Hello, and welcome to the Spotlight Vancouver
podcast. I am your host, Doug Varinas, licensed
realtor in Washington and Oregon. And on today's
show, we're going to talk a little bit about
investing, why you should invest in Vancouver,
Washington, and what are some real estate investment
strategies that are working today, giving you
kind of an overview on your options and what
is best. This is going to be very individual,
so let's get right into it. So as an investor,
What I am primarily looking for in a real estate
market is I want to see population growth. I
also want to see economic growth and development,
and I want to see rental growth. And Vancouver
really has all of these in spades and why I think
it's going to continue to perform very well,
especially relative to other cities in this area
and along the West Coast. And so I think the
most important thing to ask yourself if you're
looking to invest is what you're looking to get
out of it. What do you want the outcome to be
from real estate investing? So there's a lot
of people out there that have tons of equity
in their homes currently, and maybe that's you,
and you're looking to put some of that equity
to work because it's just sitting there, it's
untapped, own your home, and you have additional
savings that you're thinking about putting towards
real estate investing. There's a lot of options
out there for a real estate investor, and it's
easy to get super confused as to what's the best
one. What's the best one? as far as which one's
gonna outperform, which one's gonna give you
the most return on your investment. But speaking
from experience, I must say that the most important
question you need to ask is what are you trying
to do? So are you looking to replace your current
income, cover all your expenses with monthly
cashflow? Are you looking to build equity so
you can cash out? retirement age or in 10, 20
years, are you looking to build up capital in
a more quick fashion? What are you trying to
do? And that's really where I'd recommend starting
because if you don't know that there's a million
different directions you can get pulled and it's
going to potentially have some negative impact
on your financial situation and it might cause
some some headaches for you. And I'll give you
an example. Like I used to chase a cashflow quite
a bit. So I wanted to maximize my monthly amount
that I got out of a rental property, which is
great. Makes sense, right? But I'm going to tell
you that a lot of times chasing cashflow is going
to lead to a whole bunch of other problems because
when you do that, you're typically looking at
lower price properties in areas that just maybe
not as good C, C minus neighborhoods, maybe even
a D class neighborhood where on paper, yes, you're
going to make a lot of money every month. Maybe
it's 500 bucks a month, which is pretty good
for cash flow on a property, especially nowadays,
pretty much impossible to find around here. I
mean, not impossible, but very difficult. And
so what you get with that situation is you get
tons of headaches as far as like your tenants
so you're gonna typically those properties just
given the fact of where they're at and the price
point you're gonna attract tenants who might
not pay rent so you're gonna have to either you
know get stiffed on rent or the tenant does damage
to your property that you're gonna have to repair
the home in general might be in disrepair. So
you're going to have those capital expenses of
like roofs and HVAC and everything. And so what
you thought was going to cashflow is not cash
flowing. And so again, by figuring out where
you want to go, you can figure out the best way
to get there. So a little overview of Vancouver
and why I like it is population growth. And I'm
looking at about 1 % growth in population per
year. It's grown 4 .5 % since 2020, Vancouver
that is, and Clark County in general since 2010
has grown just over 24%. So we're seeing a lot
of growth here in population, which means people
are moving here. And that is really great because
that's going to raise the demand for rental properties,
which you want to see. So I'm always looking
for population growth. Another one is development.
We've already seen a lot of waterfront development.
If you drive around Vancouver, you see a lot
of land. There's just a lot of space and you're
seeing a lot of development there. You're seeing
people subdivide larger lots to build single
-family homes. So you're seeing a lot of new
construction in that way. Along with that new
construction, typically you're going to see a
lot of commercial construction. So you've seen
that in Ridgefield with the Costco, and you can
see commercial builders building shopping complexes,
light industrial spaces, small factories. And
so you're really seeing a lot of growth in this
area. And that is good for an investor because
again, it indicates that people are invested
in the community. They see where the puck is
headed and they're putting their money where
their mouth is, I guess. And so when you see
those signs, you know that the rental market
is going to be strong and appreciating. So the
rental market, rental growth this year is about
1 .3%. Since COVID, it's gone up about 5 .3%,
which is over the median national rent increase
number of something that's like 3 .3%. And I
don't plan on this level of increase all the
time, but I think it's safe to project rental
income. sorry, rental rates continuing to increase.
