Author Topic: Landlording in Seattle  (Read 4455 times)

Frugal D

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Landlording in Seattle
« on: September 23, 2015, 10:40:37 AM »
I've read multiple times on this forum that given where real estate prices are, Seattle is not the best place to begin landlording. As someone who would like to begin buying a few rental properties, where would current Seattle-area landlords suggest starting? Are you buying your properties farther and farther outside of Seattle?

iamlindoro

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Re: Landlording in Seattle
« Reply #1 on: September 23, 2015, 10:43:29 AM »
Large and medium sized cities in the midwest and south.  Try to pick cities which are growing long-term, and which have international business presence.  Get on to BiggerPockets and absorb everything on the forums for a few months, and you'll be able to easily discern the hot areas.

Telecaster

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Re: Landlording in Seattle
« Reply #2 on: September 24, 2015, 12:02:03 PM »
I live in Seattle and have a rental in Spokane.  I think there are some deals to be had out there, especially if you are willing to do some rehab.   Problem is that it is Spokane, obviously.   I have family there which makes it a little easier, but you can't just run out there every weekend.   

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Re: Landlording in Seattle
« Reply #3 on: September 24, 2015, 12:31:13 PM »
If you're doing this for the first time, and thinking about investing long-distance, I would consider paid management a must. I know some people make it work without it, but I've been through some nightmare shit myself.
My area is good for rentals... it's not hard to find 15-20% gross cap rates, 8-10% net, leveraged to 25% or more with 80% financing. In my LLC alone (just a piece of my holdings), my total stake of $20K will be pushing out well over $1k/mo in profit by 2019 if current results continue. Older parts of town are being revitalized, adding the prospect of major appreciation to what are already solid investment properties on a cash-flow basis alone.

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Re: Landlording in Seattle
« Reply #4 on: September 24, 2015, 01:47:01 PM »
Though it is difficult to find a cash flowing property right now in the Seattle area, I was able to get into rentals a little north of Seattle and am doing well with them. I am a buy and hold investor. I use a PM and do all maintenance as I am a want to do (some PMs will not entertain the owner doing maintenance).

I believe we've got a little housing bubble in the PNW and it is going to burst at some point. I am not currently looking because of this. I am just growing my stash waiting for prices to normalize.

Because of this bubble, rents are skyrocketing. Every vacancy is at least $100 increase in rent and I thought our rents were fair market value to begin with. It is a pretty amazing ride!

You might have to wait this out or seek investments way out of the area.

Ricky

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Re: Landlording in Seattle
« Reply #5 on: September 25, 2015, 05:52:20 PM »
You should be able to find something in Everett. Not promising it will be easy, but at least it's feasible where Seattle proper is not.

Bearded Man

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Re: Landlording in Seattle
« Reply #6 on: October 08, 2015, 09:05:46 AM »
Though it is difficult to find a cash flowing property right now in the Seattle area, I was able to get into rentals a little north of Seattle and am doing well with them. I am a buy and hold investor. I use a PM and do all maintenance as I am a want to do (some PMs will not entertain the owner doing maintenance).

I believe we've got a little housing bubble in the PNW and it is going to burst at some point. I am not currently looking because of this. I am just growing my stash waiting for prices to normalize.

Because of this bubble, rents are skyrocketing. Every vacancy is at least $100 increase in rent and I thought our rents were fair market value to begin with. It is a pretty amazing ride!

You might have to wait this out or seek investments way out of the area.

I picked up three houses between end of 2010 and summer 2014. They all cash flow well, over 1%, but only because I got steals during the downturn. Now I'm having a hard time finding ANYTHING that cashflows in the area, other than maybe Tacoma, but even then it's tough to find a place that doesn't need a ton of rehab.

I've looked at Spokane, those houses are dirt cheap, and cash flow well, but is it too long of a drive at 4 hours one way? Hiring a PM takes too large a cut from my profits to the point it's almost not worth it, BUT...I may very well move to Spokane for the cheap housing in retirement, which would theoretically allow me to keep my cashflowing AND equity growing Puget Sound properties, or I could 10-31 exchange them for rentals in Spokane. Never been so might be worth taking a road trip to see how the area is.

