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Thinking of buying in Burien, Washington? Get our financial spreadsheet tailored to the city.
Some people have lost a lot of money in Burien's housing market.
We've all heard of that person who bought a single-family home somewhere like in Gregory Heights in 2018, expecting prices to keep skyrocketing. Instead, the market dipped, and their property value dropped by 15%.
With high mortgage payments and maintenance costs, their rental income couldn't cover expenses, giving them a negative ROI. They ended up losing thousands of dollars every year.
But then, there are the success stories.
Some folks prepared well, using a solid spreadsheet tailored to the Burien market. They bought a multi-family unit in places like Seahurst during a market dip in 2010. They renovated it, adding energy-efficient appliances and modern amenities. Seattle commuters loved it and paid premium rents.
Over the years, the property value more than doubled, and their rental income kept rising. Their ROI is over 10% annually because they bought smart and renovated wisely.
Thinking of buying in Burien? Want to be one of the successful ones and see some nice cash flow hitting your bank account every month? Let us give you some advice now.
Don't lose money on your next property in Burien!
Unprepared first-time buyers often end up losing money. Invest only after reviewing all the performance metrics. Get our spreadsheet tailored to Burien, Washington.
NOI, Cash Flow, Rental Yield and ROI in Burien, Washington
Net Operating Income (NOI)
NOI, or Net Operating Income, is crucial for property investors in Burien, Washington, a city known for its growing rental market and moderate operating costs.
Simply put, it measures your property's profitability after subtracting operating expenses from rental income.
The formula is straightforward: NOI = Rental Income - Operating Expenses.
If you have a mid-century home in Gregory Heights that earns $50,000 a year in rent and costs $20,000 annually to maintain, your NOI would be $30,000.
In Burien, a high NOI, say $40,000, indicates a well-performing investment, given the city's increasing demand and reasonable rental prices.
A low NOI, like $5,000, might suggest excessive maintenance costs or underperforming rent, both common issues in older properties or less desirable neighborhoods.
Cash Flow
Cash flow is the lifeblood of your property investment, especially in a city like Burien where property values and mortgage payments are moderate but rising.
It’s calculated by subtracting your debt service (mortgage payments) from your NOI: Cash Flow = NOI - Debt Service.
For instance, if your NOI is $30,000 and your annual mortgage payments are $25,000, your cash flow is $5,000.
In a city with rising property prices like Burien, positive cash flow means your property is generating excess income, which is crucial for long-term sustainability.
A positive cash flow of $500 a month can provide a cushion for unexpected expenses.
Negative cash flow, where expenses exceed income, could mean you’re over-leveraged or the property isn’t as profitable, a common scenario in high-cost areas like Three Tree Point.
Rental Yield
Rental yield is particularly important in Burien, where property values are steadily increasing.
It measures your annual return as a percentage of the property's value: Rental Yield = (Annual Rental Income / Property Value) x 100. For example, if you have a townhouse in Seahurst worth $500,000 and it generates $40,000 in annual rent, your rental yield is 8%.
A high rental yield, like 9%, is excellent in Burien, indicating a strong return relative to the moderate property costs.
Conversely, a low rental yield, like 4%, might suggest that the property value is high relative to the income it generates, which is a common challenge in upscale neighborhoods like Lake Burien.
Return on Investment (ROI)
ROI measures your overall profitability, factoring in all costs and income, which is vital in Burien’s dynamic housing market.
The formula is: ROI = (Net Profit / Total Investment) x 100. Suppose you bought a property in Boulevard Park for $400,000, spent $50,000 on renovations, and it’s now worth $600,000.
If your net profit is $150,000, your ROI would be 30%.
In Burien, a high ROI, like 35%, reflects a strong investment given the significant appreciation potential and growing rental demand.
A low ROI, like 5%, may indicate either high acquisition and renovation costs or that the property is not appreciating as expected, which can happen in areas with slower growth or high maintenance needs.
