First post and a question!

13 Replies

Hi, my name is Keith and I'm new to BiggerPockets. I live in the Everett area of Washington state. I found the BiggerPockets podcast about a month ago and have listened to the first 30 and plan on listening to all of them. I have been somewhat of an investor for 15 years.  I read all the books when I was younger and started out in my early 20's.  I currently have 2  investment properties. The first one is a single family that I have about 110k equity in that I bought in 2000.   The second is a duplex that I have about 140k equity in that I bought in 2002.  Basically I have always rented them for below market rents which kind of forced me to be almost a slum lord.  I'm going to fix up my properties and get the rents up to market rates.

Duplex mortgage is 283,000 and the ARV $425,000 and should be able to cash flow around $800 per month.

House mortgage is $262,000 and the ARV $375,000 and should be able to cash flow around $300 per month.

I guess my question is what would other investors do after doing that if you were in my place?  I am interested in buying more but currently there is few multi family units available to buy. I'm also not sure about my options for financing since I did have to short sale another one of my properties  in 2013 but my credit score is still 720.

Originally posted by @Keith Eke :

Hi, my name is Keith and I'm new to BiggerPockets. I live in the Everett area of Washington state. I found the BiggerPockets podcast about a month ago and have listened to the first 30 and plan on listening to all of them. I have been somewhat of an investor for 15 years.  I read all the books when I was younger and started out in my early 20's.  I currently have 2  investment properties. The first one is a single family that I have about 110k equity in that I bought in 2000.   The second is a duplex that I have about 140k equity in that I bought in 2002.  Basically I have always rented them for below market rents which kind of forced me to be almost a slum lord.  I'm going to fix up my properties and get the rents up to market rates.

Duplex mortgage is 283,000 and the ARV $425,000 and should be able to cash flow around $800 per month.

House mortgage is $262,000 and the ARV $375,000 and should be able to cash flow around $300 per month.

I guess my question is what would other investors do after doing that if you were in my place?  I am interested in buying more but currently there is few multi family units available to buy. I'm also not sure about my options for financing since I did have to short sale another one of my properties  in 2013 but my credit score is still 720.

 Well, there is a lot you can do. Do you work for the Big "B" Co? (Everett, you know, what other employer is there?) Anyway. If you are full time employed, you might just need some guidance. If you are living off of that kind of cash flow, God Bless you. I need to know a bit more about your goals and situation to figure it out for you. PM me if you want input.

I would ID and put under contract a new plex investment, then sell the house. Finding the new multi is obviously going to be the hard part, so do it first.

Renting out a $375k single fam would make me nervous.  That's a lot of house in the hands of renters who often won't bother noticing slow leaks and stuff. Last time I spent that much for one place, it was a nice  7-plex!

Welcome to BP @Keith

@Keith Eke ! Sounds like you're on the right track. Easiest option would be to extract equity from the two properties and use the funds for an additional purchase. Enough time has passed on the short sale, it shouldn't limit your loan abilities too much at this point. 

@Keith Eke On the duplex, you can refinance using a Fannie Mae loan to 70% LTV or if you want a higher LTV you will need to go Non-QM to about 80% LTV.

The SFR you can go to 75% LTV with Fannie Mae or up to 80% LTV with Non-QM.

When you buy, you will need a 15% down payment on a SFR or 25% down for a 2-4 unit using a Fannie Mae loan.

On a Non-QM loan on 1-4 units you will need a 15% down payment.  

I would spend the time to figure out what your likely purchase price will be and determine the down payment, closing costs and reserve requirements. That way you will better understand how much money will be needed to close the deal and where your refinances need to come in at? Plan a contingency in the event the appraisal on the refinances don't come in? 

I would also connect with your realtor / broker and tell them your plans, have them pull comps on your existing properties which will give you good feel for the anticipated appraised values. If you dispute the appraised value, you can use the comps the broker pulled to help you in that rebuttal. The broker will be more than happy to help walk you through that process knowing you will be buying and using them for that end of the deal.

Feel free to PM me if you want additional details. 

Thanks for replying.  Really there is a lot to think about, including weather I should start investing out of state.  Its really hard to make the numbers work in my area.

@Keith Eke Hey Keith, welcome to the forums! There's a local meetup on 2/26/18 at the Bob's Burgers in Marysville, WA (Cascadia Investors Alliance - North end meetup). People usually start showing up at 7pm. Would be worth your while to meet some local investors and hear what types of deals they are looking for/finding in WA state and out of state. 

@Keith Eke Everett is doing great for investment properties these days. I would 1031 exchange both the single family and the duplex into a large 6-8 unit building. Or single family into 4plex and duplex into a 4plex, this may be a more doable step in this competitive housing environment. I would certainly not go out of state though. Everett is a great market to keep investing in.

@Grant Fosheim I'm actually really interested in the idea of doing a 1031 exchange on the single family house.  I really could increase my cash flow  with a 4plex.  I guess I will research that, thanks for the idea.

@Keith Eke , You're definitely on the right track in thinking about a 1031 for that SF. Good NOI is hard to get the higher priced the SF residence is. That kind of property is an appreciation play. And you've had some great appreciation on it so it may be time to move on to the multi you want.

But there is another option that might resonate as you're shopping. If you sold both of your properties It looks like you'd end up with north of $200K as a down payment that could go to something very significant with more doors than the 3 you've got now. A small MF could really boost your ROI whether in or out of state. And that would still work within the 1031 regs as long as the valuations work.

The key to this is going to be contingent contracts or  being very careful with the timing as @Steve Vaughan said.  Or at that price point a reverse exchange would be a very viable option.

Hi Keith, although I may not be able to help your current situation out right now in Everett. I am planning on traveling the US here within the next year. Is there a particular area you have your eye on? I know investors from all over the country, almost. LA in California, Dallas Texas, and Memphis Tennessee mainly. If there is an area you have your eye on or have done some research on, I'll go the extra mile and see if I can't hook you up with the right people and really thats all I can offer.

I myself am in a bad financial situation and I am signing up to work here soon and I'm probably not going to stick around Everett much longer. If there is any other way I can help please let me know!

@Keith Eke welcome from the shadows. Me being a cashflow investor would say sell those and invest out of state with more favorable rent to value ratios (I started in Seattle too) but as you can tell on this platform a lot of cooks here in the kitchen.

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