One "dream" is to relocate to Florida, better weather, lower cost of living, and I can buy about 5 rentals with my stash. But won't do that until I am actually ready to pull the plug, at which point I should be able to replace my six figure income from 10+ rentals in Florida. At that point, in a paid off house with a six figure income from rentals and a cost of living of about 15K a year, I think I'd rather work "part time" managing my rentals than keep on my current career track.


Ricky

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Re: Landlording in Seattle
« Reply #7 on: October 08, 2015, 09:23:31 AM »
I believe we've got a little housing bubble in the PNW and it is going to burst at some point. I am not currently looking because of this. I am just growing my stash waiting for prices to normalize.

Because of this bubble, rents are skyrocketing. Every vacancy is at least $100 increase in rent and I thought our rents were fair market value to begin with. It is a pretty amazing ride!

Trying to time the market isn't going to make you more profits in the long run. The only bubble is the one you're in thinking that everything is overvalued - when it fact it might not be at all. Just like the stock market, history has shown that you're better off investing when you can, rather than when you think you can. That said, I would not be looking in the Seattle metro for cash flow as of today.

Quote from: Bearded Man
I've looked at Spokane, those houses are dirt cheap, and cash flow well, but is it too long of a drive at 4 hours one way? Hiring a PM takes too large a cut from my profits to the point it's almost not worth it, BUT...I may very well move to Spokane for the cheap housing in retirement, which would theoretically allow me to keep my cashflowing AND equity growing Puget Sound properties, or I could 10-31 exchange them for rentals in Spokane. Never been so might be worth taking a road trip to see how the area is.

Yeah, but you're comparing apple's to apple's. If you already have good cash-flowing units, you're going to have to find a PM for those if you do move or do the 1031 as you said. It's as broad as it is long. At some point, if you keep acquiring more properties, you're going to have to have help managing. You won't be able to really scale into you get out of that mindset of having to do everything yourself.
« Last Edit: October 08, 2015, 09:28:12 AM by Ricky »

Bearded Man

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Re: Landlording in Seattle
« Reply #8 on: October 08, 2015, 04:16:29 PM »
I've heard several experienced real estate mentors/authors with a huge following say that 4 or more rentals requires help. I'm currently at 2 and only feel the pressure when there is turnover. If I had 2 units turnover at the same time between a full time stressful six figure job and an MBA, I'd definitely start feeling the pinch. Even one unit turning this summer sucked ass. I had to hire someone to do the repair work I needed.

When I get near the point of having 10 or more rentals, say if I move to Florida to do it, I'd definitely be retiring from my IT career to do that part time instead. It's mostly hard when you have other responsibilities x2 at the same time.

Bearded Man

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Re: Landlording in Seattle
« Reply #9 on: November 22, 2015, 03:20:38 PM »
I believe we've got a little housing bubble in the PNW and it is going to burst at some point. I am not currently looking because of this. I am just growing my stash waiting for prices to normalize.

Because of this bubble, rents are skyrocketing. Every vacancy is at least $100 increase in rent and I thought our rents were fair market value to begin with. It is a pretty amazing ride!

Trying to time the market isn't going to make you more profits in the long run. The only bubble is the one you're in thinking that everything is overvalued - when it fact it might not be at all. Just like the stock market, history has shown that you're better off investing when you can, rather than when you think you can. That said, I would not be looking in the Seattle metro for cash flow as of today.

Quote from: Bearded Man
I've looked at Spokane, those houses are dirt cheap, and cash flow well, but is it too long of a drive at 4 hours one way? Hiring a PM takes too large a cut from my profits to the point it's almost not worth it, BUT...I may very well move to Spokane for the cheap housing in retirement, which would theoretically allow me to keep my cashflowing AND equity growing Puget Sound properties, or I could 10-31 exchange them for rentals in Spokane. Never been so might be worth taking a road trip to see how the area is.

Yeah, but you're comparing apple's to apple's. If you already have good cash-flowing units, you're going to have to find a PM for those if you do move or do the 1031 as you said. It's as broad as it is long. At some point, if you keep acquiring more properties, you're going to have to have help managing. You won't be able to really scale into you get out of that mindset of having to do everything yourself.

There is truth to this. I have been a bit hesitant to buy more recently myself. Last year I was debating whether I should buy another. I'm glad I did, because that one house alone has  made me 48K on paper in ONE year. The stock market, in contrast, has been flat all year.