And they just increase because of inflation,
but I'm looking for sort of asymmetrical increase.
And I think with that, again, that population
growth, you're going to see more demand for rentals,
which increases the demand in rent and the price
that you can command for rent. So overall, I'm
super bullish on Vancouver. I have been for quite
a while and I'm seeing that happening with East
Side Waterfront development, large residential
developments in East Vancouver, Camas, Ridgefield,
you know, a lot of the Barberton area, you're
seeing a lot of new construction. And so overall,
I'm just incredibly bullish about the rental
market here. So I think it's a great place to
be. And given that the sub market has been so
strong, I think that it's a great time for investors
to jump in, even with the current rate environment.
So we're going to go over some strategies to
sort out what might be the best for you. What
options are there? Because there's just a lot.
And there's probably some that I'm not going
to mention, but this podcast is for the novice
investor who's looking to jump in, looking to
get some general clarity on sort of what some
investment strategies are. You know, my investment
journey is continuing to develop and evolve over
time. Like I mentioned, I used to chase a lot
of cash flow and now I'm much more interested
in appreciation and rental appreciation and just
the equity in the home. So just targeting some
better environments and paying more for them.
Because I have that experience where I know that
like, you know, and get what you pay for. And,
you know, you can hear all these success stories
and people, people are successful chasing cashflow
and buying in those neighborhoods, those C minus,
you know, maybe even a D plus neighborhood and
they do very well. So thing to remember is. You
know, it's also what your skill set is. Are you
handy? Are you a contractor? Do you have that
kind of experience? Are you good with numbers?
Do you want to manage yourself? Do you want to
use a property management company? How much do
you want to be involved in real estate investing
and in what regard? So some strategies out there
that are working. I don't have these ranked,
but I'm going to just bring them up. I kind of
have a list of them. I'm going to start with
short term rentals. And this has been something
I've looked into and you just hear the stories,
the Airbnb, the Verbo short term rentals, you
know, you're just raking in the money every month.
It's great. It's, you know, it's, it's changed
quite a bit. And I think when Airbnb and Verbo
first started, it was a lot easier to just kind
of jump in. you know, expectations were lower.
You could kind of do it haphazardly and have
it work out for you. And I think that landscape
has changed quite a bit because it's just been
more competitive. There's more niches. People
are just pickier about where they're staying.
And so, and not to mention the regulations. So
a lot of cities are just clamping down on short
-term rentals. There's a lot of sentiment that
is anti -short -term rental because it's taking
up. housing to use as basically a hotel for people
that are out of town or they're not really residents.
And so there's been kind of an anti short -term
rental backlash recently. And so it's just, I
think, a lot harder. And the thing that you're
getting into with short -term rentals, because
it's nothing about it is passive. And if it is,
you're paying for it. So you're basically in
the hospitality business. If you're doing short
-term rentals, so you are taking care of customers
who are staying at your place. And so, you know,
there's a lot involved with that. There's communication
back and forth on whatever platform you're using.
You're handling the reviews, you're changing
towels, you're cleaning your, and you can do,
you can be as active or as passive in that process
as you want, but you're going to have to pay
for that. So if you're paying for a company to
come in and do that turnover with clients. You
know, you're looking at 35 % of what you're charging
is going to that service. It's that high. I've
looked into it because I'm like short -term rental.
I fell for it too, or I was interested in it
because I wanted to see if I could squeeze more
juice. What I found was at the end of the day,
if you're not willing to do it, it's going to
really cut into your profit margin. And it is
a business that you have to run and it's not
passive. You know, really none of this is passive.
You got to keep your eyes on it. You got to pay
attention to what's going on. But short -term
rentals are to me are the least passive. And
if you throw in that expense of having somebody
manage your short -term rental, because they're
doing quite a lot. And especially, you know,
if they're handling everything, all the booking,
all the communication, that's a real hassle.
