Your thoughts on strategy - Duplex/Triplex $700k-$800k in WA or 2-3 in Midwest

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Your thoughts on strategy - Duplex/Triplex $700k-$800k in WA or 2-3 in Midwest

Terima Nagatani
Member since 2020 · 5 posts · 5 votes

Hi ya'll, 

Wanted to hear your thought on this. Currently have $170k saved up + mother offered to sign loan w/ me. Looking at duplex/triplex and plan on house hacking. My lender basically stated, whatever monthly payment (plus income rent) that we're comfortable with. 

I'm aware if we go the conventional route, duplexes are typically 15% down, triplexes 20-25% down; while FHA is as low as 3.5% down but PMI included. I rather put less down so I still have extra funds to jump on other opportunities that arise.

Currently looking in WA state (the state I work in) for duplex/triplex to house hack, however, majority of these properties won't cashflow for a few years (even after I move out of the unit). I've been crunching numbers since Nov and there's only been a handful where I've seen the numbers make sense. 

I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   


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Sherief Elbassuoni
Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
3y

@Terima Nagatani, you are correct. The local market here is a mix between appreciation and cash flow. You can get cash flow here with STR, rent by the room, .....

But standard one family in one house, will rarely cash flow in our local market

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  • Amir Khan
    Investor · Coppell, TX · Member since 2018 · 311 posts · 166 votes
    3y

    @Terima Nagatani it is true that you can deploy your cash to another market (other than WA state) where you will find duplex or triplex, which will cashflow. Just remember, even if you have a property that cashflows (with tenants in them), with a vacancy and repairs, couple of months of cash flow could be wiped out very quickly. I guess what I am saying is, all strategies work (buying properties with cashflow, value-add flips, buying for appreciation), there will always to something that can go wrong. You are on the right track of thinking to put as little cash down as possible and keeping as much reserve as possible...in my opinion, the key is what is your plan for the property and what is your exit strategy for the property?

    2Reply
  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    3y

    @Terima Nagatani let's see; got money, free to move, want to invest in REI, looking for cash flow and unimpressed by appreciation. You realize none if that spells "Washington". You have your head on straight and all the best!

    2Reply
  • Terima Nagatani
    OP
    Member since 2020 · 5 posts · 5 votes
    3y

    @Amir Khan Appreciate you sharing your insights! 
    If I were to invest in WA - I would simply buy & hold or if I look outside of Seattle; Renton, Federal, Tacoma (typically have larger lot sizes)- would possibly look into a building in ADU to generate extra income or live in while I rent out the other units.

    Given interest rates are high right now, I would think in 3 - 7 years rates will drop and I'd be able to refinance on the properties -> reducing my monthly payments. When I do refinance I'd transfer these properties under an LLC.

    In the case properties aren't cash-flowing even after refinancing in 3 - 7 yrs, I'd look into using the home equity to purchase a new property (hoping this offset the underperforming property) or 1030 exchange. 

    @Bjorn Ahlblad Thank you - I think I just had to hear it from someone else haha! 


    1Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    I don't see why these are your only options based off the information you gave us.

    I'd choose none of the above. And look at options in the sunbelt, and get a duplex + 1 SFR in a low(er) cost environment than WA that's tax friendly, landlord friendly, and go that route. Florida, Georgia, the Carolinas, Tennessee, maybe even Texas though it is not tax friendly. But man that's an easy one.

    I'd buy a $400-500k duplex & house hack + $250k-300k SFR in that same city.

    1Reply
  • Terima Nagatani
    OP
    Member since 2020 · 5 posts · 5 votes
    3y

    @V.G Jason most definitely! I have Florida, and Tennessee on my watch list as well! Thank you for sharing, really appreciate it! 

    0Reply
  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 457 votes
    3y

    @Terima Nagatani you are correct that there are better opportunities to find something in Tacoma with space to add a DADU. I'd stay out of Federal Way. You could find an "ok" smaller duplex in Renton around $600k. There are some older triplexes around the area (not Seattle) that come up $700-800k. It's true, cash flow stinks in the Puget Sound region. Even so, demand is strong and supply continues to be super light. Still a great market for house hacking but non-owner-occ investors (like me) will still struggle to find deals that pencil with traditional 25% down at current rates. Fortunately, rates are rarely stagnant, eventually they will come down but who knows when and by how much. But it sounds like WA isn't the market for you if you're focus is cash flow and not concerned about appreciation.  Best wishes on your real estate journey!