I'm currently trying to find another deal, because I anticipate a couple more years of upside in this area at least, followed by a few years of slight down turn. Since I'll still be in a 50% cash position at that point, I'll just buy more then, while hedging my bets by buying one more now.

clarkfan1979

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Re: Landlording in Seattle
« Reply #10 on: December 03, 2015, 03:24:33 PM »
You should be able to find something in Everett. Not promising it will be easy, but at least it's feasible where Seattle proper is not.

If I lived in the Seattle area, I would start in Everett.

arebelspy

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Re: Landlording in Seattle
« Reply #11 on: December 03, 2015, 04:18:32 PM »
I wouldn't call Everett "the Seattle area.". YMMV.
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Re: Landlording in Seattle
« Reply #12 on: December 04, 2015, 08:44:30 AM »
I wouldn't call Everett "the Seattle area.". YMMV.
I always considered it the Seattle area when I lived in Seattle. For the sake of this discussion, it's close enough that personally visiting, selecting, and even managing an investment would be feasible.

Vilgan

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Re: Landlording in Seattle
« Reply #13 on: December 04, 2015, 08:45:37 AM »
I wouldn't call Everett "the Seattle area.". YMMV.

Ditto :P Its roughly the same distance as Tacoma, but the traffic between Seattle and Everett can be brutal. I remember a reverse commute from Lynnwood (closer than Everett) taking 2 hours to get back into Seattle and the Seattle to Everett stretch is what I always dread when driving north.

zephyr911

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Re: Landlording in Seattle
« Reply #14 on: December 04, 2015, 09:01:56 AM »
Ditto :P Its roughly the same distance as Tacoma, but the traffic between Seattle and Everett can be brutal. I remember a reverse commute from Lynnwood (closer than Everett) taking 2 hours to get back into Seattle and the Seattle to Everett stretch is what I always dread when driving north.
I'd rather shoot myself than sign up for that commute daily... in 1997 I crashed in Lynnwood while for a few weeks while working at SPU (North Queen Anne). It was awful then and I'm sure it's immeasurably worse now.

But if we're gonna split hairs, the statement wasn't "Everett is in the Seattle area", it was "if I lived in the Seattle area, I'd look at Everett". And, to support that statement, it's close enough to select and self-manage an investment if one were so inclined, as opposed to the full-day roundtrip to Spokane.

Bearded Man

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Re: Landlording in Seattle
« Reply #15 on: December 05, 2015, 12:13:11 AM »
Snohomish county is considered Seattle area, as is Pierce county, in the context of real estate. King, pierce and Snohomish counties make up the "Seattle area".

merlin7676

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Re: Landlording in Seattle
« Reply #16 on: December 08, 2015, 08:16:39 AM »
They were just talking about this on Komo 1000 yesterday. Said that in the Seattle area prices continue to go up. Less than 1 month inventory and buyers are continuing to push up prices in bidding wars. And that people have to literally jump on a listing as soon as it's listed.
So this area now is still a hot bed in terms of real estate. With all the increase in tech jobs and Amazon growing and whatnot it doesn't look like this trend will reverse anytime soon.
And this is the "slow season" they said come march it will be even hotter.

so I'd say here and now probably isn't the best place to start landlording. That being said the further south you go, the better the prices are. Again like the Everett post, it depends on what your definition of seattle area is.

zephyr911

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Re: Landlording in Seattle
« Reply #17 on: December 08, 2015, 11:02:38 AM »
people have to literally jump on a listing as soon as it's listed
The listing, or the house? Either way, I'd think the seller wouldn't appreciate that.

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Re: Landlording in Seattle
« Reply #18 on: December 08, 2015, 11:36:35 AM »
They were just talking about this on Komo 1000 yesterday. Said that in the Seattle area prices continue to go up. Less than 1 month inventory and buyers are continuing to push up prices in bidding wars. And that people have to literally jump on a listing as soon as it's listed.

We just turned a rental property in Tacoma.  In December.  For 15% above "market rent" and I had like ten people call me in the first 48 hours after posting it online.  It was vacant for exactly one day and only because I wanted a day to do a little maintenance work.  Apparently I should have asked for even higher rent.