Determining the value of an investment property

Written by Edward Krigsman

Oftentimes we’re asked the question, how do you determine the value of an investment property? There are several ways to do it, and different approaches work best for different properties. For smaller duplexes, and fourplexes often times a quick and dirty way to discuss the value is to look at a gross rent multiplier. So you would take your gross rents, maybe $30,000 a year and multiply it times the gross rent multiplier or GRM that prevails for similar places in the neighborhood. So a property may sell for 10% or 20% its gross rent.

A property where the gross rents are $30,000, it may sell for $300,000. For example that would be a GRM of 10. With investment property, we also look at the price per square foot. A very similar metric as with single-family homes and since investors really look at the rent rate per square foot, which in the Seattle area could range from $1.50 per month for gross rents up to maybe $3 or $4 per square foot for smaller properties or newer and better properties.

You can look at the price per square foot since again, rents and value are related to size and since you’re renting out square feet that can be another tool for calculating the value. You can look at the prevailing price per square foot of similar investment properties. Duplexes, fourplexes, and the like in the area and then multiply that area times the square feet for the subject property, and you come up with an estimation of value.

That figure also works well for bigger, five units or greater, multi-family and commercial properties as well. But for bigger properties, we really rely on a capitalization rate to determine value. So a cap rate prevails in different neighborhoods differently. So in a very high demand area, you may see a cap rate of 3% or 4% or 5%. And that maybe like in Capitol Hill, in an urban area where there’s very, very focused demand and limited supply for rentals and limited land.
Cap rates again can be 3% of 4%. Whereas they may be 7% or 10% in outlying areas maybe Tacoma, Everett areas further out where there’s less demand for housing, lower incomes and so forth. Cap rate is determined by taking the NOI, the net operating income and looking at the ratio of that to its asset value. So, for example, if a property sold for a million dollars and it had a net operating income of $100,000, then the cap rate would be 10%.

Subscribe to EK Invest, our new monthly newsletter, tiered toward beginner and seasoned real estate investors.

Posted on October 18, 2018 at 7:54 pm
Edward Krigsman | Posted in Blog |

Cooling of the Seattle apartment market

Written by Edward Krigsman

A decade of limited supply of rental units and heightened demand due to strong local employment caused a dramatic increase in Seattle’s rent rates. They surged nearly 70% over the past decade, nearly 8 times the national average. During this period, apartment developers responded by constructing new apartment units. The past decade saw the construction of 20,000 new rental units, and there are about 30,000 in the construction pipeline.

As a result of these factors, Seattle’s rental market has finally cooled off, providing some relief to renters and a shift in profitability for investors. Rising vacancies combined with renter-incentives (at least in the newer, more expensive buildings) diminished investor returns. Combine these factors with slightly increasing interest rates and you have a receipt for slightly higher cap rates when properties are traded. Not surprisingly, development of new units is slowing. New apartment construction is down 22% over last year, the first such drop in a decade.

What does this shift mean for you?

If you are a renter

Now is a good time to renegotiate your lease. Landlords will likely be putting forth effort to retain your business, and perhaps without the rental increases you may have experienced before. They may even be willing to sign a lease longer than the standard 12-months. Take advantage of this blip in the market.

If you are considering buying investment property

If you want to get a foothold in Seattle’ market and are willing to deal with some short-term softness, now is an excellent time to explore your options.Our investor-buyers are encountering a surprising range of choices, often at cap rates that are a bit higher than they would have been in 2016-17. Flattening rents and increasing vacancy loss combined with rising interest rates have made some investors skittish at a time when apartment values seem to have peaked. Investors without a long-term time holding horizon are choosing to cash out now, rather than risk future market softness.

If you own investment property

If your time horizon is short, you might considering cashing out now. But if your investment horizon is five years or longer, it may be wise to hold onto your property. Seattle’s business environment remains favorable, and our city will likely continue to attract highly-compensated workers, especially from areas that are less affordable. I believe that Amazon and other newer tech firms are poised to produce the region’s next generation of entrepreneurs and start ups. If this happens, it will create another boom of new jobs and heightened demand for workers. So if you share my favorable long-view, then consider weathering the softening market because Seattle is likely to remain a strong place to live, work, and own property. To address the current cooling market however, increase rents only after carefully assessing today’s rent rates at nearby buildings. Work carefully to retain your most desirable tenants.