    Broker at Multifamily Properties519 Reviews
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  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @Terima Nagatani:

    Hi ya'll, 

    Wanted to hear your thought on this. Currently have $170k saved up + mother offered to sign loan w/ me. Looking at duplex/triplex and plan on house hacking. My lender basically stated, whatever monthly payment (plus income rent) that we're comfortable with. 

    I'm aware if we go the conventional route, duplexes are typically 15% down, triplexes 20-25% down; while FHA is as low as 3.5% down but PMI included. I rather put less down so I still have extra funds to jump on other opportunities that arise.

    Currently looking in WA state (the state I work in) for duplex/triplex to house hack, however, majority of these properties won't cashflow for a few years (even after I move out of the unit). I've been crunching numbers since Nov and there's only been a handful where I've seen the numbers make sense. 

    I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

    Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   



     In the Midwest you can get 7 duplex that will rent for not less then 1700 - 1800 EACH, for about 750kish. Just last week I picked up a 7 unit all in 200k, NET rent about 39k so about 20% . This week two more closings, 4 /2 all in 75k, rent will be about 1300, 3 br all in 55k, 7860 rent. I see these all the time, Its all about knowledge and your network. BTW I do all this while living on the beach on FL 

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @Terima Nagatani:

    @V.G Jason most definitely! I have Florida, and Tennessee on my watch list as well! Thank you for sharing, really appreciate it! 


     FL where??? I am very familiar with both coasts, you will be lucky to get 4 % net cap, EVEYTHIING is way overpriced. I live in FL, have my finger on all of it, its crazy high 

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    3y
    Quote from @V.G Jason:

    I don't see why these are your only options based off the information you gave us.

    I'd choose none of the above. And look at options in the sunbelt, and get a duplex + 1 SFR in a low(er) cost environment than WA that's tax friendly, landlord friendly, and go that route. Florida, Georgia, the Carolinas, Tennessee, maybe even Texas though it is not tax friendly. But man that's an easy one.

    I'd buy a $400-500k duplex & house hack + $250k-300k SFR in that same city.


     Where can you get a good deal in FL???? Both coasts are crazy overpriced. 

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Terima Nagatani:

    Hi ya'll, 

    I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

    Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   



    The irony of all of these are you are mixing so many things, a cash-flow market like OH or WI "can't" be combined with appreciation like WA , FL , TN.

    You said you don't care appreciation but you want to house-hack in WA too.

    The answer is pretty easy:

    Find within 75 miles a Single Family that has ADU/basement and such (so you get free ADU), and house hack it.
    And for cashflow just typically invest in OH/WI.

    FL however, could be more expensive than WA in some areas.

    0Reply
  • Sam McCormackBusiness Member
    Real Estate Agent · Cincinnati, OH/NKY · Member since 2021 · 1k+ posts · 833 votes
    3y

    @Terima Nagatani

    Cincinnati has plenty cash flow you can take advantage of. 20% is the norm, anything under that, while is possible, I don't see it often. If you can get it, awesome! It doesn't hurt to look!

    [email protected]859-443-4952
    Sam McCormack Realtor
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    0Reply
  • Ran Iarovich
    Real Estate Agent · WA · Member since 2021 · 254 posts · 173 votes
    3y
    Quote from @Brandon Vukelich:

    @Terima Nagatani you are correct that there are better opportunities to find something in Tacoma with space to add a DADU. I'd stay out of Federal Way. You could find an "ok" smaller duplex in Renton around $600k. There are some older triplexes around the area (not Seattle) that come up $700-800k. It's true, cash flow stinks in the Puget Sound region. Even so, demand is strong and supply continues to be super light. Still a great market for house hacking but non-owner-occ investors (like me) will still struggle to find deals that pencil with traditional 25% down at current rates. Fortunately, rates are rarely stagnant, eventually they will come down but who knows when and by how much. But it sounds like WA isn't the market for you if you're focus is cash flow and not concerned about appreciation.  Best wishes on your real estate journey!


