Cash Flow or Appreciation in Seattle Area

[Ted Klein]

Looking for some advice on the Seattle area market.

Since I am hoping to acquire multiple properties, should I start in a lower priced local market and acquire a couple of properties that cash flow good and let them season so that the income can be counted on my W2 or should I look at the more expensive properties that will cash flow and hope for the appreciation?

I have been looking in the Puyallup area for small MF properties and find that they can cash flow and have a decent COC return, I am however, concerned about the appreciation.

My agent has mentioned that properties in that area will not appreciate and that I will have more tenant problems.  She is recommending Seattle / King County area since the rental rates are much higher and having a much better chance of appreciation which I agree on both.

Problem I have is, with the values already so high in King County, it will limit the number of properties I can acquire given the impact of the debt to income ratio after purchasing such a high priced property.

What are the opinions on this and are there any recommendations on financing options to acquire additional properties once this occurs? Or should I stick with the lower priced properties to get started again?

[Catherine German]

I would try to focus on areas which will resell easily, are easier to rent (don't buy a multi family with a bunch of multi family properties on the same block or close by), and have a better school district - Puyallup is a good area to look into (low vacancy factor). You may not get the higher rents but you will get long term tenants who will take care of the property and you can always 1031 up to a bigger property down the road. If you can afford King County that is great but I would talk to someone who manages multi families in King County before buying there to get a feel for the landlord/tenant laws, etc.