To discuss the opportunities and threats posed by the cooling rental market, please contact us at 206.387.6789 or

Posted on September 1, 2018 at 5:22 pm
Edward Krigsman | Posted in Blog |

Winds of Change?

Seattle’s last ten years witnessed what may be remembered as its juggernaut real estate decade, marked by year-over-year price increases often in the double-figures. For property owners, this market was a windfall. But for many home homebuyers it has been dispiriting.

But change may be coming: You may have noticed a higher number of houses for sale this month, more price reductions, and a longer market time. Do these trends reflect a seasonal summer slowdown? Or might we have reached the peak of a real estate cycle? While the jury still out, these shifts have caught our attention.

Seattle real estate historically moves in 10-year cycles, so a shift toward equilibrium is logical, expected and probably healthy for long-term stability. EK clients as well as our colleague-brokers visiting from historically more costly markets (such as New York and San Francisco) have remarked recently Seattle property prices are “high.” Other markets nationally (Los Angeles, for one) and globally (Japan) have seen their highly appreciating markets recalibrate in the last eight months. As the cost of entry for home ownership in Seattle’s most conveniently located neighborhoods now exceeding $1M, a slowdown seems inevitable.

Over the last three years, dozens of our clients—mostly Baby Boomers—have pulled up stakes; selling their historically-highly valued Seattle home to move out of the area. Some have purchased small downtown condos to maintain a local foothold. Others have moved away altogether, remarking that while Seattle is now a world class city, it has also become a place they no longer recognize, one marked by traffic congestion, fractious urban politics, and increasing levels of homelessness. Most are looking forward to living in sunnier places with less complicated lifestyles: In Eastern Washington, Southern California, and even Panama.  Young working families are often selling their first Seattle house and buying a new one for less, but in locations like Shoreline, often near future light rail stations. This trend may increase Seattle inventory and ultimately slow price appreciation.

In 2016, economists projected that “secondary markets” (those outside the nation’s urban hubs) would outperform major cities. This prediction is being realized. Our younger clients—particularly those NOT employed in the lucrative technology fields—increasingly ask us to show them homes outside of Seattle in places like Tacoma. There, they discover “half price housing,” as well as an urban scene with less traffic. On a corporate level, Amazon’s decision to open headquarters beyond Seattle may also reflect this tendency.  This trend may increase Seattle inventory and soften slow appreciation rates. For historically more affordable areas like Burien, Renton, Tacoma, Bremerton and Everett, it is already having the opposite effect.

Whether Seattle’s increasingly real estate inventory reflects a historical ten-year appreciation cycle remains to be seen. But we’ve noticed trends which could indicate this is the case. Whether you are a home buyer, seller, savvy investor or home owner, periods of change bring new risks and rewards. Please contact us if you would like to review your current position and explore options.

Next month, we will explore trends in apartment and condominium construction that may be contributing to structural changes in Seattle’s real estate market.


Posted on June 28, 2018 at 5:23 pm
Edward Krigsman | Posted in Blog |

Pacific Northwest Regionalism

The Södergren Studio House is a classic example of a form of modernist architecture called Northwest Regionalism. 

This architecture evolved between the 1930's and the 1970's–largely thanks to the University of Washington and what became it's School of Architecture. The architects associated with this time period in Northwest Regionalism showcased the Pacific Northwest’s natural materials, such as wood, and rethought the traditional placement of buildings to accentuate the relationship between the architecture and the natural setting, often with trees and terraces.

Northwest Regionalism expressed the Pacific Northwest's natural materials such as wood, and re-thought the placement of buildings to showcase its relationship between the natural setting, often with trees and terraces.  Regionalists include many architectural craftsman–artists who coordinated with architects to create furnishings, mosaic, sculpture, fountains, murals and other elements as architectural elements. Pacific Northwest Regionalist architectural craftsmen included, in addition to Södergren, George Tsutakawa, Norman Warsinske, Glen Alps, Everett Dupin, Robert Sperry and James Bartell. 

