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Is Seattle a good place to invest in real estate in 2022? Here are the market conditions and opportunities to consider before investing in Seattle real estate.

Is Seattle a Good Place to Invest in Real Estate in 2022?

While Seattle homes continue to rise in price, there are signs that the real estate market is cooling. These factors and Seattle’s lasting desirability indicate that Seattle real estate remains an excellent opportunity. 

If you plan on investing in Seattle real estate, you can ensure that you make the best investment possible by choosing the right property and carefully calculating cash flow and ROI. A team of professionals can help you to manage your investment property and maximize your potential profits. 

Before you evaluate Seattle as a potential location to invest in real estate, it's helpful to understand what changes the real estate market is currently experiencing. These shifts will inevitably affect the real estate market in Seattle. 

The recent rise in interest rates significantly impacts the real estate market and how investors should approach a potential purchase. As of summer 2022, the average mortgage interest rate for a 30-year, fixed-rate mortgage was 5.25%. Interest rates for other financing options for real estate investments are also increasing. Overall, an increase in interest rates will make it more expensive to purchase real estate. 

How interest rates are affecting housing markets, including Seattle 

With higher interest rates, buying a home in Seattle becomes more expensive. The rise in interest rates is designed to slow the housing market by increasing the cost of purchasing real estate and reducing demand. The speed and intensity at which the market will slow vary based on other local factors. 

While increased interest rates can make investing in real estate more expensive, it does not automatically mean that Seattle real estate is a poor investment. Interest rates are still historically low, and real estate investing allows you to capitalize on an increasingly appreciating asset. 

Although the overall housing market may be experiencing a moderate slow down, local communities may experience a cooling housing market differently. Hyper-competitive markets are less likely to see a real estate market cool down. In moderately competitive markets, you can expect that the real estate market may begin to slow slightly. 

Although we expect to see rents continue to rise across the country, 2022 rental rates have not risen as quickly as they did in 2021. As a result, we may see the housing market begin to normalize. 

The overall increase in rental prices is likely the result of a supply-demand mismatch and pandemic-related delays in building new homes. For some communities, stabilizing rental rates may discourage renters from exploring home purchases. However, long-term renters may see a cooling housing market as an opportunity to purchase a home. 

As the real estate market slows, homeowners are less likely to list their homes, and fewer homes are listed for sale. In a cooler real estate market, sellers have less incentive to sell their homes. Home prices and interest rates are currently high enough to cause sellers to carefully evaluate any potential motivation to sell their homes. For many homeowners, it doesn’t make sense to move unless circumstances require it. 

While the shifts we’re seeing in the national housing market are sure to affect Seattle, each city will have factors that uniquely affect the local housing market. 

The National Association of Realtors reports that Seattle's “home prices rose by 19.6%” and that the “monthly mortgage payment is higher by $603.” This increase is significant but consistent with what you expect in a highly competitive and desirable market. Median home prices in Seattle continue to rise. According to Realtor.com, “the median listing home price in King County, WA was $899K, and the median home sold price was $905K.”

Despite the increase in home prices, there is some evidence that the market in Seattle may be slowing, albeit slowly. The Seattle Times reports that there were fewer new listings, more listings left on the market at the end of the month, and fewer pending home sales in April 2022 than in the year before. 

Read More: How to Find the Sweet Spot of Rental Pricing For Your Seattle Home

How to evaluate real estate investment opportunities 

Regardless of where you choose to invest in real estate, you should carefully evaluate your investments. Investing in real estate is likely one of the largest single purchases made during your lifetime. Ultimately, the best time to invest in real estate is unique to your financial circumstances. Generally, investing makes good sense when you have long-term financial stability.

Before you begin your search for a real estate agent or lender, you should clearly define your budget. As you search for potential real estate investment properties, filter listings based on the parameters of your budget. You should prepare to pay more than the list price and target properties accordingly.  

