Home Buying in Seattle>Question Details

Ctr, Home Buyer in San Diego, CA

Best areas to buy rental property in Seattle?

Asked by Ctr, San Diego, CA Mon Mar 18, 2013

I am new to Seattle and want to buy rental property. I own rentals in another state so I'm an experienced landlord. What are some areas you recommen to buy? I would prefer SFR and 2-4 units, but would look at condos too if good deals. Also looking for a Realtor that is very knowledgeable about investment property and even better if the Realor owns rentals themselves locally.

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I work regularly with investors, but part of the answer depends on price and how long you plan to hold the property. You can find strong opportunities with good CAP rates in most areas of Seattle neighborhoods that are closer in.

That said, Ballard and Columbia City are at the top of my list for all of your categories. Columbia City is pretty affordable, with strong rental and buyer demand. Ballard is quite popular and, while prices are rising quickly, there are good options to purchase.

You can't go wrong in Wallingford, Capitol Hill, and Fremont - there is continually strong rental desire with steady and solid market increases. These will be more expensive to buy but generally a higher yield and higher long term potential. The university district, near University of Washington is great for long-term holds but unless you get grad students overseeing them can be more challenging.

If you want more detailed information about neighborhoods to consider purchasing in feel free to contact me directly.

Robin
Windermere Real Estate
0 votes Thank Flag Link Thu Mar 28, 2013
Hi Karen
ROI monthly or over the term of investment? The closer the property is to the center of the market the more appreciation. A basic in healthy markets.
I wrote an article a year ago stating that we would soon see the healthiest real estate boom in recent history and it is happening. I also wrote an article three years ago stating the investors from around the world would soon be buying homes in the healthy markets. Thats were that 'looming inventory of foreclosed homes" vanished to.
Pent up demand low interest rates and investors buying like never before.
What home buyers purchase is most often dictated by monthly payment. So when interest rates drop buyers can buy higher priced homes and people who could not buy in the lower price ranges are able to purchase. So more demand. Supply and demand at work again drives prices up.
The NYT published an article one year ago confirming that domestic and investors from around the world were buying homes in the US. If I remember correctly it was "A New Bread of Real Estate Investor".
There are now more multipul offers on property in the Seattle Met than ever before. The market is on fire. I encourage everyone who can to buy property. Best of Luck and thanks for a very timely question. Stephen Webber, Your-Road-Home.com
0 votes Thank Flag Link Wed Mar 27, 2013
Hi Ctr,

As you know, what you buy is based on your own investment criteria. That being said, like any city, getting outside the core usually has the best rate of return. I am finding Renton to be great and also have investors in the Shoreline and Ballard areas. Rention is appreciating well right now and rents are good. Bothell is just starting a significant re-invention so still has affordably priced properties.

I have extensive training in investment real estate and am currently working with several investors. I am happy to answer any more detailed questions you may have and I have some good tools for single family investment analysis.

Warm Regards,
Karen
0 votes Thank Flag Link Mon Mar 18, 2013
Johan Tong mentioned a 3/1 townhome that rents for $1,750. Let me show why that wouldn't work as a rental since the cash-on-cash return would be subpar.

Based on 25% down with a 4.25% rate:
-$1,106 mortgage
-$281 property taxes (I just estimated this as I do not know WA property tax rate)
-$200 hoa (estimated - not sure if that is too low for hoa here in Seattle)
-$20 walls in insurance for a condo
-$150 for vacancy, maintenance
Total:$1,757 PITI + maintenance
Rent:$1,750
Cash flow: -$7/mo

So I would just break even on this. I'm looking for a decent positive cash flow of say $300/mo with 25% down. So this townhome would have to get like $2,050 in rent for the numbers to start to make sense for me as a rental.
0 votes Thank Flag Link Mon Mar 18, 2013
Hi Ctr,

First, Welcome!! I like that you are new here and already getting start on the real estate market. I greatly appreciate your enthusiasm in real estate investment, and boy, I will say for every Realtor that we definitely can appreciate more people like you here in Seattle.
I moved from Sacramento to Seattle a few years ago. Even though both states are quite similar in many ways, I still recommend you take time to accommodate the change and enjoy the beautiful summer to come, and there are reasons why I said that. If you like to further discuss the number, the areas, and the reasons why I made my recommendation, get connected and email me. We can talk more on the emails and I can run numbers for you via emails.