And so if you're not doing it, you're paying
quite a bit for somebody to do it. So you're
either paying with time or you're paying with
money. And so short -term rentals, And for Vancouver,
not a super short -term rental destination. I've
seen short -term rental prices here and there's
not a lot of people coming to Vancouver for a
vacation. I love Vancouver and I think it's great.
It's a great place to live. Not sure if it's
high on people's destination list. unless they're
into volcanoes or something, they want to see
Mount St. Helens, or they want to use it as a
base for getting out and hiking and fishing,
I can see certain places, certain cabins that
are maybe in a more rural area that have access
to that recreation, or some lake homes and stuff
like Lake Merwin. You have to have a destination.
And so if you're in Vancouver proper, just somewhere
in Clark County, there's just not a lot of consistent
demand, I think. And you know what, if I'm wrong?
Drop something in the comments. Let me know because
I'd like to be proven wrong and if you have a
great story about your short -term rental Hey,
let me know about it. Maybe you can be on the
show I'd love to have you on but in my experience
is just what I've seen the prices are kind of
lower There's we don't have like a college team
here You know, some people will come all the
way to see the big, you know a college football
game or maybe they it's a destination for weddings
and so have you know There's just a lot of short
-term rentals are themes and you have to have
a certain niche and I'm not I'm not really seeing
that as much in Vancouver. So this option would
require a lot of effort and potentially a lot
of money for somebody to manage. And I don't
know if the returns are going to be worth it.
You have medium term rentals. And actually I
am looking into this myself, medium term rentals.
So that's a minimum 30 day stays. You can use
platforms like furnished finder to post your
home. I always recommend professional photos.
And that's for people who are looking for quasi
permanent, but temporary residents. You know,
maybe it could be for a job. So like traveling
nurses or doctors could be people looking to
relocate that are just looking for a few months
here and there until they decide what they're
doing. They have some reason that they're here
for 30 days, you know, maybe six months, maybe,
but for a shorter amount of time, but not a short
-term rental where it's turning over every couple
of days. So I do like this because I do think
people come to Vancouver. There are some traveling
nurses. There's also some people's homes are
damaged for some reason or flood or fire or something.
They might need a semi -permanent place to stay.
So I am interested in medium -term rentals in
Vancouver. And I do think there's a demand. I
haven't looked into it enough to really claim
to be an expert, but I'm seeing the rental prices
being maybe about 500 to 1 ,000 more than long
-term rental prices for these medium -term rentals.
You do have to furnish them and so similar to
short -term rentals, there is an expense of getting
them furnished nicely, having all the amenities
there, and really setting yourself apart from
the competition because that is part of it too.
It's still kind of a hospitality, but the turnover
is less and I really like that because it wouldn't
be... so hard to turn over after a month. You
could come in and clean it yourself and replace
the soap and the towels and straighten up and
everything. So I do like this option because
I do think it could raise the amount of rent
you're able to get. Again, if it's sitting though,
like if it sits for a month or it's just not
being rented for whatever reason, you know, that's
a consideration that vacancies eating into your
profit margin. So I like it better than short
term, but it's still a little bit risky and something
I'm looking into, but not something I've done
yet. So we had short -term and medium -term rentals.
Next on my list is just going to be your straight
up long -term rental. And this is, you know,
this is a tried and true method. So you get somebody
on a year lease and then maybe a month to month
and they're staying there and they're paying
you rent every month. Ideally, it's what you
think of when you think of a rental property,
like a long -term rental. The thing with long
-term rental properties, it's hard to cashflow
with them in Vancouver unless you're putting
a large amount down. And so, and even then, if
you're putting, you know, a lot of lenders require
25 % down on an investment property, it's quite
a big chunk of cash that you might, you're not
going to be able to get back very easily. So
a lot of times a consideration is you're going
to put in this capital and you're not going to
get it back immediately. And so I like to put
in the least amount of capital possible. and
then leverage the rest via a loan. That is hard
to do with rental properties because if you're
doing a straight buy on a rental, it's usually
25 % unless you're doing some kind of seller
finance deal and that's kind of hard to come
by. It's not impossible. I haven't done it yet,
but I've definitely reached out to several listings
I've seen. I've just asked the listing agent,
is the seller willing to do seller financing?