For these designers, the use of locally harvested wood, stone and other natural materials became a key differentiator between their work and the work of their contemporaries in other parts of the United Sates. Responding to the local context of forest, views and rain, these architects developed a regional style known for its elegant  structural expression…wood being the medium. These buildings were smaller in scale (wood not being suitable for larger commercial projects), featured pitched roofs, large expanses of glass for views and openness, and reached out to incorporate the landscape, often very dramatically. This love of wood and other natural materials creates an obvious reference to Japanese aesthetics, especially Japanese vernacular architecture. 

The Södergren Studio house's embrace of Northwest Regionalism can be found in the large, extensive eaves, the craftsman-inspired corbels–a tip of the hat perhaps to original beach cottage which Anderson and Södergren discovered together and then redesigned. The archway theme – perhaps a tip of the hat to the New Formalism inspiring local municipal buildings such as The Pacific Science Center. But it is the extensive use of wood, the deep eaves, the wall of glass embracing Lake Washington, the heavy, protruding decks all furnished with pickets inspried by boat oars–echoed inside by a diminuive version of the same design–all wroght from the hand of Södergren's studio. 
To learn more about Pacific Northwest Regionalism in architecture, you may enjoy these titles:

To learn more about the Sodergren Studio House, visit:


Posted on July 17, 2015 at 10:53 pm
Edward Krigsman | Posted in Blog |

Wishing You A Good New Year

Happy New Year!

I hope this letter finds you and your loved ones well. I would enjoy hearing from you; please drop me a line when you have a moment.

My personal life continues to be enriched by our first child, Abraham, now a toddler. Although Abraham’s interests are varied, he possesses an admirable love of reading, devouring up to 15 books consecutively. His overflowing bookcase insufficiently  contains his growing curiosity. So, throughout 2014, I was challenged to re-tell the same story to my son while retaining his attention.

In my real estate practice, we continued to support clients through the buoyant 2014 market. This year, inspired by story time with my son, EK Group has focused on the ancient craft of skillful storytelling, using words, pictures and media like blog posts and websites to distinguish what makes each property we sell rare and valuable. This technique applied to all our listings has created favorable results for our clients. 

A noteworthy example of this approach in 2014 was The Dowell Residence Architect Paul Hayden Kirk designed this house in 1953 and we sold it together with many original components and artifacts including shoji screens made of horse hair, resin, and Japanese Sen wood, as well as a trove of archival documentation. Our story of this classic Seattle residence struck a chord across the nation, leading to a feature in The New York Times. This marketing campaign culminated into events supporting two worthy organizations The Seattle Architecture Foundation and ARCADE. Fundraising efforts for both organizations hosted at The Dowell Residence brought in over 200 people seeking inspiration and connection with others who shared their passion for timeless design and local history. In the end, these efforts resulted in a successful real estate transaction for the owners of the house.

We look forward to taking on more worthwhile endeavors in 2015 including serving you, your friends, and your family. The best way to reach me remains 206.387.6789 and For those friends who continue to contribute to young Abraham’s learning through your gifts of books, I am forever grateful. My ongoing learning as a parent will continue to inspire my real estate practice in ways I could not have predicted. 

May your 2015 bring good stories worth telling,


Posted on January 7, 2015 at 9:25 pm
Edward Krigsman | Posted in Blog |

Designing The Future in the 1960’s

We recently had the opportunity to list for sale a home whose design reflects a diversity of styles and trends – all from the early 1960's and rarely found in a single property. These trends include Modernism, Space Age, Car Culture, Atomic Age, Googie and Futurism. 

The Vista ’63 endeavor also reflects how 60’s-era technology and including the prefabricated construction championed through the Case Studies program and celebrated in the work of Charles and Ray Ames.

Architect Ken Kohler designed Vista '63 as the star attraction of the 1963 Seattle Post Intelligencer Home Show, which took place in the Seattle Center Coliseum (now Key Arena) in the spring of 1963. Following the Home Show, Vista '63 was moved to the shores of Lake Washington to a more permanent location – a 10,000-square-foot lot as the home for Koehler’s young family.