Carefully calculate the potential cash flow and ROI of a real estate investment property in Seattle 

As you identify potential properties, carefully calculate the cash flow for each by subtracting potential expenses from the potential income a property can generate. You’ll need a firm grasp of Seattle rental pricing to calculate cash flow accurately. You can also calculate the possible ROI of a specific property by dividing the annual return by planned expenses (including the down payment, closing costs, and any home improvements).

Consider locations outside of the most popular counties in Seattle 

If potential real estate investment properties in Seattle give you sticker shock, you can also consider growing neighborhoods or smaller suburbs just outside the city. These areas can offer more varied opportunities. As Seattle grows, renters will look for opportunities outside the city center. 

Ultimately, investing in Seattle real estate can offer significant opportunities

The Seattle job market continues to grow, and the city offers residents an almost incomparable quality of life. Seattle's proximity to the outdoors will continue to attract residents from all over the country. Further, the amount of renters in Seattle continues to grow, providing real estate investors with growth opportunities. Since the 2020 census, renters in Seattle outnumber owner-occupied residents. As long as you market and manage your rental properties appropriately, you can expect an ROI from investing in Seattle real estate. 

Learn how Belong can help you maximize the cash flow of your Seattle real estate investment property 

Belong offers homeowners an alternative to property management that positively impacts rental property cash flows. We help you maintain a positive cash flow for your real estate investment by maximizing the rental price, regularly inspecting the property, conducting regular preventive maintenance, and limiting vacancy and resident turnover. With Belong, there are no hidden fees. We offer rent guarantees and 24/7 concierge-level support. 

Learn more about Belong and see the role it plays in your real estate investment strategy.

Before investing in a rental property in Miami, consider the schools in each neighborhood. Find out the best Miami school districts to own a rental property.

Best Miami School Districts To Own Rental Property

If you’re interested in investing in Miami real estate, you’ll want to understand the role school districts play in how potential residents will evaluate your rental property.

Miami is home to the fourth largest school district in the country: Miami-Dade County Public Schools. The school district maintains a 19:1 student-teacher ratio. The public school district is home to four high schools that are ranked among the top 100 in the nation and nine of the top 20 schools in Florida. There are also over 300 private schools in Miami with an average tuition cost of $14,626. 

Parents will want to rent a home in an area with high-quality private and public schools. You can expect potential residents to research local schools using an online platform like Niche or Public School Review. You should conduct similar research to decide how much schools will impact your rental pricing.

How do schools affect rental property pricing? 

If you’re looking for a rental property in Miami, you’ll want to consider the schools in each neighborhood. Rental property owners can expect that home values will be higher in areas where school districts are highly rated. If you’re planning to rent a home in an area with high-quality schools, those schools will also influence how you price your rental.

There is often a specific demand for rental homes in the best school districts. In areas with exceptional schools, residents may be willing to pay more for smaller, older, or less updated homes and forgo some amenities in exchange for access and proximity to good schools.

Benefits of having a rental property in the best Miami school districts

Choosing a rental property in areas with good schools can ensure that the home values continue to grow. In the case of a changing real estate market, investing in a home in a good school district can ensure that your home value remains stable. Residents in homes with good schools are more likely to renew their leases and continue to see the value in your home, increasing the likelihood of renewing their lease. Finally, residents who prioritize good school districts tend to be invested in their communities' success, making them ideal tenants for a rental property.  

Best Miami neighborhoods for schools and to own rental property 

Key Biscayne is an Island neighborhood south of downtown Miami that is recognized for its high-quality public and private schools. This neighborhood is a tight-knit community and offers residents all the amenities and services of a neighborhood on the coast. Like almost all Miami neighborhoods, Key Biscayne is part of the Miami-Dade County Public School district. Key Biscayne offers residents access to excellent local restaurants and outdoor activities, including visiting the local lighthouse and biking and walking trails.