     What market would you recommend for cash flow over appreciation? 

    0Reply
  • Brandon VukelichBusiness Member
    Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 549 posts · 457 votes
    3y
    Quote from @Ran Iarovich:
    Quote from @Brandon Vukelich:

    @Terima Nagatani you are correct that there are better opportunities to find something in Tacoma with space to add a DADU. I'd stay out of Federal Way. You could find an "ok" smaller duplex in Renton around $600k. There are some older triplexes around the area (not Seattle) that come up $700-800k. It's true, cash flow stinks in the Puget Sound region. Even so, demand is strong and supply continues to be super light. Still a great market for house hacking but non-owner-occ investors (like me) will still struggle to find deals that pencil with traditional 25% down at current rates. Fortunately, rates are rarely stagnant, eventually they will come down but who knows when and by how much. But it sounds like WA isn't the market for you if you're focus is cash flow and not concerned about appreciation.  Best wishes on your real estate journey!


     What market would you recommend for cash flow over appreciation? 


    I only watch Sno, King, Pierce, Kitsap & Thurston counties so I can't speak to then entire state of WA but Moses Lake is up and coming with better numbers. My brokerage business partner owns 100+ units out there.  If you're asking about any markets, I know many that are flocking to better cash flow in midwest markets like Indy, Cinci, Columbus & Kansas City.

    Broker at Multifamily Properties519 Reviews
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    1Reply
  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 490 votes
    3y

    It's great that you've been actively analyzing the numbers and exploring different options for your real estate investment. Here are some thoughts and considerations for your situation:

    1. House Hacking: House hacking can be a smart strategy to start building your real estate portfolio while reducing your living expenses. By living in one unit and renting out the others, you can generate rental income to offset your mortgage costs.
    2. Location Considerations: Analyzing the local market is crucial, and it's understandable that some areas in Washington State may not offer immediate cash flow. Exploring other states where properties may be more affordable and generate positive cash flow could be a viable alternative.
    3. Out-of-State Investing: Investing in out-of-state properties can offer opportunities for better cash flow, especially in areas with lower purchase prices and favorable rental markets. However, it's important to thoroughly research the market, understand the local dynamics, and build a reliable team of property managers and local professionals to support your investment from a distance.
    4. Risk and Familiarity: Investing out of state comes with its own set of risks and challenges. You may face potential difficulties in managing properties from a distance, dealing with local regulations, and understanding the unique characteristics of the market. It's important to carefully weigh the risks and assess your comfort level with managing properties remotely.
    5. Financing Options: As you mentioned, there are different financing options available for duplexes and triplexes, ranging from conventional loans to FHA loans with lower down payments. Each option has its own pros and cons, so consider your financial situation, long-term goals, and the impact of PMI on your monthly cash flow.
    6. Professional Advice: Consulting with a local real estate agent, financial advisor, or real estate investment mentor who is familiar with both the Washington State market and potential out-of-state markets can provide valuable insights. They can help you analyze different scenarios, assess risks, and determine the best strategy based on your specific goals.

    Ultimately, the decision depends on your risk tolerance, financial objectives, and personal preferences. Analyze the numbers, consider the local market conditions, and evaluate your ability to manage properties remotely. By conducting thorough research and seeking professional advice, you can make an informed decision that aligns with your investment goals.

    [email protected]
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  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y
    Quote from @Bob S.:
    Quote from @V.G Jason:

    I don't see why these are your only options based off the information you gave us.

    I'd choose none of the above. And look at options in the sunbelt, and get a duplex + 1 SFR in a low(er) cost environment than WA that's tax friendly, landlord friendly, and go that route. Florida, Georgia, the Carolinas, Tennessee, maybe even Texas though it is not tax friendly. But man that's an easy one.

    I'd buy a $400-500k duplex & house hack + $250k-300k SFR in that same city.


     Where can you get a good deal in FL???? Both coasts are crazy overpriced. 


     Agree in FL specifically, guess you can in Georgia, Carolinas, part of the TN. 

    0Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    3y
    Quote from @Terima Nagatani:

    Hi ya'll, 

    Wanted to hear your thought on this. Currently have $170k saved up + mother offered to sign loan w/ me. Looking at duplex/triplex and plan on house hacking. My lender basically stated, whatever monthly payment (plus income rent) that we're comfortable with. 

