Investment / Rental property in Seattle - where should I buy?

[Peter Shaw]

Hello,

I have never lived in SEA area but given the strong High Tech employment market, I want to buy a rental unit. I'm looking for something <500-600K, which will generate decent rental income and will appreciate over time (10-15 years time horizon). 

Which neighborhoods should I be looking at? Are there agents who specialize in investment properties? Anyone you've worked with that you would recommend? Any property management company that you'd recommend?

Thanks,

Peter

[Brian Hughes]

If you're not familiar with Seattle please research the considerable amount of additional regulations and rules that Seattle has imposed on rentals owners of any size (1 fully separate unit and up) within city limits.   They only cut you a break on some regulations if you are actually sharing living space, e.g. roomates.) These regulations limit how much you can charge for up front costs and force you to accept payment plans.   You aren't allowed to consider criminal history except for sex crimes as part of a background check,  and you must accept the first qualified application according to your (legal) rental criteria.   You are required to rent to section 8 and any other subsidy recipients (even if short term) if they otherwise qualify for your rental criteria.  There is no overt rent control (yet) but ordinances that come just shy are being pushed;  things like forcing you to pay 3 months moving costs to each adult resident if you ever raise rent more than 10% in a year and the tenant(s) move.   

All that said,   yes Seattle is currently a very desirable place for people to be moving.  But,  we have had a rapidly appreciating RE market for about 7-8 years now,  and median prices are getting unaffordable for anybody who doesn't have well over a 100k salary.   Everybody says this time is different,  but I'm not sure how much longer til there is some kind of correction.  All it will take is something like Jeff Bezos deciding to move 10% of his employees to the new "equal" headquarters someplace else.

As for finding something in that price range,   you would probably be looking at a resale townhouse or a modest (but possibly very decent) older home in a working class neighborhood in south seattle.   You'll have better luck avoiding competition if you are OK with something on a minor arterial or which needs significant rehab.   Be prepared for a bidding war if it is anything of above average desirability for the price point.  You aren't likely to find a legal multifamily in that price range within city limits right now.

As suggested by prior poster,   going north or south by 30 minutes (off peak traffic) from seattle limits might increase your prospects.    There are closer in municipalities and unincorporated areas (burien, renton, tukwila, white center) bordering south seattle which you might find a duplex in that price range,  but you will likely have considerable competition,  either from other people wanting such a property or from developers.   Still,  inventory is quite low all over.

Good luck.