Hello from Seattle! Looking to build cash flow from long-term rentals
Member since 2024 · 3 posts · 8 votes
Hello from Seattle! Looking to build cash flow from long-term rentals
Most Popular Reply
Developer · Seattle, WA · Member since 2018 · 90 posts · 47 votes
2yI live and invest in Seattle. I've found that there are still ways to make the 1% rule work.
> 12-unit in Eastlake I bought for $2.5m last year... pulling in $26k of rent/month
> Individual DADU builds cost ~$325-350k to build, and I'm renting them for $3,200 - 3,550
However, I'm also investing in Wenatchee which is much more cash flow friendly:
> 30-unit apartment bought for $4.2m and renting for $38k/month
> 33-unit townhome community closing this April for $6.3m and will rent for $70k/month
Investing in RE is a legacy and the ability to show my kids what we are doing holds just as much weight as the rent checks we net.
Happy to discuss how we're investing locally.
17 Replies
- 2yJulio GonzalezPro MemberSpecialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
Glad to have you as a part of this awesome community, Julio!
- Investor · CO · Member since 2016 · 757 posts · 1k+ votes2y
Welcome!
Hi Julio,
Glad to meet another like minded investor in the Seattle area. I've exited the corporate world thanks to my local portfolio of rental properties. It allowed to choose how to spend my time. I've also explored out of state (Memphis, TN) investing and have great contacts in the other states.
Feel free to reach out, I'm always happy to share share my experience. - 2yMarnie OshanPro MemberReal Estate Agent · Seattle, WA · Member since 2021 · 6 posts · 3 votes
Hi Julio,
Welcome to the club! I'm an investor-friendly agent here in Seattle, and completely understand the struggle with getting into this market as an investor. Like it sounds like you are planning, I owned my primary residence here and then rented it when I moved and bought a new house. I was actually living out of state for awhile managing my rental here in Seattle. It can all be done. Happy to share my experience and help you find local rentals if you want to try that out as well! Best of luck!
- Member since 2024 · 3 posts · 8 votes2y
Hi Marnie! Thanks for sharing your experience. I'm open to local properties as long as the numbers work out, but the price-to-rent ratio here doesn't seem very profitable. Maybe I'm mistaken though, so I'd love to hear about what areas you've looked at and found success in!
- Member since 2024 · 3 posts · 8 votes2y
Thanks for the warm welcome! I'm still just learning and trying to get a sense of what qualities of a market I should look for when deciding what cities to focus on. I'll reach out when I have a clearer sense of what these are and where I'd like to search!
- Investor · CO · Member since 2016 · 757 posts · 1k+ votes2y
Quote from @Julio Medina:
Thanks for the warm welcome! I'm still just learning and trying to get a sense of what qualities of a market I should look for when deciding what cities to focus on. I'll reach out when I have a clearer sense of what these are and where I'd like to search!
I find that starting with a goal in mind and the criteria to achieve that goal is useful to pick which city to invest in.
- 2yAxel MeierhoeferPro MemberRental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
Hi Julio
Welcome to the BP community. I started the same way. I was an executive at a software company in Santa Barbara and the area was way too expensive to get any performance out of investments.
I did study a lot of different options and realized (for me and my family) that the government is actually supporting investing in residential real estate with a lot of benefits.
I first determined what I believe performance really means and concluded that for me, it means I should have some positive cash flow from day 1 after closing (or Day 1 when a tenant moves into the property).
It also meant that a good tool to even see if any available deal could work was applying the 1%-rule. If I got an offer for, let’s say $150K and the rent was not somewhere close to $1500/month, I would not even twitch. That has proven to be a god-sent now that interest rates are so high. In the past, it ensured good cash flow.
Ultimately, I learned (expensive lesson) that having a provider of a property (even if it meets the 1% rule), and separate property management creates an issue each time something needs to be tended to in the property.
