Where to invest outside of Seattle in 2019?

Question

Hello Everyone,

Happy to be here! I am an investor from Renton, WA and new here in Bigger Pockets. I am looking to purchase my first rental property before the year ends and I am seeking an area where I can get my feet wet and get the best bang for my buck. My criteria:

• 1. Within 25 miles or approx 1hr drive from where I live - Since this is my first rental I would prefer to purchase a house where I can easily drive by and check on it during rehabbing. 
• - Since this is my first rental I would prefer to purchase a house where I can easily drive by and check on it during rehabbing. 
• 
• 2. Price Range In the Lower 200's- Of course, I would have to rule out Seattle and East Side since houses there are way too expensive. I've seen from the forum recommendations for Tacoma, Bremerton, and Everett yet MLS only have a few listings in this range except if I go for foreclosures/auction which I want to avoid since it maybe complicated process for a newbie. 
• - Of course, I would have to rule out Seattle and East Side since houses there are way too expensive. I've seen from the forum recommendations for Tacoma, Bremerton, and Everett yet MLS only have a few listings in this range except if I go for foreclosures/auction which I want to avoid since it maybe complicated process for a newbie.

• - Since this is my first rental I would prefer to purchase a house where I can easily drive by and check on it during rehabbing. 
•

• - Of course, I would have to rule out Seattle and East Side since houses there are way too expensive. I've seen from the forum recommendations for Tacoma, Bremerton, and Everett yet MLS only have a few listings in this range except if I go for foreclosures/auction which I want to avoid since it maybe complicated process for a newbie.

• 3. Minor Rehab Opportunity - Would like to do the BRRR strategy to force the property's appreciation but hoping the rehab won't be too overwhelming. 
• - Would like to do the BRRR strategy to force the property's appreciation but hoping the rehab won't be too overwhelming.

• - Would like to do the BRRR strategy to force the property's appreciation but hoping the rehab won't be too overwhelming.

Any recommendations? Thanks in advance for your help! :)

Gabriel Graumann · Answer

Hi Nett,

Great goal. Plenty of opportunities if you did for them. Might take working with a wholesaler if you're trying to stay under the $300K price point and want a value-add opportunity. As a broker in the local market I can share that finding a true "deal" on the MLS in our current market cycle is rare, so either working with a broker willing to assist in sourcing an off-market deal or you personally attempt to source an off-market deal will typically net you a higher return opportunity for your price point. Case in point, I'm closing Monday on my latest flip property in Shoreline just 1 block north of the Seattle city limit boundary line near 175th St., and I was able to get a rehab property for $350K off-market when the same listed property would have cost me $400-425K. Just sharing this to say it's possible to find a deal if you're willing to dig. My focus is Seattle and north, so I don't pay as much attention to the south end unless I have a client headed that way.

Account Closed · Answer

I'm from Seattle. I've bought and sold worth millions in King, Pierce, and Snohomish counties. It is hard to cash flow there. That's one reason I moved. Another is taxes. Another is the anti-landlord approach in the area. Another is the, shall I say "rain". ;-) Anyway, If you want to see real cash flow numbers:

Average Turnkey Cash Flow Per Door In Phoenix
Metro Area No Bank Financing Needed

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Even people from So Cal (CA) can see the difference in the numbers.

Rachel Luoto · Answer

Purchase to rent ratio would all depend on your definition of “good”, I know people who like the numbers here and people who don’t, so I think it’s relative to what return you’re expecting! I believe a 4% cap rate is common here, the highest I’ve seen advertised is 6% on big complexes, if that gives you an idea. Though, a big part of it comes to how you are sourcing and financing deals, as you’ll end up in very different places with cash/bank$/hard$, buying mls/direct mail, etc.

Jess Haas · Answer

Hey Gabriel,

Did you use a wholesaler for your recent deal? Im struggling as well to find MLS deals and am up for creative methods.

Gabriel Graumann · Answer

Hi Jess,

If you mean the flip I have posted in Bothell, no, I sourced that one off-market and structured something that worked for both the seller and I. I'd be happy to discuss this one more with you to hopefully help you get more deals if you'd like. There are always ways to find deals even in tight markets.

Rachel Luoto · Answer

Hey welcome to BP! In that price range, I’d be looking either somewhere very rural, or at a condo/mobile. Buying foreclosure is getting harder, as big $ players are buying pretty high there, so I’ve heard. If you want to come check out bremerton let me know! I’ve got rentals and a completed flip there :)

Megan Shay · Answer

Even in Bremerton, prices will be $200k+ (closer to the mid-$200s) for something worth touching. The fast ferry helps with the commute time. You may also want to consider Kingston, though again, prices will be an issue. At least for now...

Good luck!

Nett Victoria · Answer

@Dave Skow thanks for your advice on getting a loan pre-approval. I was actually thinking about when to get a loan if I would have to do multiple offers. Now that makes sense.

Nett Victoria · Answer

@Rachel Luoto - looks like Bremerton is a great option with the ferry to Seattle within 30mins. Does it have a good purchase to rent ratio?

I think I would have to rule out Tacoma for now and choose between Bremerton/Kitsap area and Spokane (I know this is 4hrs away but looks like the place is also about to boom in a few years).

Dave Skow · Answer

9/23/2019

Victoria – thanks for the post

As  Kitsap  county and  probably  Snohomish  county  will  exceed  the 1 hour  driving time  criteria  ,  I think your best  bet  will be  S King  county / N  Pierce  county

The Lowers  200s  will also  be a large  filter …not many  properties  in this price  range out there ….are you  willing to consider  townhome/ condo  type  properties ?

If  actively looking and  if needing to use  financing to but this property – make sure to get into a loan pre approval position  so you can  furnish a pre approval letter with any offer you might make

Thanks

Where to invest outside of Seattle in 2019?

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