Invest multi family in Seattle now and seek guidance and advices

[Linus Cui]

Hi all,

I started looking into small multi-family property (5-9) units in the north Seattle areas (Fremont, Wallingford, UW, and Greenlake etc). Based on what I can find from the listed properties, it seems the cap rate of most properties are usually listed in the range of 3-4.5% cap. Also my agent said it is impossible to get a decent property in Seattle with 5+% cap. Due to covid, the current multi-family market is softer since there are less buyers, but 5+% cap rate seems still very hard, the only change might be buyers can negotiate with sellers for a better deal, which is harder pre-covid.

Is 4.5% cap rate is a reasonable number when looking for good properties to buy in Seattle? My current strategy is for long term appreciation, being able to get my downpayment back within 5 years with cash out refinance. The short term cash flow probably will not look very good even if ~50% downpay is commonly required now for commercial residential loan.

As to why I choose north Seattle, I bet on long term property appreciation and probably get less tenant issues down the road. Since this is my first MF investment, I would prefer to get a less stressed property, focusing on learning apartment basics through my 1st MF deal. I am also passing SFH and 1-4plex, since I think large apartment scales better, and commercial residential is an area I have to know, I would rather do it sooner than later.

At the same time, I am also open to other suggestions from the experts in the forum.

Thanks a lot.