Are you weighing a rental purchase in Everett and wondering what the numbers really look like? You are not alone. With major employers, growing transit access, and spillover from Seattle, the market can feel promising yet complex. In this guide, you will learn how to read cap rates, build a clean cash flow, and pressure-test a deal so you can invest with confidence in Snohomish County. Let’s dive in.
What drives Everett rental demand
Everett sits at the center of Snohomish County and anchors the north end of the Seattle–Bellevue–Everett metro. Local job hubs include Boeing operations near Paine Field, healthcare systems, the Port of Everett, and Naval Station Everett. These employers support steady renter demand across nearby neighborhoods.
Commute patterns matter. Access to I-5 and regional transit affects where renters want to live, and proximity to jobs and transit can reduce vacancy risk. Affordability pressures in Seattle and hybrid work continue to push renters north, which supports demand in Everett and surrounding areas.
Cap rates in plain English
A cap rate measures the relationship between income and price for a property in its current state.
- Cap rate = Net Operating Income (NOI) / Purchase Price.
- NOI = Effective Gross Income minus Operating Expenses.
- Cap rate reflects the return on an all-cash purchase before financing and taxes.
How to use cap rates in Everett:
- Compare like with like. Match property type, size, and vintage. A 5+ unit building trades differently than a single-family rental.
- Location influences cap rates. Properties near major employers and transit often command lower cap rates because investors expect lower vacancy and better long-term growth.
- Watch for distortions. Excluding capital expenditures or using non-recurring income can make a cap rate look better than it is.
Calculate NOI the right way
To build a clean NOI, start with the pieces you can verify:
- Gross Scheduled Income: market rent at full occupancy plus recurring income like parking or laundry.
- Vacancy and Credit Loss: set a realistic allowance based on current local conditions.
- Other Income: fees or utility bill-backs.
- Effective Gross Income (EGI): GSI minus vacancy plus other income.
- Operating Expenses: property taxes, insurance, utilities you pay, repairs, maintenance, management, advertising, legal, accounting, supplies, HOA dues if applicable, and reserves for replacement.
Keep capital expenditures separate. Roofing, major system replacements, and code upgrades should be planned as CapEx or reserves so your NOI stays honest.
Cash flow and financing impact
Cap rate tells you how a property performs before debt. Cash flow tells you what you actually keep after the mortgage.
Key formulas:
- Cap rate = NOI / Purchase Price.
- Cash flow before tax = NOI − Annual Debt Service.
- Cash-on-cash return = (NOI − Annual Debt Service) / Total Cash Invested.
- Debt-service coverage ratio (DSCR) = NOI / Annual Debt Service.
Financing terms matter a lot. Rate, amortization, and loan-to-value change your monthly payments and your DSCR. A small shift in interest rate or vacancy can flip a marginal deal from positive to negative cash flow.
Example: one deal, two outcomes
Here is a simple illustration to show how the same cap rate can produce very different cash flows. This is an example for learning purposes only.
- Purchase price: 600,000
- Gross scheduled rent: 48,000 per year
- Vacancy allowance: 5 percent → 2,400
- Other income: 0
- EGI: 45,600
- Operating expenses: 9,600
- NOI: 36,000 → 6 percent cap rate
Now compare two loan scenarios at 70 percent LTV on 420,000, 30-year amortization.
- Scenario A, 7 percent interest: annual debt service about 33,600 → pre-tax cash flow about 2,400.
- Scenario B, 6 percent interest: annual debt service about 30,200 → pre-tax cash flow about 5,800.
If you invest 195,000 in total cash (down payment, closing costs, immediate repairs), your cash-on-cash could be roughly 1.2 percent in Scenario A and about 3.0 percent in Scenario B. The property’s cap rate did not change, but your financing did, and that changed your results.
Neighborhood lens: where numbers vary
Everett is not one uniform market. Cap rates and rents can shift by pocket.
- Downtown Everett: Close to transit and services. Often lower cap rates due to demand and convenience.