This is how a good property investment looks like in Burien
If you're making a property investment in Burien, Washington, these are the performance metric values you should be aiming for.
| Metric | Threshold for Good Value | Potential Reasons for Good Value in Burien |
|---|---|---|
| Net Operating Income (NOI) | Above $50,000 | Moderate rental income driven by proximity to Seattle, efficient property management reducing operating costs, properties in desirable neighborhoods like Gregory Heights or Seahurst. |
| Cash Flow | Positive and above $500/month | Steady rental market with demand from commuters to Seattle, manageable mortgage payments due to relatively lower property prices, and proximity to amenities like parks and schools attracting tenants. |
| Rental Yield | Above 5% | Consistent rental demand from families and professionals, affordable property prices in emerging areas like Boulevard Park, and potential for rent increases as the area develops. |
| Return on Investment (ROI) | Above 8% over a few years | Gradual property appreciation in neighborhoods seeing revitalization, strategic property improvements adding value, effective property management keeping vacancy rates low, and supportive local policies encouraging investment. |
How much cash flow can you generate in Burien?
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A real-life example of a successful property investment in Burien
Here is what a good property investment in Burien, Washington could look like.
Imagine you purchase a multi-family unit in the heart of Burien, a growing suburb with a mix of urban amenities and suburban charm, attracting a diverse range of tenants.
You buy a four-unit building for $1,200,000. Each unit rents for $2,500 per month, giving you an annual rental income of $120,000.
Your annual operating expenses, including maintenance, property management, and taxes, amount to $40,000.
You have a mortgage with annual payments of $60,000.
If we input everything in the real estate spreadsheet tailored to Burien, we would get a comprehensive view of more than 200 metrics.
But, as for now, let's check the 4 metrics we mentioned before.
Detailed metrics
- Net Operating Income (NOI)
Calculation: $120,000 (rental income) - $40,000 (operating expenses) = $80,000
This high NOI indicates strong profitability, thanks to high rental income and controlled expenses.
- Cash Flow
Calculation: $80,000 (NOI) - $60,000 (mortgage payments) = $20,000
Positive cash flow of $20,000 annually (or about $1,667 monthly) shows the property generates extra income after covering all costs, providing financial stability and flexibility.
- Rental Yield
Calculation: ($120,000 / $1,200,000) x 100 = 10%
A rental yield of 10% signifies a solid return on the investment relative to the property’s value, highlighting its profitability.
- Return on Investment (ROI)
Assume you sell the property after five years for $1,500,000. Your net profit, considering purchase price, renovation costs of $50,000, and selling expenses of $30,000, would be $220,000.
Calculation: ($220,000 / $1,250,000) x 100 = 17.6%
An ROI of 17.6% over five years indicates significant appreciation and effective management, making it a lucrative investment.
This is how a bad property investment looks like in Burien
These are the performance metric values that indicate potential issues in your real estate investment in Burien, Washington.
| Metric | Threshold for Bad Value | Potential Reasons for Bad Value in Burien, Washington |
|---|---|---|
| Net Operating Income (NOI) | Below $30,000 | High operating costs due to local service fees and taxes, low rental income from properties in less desirable neighborhoods, or elevated vacancy rates. |
| Cash Flow | Negative or below $300/month | High mortgage payments outweighing rental income, frequent maintenance issues increasing expenses, or difficulty finding tenants due to market competition. |
| Rental Yield | Below 4% | High property prices with low rental returns, oversupply of rental properties reducing demand, or properties located in areas with low rental desirability. |
| Return on Investment (ROI) | Below 6% over a few years | Slow property appreciation in stagnant or declining neighborhoods, high costs of property management, frequent vacancies, and local regulations impacting profitability. |
Don't lose money on your next property in Burien!
Unprepared first-time buyers often end up losing money. Invest only after reviewing all the performance metrics. Get our spreadsheet tailored to Burien, Washington.
A real-life example of a disastrous property investment in Burien
Here is what a bad real estate investment in Burien, Washington could look like.
Imagine you purchase a multi-family unit in a less desirable part of Burien, away from the bustling areas near the airport or the waterfront.
You buy a four-unit building for $1,200,000. Each unit struggles to rent for $1,200 per month, giving you an annual rental income of $57,600.
Your annual operating expenses, including maintenance, property management, and taxes, amount to $50,000.
You have a mortgage with annual payments of $70,000.
If we input everything in the real estate spreadsheet tailored to Burien, we would get a comprehensive view of 200+ metrics, and we would know, before buying, that it's a bad investment.
