All Forum Posts by: Pete M.

I'm currently looking at an apartment complex in Lakewood, and am curious how it compares to Tacoma.  I'm obviously not local to that area, so curious as to any feedback from locals or people familiar with the area.  Does it operate as it's own city?  What are the perceptions?  It seems to be dominated by the joint military base.

Here's a link to my post in the multifamily forum to analyze the deal; any and all input is welcome and appreciated.

Thanks.

Hi all,

Looking at 10-unit in Lakewood, WA, basically surrounded by the military base.  Split is seven 2/1s and three 1/1s.  Current rents gross to about $6k/mo, which seems way under market.  Could likely get $8800-$10k, based on rentometer averages.  The complex was built in 1968; pictures of inside look nice, but are also dated from 2004 (for inside), so who knows.  Asking price is $795,000, which I have a feeling is very high for the way-below-market rents.  Oh, and it's on an EPA Superfund site... but even then, rents seem to be way below market, even for other units in the same site.

I feel like it could work out great after doing some undetermined fixing-up and significant raises of rents, but both are also speculation, and I'm also loathe to give the seller money for value they're not going to do (and asking for a low cap, probably).

Anyone have thoughts on this property?  It'd be a pretty negative cash flow to start out, banking on the fact that it could be turned into a gem.  This seems a bit optimistic in my book, and I'm looking for a reality check on whether I should be laughing at this or jumping at it as quickly as possible.  My gut is saying to not pay sellers for value they're not delivering, but I'm not sure what's to be expected in the current market conditions.

What are expected cap rates for Lakewood, WA?  Any special considerations for the EPA Superfund site?  What kind of offer price would make sense (realizing they may blow it off)?

Thanks in advance.

Hi all,

Evaluating an opportunity in Yakima on an 8-unit, and curious as to feedback from others on what the norms are for cashflow per door, cost per unit (these are 2/1 units), and cap rates for the area (plus other relevant factors I'm likely missing).  I'm still waiting on documentation from the seller, so don't have specifics to provide yet, but wanting to set my expectations and understand the norms to evaluate against.

Thanks in advance.

@Derrik Jacobson You're getting plenty of great feedback already from folks on this thread, but I'll echo the hesitancy.  At a very high level, you're not hitting the 1% rule (which is not set in stone, but a good quick litmus test), and you're omitting several costs that should be included in your calculations, as @Casey Maib pointed out. Even without those additional costs, I'd say your ROI numbers are too thin. I've considered investing in Yakima myself, and it is definitely an area where appreciation should not be anything more than icing on the cake; your cash flow numbers need to be able to stand by themselves. Obviously this is all opinion.

On a side note, most investors consider CapRate inconsequential for anything under 5+ units.

Welcome and good luck!

@Rupesh Singh I'm not a current investor (so take this with a grain of salt), but you need to avoid the hot markets if you want cash flow.  Seattle especially is pretty much all gambling on appreciation at this point, as the properties are valued so high that cash flow is extremely low to actually being negative.  My research and time spent networking has all come back to the point that unless you're getting a screaming deal in a hot market, the secondary (or even tertiary, in some cases) markets are going to be best for cash flow.  The Midwest tends to do better for cash flow as well.

@Travis Zarelli

There are several groups in the area to check out.  You can check the Events section here on BP, but I'll list out a few others below that I've been to:

Fixated on Real Estate (FORE): Organized by Tarl Yarber.  Believe it's meeting this Thursday (22-Feb) at Renton Technical College. https://www.meetup.com/Fixated-On-Real-Estate/

Real Estate Association of Puget Sound (REAPS): http://www.reapsweb.com/

Seattle Investors Club (SIC): https://seattleinvestorsclub.com/

Cascadia Investors Alliance: https://www.meetup.com/CascadiaInvestorsAlliance/

Each can focus on different areas, but they're all excellent for networking with other investors and RE-focused business partners.

Keep listening to the podcasts, start joining the networking events, and you'll start to define your goals and how you want to get there.  Single family, multifamily, flipping, buy & hold, commercial, wholesaling, etc... lots of avenues to success in this business.

Thanks.

Had Thomas Jones from Sweeney Conrad recommended to me by another investor/broker.

Full disclosure: have spoken with him, but not used his service (don't own any properties yet).

Thanks.

Welcome to BP, Christy!

Tell us more about your goals!  Which areas are you looking in?

Welcome to BP, Zachery!

Relatively new to investing myself, though I've been doing lots of research and looking at properties.  Anyway, do you have an interest in making a career of real estate?  In other words, would you enjoy that field?  Lots of people gain valuable experience by working in the field, but it's by no means a requirement.  I work in the tech sector, for example, and (will hopefully soon) invest on the side; perhaps I can grow my income from RE investing to the point where I could exit my current job.

I wanted to post a follow-up on this thread.  I decided to pass on this property today for a variety of reasons, which I'll spell out here. Feel free to analyze and comment on whether it makes sense or not.

1. After finding a new financial advisor, I've decided to restructure a lot of my holdings to set myself up better for real estate investing, life insurance, etc. This includes using a whole life insurance policy that we can get a LOC against for buying homes at a decent rate. Figured it would be best to do this before starting to tie up properties.

2. The permitting issues on the house are still unclear to me and I don't want to step into something like that on my first property. I'd rather pass on a good deal than buy a lemon starting out.

3. I'm not sure if this property aligns with my goals of focusing on cash flow vs appreciation. My conservative numbers showed a positive cash flow, but the age of the unit (even with major upgrades) still has me wondering and one big ticket item could wipe out the cash flow easily.

4. Seems to violate the rule of "buy a C home in a B neighborhood." This one seems to be the reverse, in my opinion.

5. Not confident we could get those rental prices, as noted. I talked to a PM who works in that area, and he suggested dropping the $2750 down to around $2500-$2550 (gross on both) to attract better tenants.

Thanks all for the feedback!