Coral Gables is located west of Key Biscayne, southwest of downtown Miami, and near the University of Miami. The neighborhood is characterized by its historical landmarks and strict residential zoning that helps protect the community’s charm. You’ll find several quiet neighborhoods with Spanish-influenced architecture. Coral Gables is rich with heritage and is a community that welcomes the unique cultural influence of Hispanic and Caribbean immigrants. 

This family-friendly community may be known for its proliferation of golf courses. Still, Doral offers families a clean and safe environment with many parks and free trolley service. Parents can choose from excellent public schools, which include Doral Academy, Renaissance Elementary Charter School, and Doral Academy Charter Middle School. Several private schools, including Petersen Montessori Academy, World of Kids Academy, and Little Kid’s Academy, also offer parents excellent educational opportunities for their children. 

Palmetto Bay is a community located on the coast between Pinecrest and Cutler Bay. This neighborhood offers a relatively affordable option for families looking for a safe, community center neighborhood with great schools. Many residents use golf carts to drop kids off at school, go shopping, or pick up a cup of coffee. The community's schools are highly rated, and the community includes lots of professionals and successful business owners. 

Pinecrest is a family-friendly suburban village and one of Miami's safest neighborhoods. Palmetto Middle School and Miami Palmetto Senior High School are both reputable public schools in the neighborhood. A rental home in Pinecrest offers parents the opportunity to be near excellent schools in Pinecrest, Coral Gables, and Palmetto Bay. Residents will also love living near Pinecrest Gardens, which hosts concerts, art shows, a weekly farmer’s market, and other special events.

You’ll find the Aventura neighborhood to the north of Miami. This neighborhood is ideal for young families looking to raise their kids in a diverse, safe community. Aventura is close to the beach and is home to plenty of restaurants and recreational centers. While most of the schools in this neighborhood are private, The Aventura City Of Excellence School is a highly rated public charter school. The area is also home to the largest mall in Florida, with over 300 stores, dining options, and public art installations. 

Coconut Grove, also called The Grove, is one of the oldest neighborhoods in Miami and is located between Brickell and Coral Gables. This trendy neighborhood is home to some of Miami’s most prestigious private schools, including St Stephens, Carrollton School of the Sacred Heart, and Ransom Everglades. Residents will love the sense of community and the small-town vibe of The Grove. This lush, lovely, and highly-walkable neighborhood is full of cafes, boutiques, parks, and gardens. 

School districts are just one of many rental pricing factors that will affect your Miami rental property. Once you’ve acquired a Miami investment property, you’ll face the challenge of knowing how to best price it. Nailing the right rental price requires that you earn enough profit after expenses. Still, you must be careful not to price yourself out of the local rental market. 

Belong can help you evaluate and price their rental property, factoring in school districts. We use current trends, an evaluation of the current real estate market, real-time property values, and an assessment of the particular features of each home to maximize your rental price. Once we identify the best rental price, our team will work to get you the best residents possible. 

Enter your home address to see rental pricing for your property. 

If local zoning permits it, having a guest house or ADU as a long-term rental is a great way to secure extra income. Learn more about what to consider.

Can You Rent Out a Guest House On Your Property?

More often referred to as Accessory Dwelling Units (or ADUs), guest houses are typically separate, additional living spaces to someone’s primary residence. They can be attached to the main home, be a separate structure, or be located above a garage. You might also call guest houses granny flats or carriage houses. Guest houses can provide a passive income opportunity to property owners, but those interested in renting an ADU on their property should consider some key factors. 

Listing your guest house or ADU as a short term rental 

While listing a guest house for short-term rentals is possible, doing so comes with challenges. Most cities and municipalities require a specific license for short-term rentals. Additionally, short-term rental marketplaces are changing their guidelines to attract and favor guests. Short-term rentals require more maintenance, including regular cleaning, management, and marketing.  

Can your guest home become a long term rental?