But, as for now, let's check the 4 metrics we mentioned before.
Detailed metrics
- Net Operating Income (NOI)
Calculation: $57,600 (rental income) - $50,000 (operating expenses) = $7,600
This low NOI indicates weak profitability, due to low rental income and high expenses.
- Cash Flow
Calculation: $7,600 (NOI) - $70,000 (mortgage payments) = -$62,400
Negative cash flow of -$62,400 annually (or about -$5,200 monthly) shows the property incurs significant losses, straining financial resources.
- Rental Yield
Calculation: ($57,600 / $1,200,000) x 100 = 4.8%
A rental yield of 4.8% signifies a poor return on the investment relative to the property’s high value, highlighting its lack of profitability.
- Return on Investment (ROI)
Assume you sell the property after five years for $1,000,000. Your net loss, considering purchase price, renovation costs of $50,000, and selling expenses of $30,000, would be $280,000.
Calculation: (-$280,000 / $1,250,000) x 100 = -22.4%
An ROI of -22.4% over five years indicates significant depreciation and poor management, making it a disastrous investment.
What initiatives should you take to improve all the performance metrics of your real estate investment in Burien, Washington?
When you are looking for a property
To boost your cash flow potential in Burien, Washington, take these steps before buying a property.
| Specific Strategy/Initiative | Impact Potential | Metric(s) Impacted |
|---|---|---|
| Analyze Proximity to Seattle: Focus on properties within a 20-minute commute to downtown Seattle, leveraging the demand from professionals working in the city. | High | ROI, Rental Yield |
| Plan Everything and Make Different Scenarios: Use a solid spreadsheet already tailored to Burien’s housing market to forecast different financial outcomes. | High | NOI, Cash Flow, ROI |
| Understand Local Legislation: Familiarize yourself with Burien's rental regulations, including any rent control measures and tenant protections. | High | NOI, Cash Flow |
| Compare Rental Rates: Use rental comparables from similar units in desirable Burien neighborhoods to estimate potential rental income accurately. | High | Cash Flow, Rental Yield |
| Review Financial Records: Obtain and analyze the financial history, including previous rental income and expenses, for multi-family units in Burien. | High | NOI, Cash Flow |
| Assess Property Condition: Hire a professional inspector to identify any potential costly repairs or renovations needed in older Burien properties. | Medium | NOI, Cash Flow, ROI |
| Investigate Future Developments: Check for planned infrastructure projects like new light rail stations or commercial developments in neighborhoods like Gregory Heights. | Medium | ROI, Rental Yield |
| Partner with a Local Realtor: Engage a realtor who specializes in Burien properties to access exclusive listings and local market insights. | Medium | ROI, Rental Yield, NOI |
| Assess Property Management Companies: Research and interview property management firms with strong track records in Burien. | Medium | NOI, Cash Flow |
| Check Environmental Risks: Ensure the property is not in flood zones or areas prone to landslides, and verify compliance with Burien's environmental regulations. | Medium | ROI, NOI |
99% of successful investors meticulously planned their investments!
Don’t make costly mistakes with your next property in Burien. Make sure you have all the necessary information and data before making a decision.
