House hacking north of Seattle

[James Fraundorf]

Anyone have experience house hacking just north of Seattle anywhere from Edmonds to marysville? I am looking to buy my first house towards the end of summer and househacking. Hoping to snag a 2-3bed single story for under 350 that I can get an fha loan on but still do some rehab to to add value.

[Michael Haas]

Hey @James Fraundorf - We've done 3 house hacks and own 6 rentals just a little South of you in Seattle. A client of mine just went into mutual on a house hack in Edmonds last week - its a 4 bed with good square footage that he'll be converting to a 6 bed. He paid closer to $500k - even fixers in the Edmonds - Lynnwood area will be at the top of your $350 price range or above, but you should have more options farther north in Marysville or elsewhere.

Just a couple tips for you as you get started:

1. Check the unrelated persons count in any city you're interested in. Seattle allows 8 unrelated persons in a rental house, unincorporated Snohomish County allows 6, but some cities allow as few as 3-4. House hacking financials get significantly stronger as you increase the bed count above 4, or add a ADU or separate dwelling unit.

2. The 203K is a great product, but there are a lot of hoops to jump through. If you can find a cosmetic fixer where you can add value and get a conventional loan on it that can often be a better option. Part of this depends on whether you'd like to do any work yourself - with the 203K you need a licensed contractor to complete the work and can't break  out your hammer much yourself. 

3. If your property doesn't need the 203K then I wouldn't go FHA at all (if you can qualify for conventional). Way back before 2013 FHA allowed the mortgage insurance to be cancelled when the mortgage insurance has been paid for 5 years and the loan balance reached 78% of the original purchase price or value of the home, but since 2014 new FHA loans haven't had such good terms. At 90% loan-to-value or less (more than 10% down), they have the monthly mortgage insurance premium payable for at least 11 years. New loans at more than 90% loan-to-value (less than 10% down), have he monthly mortgage insurance will be payable for the life of the loan. OUCH. Of course you can refinance, but with rates as low as they are now there's a good chance you won't want to. 

Lots of info I know - happy to talk more on the phone or over a coffee once Stay-Home-Stay-Safe is lifted. Cheers!