Best Regards,

Johan
Flag Mon Mar 18, 2013
Let me answer some questions:

-I am not out of state, I LIVE in Seattle and moved here 2 months ago
-I'm not familar with Seattle's tenant friendly laws, but I own rentals in CA that has VERY tenant friendly laws too!
-I would self manage, but I hire out 100% of the fix up work
-I own 4 rental properties in CA and I self manage those from Seattle (I have a local handyman who fixes things and shows rentals for me) - I've been a landlord for 10 years
-I am open to anything in about a 45 min radius of downtown Seattle
-I am a long term buy and hold guy, I don't plan to ever sell
-I am not buying to speculate on appreciation. I must get a immediate return on my out of pocket cash into the purchase (down payment + closing costs + any fix up work). So I need a decent positive cash flow with 25% down. I can still get 6 more conventional 30 year fixed loans with rates in the low 4% range.
0 votes Thank Flag Link Mon Mar 18, 2013
Just make sure you're working with a lender that can accommodate more than 4 financed properties. I am not aware of any, unless you're buying under a specific program, that allow for a buyer to obtain a 5th financed property. Not saying there isn't one out there though. I know it's a Fannie/Freddie guideline, but I also know finding a lender to adhere to those guidelines is easier said than done. Best of luck.
Flag Mon Mar 18, 2013
You have asked very important questions, but as you can see from previous responses, most of us with experience have more questions to ask you before we can make a recommendation as to which areas would fit your needs better. I sell investment properties all the time & have 3 myself besides my own home (which is an investment as well since I will be developing it soon.)

I would suggest, that as a buyer, you Google every agent that responds to your question here on Trulia, learn as much as you can about who they are online, read their client testimonials, so you know what their clients are saying about them, and then give us each a call and just ask us why we think you should work with us instead of another agent. This will take you a little while to do, but will be time well spent, as choosing the right agent is the first step towards choosing the right home. Then, pick the best fit for you and let them go to work for you with the skill and knowledge that they have. I hope to hear from you soon.

Good luck to you in any case,
Jirius Isaac
Isaac Real Estate Team
Champions Real Estate Services
TriStar Finance #MLO-107799
Office: 425-483-6849 Cell: 206-841-9976
Winner of Seattle Magazines 5 Star
Real Estate Agent Best in Client Satisfaction Award
Mortgage Loan Originator Best in Client Satisfaction
0 votes Thank Flag Link Mon Mar 18, 2013
Hi,

I am currently helping a out-of-state investor to find an investment property in Central Seattle and North Seattle. He has the same story as you do, so I am very glad to help.

If you are looking for condos, I would highly recommend Queen Anne, Magnolia, Ballard, Fremont, Sand Point, Ravenna, and Madrona. These areas have hilly landscape so even condos may have a good view. Typically, a small 1 bedroom (700ish SF) condo in Queen Anne can provide $1,000 in rental but it also depend on the view you acquire.

If you are looking for townhomes, I would recommend North Seattle, such as Greenwood, Greenlake, and Northgate areas, even up to N 145th Street. You can easily find a 3 bedroom 1 garage townhome under 300K, and look at rental income for about $1,750 depending on the area. A few nice things about townhomes are less maintenance than SFH and no HOA like condos do.

If you are looking for SFH, I would highly recommend Central Seattle (98122 & 98144) and Beacon Hill (98118). You can even try to look in Renton. Renton is less expensive and has a few nice neighborhoods. In Central Seattle and Beacon Hill, there are many industrious working family looking for SFH property to call home.

If you are looking at duplex and triplex, you are look of my knowledge area, but I can refer you someone who is an expert in my company. Century 21 North Homes have all the real estate professions to help you will all sort of property needs.

As for the Realtor, I am helping a Mister in SF to buy a rental in Seattle. If you need help, please give me a call. I will show you how I can earn your business. Visit my website: http://www.seattlesweethomesearch.com
0 votes Thank Flag Link Mon Mar 18, 2013
I see your from San Diego?

If so, are you looking for long term investments or shorter term and quicker growth?

Like the other gentlemen added, we would all need more details as to your goals.

I will say that Seattle is the hottest place to be investing in the entire country and most any investments here are wise ones, but it does depend on your budget as well as the best investments tend to be in the metropolitan areas of Seattle and the values are higher.

I have had over 26 years of taking care of investment clients goals here in Seattle, and would be happy to help you with yours!

Thank you,
Dave
0 votes Thank Flag Link Mon Mar 18, 2013
Are you a 'hands-on' property owner, or will you be more of an an absentee-owner? Are you familiar with Seattle's tenant-friendly laws? Do you want rentals near where you live? Or, are you open to close-in neighboring cities? In order to offer you advice that is tailored to your unique circumstances, I would need more information. Feel free to contact me if I can be of assistance.
0 votes Thank Flag Link Mon Mar 18, 2013
It really depends on a number of factors. Location, distance, desired demographics, price, etc. My team and I can certainly help you find what you desire. Feel free to contact me.
Best of luck
0 votes Thank Flag Link Mon Mar 18, 2013
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