New to RE investing live in Seattle limited funds where to start?

Question

I am currently renting and want to start investing, I have little cash and am in need of some direction. I live in Seattle, WA, and opportunities for a great deal are hard to come by, I've been looking at websites such as Realtor.com, Zillow, the MLS, etc...My ultimate goal is to get into multi-family properties.  Unfortunately, I don't have a lot of funds to allocate to my mailings just yet, so I can only do a small batch maybe 100 at a time.  I can only qualify to finance about a $300,000 property, and that is tough to find in the Seattle area for any property. So, I started looking at buying a list, does anyone have a good search criteria recommendation for finding multi-family duplex, or should I consider starting out with SFR and find a way to house hack instead?  I'm not sure what is the best criteria is to get biggest bang for my buck, are mailers a good way to start? Any suggestions?

Michael Haas · Answer

You mentioned House Hacking Michael - I'd consider house hacking a SFH with a basement ADU as a great option. You'd have to look outside of Seattle to buy under $300k, but with a house hack you could also put only 3-5% down and potential increase your purchase price (vs. 20-25% for a non-owner occupied property).

I wouldn't buy a list at this point - our market is super competitive and I think you're time and money is better spent building your portfolio vs. trying to build the scale and expertise to work off-market deals yourself. We and other agent wholesale a lot of deals as well, partnering up with someone like that will save a lot of time vs designing your own mailers.

Vaughn K. · Answer

I dunno why you said not to the north, maybe where you work is south Seattle and worried about commute time? But if you have to stay in the Seattle area, Everett or other areas up that direction would be good to look at. Also, of course, south. Tacoma and the other south side cities. East you have to get pretty deep for prices to drop, so north or south is probably the ticket.

Keep in mind if you go for a house hack, which is probably the best move because of the low down payment and preferential financing terms, IT ISN'T FOR FOREVER! If you move into a place with 3-5% down, live there for a year, and can show a signed lease (get your current roommates to sign a lease for the whole place upon your "moving out" date essentially) you could use that income to purchase another SFR to house hack in a mere 12 months if you can come up with another down payment. So ask yourself if you can deal with a meh commute for 12-24 months, not for forever. If the answer is that you can put up with that to move your financial goals forward, then you may be able to consider a wider area than you think.

Anthony Dadlani · Answer

@Michael Oziel

Suggest starting with smaller projects to get your feet wet. Single-family homes are a good place to start. Potentially bringing in a capital partner or private investor will help you leverage your current funds.

Best of luck in all your endeavors.

￼￼

Michael Oziel · Answer

Account Closed, those are definitely more affordable markets but I need to live in the Seattle Area.

Account Closed · Answer

Tri Cities, Yakima, Spokane

Vaughn K. · Answer

Well south it is then! Good luck!

Michael Oziel · Answer

@Vaughn K. good advice, you pegged it, I currently work Georgetown and the commute north just looks too ugly for me. Pretty much anywhere I find a place is going to be a tough commute, but worth it for a few years to get closer to my financial goals. I do plan on starting with an SFR and do a house hack, and hopefully be able to repeat within 12-18 months. Thanks for your input.

Michael Oziel · Answer

@Phil Wells I have thought about looking across the state, I'm not knowledgable enough yet to have confidence to invest out of my area and don't have other financial resources set up yet, I really would like find a place in the Seattle area (does not have to be in Seattle but within 30 miles) so I can live in the property and create equity.

Michael Oziel · Answer

There has been some great advice, all ideas I have considered. I think I need to focus on getting started with an SFR, @Michael Haas that is more along the line I thought I would start with, and eventually when I have more knowledge and experience move to Multi-Family. Thanks @John Barrett for your advice as well. I think a house hack ideally with a basement would allow me to live in it and create equity. Thanks to everyone who has posted and taking the time to read my 1st post. I plan to get more involved as I learn.

John Barrett · Answer

@Michael Oziel lots of good advice here on this thread.  If I were in your position, I would be following @Michael Haas advice and starting with a house hack.  Qualifying for a primary residence will allow you to get the lowest cost financing and low down payment options.  Additionally, if you have roommates or are able to do home improvements you will be able to dramatically reduce your cost of living while building equity. Finally, if you live there for at least two years you will be able to sell and not pay capital gains so long as they are under the federal limit.

I would caution you not to feel rushed to make the leap into investing.  The only time frame that matters is yours.  Spend the time to get ready for this next step.  Develop your plan, research the areas you think you might like invest, get your financing lined up, and general real estate education.  I don't mean to imply you have to have everything figured out (Analysis Paralysis) but having done this work will give you the confidence to move decisively when you do see the right property for you.

Best of luck,

John

New to RE investing live in Seattle limited funds where to start?

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