And a lot of times you get a no answer, but it's
always something to ask. If you're an investor
looking to pick up a home, like you might be
able to put less down and negotiate an interest
rate that is lower than what's being offered.
It's just sort of the holy grail of investing
is finding that seller financing. And I actually
have ran into it on a duplex and I passed on
it, but I am kind of like kicking myself a little
bit because it was a seller finance deal at a
very reasonable rate. They just wanted more money
than I was willing to sink into it because I
knew I wasn't going to get that back. And I had
some other options. I do think about that from
time to time. Like, wow, I had this seller finance
deal and I didn't take advantage of it. So they
do come along. But with long term rentals, even
with that 25 % down, you're lucky to break even
when you account for the principal interest taxes
and insurance. It's really hard to make long
-term rentals cash flow, just buying standard
homes at the 25%. Not saying it's impossible.
Breakeven's definitely possible, depending on
the terms. And again, if you put 50 % down, yeah,
you can cash flow on it, but then it requires
quite a bit of capital. And so a lot of people
don't have that capital, or a lot of investors
I know, including myself, don't want to throw
in a bunch of capital that they're not going
to see back because then it just sits there.
And so long -term rentals are great, and they
were better a few years ago when interest rates
were lower. So a tried and true classic, but
just be aware that you might not cash flow, so
you're going to be looking for more rental appreciation
and equity appreciation. Next up I have fix and
flips now fix and flips are definitely sort of
what's making money right now because you're
able to get all your capital back and more obviously
you're doing the math on that but because you're
not trying to refinance or you're just selling
you're able to get all your capital back and
the idea is you make money on it so you get more
on your capital. So you're buying a home using
typically a hard money loan, sort of alternate
bank route, if you will. The interest rates are
higher. There's certain financial requirements
that you have to fulfill. These are sort of like
companies that they're not exactly banks. They're
designed to loan money out for these kind of
projects and they make money on the interest.
And then if you default, then they take the property.
And so you're still financing it and you're still
required to put some down. If you have more experience,
you could do zero down, fix and flips. But if
you're not an experienced investor, expect to
put down anywhere from 10 to 20%. And then you're
going to be paying a higher interest rate during
the time that your project is going on. So while
you're doing the renovations, you're going to
be paying interest on that. You're going to be
paying a higher loan fee. So the fees can be
pretty high using hard money to do a fix and
flip. And you have to really have a lot of experience
being able to estimate repair costs, having the
ability to bring in vendors that are going to
cost effectively. be able to rehab your property
so you can make money because these flips can
they're pretty risky and you could easily lose
money on them if you don't know what you're doing
and there's a learning curve and so while this
is working for people right now there's a pretty
high level of risk to it especially when we have
these kind of dips in the market so i've seen
plenty of like abandoned flips or you know, flips
where it's halfway done because they ran out
of money and they just were like, we need to
get back something. And so we're going to put
it on the market, which is really unfortunate,
but it is what's making money right now for more
experienced investors. There is a strategy where
you kind of do the same thing. You can use hard
money to buy a property. It's called the BRR
method. It's buy, renovate, refinance, and repeat.
And so that's basically where you're buying a
distressed property, repairing it, putting somebody
in it. There's a seasoning period of usually
12 months, and then you're able to refinance
out. So that gets your money back and you're
able to keep the property right now. These are
really hard to make the math work on. And so
you're not seeing them as much. You saw them
a lot more when the interest rates were lower.
So. I don't see these very much. Again, if you're
doing them, I want to hear about it. Let me know.
Let me know in the comments. Come on the show.
I want to hear about your experience and I think
other people would too, but I'm seeing more of
the fix and flips right now because you're able
to get all of your money back. You know, we're
in that burr. You have to keep some money in
the deal and hopefully you get that money back
so you can reuse that money, but you're not really
making more money on top of it. You're just,
you're getting a property that you own, which
is great. And I would, I would choose that over
a fix and flip because with the fix and flips,
you got to pay taxes. You're in a, you're in
a business on that too. Like you're working really
hard. If you're involved in the flip at all,
you're managing it. There's all the risk. So
it sounds sexy and there's people that do it
well and people that make a lot of money. you're
paying short term capital gains and whatever
else taxes. So you're losing sort of that tax
advantage of owning real estate and it's a job.
