I've recently moved to Seattle from the Midwest. From what I've seen so far, things are going with multiple offers in a highly competitive market. I am familiar with a couple other areas in the Midwest, where prices are lower and there is less competition. I have two rentals there that are managed by PM's.
Is it better long term to jump into the fray and try to invest locally, where prices are higher and competition is higher, or invest in the other areas I am more familiar with, maybe not as hot but where prices are lower, inventory higher and there is less competition for properties?
Out of state ownership isn't the best, so maybe I am not looking at the market in the right way. I am most interested in rehab/rentals; I have some capital but not a lot.
Hey Amie D. I'd always be nervous of long-distance investing, unless it was a larger, more "hands off" property. Which, I guess, begs the question: what kind of investing are you looking to do more of? Single family homes, multi, commercial?
Also, have you considered Tacoma? I'm not sure the quality, but I know prices are much cheaper than Seattle.
Thanks so much for the advice Brandon Turner, I am unsure of what to do at this point. Besides having moved to a new part of the country, there is so much I feel like I don't know and still have to learn about real estate investing in general. I will check out Tacoma though as well, I'm a fish out of water in that town.
To complicate matters I am searching for a house of my own and would like to stay in the Seattle area to be closer to family, but I see a lot of others moving for their real estate career. Not sure if it's a good way of thinking, but I would rather work to live than live to work if that makes any sense. Real estate was less expensive in Cincy and I knew that area down to about the street level, but I personally did not like living out there so, I'm trying to decide what to do.
I don't know how people invest in the more expensive areas of the country (or even more expensive like NYC or LA) but I know that people do. I am guessing they must have "bigger pockets" than what I do... LOL. Again, I just feel like I have so much to learn, I don't want it to stop me but don't want to make a lot of mistakes either.
I often wonder the same thing - how the heck they do it. I think you need to find the "sub markets" in your area, and get really good at just one or two small markets. My good buddy Arthur Garcia lives in LA, but invests a few hours a way, where it makes sense. I'd probably take his approach if I were in that situation.
I agree they do mostly have to have biggerpockets to invest in LA (or access to some big pockets) I am in L.A and valuations are pretty crazy for sure. I am considering moving partly because of the market and because L.A is just a crazy place to live anyways.
Also buy+hold investing doesn't really make any sense in certain markets. It's mostly people that can afford to purchase and flip or purchase and "repurpose" a property somehow.
I think Brandon's suggestion is a good one though..try to find areas near you that make sense.
I'm pretty sure Arthur invests in the Antelope Valley area mostly which is about 90 mins or so from most of L.A.
Even 2-3 hours is better than being out of state though and gives you a lot more control.
Hi Amie D., I'm pretty much in your same situation at the moment. My family owns some multi-family properties in Snohomish County, but that particular area worries me because of the long term prospects with Boeing. The economic analysis reports on if/when Boeing leaves would leave the market stagnated, and in my opinion devastated.
I've been starting to research the Seattle area, but as you've said it is currently very competitive. It feels as if Seattle is going through a tech-boom of some sort with Amazon,Google and Microsoft hiring like crazy!
If you're interested, we should work together and research some outlying areas that seem promising for investing. It looks to me like Seattle has great future economic prospects, we just need to find an area that is more investor friendly!
This is a difficult question to answer without knowing a ton more details about u. However, investing for buy and hold has several strategies inside the strategy. Cash flow is one, appreciation is another. Typically, u obtain good cash fliw combied with lower potential appreciation and vice versa. If cash flow is what u are after, then stick to the numbers. If they dont pencil in your new local, invest elsewhere.
Amie, to your question about investing out of state, being that you already have the properties there, I see nothing wrong with continuing to invest in that area. I would however, first get your PM concerns settled. If you can buy properties that cash flow in your out of state market, and you are completely at ease with the service you get from a PM, I say go for it.
While you continue to build in the area you know, you can take your time learning about the potential markets in your new area and wont feel the pressure to move on deals until you are comfortable and possibly have more income to reinvest.
Randy F., yeah, I've got a pretty good team going (so far) in Cincinnati, actually it is just across the river in Northern Kentucky, so I'd probably buy there again to minimize the out of state tax forms I'd have to account for at the end of the year, since I already own property in Indiana and Kentucky. Ohio would add a 3rd state in the mix, though I could use the same management team. My other property is in Bloomington, IN, a college town great for rentals, however the management I have there has been having problems so I'd be hesitant to do something there until the problems are worked out for sure.
I'm considering buying out my sister and brother's share of my Dad's house, which we inherited, it's also in Indiana but in a different part of the state. I just get concerned about having too many different property managers involved in too many different areas, it eats up a lot of time to make sure they are all doing OK versus just having one area and one team to cover. Still, after seeing some of these frigging bidding wars over properties that cost twice as much that are in worse shape, I feel I may be passing up an opportunity if I don't pick up his house in Indiana.
And as Will Barnard stated, there are many strategies. I have been more of a buy/hold with both cash flow and appreciation in the areas I have bought in the past. Here that doesn't seem to be an option to do both so yeah I may have to look at a different strategy than what I am used to.
David Gellner, that is a good idea, yeah Seattle is at the heart of a tech boom, well it has been ever since Microsoft took root here, but it is even moreso lately. That speaks to higher end properties but investing in those would take more cash than I have right now. Still, the existing population needs to live somewhere... LOL.
I can see a rising market in a hot area being great for a investor looking to flip with a decent amount of cash to invest up front and a lot of experience in doing that. Again, I don't think I am in that market.
I will look at some outer areas away from Seattle. I think that's a good idea. Washington has no state tax so it seems that it would be another advantage to investing in state, though sales tax is high here for any costs involved in rehabbing, etc.
Nicholas Quinn, I expect this whole region is going to rebound/appreciate well. It really already has. This is why I dislike hesitating but at the same time want to do things right.
How about just trying to buy a property in a high cost or expensive area. Makes it just as tough as hot sellers market because typically properties sell for the anticipated appreciation or the current built up appreciation.
A cash flow investor like myself is regulated into big rehabs or properties that can be re-marketed into different income streams.
I think it will come to you in due time. Just keep researching and understanding what is a good deal and be patient. In my market a decent deal only comes around every few years so it gives me the time for my W2 to build up the kitty for the next investment.