Seattle market - How to get started at these prices?

Question

Gallagher Wilson · Answer

What specifically are you looking to learn? The best learning method is to dive in. Yes, prices are high, cap rates are low, but roughly translated, that indicates very low risk. You'll pay a premium, but the rise in prices doesn't seem to be slowing down.  It depends what strategy your looking for, I opted for a long term buy/hold so up-front purchase price was less of an issue.  If you want to try and find a deal, maybe leverage personal connections and network.  See if there is someone you know looking to sell their house, but have yet to sign a listing agreement.  Make them an offer for an off-market sale and save both you and them some serious money (this was my strategy).  If your hoping to flip, hard money is available, but competition for distressed properties is fierce.  There are lots of ways in, just have to get clever and start talking to people around you!

Larry Murrell · Answer

@Chris Levarek Thanks!  I am looking to go out of state. I want to be more passive so exploring turnkey.

Adrian Chu · Answer

Just some food for thoughts -

Lots of opportunities to optimize land use code for profits.

Still a very strong economy here.

Amazon stock is at all time high.

Justin Frank · Answer

Hi @Larry Murrell

Washington in general is a great place to invest. I am from the Tacoma area. You can make anywhere a great place to invest. It really just depend on who you know, how much capital you have and what your investment goals are. In my personal opinion most of the PNW is very over valued which makes it very difficult to find cash flowing properties. It’s not impossible to find them you just have to be patient. To me I find that the Seattle area is best suited for folks who have excessive amounts of dollars and can place those dollars in properties and be happy with 4-5% returns. As stated earlier there are great deals to be had anywhere. They can just be very difficult to find in places like Seattle. Again, this is all relative to what your goals, wants, and needs are. Hope this helps. Feel free to reach out to me with any questions.

Michael Haas · Answer

First let me say that the current landlord tenant legislation coming out of WA & Seattle is poorly planned out and short-sighted. That being said, Bigger Pockets comments make it sound like very tenant in Seattle & Tacoma has stopped paying rent just because they can. That may happen in C & D markets, but the reality is that the majority of Western Washington is one big A / B / C+ market, with tenants who are generally employed, responsible, and highly paid. Its not unusual for our rentals to house tenants working in tech that make more money than we do! The vast majority of these folks aren't looking to stiff their landlords just because the law says that we won't be able to evict them until late this year.

Again, the laws suck, but the social contract between good landlords and good tenants is still intact.

Account Closed · Answer

I guess you didn't read the news. This doesn't make WA a landlord friendly state after over paying for properties and taxes. I voted with my feet and sold my WA properties.

Gov. expands statewide eviction moratorium, halts rent hikes

By Associated Press                        Thursday, April 16, 2020

OLYMPIA, Wash. (AP) - Washington Gov. Jay 
Inslee on Thursday extended and expanded his moratorium on evictions and
 imposed a new freeze on increases of residential rents in an effort to 
help residents better handle the economic shutdown amid the coronavirus 
pandemic.

The order comes a month after Inslee announced a
 30-day moratorium on evictions for residential tenants, the Seattle 
Times reported. The statewide ban on evictions will be extended another 
seven weeks and will include new measures meant to protect more tenants.

The state Attorney General’s Office said 
earlier this week that it had received complaints of landlords sending 
out rent increases during the pandemic, which could, under certain 
circumstances, violate state law. Attorney General Bob Ferguson said his
 office would be looking closing at those complaints.

The extended eviction moratorium will now also 
cover people in housing such as motels and Airbnbs, on public camping 
grounds and mobile home owners on leased lots.

Additionally, the order prohibits landlords 
from threatening to add late fees or charges for non-payment, as well as
 charge rent for housing where a tenant’s access to the unit was 
prevented by COVID-19. The provision includes seasonal and college 
housing in which tenants weren’t able to stay in the unit as a result of
 the crisis.

“People are going to feel better about staying 
home and I think this will ultimately help us fight the virus,” Xochitl 
Maykovich, political director for the Washington Community Action 
Network, said. “I hope the legislature is thinking about how we can put 
these policies into law permanently. It shouldn’t just be for COVID-19, 
because there are plenty of situations where people have emergencies and
 can’t pay rent.”

Over 585,000 people in Washington sought 
unemployment benefits last week, with 143,000 people filing claims for 
the first time as businesses remain shuttered or with limited operations

Justin Frank · Answer

@Aaron Nelson

Good points Aaron. Though, I do somewhat disagree about the upside potential for investors. I think you really have to get down to the microeconomics of Washington state to find the areas with significant upside. We were hoping to purchase a primary residence in issaquah but just can’t justify paying $1mm+ for an outdated home built in the late 80s, 90s. If you want to invest in the PNW you have to really know the market. Parts of Tacoma are still great. Other parts are tapped out. As stated in my last post this is all an option and relative to your goals and capital available. One thing I completely agree with you about is our diverse and rather strong economy. Doesn’t get much better. The only downside is that the high paying tech jobs are part of the reason homes are selling for $500/sqft or more. Love where I live but I am very very selective on my investments here. Thanks for the comment Aaron.

Aaron Nelson · Answer

Mostly agree with what @Justin Frank said. The greater Seattle-Tacoma area still has a lot of upside and offers a blend of cashflow and appreciation potential. In many areas, we've seen double digit appreciation and rent growth for multiple years in a row. My wife and I just leased two of our Tacoma rentals in less than a week and got $100+ rent bumps on each unit.

The economy is very diverse with multiple tech companies, universities, healthcare, military, import/export, etc. It is important to keep the quality of jobs in mind when assessing an area's investment potential. There are a lot of tertiary markets where one or two major employers provide a large percentage of the employment. To me, that is a red flag!

Nora Spangler · Answer

:-) Maybe Bend, Oregon prices are better for you?

Justin Frank · Answer

Account Closed

I completely understand that Washington state is very tenant friendly. With that being said, I try to look at the positives of the market. As @Aaron Nelson mentioned, we have a very diverse and strong economy which is very important and I personally feel our tenant base is very quality. I don’t want to jinx myself and/or sound as if tenants elsewhere are all bad, but I do truly feel that most of the PNW has very quality and maintenance free tenants. It’s rare that I have had any difficulties or destruction of property from my tenants. This could be look, or good screening but I also feel that part of it is just the quality of tenants this area houses. There are positives and negatives in all markets. Just have to decide which ones you are willing to work with and which ones you aren’t. I do know a lot of folks complain about the west coasts landlord/tenant laws. There are a lot of very successful RE investors out here. It’s not all bad 😀

Seattle market - How to get started at these prices?

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