Seattle apartment buyers
Know If an Apartment Building Pays Before You Buy
How to read the seller’s numbers, rebuild them yourself and price in the Seattle rules that change the math.
A listing flyer shows the building at its best: full occupancy, market rents and a thin expense line. The real question is what the property will earn under your ownership, with your taxes, your loan and your management. Many buyers start with an experienced local commercial real estate broker and still rebuild every number themselves.
Our guides walk through that rebuild one step at a time: the rent roll, vacancy, operating expenses, net operating income, cap rate, financing and the Washington and Seattle landlord rules that affect rent growth. Official city and state resources are the place to confirm current requirements before you make an offer.
Guides
Every Apartment Profits Guide
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Quick check
Apartment Deal Calculator
Enter the deal’s numbers to see income, NOI, cap rate, loan payment and cash flow. The starting values are only an example; replace them with the property’s own figures.
| Gross scheduled rent | – |
|---|---|
| Effective gross income | – |
| Operating expenses | – |
| Net operating income | – |
| Cap rate | – |
| Loan amount | – |
| Annual debt service | – |
| DSCR | – |
| Cash flow after debt service | – |
| Cash invested | – |
| Cash-on-cash return | – |
A rough first pass, not an appraisal or a loan quote. Real underwriting uses the property’s actual rent roll, T12 and lender terms.
The method
How to Tell If an Apartment Complex Is Profitable
Profit on an apartment building is not the asking price divided by the rent. It is a chain of numbers, and each link can be checked.
Start with the income the building really collects
Scheduled rent is what the units would bring if every tenant paid full rent every month. Collected rent is what arrives. The gap between them (vacancy, concessions, units rented below market and unpaid rent) is where many deals look better on paper than in the bank account. Rebuild income from the rent roll and the seller’s trailing twelve months, not from the flyer.
Add other income only if it is actually being collected: parking, storage, laundry, pet rent, utility bill-backs. Ask how each line is billed and whether it survives a change of ownership.
Rebuild expenses as the next owner
A seller’s expense line reflects how they run the building, not how you will. Property taxes may be reassessed, insurance is quoted fresh, and a self-managing owner may not show a management fee at all. Build your own budget line by line: taxes, insurance, utilities the owner pays, repairs and maintenance, turnover, management, payroll, administration, and the city’s registration and inspection costs.
Keep capital items such as roofs, windows and boilers out of operating expenses, but not out of the plan. They belong in a reserve.
Net operating income is the core number
Net operating income (NOI) is effective income minus operating expenses, before loan payments and before capital spending. It is what the property earns on its own, whoever owns it and however it is financed. Cap rate, loan size and value all flow from it, so an error in NOI carries through every other number.
Then add the loan
Most buyers finance. The lender looks at the debt service coverage ratio (NOI divided by the annual loan payment) and at loan-to-value. Your own return is the cash left after the loan payment, divided by the cash you put in. A deal can have a healthy NOI and still produce thin cash flow if the rate is high or the down payment is small.
Price in Seattle and Washington rules
Washington limits most annual rent increases, and Seattle adds a long notice period and relocation-assistance rules for large increases. Rental properties must be registered with the city and can be selected for inspection. None of this makes a deal bad, but it changes how fast rents can grow and what a renovation plan can assume. Build those rules into the projections from the start.
FAQ
Questions Buyers Ask About Apartment Numbers
What does Apartment Profits cover?
How to judge whether an apartment building makes money before you buy it: income, expenses, net operating income, cap rate, financing and the Seattle and Washington rules that affect rents.
Do you list or sell properties?
No. We are not brokers, lenders or advisors. We explain the method so you can check a deal yourself and ask better questions.
What is net operating income?
Effective income from the property minus its operating expenses, before loan payments, income taxes and capital spending.
Is a higher cap rate always better?
No. A higher cap rate means more income per dollar of price, but it often comes with more risk, an older building or a weaker location. Compare cap rates for similar buildings.
Why do my numbers differ from the listing?
Listings often use full occupancy, market rents and the seller’s own expenses. Rebuilding income and expenses as the next owner usually gives a lower NOI.
Can I raise rents after I buy?
In Washington most increases are limited each year, and in Seattle they need long advance notice. Check the current rules and any exemptions before you count on rent growth.
What is DSCR?
The debt service coverage ratio: NOI divided by the annual loan payment. Lenders use it to decide how large a loan the property can support.
Is the calculator on this site an appraisal?
No. It is a quick first pass with your own inputs. Real underwriting uses the rent roll, trailing twelve months, inspection reports and lender terms.