent is evaporating. Investors are even selling to developers, who bulldoze the building(s) and cram 2 townhouses on a 5000 sq ft lot. That's where the money is.

But if a guy wanted to go where the deals are, there is still a lot of money to made as a mom-pop rental operator in some of the more obscure markets.

Also don't forget Seattle is becoming particularly hostile against landlords. I've been a member of the RHAWA (Rental Housing Association of Washington) for the last year and I receive periodic newsletters about changes and situations for Seattle landlords and it's NOT a good time right now. I would love to buy more properties, and probably will within five years, but never in Seattle city limits.

OP you absolutely need to look at some of these news letters of the RHAWA to learn more about owning rental properties in Seattle to know what you might be getting yourself into.

[thatguy950]

Originally Posted by pnwguy2

Everett is the next boom area.

True with that waterfront expansion I see Everett booming like Renton did with the Landing. Of course Boeing and the military are still a massive presence there tol

[grega94]

Originally Posted by Botev1912

Some people say Tacoma has the potential.

Isn’t Tacoma already booming? I heard it’s the hottest real estate market in the country.

[pnwguy2]

Originally Posted by grega94

Isn’t Tacoma already booming? I heard it’s the hottest real estate market in the country.

I think Tacoma has boomed and the prices are slowly becoming just as steep as Seattle, though still lower, especially in the suburbs of T-town.

Everett and Snohomish County has always been a lower-cost area than King County. The proximity to the metro area is now allowing prices to go up there, so many are getting in now. But there is a Boeing component here...when the Giant does well, Snohomish County does well. What I find interesting is Boeing is in a state of crisis right now with the MAX problem, yet projections for Everett/Snohomish Co. remain strong. The Max planes generally were built at the Renton plant, (one county down), however.

Will be interesting to see how Boeing solves this problem. As I have posted before, they are too big to fail. I think they are taking their time to get it right. That may be the correct route.

But getting this back on thread, I think the entire metro is priced near the peak right now. I expect that prices can't rise much more than they are today. Perhaps some buyers might wait for some bargains, but they probably won't be too much lower as the region is still strong.

[peequi]

Everyone's advice could be wrong. That being said I agree with everyone else that holding off is worth it. There are always dips, maybe it will be today, maybe next year, maybe in a decade. But there will be a dip. It is hard to predict when that dip happens and when it does happen it is hard to predict how low it will go. But you know for certain when you are in a dip.

[StealthRabbit]

Originally Posted by NTATL

We've been thinking about diversifying by investing in real estate here in Seattle, but are unsure of where to start.

Is buying a condo in the $300-450k range in town to rent out a good idea?
Would buying now mean buying at the peak of the market or are we still trending downwards?
Are there realtors that focus solely on investment properties?

Thank you in advance for your insights!

Any market has potential (and pitfalls).
Find a successful PRIVATE commercial RE broker to mentor you. (non-agency)

Run the numbers (all the numbers).

I moved most of my income property holdings from WA to TX (another no income tax state)

Far better cap rates / cash flows in TX for my props, but not as much equity appreciation.

I have a very simple rule (works for me, but maybe not for you).

Property must be able to rent for 1% of capital investment per month.
$500k property must be capable of renting for $5k / month. Tough to do in Seattle / PNW at the moment.

+ the 'additional costs' must still allow a 10% cap rate.

+ be able to sell tomorrow for 110% of my purchase price. (Cost of transaction)

If not... I keep looking. I only buy desirable props (view, transit, parks, rezoning potential).

34 property transactions (in my free time). Had to only use a realtor 2x (seller wanted hand holding).

I find and close my own deals, quickly & quietly. (Very VERY ez with today public GIS records, vs weeks spent in the courthouse finding details (20 yrs ago))
Seldom buy something that is listed / marketed FS.

[mayfair]

Originally Posted by thatguy950

True with that waterfront expansion I see Everett booming like Renton did with the Landing. Of course Boeing and the military are still a massive presence there tol

Everett could boom. They've been saying that about Lynnwood for decades. There's a great deal of potential in the Lynnwood/Everett area with issues holding those areas back. When Lynnwood gets light rail, that might be a game changer for that area. Maybe they'll build a city center. With Everett, there's crime that isn't contained to the bad areas. Homeless issues. Who is to say whether those will expand or improve? Will the waterfront become full of homeless? Or will the city clean up? It could go either way.