I dont buy ultra cheap properties...but there is a reason why those properties price/rent ratio is 2%, (or 2.33% in the example you gave).

As of writing this on November 1, 2016, flipping is ultra risky in Seattle.  

A low capitalization rate simply means that investors are very bullish on the marketplace, and deem it to be ultra safe in terms of value preservation, which leads them to pay extremely high dollars for the income - because it's "safe".  

I usually see commercial developers budget for a 4 year project.After land seller delays,political delays,zoning and site delays,construction and phase funding drying up these projects can take up to 10 years to get the first phase going.If there are multiple phases you could be looking at up to 20 to 25 years to finish.Everything constantly changes.The people in local city and county changes.The mayor can change.Budgets from the city and county allotted to development change.Type of project and viability can change etc.Used to developers just made an LLC with high LTV and put a little coin in on high non-recourse say 90% with 10% down.Maybe 85%,10% down,and 5% mezz debt.That has all changed.Lenders want recourse and your first born now and cities and counties need monetary assurances they won't be left finishing up a half built project of roads and lighting and the tax payer footing the bill.They want you to pony up other trophy properties in your portfolio as collateral.This has caused developers to be ultra conservative on what they can pay for land to develop along with projected rents they will get during lease up and completion.

That is why pension funds and insurance companies LOVE to invest in them; because theirs is an ultra conservative "can't lose" strategy. 

-What should my strategy be in this ultra-crowded market?

Ultra lame and completely predictable and I'm sure you've heard it before. 

So, if the CONSERVATIVE after-repair-value is $100,000 (and they will be ultra conservative in their determination of the ARV) - they will most likely not go above $65,000 - meaning you'll have to come up with the rest.

So, we should continue to be in the game, but we must be VERY vigilant and ULTRA cautious.

Hi Ebere,yeah, I know what you mean.But when I went through the exercise, I really do work a lot of hours (I'm not trying to boast - I wish I could work a lot less).Once I started to actually track how many work hours vs real estate hours it became clear that work was going to be the clear winner by a mile - so there's no way I could ever qualify.Oh well - no worries.