Here is a summary of the home’s design themes – so that we might learn from this living architectural laboratory:


Futurism dates its roots to Italy as far back as 1910, but found refinement in Futurist architecture of the early 20th century. Characterized by strong color, long dynamic lines, suggestions of speed and motion, urgency and lyricism, the movement attracted poets, musicians, artists and architects alike.

Neo-Futurism was reinvented from early 60s and late 70s by Finnish architects like Eero Saarinen, whose streamlined furniture designs, often of industrial materials like plastic, are associated with the era of space exploration. In popular literature, the term futuristic came to be used without much precision to define architecture with the appearance of the space age as described in works of science fiction.


In the 1950's, a style of architecture related to Futurism arose in America – Googie modified Futurism from a distinctive style to a free and uninhibited architectural approach which was interpreted and transformed by generations of architects. Generally, it included amazing shapes and dynamic lines with sharp contrasts as well as the use of technologically-advanced systems and materials. Examples of such architecture in the Seattle area include the Space Needle (1962(, Key Arena (1962), various Denny's Restaurants throughout Washington State, and the Henry M. Jackson Visitor Center at Mt. Rainier National Park (1966). Vista '63 is a classic and exceptionally rare example of Googie in residential design, as the style was applied more commonly to commercial buildings related to transportation—from automobile to air travel. LAX Airport is perhaps the most classic example.

Blob architecture represents an extension of Googie, with an example being the Blob, the now-demolished “blob building” once located at the foot of Queen Anne Hill. Many view architect Frank Gehry’s Experience Music Project as a celebration of Blob design.


In July 1944, a year prior to the end of World War II, the California-based journal – Arts and Architecture – published what was in essence a manifesto on the “post-war house” and the opportunities and necessity for prefabrication. This was largely the work of John Entenza, publisher and editor of Arts and Architecture since the late 1930’s, and his editorial assistants, Charles and Ray Eames, with contributions from Eero Saarinen and Buckminster Fuller.

Entenza and his editors were aware at the time of the pent-up demand for new housing that awaited the end of the War. They had also come to realize that the postwar house – when it was finally built – would be produced in a fundamentally different way than the prewar house given the social, economic and technological changes that had emerged from the war effort.


With the Case Study House Program, Entenza and the Eameses linked new technical possibilities, including factory-based prefabrication of new materials and assemblies, to the idea of the “modern house” and thus envisioned the future of home design.

Thanks to the Case Study House Program, by the 1960's significant progress was made in the development of new building materials. Vista '63 fabrication within the Seattle Coliseum, and then its efficient move to its future location near Lake Washington, represents the victory of the vision of Charles and Ray Eames, Eero Saarinen, and others.

Today's home buyers expect new homes to integrate various new technologies including home security, wireless internet, robot vacuums, heated driveways and AppleTV.

The seeds of today's innovations were spawned in the era of Vista '63. Just one year prior to the launch of Vista '63, thousands of visitors flocked to Century 21's World of Tomorrow to experience the future. Up to 100 visitors could ride the Bubbleator (a large glass globe) up into a honeycomb of cubes that foretold the future.

Here, they learned how the House of Tomorrow might include such conveniences as disposable dishes, automatic windows and changeable color schemes. Garages might be equipped with gyrocopters to zip them off to the Office of Tomorrow, which could have miniature micro-mail and machines to transmit correspondence, a 24-hour work week, and an astronomical salary of $12,000 a year!

Posted on November 13, 2014 at 6:01 pm
Edward Krigsman | Posted in Blog |

Mountain Modern Architecture

“It is the pervading law of all things organic and inorganic…that form ever follows function." – American architect, Louis Sullivan,

Prior to the 1950’s, Seattle could not boast a distinctive regional architectural language. Instead, Pacific Northwest architecture referenced bungalow and Queen Anne and other styles less popular in California and the Midwest, with frequent nods toward interpretations of European revival styles such as Tudor and Georgian.