So, to start I looked at locations where I can find properties that perform to the rules above. That resulted in investing in places like Idaho, Ohio, Tennessee, etc. Pretty soon after my first investment I began developing relationships with lenders, insurance providers, and my preferred providers, the great turnkey providers. They find the ugly duckling in a good neighborhood, renovate it, sell it to me for a price that appraises so the lender is happy to finance it, and then also manage it for me – all in one hand. Some are now so confident in the quality of their renovations that they cover repairs and management fees for the first year and put tenants in before closing.
Just like I am writing here for you, I told my friends when they wanted to know “What are you up to these days?”. I am now offering a mentoring program for anybody who likes to not just invest but really build a legacy and a complete portfolio. The “Time Freedom Point” is that major milestone we are all working towards, so we gain financial independence and keep growing our assets in a safe, multi-generational way. In some cases, people just like to get access to my network, and I am happy to share. If that sounds like something you would consider, let me know and I would be happy to help you. Bigger Pockets helped me when I started, and I am happy to pay it forward.
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Julio Medina welcome to the forums and congrats on the first post! I work with hundreds of investors that are in a similar situation as yourself. They invest passively here in the southern/middle part of the country where price points are much easier and the laws are landlord friendly.
Feel free to reach out if any questions arise. Best of luck investing!
- 2yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votesHey Julio, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!
Quote from @Julio Medina:
Hi All,
I'm a 27 year old Software Engineer living in Seattle, and am looking to begin my real estate investment journey after listening to the Bigger Pockets podcast!My goal is to gain cash flow that can eventually be used to increase the freedom and financial independence in my life.
My local area is pretty unaffordable investors just starting out, but I don't want to sit on the sidelines so I'm learning about buying and renting properties out of state! I currently own my primary residence near University of Washington and plan to rent that out when I eventually move. If anyone has similar stories, I'd love to hear about how you got started and navigated all the uncertainties with buying properties out of state.
Outside of investing, I love playing classical piano, driving (I frequently volunteer at Porsche Club of America events here), and dancing, so feel free to connect with me about those things as well :)
Have a prosperous New Year,
-Julio
Jimmy Lieu, Red 1 Realty4.9120 Reviews - 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Julio Medina check out Detroit!
https://michiganchronicle.com/2024/01/03/major-developments-that-will-define-detroit-in-2024/
Logical Property Management4.9446 Reviews - 2yAlfath AhmedBusiness MemberReal Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
Quote from @Julio Medina:
Hi All,
I'm a 27 year old Software Engineer living in Seattle, and am looking to begin my real estate investment journey after listening to the Bigger Pockets podcast!My goal is to gain cash flow that can eventually be used to increase the freedom and financial independence in my life.
My local area is pretty unaffordable investors just starting out, but I don't want to sit on the sidelines so I'm learning about buying and renting properties out of state! I currently own my primary residence near University of Washington and plan to rent that out when I eventually move. If anyone has similar stories, I'd love to hear about how you got started and navigated all the uncertainties with buying properties out of state.
Outside of investing, I love playing classical piano, driving (I frequently volunteer at Porsche Club of America events here), and dancing, so feel free to connect with me about those things as well :)
Have a prosperous New Year,
-Julio
Hey Julio, glad you are started early and understand the value of understanding OOS. I would look to identify a market that you love which is going up in appreciation and still has cashflow. I think Ohio is a great market to get started. Columbus is a major tech hub. This is where I personally invest and have seen tons of growth. Happy to share my journey.
ReafCo | Ahmed Group 530 Reviews - 2yMin ZhangBusiness MemberReal Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
Hello Julio, my recommendation is for you to start investing in the midwest, because the entry point is much lower and cash flows the best. As long as you develop your Core 4 like David Green’s mentioned in his long-distance investing strategy (realtor, contractor, property manager, and lender), you should be able to invest anywhere with confidence. I buy in Columbus, Ohio. Columbus has experienced so much growth for the past few years, partly due to the influx of tech giants like Intel ($20 billion), Meta, Amazon, and Google building warehouses and data centers in the area, which has contributed to an increase in property prices and more people moving into the city for job opportunities. I also invest in Cleveland and Dayton. Let me know how I can help!
- Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes2y
@Julio Medina- welcome to BP
- Member since 2023 · 6 posts · 4 votes2y
@Julio Medina I'm in a similar situation, but a few years ahead of you. When I started in my mid-late 20s, I invested in Seattle proper. Hasn't been a 1% rule city in my lifetime, but it was possible to find cash flow on a turn key property with 20% down. These days you can still find more respectable cash flow if you look in south King County and Pierce County.
I've gone with a hybrid approach and look at my portfolio as a whole. I get enough cheap out of state properties to give myself some cash flow, allowing me to afford the mortgage payments on a couple houses around here--keeping some exposure to the Seattle area's potential for appreciation. It also makes things a little logistically simpler for financing to have big loans on the Seattle properties and use cash for the out of state properties. Even if the Seattle properties are cash flow negative on paper, it offset with cash flow from elsewhere and my portfolio is balanced. I essentially think of my Seattle properties as the bank. Is this a scientific approach? Nope. But it kinda works for me and I get the warm fuzzies knowing I have some diversification.
Also, if you're 27 and have an income allowing you to invest in real estate, I'm guessing you work with some other 27 year old looking to park some cash somewhere as well. You could think about teaming up with your buddies if you want to invest locally.
- Developer · Seattle, WA · Member since 2018 · 90 posts · 47 votes2y
I live and invest in Seattle. I've found that there are still ways to make the 1% rule work.
> 12-unit in Eastlake I bought for $2.5m last year... pulling in $26k of rent/month
> Individual DADU builds cost ~$325-350k to build, and I'm renting them for $3,200 - 3,550
However, I'm also investing in Wenatchee which is much more cash flow friendly:
> 30-unit apartment bought for $4.2m and renting for $38k/month
> 33-unit townhome community closing this April for $6.3m and will rent for $70k/month
Investing in RE is a legacy and the ability to show my kids what we are doing holds just as much weight as the rent checks we net.
Happy to discuss how we're investing locally.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes2y
Quote from @Karl Krauskopf:
I'm also investing in Wenatchee which is much more cash flow friendly:
> 30-unit apartment bought for $4.2m and renting for $38k/month
> 33-unit townhome community closing this April for $6.3m and will rent for $70k/month
Investing in RE is a legacy and the ability to show my kids what we are doing holds just as much weight as the rent checks we net.
Nice! I also had a few small commercial apts here for cash-flow. Mine were 7-10 units owned individually by tired landlords that sold to me off-market with seller-financing. How do you finance yours, Karl? I sold 2 in '22 to your area syndications with seller-financing for similar gross/price ratios.
As you get smaller, cashflow and 1%ers get more difficult. I sold for instance a duplex for $475k that rented for $3k last year. Decent houses are .5%ers.
Here you have to watch your water and sewer expenses. Power is cheap but w/s definitely is not. Together they will be about $120/mo per unit.
- Developer · Seattle, WA · Member since 2018 · 90 posts · 47 votes2y
Quote from @Steve Vaughan:
Quote from @Karl Krauskopf:
I'm also investing in Wenatchee which is much more cash flow friendly:
> 30-unit apartment bought for $4.2m and renting for $38k/month
> 33-unit townhome community closing this April for $6.3m and will rent for $70k/month
Investing in RE is a legacy and the ability to show my kids what we are doing holds just as much weight as the rent checks we net.
Nice! I also had a few small commercial apts here for cash-flow. Mine were 7-10 units owned individually by tired landlords that sold to me off-market with seller-financing. How do you finance yours, Karl? I sold 2 in '22 to your area syndications with seller-financing for similar gross/price ratios.
As you get smaller, cashflow and 1%ers get more difficult. I sold for instance a duplex for $475k that rented for $3k last year. Decent houses are .5%ers.
Here you have to watch your water and sewer expenses. Power is cheap but w/s definitely is not. Together they will be about $120/mo per unit.
I'd love a few cashflow heavy seller financing deals; however, it's been purchase + rehab loans on 5-10 year fixed debt. Evergreen Court is nicely stabilized and Eastmont Townhomes will be a cash cow after we're done with it
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