To determine if you can rent a guest house or ADU to long-term tenants, you’ll need to learn more about city and county regulations. Your property or neighborhood will likely need to have the appropriate zoning designations. 

To find the zoning restrictions on your local neighborhood, start by searching for your city or county zoning ordinances to find out the allowed uses for your property (for example, San Diego Planning & Development website if your home is in the SD area). You could also call your municipal planning or building department to help them explain how the laws work in your area and get an official opinion on your specific property. 

Similarly, the HOA or homeowner association may prohibit or have specific guidelines around rental properties and ADUs. If the HOA does permit you to rent your guest house, they may request that your lease include particular terms. For example, the HOA may require that you have specific parking guidelines for tenants. 

Finally, it may be helpful to verify any other fire or safety restrictions. You may find that there are requirements for egress windows, sprinkler systems, or learn that a guest house must be within a certain distance of a fire hydrant. Even if a former owner of the property rented out the guest house previously, that doesn’t automatically mean it’s still up to code today. 

If you plan to purchase a home with a guesthouse or ADU, you should discuss your options with a lender. Conventional, FHA, and VA loans each have requirements for buying a home to rent some or all of the property to tenants. For example, an FHA loan requires that the owner lives on the property if they are planning to rent a guesthouse or ADU.  

Considerations for renting a guest house on your property

The location of your guesthouse on your property may influence how you choose to prepare your property for tenants. The space must be easily accessible from the street or parking areas. If there is no clearly defined path to your guesthouse, you may need to add one. You may also want to consider lighting. Is there adequate lighting along pathways, near garages, and entryways?

You may also want to consider ways to create clearly defined boundaries or spaces. Landscaping can help make clear, separate outdoor spaces. Hedges, trees, and paths can also help preserve your privacy and comfort.  

Tenant parking will be an essential consideration in renting a guest house on your property. If there are garages or driveways, you’ll need to decide how you plan to manage parking. Offering off-street parking to tenants can be an excellent way to stand out from other rental options on the market or allow you to increase rental income. 

If you are renting your guest house for the first time, you may need to change your utilities. We recommend researching other rentals in your area to determine if it’s advantageous to require tenants to pay for their utilities or if those costs are included in the rental fee and agreement.

For most rentals, it’s better to separate your utility services. You’ll need to contact each utility provider to see if this is possible. Dividing your utilities may require adding a meter, which often incurs an expense. 

If you plan to rent the guest house on your property, you’ll need to ensure that you and any tenants have adequate storage. In some markets, storage can be an essential factor for potential tenants. While interior storage is always appreciated, you may need to consider where your tenants will store bikes, outdoor equipment, or other recreational items. 

Who will manage the guest house on your property if you choose to rent it? Making this decision may be one of the most important determinations you make, and there are several important factors to consider in making this decision.

Your tenant will likely have maintenance requests throughout their rental term, so you can expect that renting a guesthouse on your property will require additional maintenance. Do you intend to complete the maintenance yourself, or do you have trusted contractors who can assist? It’s important to understand that a certain amount of wear and tear will occur if you rent your guesthouse. 

You may also wish to assess the current condition of your guest house. Is it likely to need repairs in the future? Are the appliances relatively new, or will they need to be replaced soon? You should also evaluate water heaters, heating, and cooling systems. 

Finally, consider how you will manage the maintenance of the property grounds. Who will be responsible for lawn care and maintenance? 

Choosing to rent a guest house on your property comes with many upsides, including additional rental income. However, you may find that it is challenging to have close proximity to your tenants. You will likely see your tenants more frequently, which may be difficult for some homeowners. 

There will be times when you need to address concerns with your tenants. It’s essential that you set clear expectations with them and approach any potential conflicts or concerns with extreme care. This dynamic may not be suitable for everyone.  

Setting and including expectations in the lease 

The best way to avoid any potential conflict or misunderstanding with tenants is to set clear expectations and ensure that they are all included in your lease agreement. Carefully consider which policies might be most important, have them in your lease, and discuss them with prospective tenants. 

