Seattle Real Estate Boom

[Henry Y.]

I feel the Seattle area real-estate (including King/Snohomish county) prices has gone up faster than I have ever seen before; the early spring allow so many home buyers to go out to shop and the overall economy and jobless rate has been the lowest (in this area there hasn't been too big of a problem) but the fear of raising interest rate get people to go shopping for houses.  Combined with a low inventory I think we are seeing the highest housing prices ever in this area.  What are the best strategies for flippers/buy-and-hold in this kind of market?  I am really curious how folks in the Bay Area and LA or other areas in the country cope with their rapid raise in housing prices.

[Adrian Chu]

My favorite niche are condos in suburban areas like Everett, Lynnwood, Renton, Kent, Federal Way, Auburn, Des Moines, Burien, etc. They cost less, so relatively lower risk, and the market is often overlooked. For cash flow, you can easily get 8%+ cap rate after HOA dues. For appreciation, since the price ranges are lower, you can get a quick appreciation with even a $10k-20k gain in value. Since there market is not efficient, there are also arbitrage opportunities when you compare comparable units in a given building or complex.

For fix and flips, some good areas I have been looking at are Downtown Everett as well as many cities in Pierce and Thurston counties which are often overlooked.

Another interesting niche in-city - go for the prime zip codes like 98105, buy a house for $500k, tear it down and build a modern 2500-3000 sq ft house, and sell for $1.3m-1.4m.