    I'm aware if we go the conventional route, duplexes are typically 15% down, triplexes 20-25% down; while FHA is as low as 3.5% down but PMI included. I rather put less down so I still have extra funds to jump on other opportunities that arise.

    Currently looking in WA state (the state I work in) for duplex/triplex to house hack, however, majority of these properties won't cashflow for a few years (even after I move out of the unit). I've been crunching numbers since Nov and there's only been a handful where I've seen the numbers make sense. 

    I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

    Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   


    Hi Terima, I'm originally from Portland, Oregon and decided to make the move to Columbus Ohio to be a full time real estate investor a few years ago - best decision I ever made. For one property in Portland, Oregon, I could buy 5 positive cash flowing BRRRRs here in the midwest. I personally love Columbus Ohio and as someone who works with a lot of out of state investors - there's so many catalysts for why you should invest here. Specifically, there's job growth (Intel, Honda, Amazon, Nationwide, etc) and the population is growing (unlike Cleveland or Cincy). I really see Columbus Ohio as an extremely safe bet for the next 10-20 years. Plus, there's still so many positive cash flowing and 1% deals here in Columbus Ohio. Just a few weeks ago, I helped a client close on a deal getting them 20% cash on cash return. As a local investor and agent here in Columbus, let me know if you have any questions or want to connect!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
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    0Reply
  • Anthony L Amos Jr
    Real Estate Agent · Columbus | Toledo · Member since 2019 · 608 posts · 768 votes
    3y
    Quote from @Terima Nagatani:

    Hi ya'll, 

    Wanted to hear your thought on this. Currently have $170k saved up + mother offered to sign loan w/ me. Looking at duplex/triplex and plan on house hacking. My lender basically stated, whatever monthly payment (plus income rent) that we're comfortable with. 

    I'm aware if we go the conventional route, duplexes are typically 15% down, triplexes 20-25% down; while FHA is as low as 3.5% down but PMI included. I rather put less down so I still have extra funds to jump on other opportunities that arise.

    Currently looking in WA state (the state I work in) for duplex/triplex to house hack, however, majority of these properties won't cashflow for a few years (even after I move out of the unit). I've been crunching numbers since Nov and there's only been a handful where I've seen the numbers make sense. 

    I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

    Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   



     Toledo, Dayton, and Cleveland Ohio are affordable and great for cashflow!

    0Reply
  • Eric Yu
    Real Estate Agent · Seattle, WA · Member since 2019 · 243 posts · 246 votes
    3y
    Quote from @Terima Nagatani:

    Hi ya'll, 

    Wanted to hear your thought on this. Currently have $170k saved up + mother offered to sign loan w/ me. Looking at duplex/triplex and plan on house hacking. My lender basically stated, whatever monthly payment (plus income rent) that we're comfortable with. 

    I'm aware if we go the conventional route, duplexes are typically 15% down, triplexes 20-25% down; while FHA is as low as 3.5% down but PMI included. I rather put less down so I still have extra funds to jump on other opportunities that arise.

    Currently looking in WA state (the state I work in) for duplex/triplex to house hack, however, majority of these properties won't cashflow for a few years (even after I move out of the unit). I've been crunching numbers since Nov and there's only been a handful where I've seen the numbers make sense. 

    I started to look in other areas like OH, WI, FL and thought I could probably purchase 2-3 duplexes there than purchase just 1 in WA. Wanted to hear if anyone else had this dilemma and what actions they took. Any insights or experience is greatly appreciated! 

    Note, I don't care much for appreciation - I rather have consistent cash flow and hold. If I was to invest out of state, I would also move there since my work is remote.   


     @Terima Nagatani, if you're open to build opportunities, you should deploy your $170k into a Seattle property that you can build a DADU on & then sell the main house & keep the DADU. It's a way for you to maintain cash flows & appreciation. It's also the project I'm currently working on right now. Shoot me a DM for more details!

    0Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    3y

    @Terima Nagatani, you are correct. The local market here is a mix between appreciation and cash flow. You can get cash flow here with STR, rent by the room, .....

    But standard one family in one house, will rarely cash flow in our local market

    5Reply
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