In the long run the biggest hit on your returns will be taxes so you should shelter as much as you can as early as you can from the government to avoid that drag.

My CPA really encouraged me to get involved in rental properties to cut down on some of the money the government is taking from me.

By close to Downtown (Southtown, Tobin Hill, Beacon Hill, Government Hill, Laurel Heights, Monte Vista, Mahncke Park, etc.) and you have high demand, qualified renters, and a property that will continue to appreciate.

Realize that common sense tells you that all of the value is in the land, but common sense and government usually doesn't mix.

The largest employers in the area are government.

I would suggest using the same CPA [a good one is hard to find like all professionals] and use a state specific attorney and then a city specific property manager.I believe most government agencies [HUD, HomePath, etc] "require" at least living in the property for one year to qualify as owner occupied.

I can say that in my area buying distreesed property from the government is more trouble than it is worth in most cases.

Lenders, independent loan and appraisal compliance companies and government agencies all review appraisals, in larger offices you'll have appraisers doing the review when certifications are required.

In addition to sales and marketing skills, you'll want to build a team of professionals that you can rely on (title, escrow, appraisers, inspectors, contractors) as well as contact as the government agencies you will occassionally visit.

There are no good wholesale deals.Washington is not Landlord friendlyThere is also talks from inside government of passing rent control in the Puget Sound area.