Investing in Seattle real estate is an enticing prospect. 

From some of the best coffee scenes in the world to some of the most iconic neighborhoods in the nation, Seattle has always been an attractive option - for buyers and renters.

Purchasing an Investment Property in the Emerald City can tap into that demand and be rewarding, but it’s essential to be prepared for ownership responsibilities.Buying any home can be challenging, but real estate investments come with their own layer of complexity. 

Below, the team at Prevu Real Estate breaks down the top things you should consider when buying an Investment Property in the Seattle area, from effective budgeting to property management.

Outline specific goals for the property

Having a clear idea of what you want to do with your investment property is key. 

Are you looking to create steady cash flow, or are you banking on the property's value appreciation for a significant return in the future? Will you be living there part of the year and renting it out the rest, or focusing on creating a full-time rental property?

Your goals will significantly impact the type of property you should target in the Seattle real estate market. For instance, if you want to generate rental income as fast as possible, you may focus on properties in highly sought-after neighborhoods with strong rental demand, such as Capitol Hill or University District.

On the other hand, if you're looking for long-term value appreciation, you might want to look at neighborhoods with significant growth potential that are seeing increased attention from developers and homeowners alike.

You should also consider whether you want to invest in a single-family home, a condo, or a multi-unit property, as each has merits and drawbacks regarding your specific goals. 

If you’re unsure where to look, you can always interview real estate agents to see if you can find a good fit for your situation. The expertise and local knowledge of an experienced buyer’s broker can be invaluable to help ensure a successful and well-informed purchase.

Hire an experienced real estate agent

Working with the right agent won’t just help make your property search easier; it can also help you save money when you buy.

An experienced Seattle buyer’s agent can offer a wealth of tools and information that can streamline your buying process, from navigating the Seattle housing market to going over home prices history. The key is to take the time to settle on a brokerage that works for you, and that offers commission rebates (we’ll talk about those in the following section).

You want to work with someone who will understand your goals for an investment property and how to help you make the most out of your purchase. If you’re aiming to purchase a condo, for example, you may want to find someone who has extensive experience in both new construction and existing condos to help you consider either option. 

If you’re planning on investing in a multi-family home, then you’ll want to find an agent that has a wealth of knowledge about Seattle’s top residential areas, such as Magnolia and Queen Anne, and who has recently helped close on some multi-family homes. 

Expertise tailored to your specific needs should be your top priority when searching for an agent, but you shouldn’t forget about essentials, either. Your agent should be easy to communicate with, ready to answer any of your questions, and, perhaps most importantly, able to offer a commission rebate to help you save.

Use commission rebates for extra savings

Knowing you stand to receive money after buying a property in Seattle can be a game-changer to kick off your investment property venture; commission rebates can help make that happen.

We highlighted that it is crucial to work with a Seattle real estate agent that offers commission rebates for a reason: they’re the only ones that can help you benefit from one.

Commission rebates, also known as buyer rebates, are a simple concept. They’re essentially a portion of your agent’s commission fee given back to you, the buyer, as a rebate. 

Modern brokerages like Prevu Real Estate leverage investment in technology and salaried agents to allow buyers to take advantage of rebates and have extra cash on hand after buying.

Prevu currently offers the largest commission rebate in Washington state, allowing buyers to receive up to 2% of a home’s final purchase price after closing.

For instance, if you were to buy a $1,400,000 condo in one of Seattle’s desirable Lake Union neighborhoods, you could potentially get a rebate totaling up to $28,000.

This extra cash can help kickstart your property management budget, help offset expensive closing costs, or serve as an emergency budget in case of unexpected costs.

Know your financing options

Financing an investment property in Seattle differs from financing a primary residence. Interest rates can be higher, and you will likely need a larger down payment - typically around 25% or more.

Before you start looking for properties, get pre-approved for a mortgage. This will give you an accurate idea of your budget and show sellers you're a serious buyer.

Traditional banks, credit unions, and online lenders offer investment property loans. However, it's worth exploring less traditional financing options, such as a Home Equity Line of Credit (HELOC) on your primary residence or a less common approach like a seller-financing agreement.

Regardless of the option you choose, ensure that the mortgage payment, combined with other costs like insurance, taxes, and maintenance, will be covered by the projected rental income. At least comfortably enough, so it doesn’t incur an unsustainable net loss.

Plan how to manage the property

Owning an investment property is not usually a passive endeavor. Real estate investors have to deal with maintenance, management, and dealing with any unexpected issues.

The most important question you will face is, will you hire a property management company or do it all yourself? The decision depends largely on your time, experience, and proximity to the property.

If you live close by and have flexible hours, self-managing may be a viable option, which can help you save on property management fees and give you more control over the property. But it also means being on call to handle leaky faucets at midnight and the responsibility of finding reliable contractors for repairs.

If you live far from the property or have a full-time job that doesn't allow you to handle maintenance issues quickly, a property management company could be a lifesaver. They handle everything from tenant screening to emergency repairs, ensuring your investment is handled professionally. 

Interested in buying an investment property in Seattle? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.