Brandon Nelson
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Where to Invest in Bellingham
The blogosphere was intended less to be a megaphone and more to be a round table. Blogs were intended to encourage discussion, not just spout the thoughts of the blogger, as most do, and as this one has done mostly up to this point.
But I want to start this post by saying right up front that I’m asking for your thoughts on this topic. I’m asking for your input. You don’t even have to be from here — you can live in Islamabad! — to submit your thoughts on the subject.
The subject is where to invest in Bellingham. Let me narrow that down a bit for you by saying that I mean to talk about non-owner occupied properties. Investment, income-producing, rental properties. Not flips, but rather buy-and-hold single and multi-family properties.
I’ve sold several this year, and I can honestly say they have all been properties I would’ve bought myself. Single family up to three units. Core Bellingham neighborhoods, no-car-required type locations in the 98225 (west of I-5, that is).
I’m on the constant look-out for more of the same for several clients, and I LOVE investment real estate. Personally I like multi-families and smaller single families. The multi’s offer a good hedge against total vacancy for any period of time when there’s a move-out. The smaller single families are constantly in demand and are less prone to developing groups of tenants with different last names.
When it IS time to sell, there’s always a market in Bellingham for starter homes in the core neighborhoods. (Right now, in all of B’ham, the group of listed houses priced under $280K has a 38.5% pending ratio! More than 1/3rd are pending).
Another category, because Bellingham is a college town, is college rentals. Some people love them and scoop them up left and right, while others shy away.
But you tell me, Bellingham and across the U.S. : Single or multi family? College or not? High-end or lower? East or west of the freeway? Brand new or broken in? Section 8? — Gov’t subsidized rental assistance. (I’ve got an old family friend in the midwest who has made his fortune buying, rehabbing and managing Section 8 rentals exclusively. BIG multi-families.)
Or does Bellingham have qualities (read: price) that are making you invest elsewhere right now, or not at all? Some believe that, for sure, while others flock here from Vancouver, California, and more and more Asian countries to buy it up.
What do YOU think? Stand up and be counted. Let the comments flow…
Okay. I’ll take the bait … in my humble opinion ….
Where to buy investment property??
In Bham – West of I-5, South of Mall, North of Lake Samish, the older unique housing stock basically. Always holds value the best, especially a house that needs sweat equity, but whose bones are good.
When to buy investment property??
Think things (prices) are still headed down, albeit excrutiatingly slowly thanks to artificial and expensive government props, so whatever is bought, needs to be a good good great deal. Must be able to withstand another 10% price reduction from fair price today. If rent (rents) covers mortgage, and holding for the long term, a further price reduction is less of a concern. Need to factor in falling rents in the future though as well. They are headed in that direction now, though only 5-10%.
When is the time to sell investment property??
… depends on personal circumstance for the most part and what you are holding. Since I believe prices have further to fall, this is a good time to sell if you are holding housing stock in the older neighborhoods. Sell before that tax writeoff expires for home buyers.
Hey Glenn,
Thanks for taking the bait and helping to kick this off! Sounds like we’re on the same page regarding location. The beauty is those west of I-5 and south of the mall neighborhoods still have some good deals in them. Good for Bellingham, anyway. I’ll invest here because it’s my backyard and because the security of the investment (in that I could sell if I had to) is stronger than most areas in the U.S. But I can remember being in Montana a few years back looking at such things as a 5-plex generating about $1600/month and listed at $84,900… or two 2/1’s on two adjacent lots, rented for $1050/month total, listed for $55K for the package. IMPOSSIBLE scenarios in B-town.
Regarding your prediction of another 10% drop in prices, are you basing that on the shadow inventory of predicted foreclosures, inflation, or both? It sounds steep in my opinion — but I do acknowledge the artifical nature of the market right now with the tax incentives and ridiculously low interest rates. Here’s a question, Glenn: based on your experience, rating from 1 to 10 with 10 being “beyond important” how would you rate tenant selection as part of overall investment success? Do you maximize rents AND screen like crazy, or keep them attractively priced so you have a pile of applications to pick from?
Hey Brandon – thanks for the free Turkey food hookup!!
anyway … I agree that investing near where you live and Hardware sales is huge, and that Bellingham real estate is a relativaly safe bet in the short term, and even better long term.
10% more drop in prices, and what is that based on?? … well, first off … it’s hard to really say what “a drop in prices” means, since there are so many numbers out there, and I don’t trust that distressed sales are always counted in, which will make a market look better than it is. I guess I should have said, I think Bellingham will remain a buyers market for the next year or so in my opinion.
I see more downward force than upward locally, and anywhere that saw big appreciation post 2002 or so. Obviously that has already happened, but I think it will continue. This is based on my feeling that the true price of bread and butter real estate in a communtity, is based on what you can rent it for. What you can rent a property for is based on wages and jobs. Rents and wages never escalated like house prices in Bham post 2002, and they are under pressure … thus my opinion is formed
Screening tenants??? good idea, but better is to have a clear agreement between parties, and make sure that the land lord acts always in good faith … screening is tough because people change for better and worse. I have seen the worst and best from sources you would never expect in the rental business. Bottom line is, if you want to play the game, and you play it long enough, you are eventually going to get burned no matter how careful you are. It’s what tools you have to recover your sanity and property with that are important. Just plan on it.
As far as rents go, I am strongly in the camp of renting at ~80% of market and making people happy and comfortable in the home they are renting. They stay way longer, the numbers work out about the same in the end and it’s much easier to sleep.