Typical areas of concern might include guests, parking, and quiet enjoyment guidelines. Consider working with an attorney specializing in lease agreements if you have not already. Often, they can help guide you to avoid any potential challenges. 

If conflict or lease violations occur, it’s critical to address them promptly. More often than not, these issues result from a misunderstanding or lack of information. You can resolve most concerns calmly and respectfully. 

If the prospect of conflict with your tenant is a concern, you should consider working with a property manager or with a modern alternative like Belong. Both a property manager and Belong can advocate on your behalf and resolve any issues with tenants. Some property managers will offer eviction protection, although be sure to read the fine print as this is often charged at a higher rate and only includes a small amount of coverage. If you choose to work with Belong and we select tenants that don't work out, you are covered for evictions with $15,000 coverages toward legal costs - more than 3x what property management companies offer (if any!). 

Property management for your guest house 

If you plan to rent your guest house, a property manager can offer you significant benefits beyond managing potential misunderstandings or conflicts. Consider how extra support can make renting your guesthouse easier, efficient, and more profitable. At Belong, we believe that renting your guesthouse should be enjoyable. 

As Belong isn't a property management company, but rather a residential network, we take all of the stress out of having tenants (or as we say, residents) living in a guesthouse on the same property. Both you and your residents will have access to a 24/7 concierge service if any issues arise and maintenance requests are handled efficiently by vetted in-house professionals (no hanging around for third-party contractors). 

Maximize rental price and guaranteed rent

Once you choose to work with Belong, you can start receiving rental income almost immediately. We work with homeowners who have both current residents and vacancies. To maximize your rental income, we’ll conduct and share the results of a market pricing analysis.

We guarantee that you’ll receive rent each month you work with us—even if you don’t have a current tenant. We’ll also give you your entire year of rent upfront. That means you’ll have more rental income in your pocket sooner. 

What if renting your guest house didn’t require you to do any maintenance? Belong has a team of professionals who conduct a full, initial inspection report. You’ll have a complete understanding of your guest house condition from the beginning. We’ll continue to complete inspections every quarter, which means fewer surprises in the long run. 

When it comes to finding the best tenants for your guest house, we take pride in managing the process from beginning to end. If you don’t already have a tenant, we’ll take high-quality photos and create a 3-D virtual walkthrough. We’ll use these photos for marketing your property to potential tenants. We’ll also facilitate tours and showing for any interested, qualified tenants. 

Great school districts impact how to price your rental. This guide for real estate investors shows how quality schools are evaluated and influence pricing.

How Your Property's School District Affects Rental Pricing

Rental property owners can expect that home values will be higher in areas where school districts are favorably rated. As a result, high-quality schools have the potential to influence the way you price your rental. However, homeowners must understand how schools are evaluated and why these factors influence rental pricing. 

How school districts influence property values 

When high-quality schools attract homeowners and residents to a specific area, the value of those properties increases. An increase in home values (and the subsequent increased price for rental homes) is more likely to occur in areas where good schools and homes are in short supply. 

When it’s easier to develop new homes, it's less likely that home values and rent prices will increase because you can reduce the demand as new homes are built. In contrast, in areas where it’s impossible to reduce demand by building new homes, the value of homes and the cost to rent homes will continue to increase. 

Understanding how we evaluate school districts 

In evaluating your property school district, it’s essential to consider the quality of the school district overall, but remember that elementary schools, middle schools, and high schools can vary significantly in the same neighborhood or district.

Several factors can affect school district ratings, including: 

How to research individual schools and school districts 

Search for online school profiles and rating sites 

Several websites publish ratings and evaluations for individual schools and their districts:

Keep in mind that these sites evaluate schools based on their own unique criteria or by compiling data from other sources. Ideally, you should compare ratings from multiple sources to validate their data and claims.

