seattle-condo-investmentsThe year of the Dragon has definitely spurred more buying activities compared to last year. More investors are getting off the fence and feeling a little bit more confident.  Every now and then, I will come across some first time investors interested in the Seattle condo market. If you are one of those first time investors who plan to buy and rent it out, there are a couple of things that you might want to consider before venturing out on your first condo search:


  • Consult your financial planner (If you have one): How is the rental property going to fit into your whole investment portfolio? Is it going to be long or short term?  These questions may have impact on your investment goals whether you're are looking at medium term capital appreciation or as part of your long term portfolio.
  • Consult your tax account– In most cases, there are some tax benefits when you own an investment property.  You could deduct your mortgage interest, taxes, insurance, and expenses associated with owning the rental property.  If you are experiencing rental loss, you might even be able to write that off but they are subject to some income limitations.  So, talk to your tax account to find out if you're eligible for those tax benefits.
  • Get pre-approved! Unlike during the condo boom years when you can easily get a pre-approval letter within hours after giving out some basis information over the phone, these days, it takes a little bit more work. Lenders are much more stringent about giving a pre-approval letter. Besides running a credit check, most lenders may need you to provide your pay stub, W2, and bank account statements. Depending on your individual circumstance, (employed, self employed,etc.) the documents required may also vary with different lenders.
  • Are you ready to be a landlord? Are you going to manage the rental property or have someone do it for you?  If you are newbies, you may feel excited with your first investment and wanted to manage it yourself.  There's paperwork, time and energy needed to manage a rental property.  So, if this is something you don't feel up for, you might want to hire a management company to deal with it.
  • Run all your numbers. After getting pre-approved and narrowing down the price range that you're comfortable with, run the numbers.  This is where an experienced realtor can come in and help you figure out the high level calcs.  The costs for buying and selling the rental property, the rental rates, vacancy rates, maintenance/repair costs, cost of hiring a management company and other expenses associated with owning an investment condo should all be considered.
  • Be open minded. I once had a client who thought distressed properties are usually not in good condition and did not even want to consider looking at them. However, majority of the condos that I have come across are usually in pretty good shape or only require minimal work to make it rentable.  Since this is an investment property, be open minded about looking at distressed properties (short sales and bank owned).  After all, these properties are generally priced 5-20% below market value which will give you a good start and more head room for appreciation down the road.

By Wendy Leung with Seattle Condo Review. A guide to Seattle condos exclusively for buyers and sellers.