Are you still buying deals in the greater Seattle area in 2018?

Question

And if you are buying in 2018, are you buying multi family, single family or land? Also how much longer do you plan on continuing to buy and why?

I'm planning on buying more houses this year and next. Single family. I don't plan on buying past 2019 for a while because I won't be able able to hold them long enough to justify the transaction costs of selling before the next down turn/when I move to Vegas.

Christen G. · Answer

I'm relatively new to REI, but have a few MFH in Tacoma which I've secured in the last 18 mo - buying in Seattle right now feels silly - it's peak market for sure. But south - where everyone is headed bc it's cheaper - you have the train going in (actually on time) thus any commute is easier and it's still affordable and easier to cash-flow. It's competitive, but affordable.

Peter Nelson · Answer

i think you are right, Terry, in theory. But the theory doesn't work so well in real estate. Allow me to explain. Trading stocks increases the risk to a portfolio versus buy-and-hold. The risk is based on calling the timing correctly, which few if any have perfected.That risk increases thousand-fold with real estate because real estate is not a liquid asset. You cannot wake up in the morning and sell your real estate like you can with stocks. The 2008 crash came so quick it would have been extremely difficult to get out in time. Banks shut down their funding pipelines so even if you could find a willing buyer that person could not get the money to purchase.That was an anomaly that hopefully won't happen again. But it may! Even in a regular market the market can change dramatically (for or against you) in the 60+ days it takes you to list and sell a property.Assessing risk-reward ratios, to each his own. But the risk is far, far too great for me. I have had the benefit and pleasure of meeting many multi-millionaires and all of them created their,wealth buying and holding real estate. None made them flipping.That being said, I do turn my properties from time to time. I buy or sell a property once every 5-10 years for various, well-founded reasons. But that is far different from flipping or timing a market.

Peter Nelson · Answer

Jack, I would suggest you reassess your investment strategy for real estate. Krystin has the right idea. Real estate is a buy-and-hold investment. I have properties I have owned for 20+ years and the performance on them outstrips anything purchased in the past 10 years. You mentioned transaction costs, and that certainly plays into it. But it is the ROI from OPM (other people's money) where real estate really shines. (I recently recorded a video about this on the Full Service Property Management youtube channel.). Our portfolio dropped 7 digits in one year.in 2009. That was trally painful. But guess what? It came back in spades and we are crushing it again.Flippers make money; buy-and-hold investors build wealth. Just gotta decide which you want to chase.

Lane Kawaoka · Answer

Jack B. I stop buying in 2012 cause prices went up. I went out of state afterwards and never looked back.

John Barrett · Answer

Hi Jack, My wife and I are still purchasing multi family properties but it is a lot harder due to the high prices currently. We have found better luck with off market deals vs the offers we have made on properties listed on the MLS. The prices being paid for properties in the areas we target have pushed returns down. Unless we can add value to the property in order to increase the rental income the returns are not attractive to us. Besides the one deal this year, not sure if we will do more this year or not. In the end it will really depend on the specific deal and the terms we are able to secure. I am also concerned about the health/sustainability of the market at this level but I don’t have a target for getting out of the market. If I was in your position with a 2019 target for the next transition in my life I wouldn’t be putting my money into another property. I would keep cash liquid and available for any opportunities that arise. Yeah you will only make 1.5% but you will also have the greatest amount of flexibility for whatever comes along.

Terry Lao · Answer

@Peter NelsonHindsight is always 20/20. Given the luck that you happen to sell your portfolio for top dollar right before the recession in 2008, then bought back again, be it perhaps not exact same but similar like kind properties, then wouldn't you have made more money? Of course, less capital gains taxes.It is like buying stocks low, and sell high. Though it is difficult timing the market, but I think it is possible, as long as you are not too greedy.Terry

Kyrstin Szewczyk · Answer

I'm planning on buying a single family home or duplex (whatever is available that makes sense) north of Seattle. I will reassess in early 2019 to see if and where I should buy another (doesn't make sense to decide that right now). As long as rents are paying the mortgage that's a good enough investment to me since I'm going to hold it and let it appreciate (if it doesn't on a small chance then at least someone else will have paid it off in 30 years or less).

Account Closed · Answer

Yes! Put a 5 unit under contract in Everett yesterday

Bjorn Ahlblad · Answer

This market sure favors sellers for now and you can't blame people for wanting to take advantage. I bought a really decent 12 unit last year; and I continue to look and work at getting to know the areas even better. If something were to come along that meets my criteria I'll go after it; but I'm not going to compromise-it has to work or what is the point? If it does not cash flow well today, it won't be any better tomorrow, and who knows beyond that.

Jake Alger · Answer

Hi Jack,I have clients looking to buy both multi-family units and single family. It all just depends on their investment strategy. I haven't heard any of them setting a timeframe for investing as most of them pick up the deals as they come along and make sense. Sure, they try to put money to work from other properties, but in this market, it's kind of hard to exchange.Most of my client investments thus far have been flips. Flippers in this market, particularly around Seattle / Bellevue (the big cities) are still able to find deals, but mostly off market or from auctions. They are paying (in my opinion) a premium at auction right now but with the property values increasing quickly, by time they are done with the project they can justify the cost.It all just comes down to strategy and what works for you.