House Hacking in Seattle

[Tyler Smith]

My girlfriend and I have been wanting to get into real estate investing for some time. Without boring you guys too much, we have a dilemma. We are looking into 2-4 unit multi family properties which we would live in for a couple years.

I’ve been hearing so much about people getting started with zero money. Right now we have roughly $6,000 in debt and together make around $100k a year. Do we take a year or two to pay off some of our debt and save up some money for a larger down payment out of pocket, or try and borrow money for a 3.5% down payment? We’re both a little worried about if it’s a good idea to borrow the entirety of the $20-30k down payment...is that too risky?

[Kai Van Leuven]

Tyler,

I am in the Seattle area (Snohomish/Skagit County). It is the best place to invest in the world! What I would suggest would be to really study the market on where you want to end up. 2-4 is insane price wise. There are some values out there but I think that if you educate yourself on the market and get everything financially in order you will be better in the long run. In my opinion there is very little that will cash flow right now in multi family for the Seattle area. I would not just throw my money at a place as an “investment” when you will probably have a negative cash flow.

What no one has mentioned above is that you go with a <20 down payment option you have PMI. That is going to kill your cashflow. Your fist few properties have to be homeruns so you can tap into the equity to keep growing.

I would save up. Track the market, look at what things are selling for, how fast, price per unit, rents in those areas, and be 100% confident. I have waited years for good deals. Sometimes that is as long as it takes.