One of the best ways to build wealth over time and even earn a sizable income is to invest in real estate.
If you’ve decided to purchase a property in WA for investment purposes, where should you look? How can you find the right place to buy and invest in? This article will provide you with the details you need to make a sound decision.
Buying real estate for the purpose of investing is a sound financial strategy. But like any other business venture, it’s important to do your due diligence. And when it comes to investing in WA State rental properties, choosing the right place to invest in is crucial. Here are some things to look at when picking the right place to invest.
When choosing a specific neighborhood to invest in, look into whether or not there is any future development in the works. This could impact not only the enjoyment of your tenants, but also the desirability and future value of your property.
You can find out this info by getting in touch with someone from the city’s municipal planning department. They will be able to fill you in on any new development that’s in the works or has been zoned in the area.
Lots of construction happening can be a good sign that the area is up-and-coming and continually improving. But certain types of construction could be a bad thing, and a lot of new housing could compete with your investment property.
Number of Listings
If an area has a lot of listings – more than what would be considered typical – it may be a sign of a seasonal cycle or a decline in the neighborhood.
Your job is to find out which one that is. Many vacancies can make it difficult for a landlord to continually market their property for rent and fill their units with good tenants. On the other hand, low vacancy rates give landlords the chance to be more capable of increasing rent rates.
There are expenses related to running an investment property, and property taxes are one of them. The thing is, property taxes can vary quite a bit across the city you’re looking to invest in, so you will want to know how much you will have to pay. That said, high property taxes might be annoying to have to pay, but they could also be a sign of a desirable neighborhood that is attractive to good, long-term tenants.
But just keep an eye out for places with high property taxes that aren’t so desirable. Ideally, you’ll want to find some place that’s high in value without the sky-high property taxes.
High Average Rent
Ideally, the more money you can charge in rent, the better. Of course, the rent price will be relative to the cost of acquiring and operating the property. For instance, $1,200 in rent might not be much for a place that you paid $700,000 for, but it could be sufficient for a place that you paid $275,000 for.
Find out what the average rent is for units in the area you’re looking in to find out how much you can realistically charge. Make sure it’s enough to cover the cost of your mortgage payments, utilities, repairs, maintenance, property taxes, homeowners’ insurances, HOA fees (if applicable), and any other expense related to carrying the property.
So, where are the best places in Washington State to invest in rental property in 2024 and beyond?
Best Cities in WA to Buy an Investment Properties
On a city-to-city basis, there are a handful of places in Washington State to invest your capital in. Here are some examples of cities that you may want to consider if investing in real estate in WA is on your agenda in 2024:
- Median home price: $601,951
- Increase in price over the past year: +1.3%
- Average rent (2-bedroom apt): $1,895
Kent, WA is just 19 miles south of Seattle, making it a great place for tenants to live at just a short commute to Seattle’s labor force. But you can snag a property for almost half of what you’d pay in Seattle. Plus, rent is fairly high for what you get as well, making it a great place to invest. Not only that, but rentals are in demand in Kent: landlords can fill their rental properties in as little as 10 days (or less).
- Median home price: $458,396
- Increase in price over the past year: +1.6%
- Average rent (2-bedroom apt): $1,785
Tacoma. WA is experiencing a healthy market right now, with prices having increased 1.6% over the past year. It’s become a bedroom community for Seattle for those who wish to be close to the action without the high housing costs of Seattle.
In addition to typical renters, there are also plenty of college kids living in Tacoma who are looking to rent, giving landlords another avenue to realize steady rental income.
- Median home price: $1,102,449
- Increase in price over the past year: +1.5%
- Average rent (2-bedroom apt): $2,599
If you can afford the higher price tag, perhaps Kirkland is a great place to invest. Just 11 miles from Seattle, Kirkland is a desirable place to live, and can bring you hefty rent every month. At an average rent of nearly $2,600, this should be able to help offset the higher cost of living in the city while still helping you pad your bottom line.
- Median home price: $697,938
- Increase in price over the past year: +1.9%
- Average rent (2-bedroom apt): $2,179
A great option for those looking to invest in income property is Renton, where you can fetch monthly rent prices over $2,000 per month on average, despite relatively affordable average home prices.
It’s a great place for investors to buy properties that are priced lower than places like Seattle or Kirkland. The area is also poised to grow and become more in-demand, which means you may be able to get away with charging higher rent in the near future.
- Median home price: $368,248
- Increase in price over the past year: -0.9%
- Average rent (2-bedroom apt): $1,295
A super-hot real estate market in Washington State right now is Spokane, making this a fabulous option for anyone wishing to invest in WA real estate. With affordable housing prices right now, you can snag a home at a low price while still collecting an average of nearly $1,300 per month in rent.
Considering the lower end of prices, you may even want to take a look at multi-family housing to collect even more in rent on a monthly basis.
Ready to Apply For a Mortgage in Washington State?
If you’re looking to buy property in Washington State for investment purposes, you’ll need a home loan to help you finance this big purchase. If so, Sammamish Mortgage can help. We are a family-owned Mortgage Company that proudly serves all of Washington, Oregon, Idaho, and Colorado, and have been since 1992. We offer many mortgage programs with flexible qualification criteria. Get in touch with Sammamish Mortgage today!