When Northwesterners embraced modernism in the post-war era, our regional variant capitalized on natural, local materials as well as dramatic views of nature. Early Seattle-area modernist architects included Paul Hayden Kirk and Ralph Anderson and hundreds of such homes appeared in the 1950’s and 60’s.

Although embraced in major cities like Seattle, modern design was less popular in the hinterlands. Visitors to ski areas such as Snoqualmie Pass or Steven’s Pass continued to encounter more conventional and traditional homes. In snow-heavy mountainous areas, the prevailing aesthetic favored chalet designs reminiscent of the Northern European and Scandinavia regions from which many of Seattle’s residents emigrated in the 19th century. The most well known example of our tendency toward “chalet” style mountain homes may be found in Leavenworth, Washington. In 1962, the entire town was redeveloped to resemble a Bavarian village.

The Pass Life at Snoqualmie Pass

For several decades a handful of modernist architects have designed alternatives to the traditional mountain chalet. One of them – Ray Johnston of Johnston Architects – has designed more than 30 modernist homes for wilderness areas of Montana, Washington and Idaho.

More recently, Johnston has collaborated with Seattle developer – evolution projects – to design The Pass Life, a collection of 54 modern lofts as well as new retail buildings at Snoqualmie Pass, located about an hour from Seattle and Bellevue.

For The Pass Life, Johnston drew upon years of work on the Alaskan Pipeline, his licensure in arctic engineering, to create about 50 compact, sturdy and modern structures that bear little in common with the traditional “Bavarian chalet” architecture surrounding it. As a result, The Pass Life lofts have provoked more than a few head turns from locals more familiar with retro-Bavarian than Pacific Northwest modern design.

Unlike the traditional chalet homes surrounding The Pass Life, the new community features distinctive shed rooflines. Johnston explains that this novel approach allows homes to shed/retain the snow on the roof. This winter layer of snow adds significant insulation to the homes resulting in better energy efficiency. And because the roofs continue down the back of each home, during spring snow melts, this layer of moist insulation is shed off the back of the home, away from the entry protecting both people and structure.

Posted on October 28, 2014 at 9:30 pm
Edward Krigsman | Posted in Blog |

Mid-Century Modern – The Pacific Northwest

The postwar era in America witnessed the expression of a new approach to architecture, one appropriate for the modern age. It was practical, functional and economical. Open spaces, new materials and connections between the outside world and the inside of a home were crafted harmoniously.

Click on the picture to view the Exterior Gallery

This aesthetic took root in Seattle after World War II and quickly became popular throughout the Pacific Northwest, albeit with modifications that capitalized on the assets of regions reflecting a love of warm, natural, local materials as well as dramatic views of nature. Prior to the 1950’s, Seattle could not boast a distinctive regional architectural and artistic style. With Modernism, this changed – and the agents of this change in the realm of architecture were four men: Paul Thiry, Roland Terry, Victor Steinbrueck and Paul Hayden Kirk. 

Click on the picture to view the Interior Gallery

Nationally, the new architectural modernist style used strong materials such as reinforced concrete, glass and steel frames to define new age homes by clean lines, simple shapes and unornamented facades. Kirk’s Dowell Residence, which Architectural Record magazine highlighted among its “Record Houses” in 1957, represented a bold softening of the severe international style.  It replaced the abundant use of concrete and steel with the richness of fir, cedar and locally quarried stonework.

Click on the picture to view the Archive Gallery

To learn more and view over 100 photographs, visit

Posted on July 14, 2014 at 8:34 pm
Edward Krigsman | Posted in Blog | Tagged , , , , ,


Windermere: What’s in a name?

Do you know where the name “Windermere” originates?  Windermere is actually the name of Old England’s largest lake. The name is Scandinavian for “Vinandr’ “Mere; Vindandr – a family’s name, and Mere  which translates as “lake” or “pool.” 

The 10.5 mile, 219 foot deep Windermere Lake is located in the Lake District National Park of  England, and is a popular destination among the English.  It is also reputed the lake is home to a monster named Bownessie.

