Tacoma area multi-family

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Tacoma area multi-family

David Goetz
Investor · Tacoma, WA · Member since 2015 · 8 posts · 3 votes

Hello fellow BPers,

I am currently living near Tacoma, WA and looking to buy a 2-4 unit multi-family property in pierce county. I would like to find a local RE agent that is knowledgeable about investing in the area and looking for recommendations/references.

The plan would be to finance with 20% down payment and I am looking for positive cash flow even being in this expensive area.

I appreciate any input

David

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Michael HaasBusiness Member
Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
5y

Hey David,

Given that Tacoma and Seattle both have ADU friendly laws on the books, we've found Single Family to cashflow better than multifamily in many cases if the single family home has an existing ADU, or the potential to put one in.

There's a lot we can talk about on ADU's, but one thing worth calling out is that as many as 90% of them have been built without permits... so although they're legal in Tacoma, they're only legal when permitted and many of those on the market are not. There's tons of options for legalizing an unpermitted unit or leaving it as it is, so I'd recommend exercising caution, rather than avoiding unpermitted work all-together.

If you're buying a true multifamily, one benefit of house hacking is the ability to put 3.5% down on a FHA loan- this can push your cash-on-cash return through the roof, and you only need to live in the property for a year to qualify for an owner occupant (low down payment loan).

If you end up househacking a SFH with or without an ADU you can get better loan terms going conventional, with a 5% downpayment.

Feel free to hit me up for a phone call or a coffee to chat more - we do a lot of multifamily and single-family w/ ADU's in Pierce and King County. Cheers!

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
WebsiteView Page
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  • Aaron NelsonBusiness Member
    Real Estate Agent · Seattle, WA · Member since 2016 · 307 posts · 191 votes
    5y

    Hey @David Goetz - Welcome to BP! It’s a hot market for small multi family (2-4 unit) properties in Tacoma but there are still deals. Are you planning to purchase the property strictly as an investment or are you planning to live in one of the units (owner occupy)?  

    [email protected]425-880-2580
    White Coat Realty535 Reviews
    WebsiteView Page
    0Reply
  • David Goetz
    OP
    Investor · Tacoma, WA · Member since 2015 · 8 posts · 3 votes
    5y

    @Aaron Nelson, thanks for getting back to me. I would most likely just use the property as an investment. I would have to run the numbers to see if house hacking would be of much benefit to me. If it changes the terms of the loan enough to make it worthwhile, then maybe live in it, but I imagine that the income from renting “my” unit would be greater than the savings.

    I do not need a place to live so I have the option either way.

    I am also not opposed to SFR but imagine they would be harder to cash flow in this market. In your experience, how do the SFR perform in pierce co?

    I currently own a 2 unit rental in Queens, NY that used to be my primary residence. It barely breaks even but I keep it as a growth property. I would like something that cash flows this time around. I think the Tacoma area’s future looks bright and even though prop values have been climbing, I still see appreciation ahead but as I said, looking more for cash flow this time.

    0Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
    5y

    Hey David,

    Given that Tacoma and Seattle both have ADU friendly laws on the books, we've found Single Family to cashflow better than multifamily in many cases if the single family home has an existing ADU, or the potential to put one in.

    There's a lot we can talk about on ADU's, but one thing worth calling out is that as many as 90% of them have been built without permits... so although they're legal in Tacoma, they're only legal when permitted and many of those on the market are not. There's tons of options for legalizing an unpermitted unit or leaving it as it is, so I'd recommend exercising caution, rather than avoiding unpermitted work all-together.

    If you're buying a true multifamily, one benefit of house hacking is the ability to put 3.5% down on a FHA loan- this can push your cash-on-cash return through the roof, and you only need to live in the property for a year to qualify for an owner occupant (low down payment loan).

    If you end up househacking a SFH with or without an ADU you can get better loan terms going conventional, with a 5% downpayment.

    Feel free to hit me up for a phone call or a coffee to chat more - we do a lot of multifamily and single-family w/ ADU's in Pierce and King County. Cheers!

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    7Reply
  • Jack Carda
    Investor · Keesler Air Force Base, MS · Member since 2019 · 16 posts · 11 votes
    5y

    @Michael Haas

    I just bought a duplex in the area and had a great experience working with Mike Mansour. Good luck!

    https://mikemansour.johnlscott.com/

    0Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @David Goetz, small multifamily is pretty hot in Kind and Pierce County. They do not stay long in the market, and they tend to be sold way above asking price. 

    A few weeks ago, I put an offer on a fourplex listed for $650K, and it was sold for more than $730K for a seller that waived the inspection.

    One other option that may be a little more appealing if you are not willing to go that high in escalation, is to get a big Signle family (5 beds+), and either permit an unfinished basement, or just rent the ADU if it already has the permits.

    I permitted an ADU earlier in 2020, so lLet me know if you got questions and I can share with you more about ADU.

    Thanks!

    0Reply
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