Investor · Redmond, WA · Member since 2016 · 267 posts · 110 votes
I am from Seattle are and just got my first rental on market. Here on, I am looking to build a solid buy and hold rental portfolio.
I was thinking of buying a SFH in 100k range in Tacoma area. Tacoma has some of the lowest priced rental properties in the greater Seattle area ( within 60 mins of driving). An average 2/3 bed apt rents ~1100 which should give pretty decent cash flow to start with. Are there any downsides with Tacoma in general? Tacoma is not as hot as Seattle but how is it out there? What do the experts think?
Rental Property Investor · Tacoma, WA · Member since 2008 · 30 posts · 11 votes
10y
I would be cautious about which areas of Tacoma you buy in. North Tacoma is good. Even Hilltop has improved significantly. East Tacoma - not so much. South Tacoma can be a mixed bag. I tend to buy more in Puyallup than Tacoma, but the numbers aren't as good.
Investor · Redmond, WA · Member since 2016 · 267 posts · 110 votes
10y
Checked in Redfin and looks like both north Tacoma and payallup have 2/3 br SFH in 150-170k range. Any reason u prefer payallup over tacoma? @Brady Winder
Rental Property Investor · Tacoma, WA · Member since 2008 · 30 posts · 11 votes
10y
Puyallup is known for having a good school district relative to Tacoma, and I don't have any problem finding good tenants for my Puyallup rentals. The "bad" parts of Puyallup aren't as rough as the bad parts of Tacoma. I keep pretty busy with my day job and family life, so I don't chase cash flow into the rougher parts of Tacoma, as I don't want too many tenant headaches. If REI was my primary job it might be another story. Don't get me wrong, there are lots of areas of Tacoma worth investing in too.
Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
10y
100k deals dont really exist in Tacoma any more, sure there are some but the ones you might find will be in really sketchy areas where management and repairs will be much more intensive.
It sounds like you're looking for a hassle free rental experience?
Usually if you get 1% in gross rents relative to acquisition cost + rehab your getting 12% gross annual. There will of course be expenses which will inevitably reduce this 12% annual gross income figure down to 6-7% most likely (cap rate - net operating income/price+cost).
so to get your 10-12% cap youd have to have an annual gross of 18-20% which means 1.5-1.70% monthly gross income to sales price+ rehab cost, unless if you drove down from redmond to tacoma and did your own management, repairs, lawn care, etc. Then again if you did that it wouldn't be an investment, it would be a job, so depending on your objectives it may or may not make sense at that point.
Investor · Redmond, WA · Member since 2016 · 267 posts · 110 votes
10y
When you say 12% cap rAte will be reduced to 6-7%, do you include interest expense too..otherwise just maintenance can't eat away almost half of rental.
When you say 12% cap rAte will be reduced to 6-7%, do you include interest expense too..otherwise just maintenance can't eat away almost half of rental.
100k deals dont really exist in Tacoma any more, sure there are some but the ones you might find will be in really sketchy areas where management and repairs will be much more intensive.
It sounds like you're looking for a hassle free rental experience?
Usually if you get 1% in gross rents relative to acquisition cost + rehab your getting 12% gross annual. There will of course be expenses which will inevitably reduce this 12% annual gross income figure down to 6-7% most likely (cap rate - net operating income/price+cost).
so to get your 10-12% cap youd have to have an annual gross of 18-20% which means 1.5-1.70% monthly gross income to sales price+ rehab cost, unless if you drove down from redmond to tacoma and did your own management, repairs, lawn care, etc. Then again if you did that it wouldn't be an investment, it would be a job, so depending on your objectives it may or may not make sense at that point.
I just bought seven of these Tacoma deals in the last three months under $70 k and we'll do the rehab between $15 k and $25 k and so I can tell that in the market right now you can find $100 k and 1.5% rule rentals locally.
100k deals dont really exist in Tacoma any more, sure there are some but the ones you might find will be in really sketchy areas where management and repairs will be much more intensive.
It sounds like you're looking for a hassle free rental experience?
Usually if you get 1% in gross rents relative to acquisition cost + rehab your getting 12% gross annual. There will of course be expenses which will inevitably reduce this 12% annual gross income figure down to 6-7% most likely (cap rate - net operating income/price+cost).
so to get your 10-12% cap youd have to have an annual gross of 18-20% which means 1.5-1.70% monthly gross income to sales price+ rehab cost, unless if you drove down from redmond to tacoma and did your own management, repairs, lawn care, etc. Then again if you did that it wouldn't be an investment, it would be a job, so depending on your objectives it may or may not make sense at that point.
I just bought seven of these Tacoma deals in the last three months under $70 k and we'll do the rehab between $15 k and $25 k and so I can tell that in the market right now you can find $100 k and 1.5% rule rentals locally.
That's a great deal was it a REO package, distressed, or off market deal?
I was referring to just readily available offerings on the MLS. I have not seen any for 100k or around that mark unless if it's 500-800 soft and in really rough shape on MLS.
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y
Originally posted by :
Any suggestion on how to find off market deals in Tacoma
@Albert Bui
The easier route is talking to wholesalers. We get about 50% from wholesalers. The other half we get the hard way which is Driving for Dollars and Doorknocking.
Investor · Redmond, WA · Member since 2016 · 267 posts · 110 votes
10y
Thanks..looks like working with wholesalers might be a good approach. Is there a way I can reach out to wholesalers, is there a platform, or is it primarily off-line socialization?
San Francisco, CA · Member since 2015 · 786 posts · 717 votes
10y
I run a brokerage myself as a real estate agent and here is the problem finding deals from agents. If you're an agent and you really had access to these amazing deals, why would you just take a 3% commission for it as a broker? Because I buy some (not many) deals on the MLS, I know there are deals. But most agents would not see the deals that I see on the MLS because they are not land developers. Pretty much anything I find in the MLS was an opportunity missed by other investors because it involved some complicated land development deal.
If the deals were THAT good, a broker could make way more a wholesaler or doing a joint venture. As an agent, I am sorry to say that I don't have any deals to give out because if it's a great deal... I would buy it myself and list it myself after doing the rehab.