While ancient English men (and monsters) may have once populated the Windermere site, the namesake is now known for its celebrity sightings.  Did you know that Tiger Woods bought his very first home in Windermere – Windermere, Florida – that is? Located in the exclusive Isleworth Community, Tiger’s old home was just a hop and a skip away from the driving range.  No wonder the current owner of this slice of real estate is another golfer, Bubba Watson, who moved his family to Isleworth from Bagdad – Bagdad, Florida – that is.  

The good old European continent not only gave us city names, it also gave us Lady Windermere.  Oscar Wilde, one of Ireland’s most popular playwrights set out to irritate 19th century Victorian society with his play, Lady Windermere’s Fan.  Wilde’s comedy bitingly satirizes the morals of society providing additional color and context to our little Windermere of the Pacific Northwest.

In 1910 Seattle annexed the land later to be known as Windermere; the year Howard Taft threw out the first baseball on opening day for the Washington Senators.  Roller-blading today along the Burke-Gilman trail – you might find it hard to imagine this thriving suburb once offered fertile ground to City’s first non-Native farmers. Farming may not have proved this land’s most attractive activity: By the 1940’s real estate develoment transformed the farmlands into Seattle’s well-known waterfront enclave; marked by concrete portals fashioned in the art deco style and capped by handsome art-glass lanterns. Lakefront neighborhood of Laurelhurst next door was also developed in this era. 

Not much changed at all here until 1972, when John W. Jacobi, recently retired from the banking industry, founded Windermere Real Estate after purchasing an eight-agent office near the charming waterfront neighborhood.  To this day, this small office serves as the company headquarters for over 300 offices.  The Windermere Real Estate Company proudly sponsors the Windermere Cup – an annual international rowing regatta located at the “Montlake Cut” – it marks Opening Day of Seattle’s boating season.  This year’s event was known for gusty weather. One of the 40,000 Cup spectators was overheard commenting the event should be re-named—at least for the day—“Windy-Mere.” 



Posted on May 13, 2014 at 4:03 pm
Edward Krigsman | Posted in Blog |

Genesis House: Funding a Future for Addiction Treatment

Named for the Arbutus trees common to the area, Madrona’s hills rose from the Vashon Glacier that melted 40,000 years ago, shaping Lake Washington and other Pacific Northwest landmarks. By the 19th century Seattle’s Union Trunk Line Railway chugged up the hill along a new town center, up 34th Avenue toward Madrona Park.

Conveniently located ten minutes from Seattle’s business and cultural core, Madrona is prized for its village ambiance and diverse housing styles. Here behind a block-long old laurel hedge you might discover a neighborhood institution called Genesis House.

In the 1970’s, founders of Genesis House cobbled together this small urban campus from the foundations of large homes and a turn of the century coach house. Today the buildings encompass dormitories, administration & counseling offices and a State-licensed day-care. Zoned for single-family homes, the city has “grandfathered in” these institutional uses, thanks to Genesis House’s 40-years of continuous operation.

Genesis House combines residential addiction treatment with therapeutic childcare, parenting classes and gender-specific group therapy sessions. This long-term approach helps families disrupt generations of addiction, substituting healthy living for hopelessness.

Recent budget cuts by the State of Washington and the Federal government forced all addiction treatment providers including Genesis House to examine their business models and to adjust operations. During this evaluation, Genesis House determined that its Madrona location—distant from public transit hubs—had grown difficult for its largely low- and no-income population to reach. Leaders also determined that the Campus buildings were due for extensive capital improvements.

Genesis House leaders decided it was prudent to sell the Campus property—nearly an acre of flat land zoned for many single family homes in the heart of one of Seattle’s most coveted neighborhoods. The economic recovery of 2010-13 had heightened demand among residential single-family developers, investors, and even institutional users for well-located land. 

So, in 2014, Genesis House sought our help in selling their Campus. By recapturing equity from the Campus property Genesis House will be positioned to continue to support addiction treatment in Washington State.  


                         Dormitory and Counseling Building         Arial View of the Genesis House Campus                         Carriage House

View more photos of The Genesis House Campus and Madrona.


Posted on March 28, 2014 at 2:28 am
Edward Krigsman | Posted in Blog |