Buying SFH or Duplex in the JBLM area (Seattle/Tacoma)

[David Pierce]

Hello all,

I am a fairly new real estate investor (in the process of closing on my first Triplex with my brother up in Wasilla, Alaska).  But my question relates to an upcoming move and decision.  I am in the military and will be moving to the Ft.Lewis area (Tacoma, Roy, Puyallup, Bonney Lake, Lakewood) and have myself in quite a pickle.  As a new investor, all my wife and I can think about is the best investment options for that area.  We have made contact with a man (who seems to be a good reference for home purchases in the area - Phil Sharpe)....  He says that single family homes are a better investment in the area due to a good market and forecast for appreciation (given the downward movement of business out of Seattle south).  I'm not seasoned enough yet to know whether he is right or wrong, but have always thought a multifamily home would be a better fit.  The problem is, the duplexes in/around Ft. Lewis aren't really big enough to have my family of four living in....We will likely be in the house/area for 3 years before moving somewhere else.   So here are my questions for anyone that is a seasoned investor in the area:

1). What is the best investment south of Seattle (SFH, MFH)? And can you justify why you think so?

2). What is the market doing right now as far as real estate?  How do you find the best deals in the area? 

3). Does anyone recommend a really good realtor in the area?  I have thus far gone off of Google, which doesn't inspire a lot of confidence.

4). I would also like to meet some more seasoned investors once I arrive, so any recommendations for mentors or group meet ups in the area would be very helpful. 

5). What areas would be more/less desirable for an investment property in the area?  Which areas around Ft. Lewis will continue to be profitable even if something were to happen to the base in the future (downsizing, etc.)? 

I am an open book at this point and welcome ANY suggestions or input into my decision making process.  I am extremely happy I found this website and hope to network with lots of other passionate investors.

Thanks for your time!

David

[Ryland Taniguchi]

1. 1) The best investment is going to be the one with the best cash-on-cash returns. We are finding and negotiating under contract off-market four-plexes in Tacoma.
2. 2) Been investing in Seattle and 2000 and have never seen the market hotter as a sellers market. Most areas have less than 1 month of inventory. Most mls properties that my team has negotiated for clients are facing 10 to 20 multiple offers. Also, hedge funds are buying everything with a 5% cash-on-cash (based on 85% LTV non-recourse financing they obtain from the bond markets at 1.75%) under $500 k. Bottom line is that you highly highly unlikely to find any deals on the mls here in seattle.
3. 3) I have a team of 8 agents at Keller Williams and we sold 153 houses last year, and so I believe that I can the credentials to say that you won't find deals using a realtor. In addition, realtors generally know very little about investing. Rather than working with a realtor, my other company wholesales 15 to 20 off-market properties a month and that will be the best way to find investments. If you still feel you need a realtor to do CMAs and list homes, PM me and I will refer you to my partner Scott Crouch who would be great at that. As far as finding deal, I woud not rely on an agent

1. 4) Join the local REIA or REAPs.

1. 5) As you know, real estate is cyclical. I think there are five years to still buy here in Seattle. We will probably hit a stock market crash in 1-3 years that may affect the local market here if tech stocks dip. The market reminds of the market in 1997. Maybe a 2000 correction and then a crazy real estate bubble after.  I'll sell everything I have here in Seattle and out-of-state (including Houston in your state) in 5 to 7 years. 
2. Some investors say the market is going to crash in Seattle but I don't think they've been around the last 15 years. Wave 1: The market starts getting hot in Seattle first like Fremont, Wallingford, Ravenna, Bellevue, Kirkland and Ballard. Wave 2: Then it gets overpriced in the suburbs like Renton, Bothell, Shoreline, Everett, Lynnwood and Mountlake Terrace. Wave 3: Then it gets overpriced in the further out suburbs like Kent, Federal Way, etc. Wave 4: Then it gets overpriced in the rural suburbs like Bonney Lake, Lake Stevens, Sultan, Puyallup, Federal Way, Monroe, Marysville, etc. Wave 5: The war zone areas get hot like Tacoma, Spanaway, etc. 
3. When the Warzone areas get way overpriced, then I'll believe a crash is coming. We're in Wave 2 right now.
4. Good luck and welcome to Seattle!