I'm looking to purchase my first home in Washington in Snohomish County (north of Seattle) which I will commit to a rental when I find something else to get into. I'm looking for advice on what to get into. I can borrow up to $320,000 and have about $40,000 saved up. Using an FHA loan I was planning on buying something that needed a little sweat equity put into it. Which I would use the remaining funds from my savings. Hopefully valued for an appraisal in one to two years that would give me 20% equity in the property. Is this a good use of my money? Looking for advice on whether partnering with someone to buy a duplex would be a better idea in this situation.
A little about me. I’m 24 and I’m working 55+ hours a week. It wasn’t until I heard about bigger pockets that I had considered real estate investing. I’m a hard worker and really want to break through into this world. I appreciate any tips or opinions on my situation as I’m trying to get into something soon!
@Colton Rockwell Snohomish County like the rest of the housing market in WA is still pretty hot and that is especially true for the more affordably priced houses. Choosing to partner with someone is really a personal decision and I'm not qualified to say which would be better for you. I personally would look for a single family home and go the house hacking route and have roommates. This would lower your cost of living and allow you to save more of your income for upgrading the house and future investments. There are also the tax benefits of being able to sell the property after 2 years and take tax free gains.
Just be careful to understand your skill set and comfort level with whatever rehab you choose to take on. You can certainly learn a ton from Youtube and other resources for doing your rehabs but given the price range you are going to be looking at, the houses will be older and could need more expensive repair/upgrades.
Best of luck,
Congrats on saving money and looking into your options while in your early 20's, many people aren't as proactive as you at that point of their life. I both live and invest in Snohomish county, and as you know, it's a large county. If the intention is to ultimately rent out the property, a key principle to follow is buying an investment where the people already are, not in fringe areas that get hit harder in softer market cycles or have to compete on rents when things get soft. Look in the communities that place people in closer proximity to great schools, higher paying jobs, and decent amenities. One single family investor I've watched grow a large portfolio emphasizes the schools above most other factors, because renters (ie. parents) will always try to hard to keep kids in schools for segments of their life, but will commute to work and amenities. This limits turn-over in your rental, which in turn reduces your expenses for cleaning up a space between tenants.
Good luck, happy to connect more if you have additional questions.
Hi @Colton Rockwell ,
I agree completely with both comments above me. Going the "house hack" route with a single-family home as @John Barrett mentioned, has been something many people have employed in recent times as part of their RE investing strategy given the market conditions. It allows you to build equity quicker, lessen your monthly expenses (should you rent rooms, etc) and maintain an asset that has a larger demographic of interested buyers should you sell in the future.
To @Gabriel Graumann 's point as well, look in areas that have good schools, employment, etc. As he mentioned, parents will typically look at school districts as one of the first, if not the primary concern for where they will relocate to. Last year I can't tell you how many of my clients who had kids named this as their primary concern, secondary being price.
In terms of finding a partner and purchasing a duplex, that's completely up to you. I think owning your own asset, something you can live in and be solely responsible to yourself for, is probably the best first step. With different types of real estate comes different strategies and goals. Yours (at least to me), sounds like a single-family house hack is what you're ultimately looking for.
@Colton Rockwell , do you work in Seattle or up north? If your work is in Seattle or the general Edmonds vicinity, I also suggest Kitsap County. it's still affordable over here. You can get a cute ~900 sf bungalow in Bremerton for < $300k, or a ~2,000 sf home in Poulsbo, Silverdale, or Kingston for well < $400k in most areas. (MF is more limited, but there are some options < $500k).
With the fast foot ferries from Bremerton and Kingston, you can get downtown in <40 minutes. Don't even need to bother driving. If, like me you have to drive, there's always the Bainbridge, Bremerton, or Kingston-Edmonds car ferries. Or you can still walk on, of course. Many companies provide/subsidize the Orca pass, which takes a big part of the sting out of transit.
BTW, speaking of orcas, I can guarantee you won't see any on I5. But I DID see a pod crossing in front of the Bainbridge ferry yesterday. True story. :-)
If you have any questions about Kitsap, PM me. Always happy to help!