When you are holding a property
These initiatives will help you get performance metrics while you hold your property in Burien, Washington
| Specific Strategy/Initiative | Impact Potential | Metric(s) Impacted |
|---|---|---|
| Regular Maintenance: Schedule consistent maintenance to avoid costly repairs and maintain property value. Given Burien's rainy climate, focus on roof inspections and gutter cleaning. | High | NOI, Cash Flow |
| Maximize Rent: Adjust rent annually based on Burien's market rates and tenant feedback. Consider the proximity to Seattle and Sea-Tac Airport as selling points. | High | NOI, Cash Flow, Rental Yield |
| Energy Efficiency Improvements: Implement energy-saving measures like double-pane windows and energy-efficient appliances to reduce utility costs, especially during the colder months. | High | NOI, ROI |
| Leverage Tax Benefits: Utilize tax benefits available in Burien, such as the Multi-Family Tax Exemption (MFTE) program for new developments. | High | ROI, Cash Flow |
| Tenant Retention Programs: Offer incentives like lease renewal bonuses or upgrades to retain good tenants. Consider adding amenities like bike storage or community gardens, which are popular in the Pacific Northwest. | Medium | NOI, Cash Flow |
| Renovate Units: Upgrade units between tenants to increase rent potential and property value. Focus on modernizing kitchens and bathrooms, which are key selling points in Burien's rental market. | Medium | NOI, ROI, Rental Yield |
| Engage with Community: Build relationships with local community groups and attend neighborhood meetings to stay informed and involved. Burien has a strong sense of community, and being active can provide valuable insights. | Medium | NOI, ROI |
| Monitor Market Conditions: Keep an eye on Burien's real estate market trends to make informed decisions about holding or selling the property. Pay attention to developments in nearby Seattle as well. | Medium | ROI, Rental Yield |
| Property Management Services: Hire a reputable property management company with experience in Burien to handle day-to-day operations. Look for firms that understand the local market dynamics. | Medium | NOI, Cash Flow |
| Implement Smart Technology: Install smart home devices like thermostats and security systems to attract tech-savvy tenants and reduce operational costs. This is particularly appealing in the tech-centric Pacific Northwest. | Medium | NOI, Rental Yield |
When you are selling a property
Some tips for when you are selling your property in Burien, Washington.
| Specific Strategy/Initiative | Impact Potential | Metric(s) Impacted |
|---|---|---|
| Highlight Proximity to Seattle: Emphasize the property's close proximity to Seattle, making it an attractive option for those who work in the city but prefer a quieter, suburban lifestyle. | High | ROI, Rental Yield |
| Leverage Local Amenities: Market the property's closeness to Burien's vibrant downtown area, including its shops, restaurants, and the Burien Farmers Market, which can attract tenants looking for convenience and lifestyle. | High | ROI, Cash Flow |
| Promote Outdoor Recreation: Highlight nearby parks and outdoor spaces like Seahurst Park and Lake Burien, appealing to nature enthusiasts and families. | High | ROI, Rental Yield |
| Engage Local Realtors: Partner with realtors who have a deep understanding of Burien's unique neighborhoods and can effectively market the property to the right buyers. | High | ROI, Cash Flow |
| Highlight School Districts: Emphasize the quality of local schools, such as Highline High School, to attract families looking for good educational opportunities for their children. | Medium | ROI, Rental Yield |
| Compliance with Local Regulations: Ensure all property upgrades and renovations comply with Burien’s building codes and regulations, which can be a selling point for buyers. | Medium | ROI, NOI |
| Offer Turnkey Solutions: Provide fully furnished or turnkey solutions for investors, emphasizing the ease of renting out immediately after purchase. | Medium | ROI, Cash Flow |
| Highlight Walkability and Transit Access: Market the property's walkability score and access to public transit options like the Burien Transit Center, which is highly valued by commuters. | Medium | ROI, Rental Yield |
| Smart Home Features: Advertise any smart home technology installed, such as security systems or smart thermostats, appealing to tech-savvy buyers. | Medium | ROI, NOI |
| Professional Photography and Virtual Tours: Use high-quality photos and virtual tours to attract out-of-state or international buyers, a growing market in Burien. | Medium | ROI, Cash Flow |
Buying in Burien, Washington? Monitor all your performance metrics right from the beginning
To maximize your ROI on your next property investment in Burien, Washington, it's essential to plan and monitor your performance metrics right from the start. Our comprehensive tool is designed to help you do just that.
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Our spreadsheet provides crucial metrics such as NOI, LTV, cap rate, and net yield, offering precise and accurate calculations. Each input and indicator is clearly explained, making it easy to understand and use, eliminating the need for complex calculations and confusing spreadsheets.
You can run various scenarios by adjusting parameters like interest rates, rental income, and operational costs, allowing you to see how these changes impact your investment. This feature helps you identify hidden risks and opportunities, ensuring you make well-informed decisions.
Our dedicated team is available 24/7 to assist you, ensuring you get the most out of this tool.
Don't leave your investment to chance. For more details, please check our detailed article about how the spreadsheet works.
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Our tool covers everything: NOI, COC, Cap Rate, Gross Yield, Net Yield, LTV, ROI, and numerous other metrics and charts.
