Learning, Sharing, and Teaching > Real Estate and Landlording
Seattle Real Estate Noob
HockeyMan:
Hi all,
I'd love to get into Seattle Real Estate investment, but admittedly, am a bit hesitant to enter the market as I don't understand it well. Ideally, I'd like to start by finding a duplex; live in half, rent half. I'm also open to a single-family rehab.
I'm hoping to find someone that I can learn from - a Seattle mentor. I'm willing to help you in any way that I can in exchange for guidance; be that finding new deals for you, doing some free manual labor, ect...
A bit about myself - new to Seattle, college grad, tech manager, well on my way to FI. I'm tired of renting, and would like to put that money to work.
Thanks in advance!
Jon Bon:
I can just leave this here...... Just so you know the Low was 128, and currently about 260.
FWIW I too am a (small time) real estate investor, butt he valuations on some of these properties is batshit crazy!
Source: https://us.spindices.com/indices/real-estate/sp-corelogic-case-shiller-20-city-composite-home-price-nsa-index
SeaWA:
I won't profess to know what the future will hold, and I won't argue that these charts tell us what the future will hold.
But if you're going to share that index time series, then at least add the Seattle data against the 20 city average so he can see that the Seattle ratio is even more extreme :)
Jon Bon:
Lol, that is fair!
Yes some markets are just insane, investing in something that is that highly valued on margin feels beyond my risk tolerance. Case Schiller of course counts all houses, not just good houses in good neighborhoods. So the dumpy houses that show zero appreciation bring down the average. I feel (notice emotion and not fact) that Seattle is approaching 2006 Las Vegas, or Miami territory.
Just a single case, In my good sized Midwestern city values in a good neighborhood are 2-3x what they were 5-10 years ago. A decent house in a good neighborhood can still be had for 400k.
Now Seattle probably had a much higher starting point, so the 2-3x appreciation over 5-10 years would put that house at a much higher valuation. It just feels like putting way to many eggs in one basket for a young investor. That is of course ignoring past performance (which I dont think one should do)
SeaWA:
Hi Jon Bon
Property is still crazy in Seattle. A common measure of rental property performance is the % of the value of the house commanded by rent. The common heuristic is 1% per month.
I haven't heard of anyone in Seattle getting a monthly rent of 1% of the value of the house that people in the midwest talk about, and the Deeper Pockets people talk about so much.
I have a SFH rental property in Seattle. It is in a A neighborhood and currently the monthly rent is .41% of the *current* value of the house.
I'm looking for another property in the area too, but I think it will be extremely hard to find a property that rents even for .5% of the value of the house. To me this means that when one buys they are speculating on house price increases, not investing in a revenue stream.
I don't have any knowledge about what the future of the Seattle real estate market will hold, so I'm just looking for properties where the rent can cover the PITI, and I consider carefully how much I put in Seattle real estate vs. the market.
I've got no guarantee that I'm making optimal allocations!
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