A Seattle Real Estate Investor's Story

The Wall Street Journal's Real Estate Journal takes an in-depth look at a local real estate investor in a multi-part, fourteen-month series:

• A First-Time Landlord Launches His Investment
• A Landlord Struggles To Find Qualified Renters
• Landlord Finds a Renter After Some Concessions
• A Landlord Experiences His First Repair Problems
• Our Landlord Searches For His Next Investment
• Despite Market Research, Our Investor Loses Out
• Landlord Takes a Risk With His New Property
• Can Our Landlord Score 20 Properties By 2020?
• Couple Shares Passion for Investing
• Landlord Has No Regrets After Year of Investing

Considering that I just found this (thanks to Ben Jones' The Housing Bubble 2), of course I haven't read it all. I do find the story told by the series of headlines to be interesting in itself, though. Quoting the final article in the series:

Lately, Mr. Jones has been chewing on a question that's plagued most U.S. homeowners and real-estate investors: Are we in a housing bubble? "We're in one in Seattle," he says. "We're not necessarily in one nationally."

A bubble commonly refers to markets where home prices have been driven up to unsustainable levels, often in part by aggressive investors.

For Mr. Jones's purposes, a "bubble" means a market in which sales prices are rising faster than rents. Since he started with only enough resources to buy single-family houses (versus multi-family properties), he says, the rents he can fetch don't yet cover his mortgage and related expenses. And, with housing prices rising, he can't currently afford to buy another house or building where rents don't outpace his carrying costs. So, for now, he's not looking in Seattle.
...
Meanwhile, he says, he will make money on renting his Seattle homes eventually. Apartment rents in Seattle are expected to increase 10% between March 2005 and the end of 2007, according to Seattle research firm Dupre + Scott. (The company doesn't track single-family rentals). If he succeeds in generating larger chunks of cash to finance deals in a cooler Seattle market or at a multi-family building that promises immediate cash flow, he'll buy there again.

There's probably a couple hours worth of reading in the entire series. Enjoy.

(Jane Hodges, Real Estate Journal, 10.05.2005)