Locate and review any state dashboards or reports

Often, each state will compile a website page where residents can compare school districts and individual schools. These dashboards can serve as a starting point for researching your property’s school district. These often include test scores and metrics like student-teacher ratios like other third-party reports. 

However, you should also search for upcoming changes or improvements planned for districts and individual schools. Schools that undergo improvements or renovation projects will likely improve their test scores in the following years. As a result, capital improvement projects can be a good indicator of improving school district performance. 

Factors that affect rental home desirability for parents 

Parents invested in finding a rental home in a good school district will likely look beyond rating and test scores. Several factors will contribute to a “good” location for high-quality education choices. 

Proximity to public school alternatives 

Parents may choose to look beyond public school education opportunities to find the ideal location to rent a home. Parents may look for a home within driving distance of a charter or private school. Parents may also look for magnet schools or special academic programs within local public schools. 

If there are nearby public schools alternatives, it might be helpful to understand how student admission works. For example, private schools may require students to interview and pass specific tests before enrolling. Alternatively, charter schools may have long waiting lists or lotteries. 

How parents can choose their child’s school

If you’re not already familiar with the school section process in your district, it may be helpful to research the process. Each state and district has different guidelines which govern which school parents can send their children to. 

In some school districts, parents may choose any school in the district and not just the school closest to their home. Other guidelines might require students to participate in a lottery system. In other districts, students may only have one choice of public school.  

How do medium and low-ranking school districts affect the rental price of a property 

If you find that your property’s school district ranks average or below, your rental pricing may not be affected. The vast majority of school districts in the country perform at a moderate level, with others ranking higher and lower. 

It is important to note that poorly performing school districts can correlate with other factors that could affect the rental price of your property. It’s often the case that communities with underperforming school districts experience more crime and enjoy fewer amenities like parks and recreational spaces. So while a low-ranking school district may not directly affect rental pricing, it’s crucial to evaluate school districts within the context of their communities. 

How highly desirable school districts affect property rental prices 

In contrast, if your property’s school district ranks well and is highly desirable, you may see that your rental pricing is affected positively. Why might that be, and what effects can school districts have on rental properties? 

There will be more demand for rental homes if fewer homes are for sale in your highly-desired school district. This is particularly true for areas with limited opportunities to build new homes or residential buildings. This increased demand will result in higher rental values and more cash flow. 

Residents are invested in the community and schools

In areas where schools are highly desirable, and there is more demand for homes, residents are more likely to renew their leases and see more value in their current rental homes. With a focus on school performance, you will likely see that residents are more invested in their communities.  

Often there is a correlation between student performance and parental involvement. If a parent is able to emphasize their children’s academic performance, they’re also likely to have the means to take good care of their rental property.

How highly rated school districts can affect home value 

High demand for rental homes in an area where the market cannot grow or reduce demand often means that homeowners will invest more money for a smaller, older, or less updated house. Buyers and renters may be willing to forgo some features, like a large yard, in exchange for access and proximity to good schools. 

The effect of school districts on home value over time

The National Bureau of Economic Research found that home values increased by twenty dollars for every dollar spent on public schools in a community. Investing in public school education has an evident positive influence on home values over time. High-quality schools can help ensure home values grow or remain stable in changing markets. A home located in a desirable school district can protect homeowners against market volatility. 

Understanding the relationship between property taxes and good school districts 

What’s the correlation between property taxes and school districts? In communities where school districts perform well and are highly desired, education-related ballot measures are often unanimously passed, resulting in higher property taxes for homeowners. The more tax revenue a school gets to pay for teachers, books, and infrastructure, the better the schools usually end up being. As a result, property values and rental prices increase. 

Jordan Newsom

Jordan Newsom is a highly-caffeinated writer who loves delighting readers, using content to teach, and broadening perspectives. When she's not behind a computer screen, she's hunting down the best coffee shops, breweries, and restaurant patios in Denver, Colorado.

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