So then you got to find the next flip and you're
doing that. So ideally you'd be doing the fix
and flip and then taking some of that profit
and putting it into a buy and hold rental property.
But yeah, you're paying a lot in taxes and you're
taking a lot of risk with the fix and flips,
but it is working. Next on my list and I'm gonna
these are the top real estate investment methods
I think are working right now and that I have
done myself and have recommended to people who
either they're Usually these people are of an
investment mindset So they are feed the first
-time home buyers or people looking to buy another
home But the method that I think is the best
right now is the live -in flip. So this is where
and also a house hack. So very kind of similar,
but a little bit different. So I'll bring in,
I'll actually bring in the house hack first.
And the house hack is typically a buying a duplex
or a fourplex and you are living in one of the
units and renting the other unit out. And that
sort of offsets your, uh, the amount of mortgage
you pay every month. And these can work very
well. A lot of times you still have to have a
pretty sizable down payment. The down payment
requirements have gone down, but some lenders
will still, you know, it depends on the lender.
Some will count the potential rent towards your
qualification and then others may be less so,
but the requirements for down payments have gotten
less over the last year or two. And so it's really
a great option for someone who might be a first
time home buyer. They're looking to just get
into an investment property and you know, they're
okay with living in one unit and renting out
the others. I mean, you can do this with a single
family home too, but you typically tend to see
it more with like a duplex or a home with an
ADU or something like that. But it is a great
idea because All that money that you're saving
on the mortgage, ideally you can, you know, you're
saving that, you can make that money work for
you. And sometime in the future, you can buy
another property to either rent or live in, and
then keep that duplex that you purchased. And
then that kind of builds your rental portfolio
over time. So I think that's a great option because
you get primary residence interest rates, which
are lower than the investor real estate rates
typically. So you get access to cheaper money.
And then you get reduced mortgage payments. Cause
again, you have that person paying it for you
at your renter. I think that's a great option.
I would be looking to do that if I was younger.
I've thought of doing it, even dragging my family
into it. They're less enthused about living in
a duplex right now, but it is an option. So I
do like house hacking and related to house hacking.
And I think this is a really great idea is the
live in flip. So this is where you buy a home
that has some cosmetic upgrades that you can
make. So basically like a granny gold, granny
special, you know, orange shag carpet, paint
countertops, you know, stuff like that, where
it's just a matter of ripping that stuff out,
replacing it with new flooring, redoing the bathroom,
you know, making those improvements to force
equity into it. And then you could either, you
know, ideally you could possibly refinance to
get your money back or to get better terms. Or
again, if you're saving, you could use it to
buy another rental property or you can sell it
and then take that money and buy another live
-in flip. And then you get that profit tax -free
because it was your primary residence. And so
I think it's just being a little more strategic
about. What home you buy and looking at the investment
potential and forcing that equity? But the great
thing about live and flip is that you have a
place to live. It's not your forever home It's
not your dream home because it's got you know,
stinky carpet But the idea is you're getting
the lower interest rate because it's your primary
you're able to move in you can flip you can do
those renovations over time you can take advantage
of more favorable interest rates in the future
hopefully and then when you do sell You can take
those gains tax free because it's your primary
residence. So that technique is what I think
is really good for people because, you know,
and if you're able to, you can hold that property
as well. So I think that's what's working right
now. Again, very individual. People can make
anything work, but deciding what your end goal
is and deciding what your strengths are and the
amount of risk you want to take. is all is super
important. So I highly recommend that. I hope
that today's show has convinced you that Vancouver
is a fantastic place to invest and given you
a little overview of some investment strategies
that you can use in your real estate investing
journey. If you're interested in investment properties
in Vancouver, drop a comment or email me at doug
at dougverinas .com. And let's just get a conversation
started about how I can help you find that great
investment property. Also, if you're an investor
and you'd like to partner with me on some investments
potentially, also drop a comment or email me
doug at dougverinas .com. Hope this has been
helpful. Please like and subscribe if it has
been, and I'll see you next time. Take care,
everybody.