- Paine Field area: Near Boeing and airport amenities. Solid workforce demand can compress cap rates for well-located properties.
- Suburban pockets farther from transit: Typically lower prices and potentially higher cap rates, but tenant profiles and vacancy risk differ.
- Waterfront, port, and medical-adjacent areas: Cyclical demand patterns may affect seasonality and lease-up times.
Match your asset to the tenant profile you want, and price accordingly.
Regulations, taxes, and costs
- Washington has no personal income tax, which can help your after-tax cash-on-cash. Property taxes and local levies still apply. Verify parcel-level assessments with the Snohomish County Assessor.
- Insurance: Budget for liability, plus flood or earthquake if applicable based on FEMA mapping and carrier guidance.
- Landlord-tenant law: The Washington Residential Landlord-Tenant Act (RCW 59.18) sets notice periods, deposit rules, habitability, and eviction procedures. The City of Everett may have additional rental requirements or tenant protections. Confirm current rules before you buy.
- Rent control: Understand the state and local legal framework around rent limitations and notice requirements.
- Short-term rentals: If you plan a short-term strategy, check licensing and local restrictions first.
Due diligence checklist
Documents to request:
- Rent roll, tenant leases, and security deposit ledger.
- Trailing 24 to 36 months income and expense statements.
- Utility bills and tax bills for at least 12 months.
- Repair records, inspection reports, warranties, and permits.
On-site and operational checks:
- Roof, exterior, and major systems for signs of deferred maintenance.
- Utility responsibility by unit. Billing back water, gas, or electricity where legal can improve NOI.
- Lease expirations and concessions that may affect near-term vacancy.
- Parking supply, access, and any zoning or use issues.
Finance and exit planning:
- Likely loan terms, amortization, prepayment penalties, and DSCR requirements.
- Hold period and exit plan, including a range of possible exit cap rates.
- Refinance risk if your strategy relies on lower future rates.
Stress test your returns
Build three cases into your model so you can act decisively when you find the right asset.
- Base case: Stabilized rents, realistic vacancy, current interest rate.
- Downside: Rents down 5 to 10 percent, vacancy up 3 to 5 percentage points, higher insurance or taxes.
- Upside: Rents up 5 to 10 percent, vacancy lower, cost growth moderates.
Check how each case affects your DSCR and cash-on-cash. If a small change in vacancy or rate breaks your deal, consider negotiating a lower price or choosing a different asset.
How AMP can help
You want clean numbers, fast answers, and a reliable close. As a founder-led team serving the Greater Puget Sound, we combine investor-minded analysis with on-the-ground sourcing across Snohomish and nearby counties. We help you:
- Source on and off-market opportunities that fit your return targets.
- Underwrite deals quickly with clear NOI, DSCR, and cash-on-cash math.
- Negotiate terms that protect your down payment and timeline.
- Execute with speed if you need a rapid close or a flexible exit.
Ready to evaluate an Everett rental or build a buy-and-hold plan? Connect with AMP Properties Group NW to get started.
FAQs
What is a cap rate for an Everett rental?
- Cap rate is NOI divided by purchase price. In Everett, location and asset type influence cap rates. Properties near major employers and transit often trade at lower cap rates due to lower vacancy risk.
How do I estimate vacancy for my pro forma?
- Use current local inputs from property managers and recent comps, then stress test by adding 2 to 5 percentage points to see how sensitive your cash flow and DSCR are to changes.
What expenses do investors often miss in underwriting?
- Reserves for replacement, rising insurance, property tax reassessments, utilities that are owner-paid, and one-time turnover or code-compliance costs can all reduce true cash flow.
Are there rent limits or special tenant rules in Everett?
- Washington’s Residential Landlord-Tenant Act governs key rules. The City of Everett may add local requirements such as notices or rental programs, so verify current regulations before you buy.
How does financing change my cash-on-cash return?
- Interest rate, amortization, and LTV drive annual debt service. Two properties with the same cap rate can have very different cash-on-cash returns based on loan terms and total cash invested.
