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Kyle Anderson
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Seattle Strategy Advice

Kyle Anderson
Posted Dec 16 2018, 09:48

Hi all,

I've been lurking around the forums for a while and trying to pinpoint the best way for me to get started investing in real estate. I think I have it nailed down to two potential strategies and I'd like to get some input/advice from people with more experience and market knowledge than I have. Some quick background on my current situation: I moved to the Seattle area back in July with my partner and we rent a 2-bedroom unit in Capitol Hill for $1995/month + electricity and internet. Our lease expires in August 2019. I have about 26k stashed away specifically for a down payment and contribute an additional 1.5k every monthly paycheck to this account so I'm estimating 38k in savings by the time our lease expires. My ideal plan would be to purchase a home (something I could house hack) on an FHA loan with 3.5% down and live there for 2 years, at which point I would purchase a second home on an FHA loan and move there while keeping the first property as a rental. The long term plan would be to repeat this process until I build up enough capital that waiting 2 years between property purchases no longer makes sense and then transition to a new strategy.

However, there are things about the Seattle area that concern me regarding the feasibility of this option. I've read that Seattle is a difficult market to cash flow and I don't want rental properties that I have to contribute to monthly just to meet the mortgage payment. It also seems like decent multifamily properties in the area are often outside of what I can afford (these are strictly observations based on Zillow/Redfin -- I have not connected with an agent at this point so maybe I'm mistaken). On top of this, I've heard that Seattle tenancy laws tend to strongly favor the tenant so renting properties here might not make the most sense.

I'm torn about how to move forward. I wholeheartedly intend to purchase a live-in property after our lease expires because 2k/month down the drain hurts. I like the strategy I described above in another market but I'm just not convinced it will work in Seattle. The alternative would be to buy a decent SFH (still on FHA) and stay there for a while to gain appreciation. In the meantime, I'd try following a BRRRR strategy in out-of-state markets where property is much cheaper (i.e. 38k could be a 20% down payment instead of 3.5%) and cash flow is more accessible. Naturally, there are down sides and hassles to this approach, too, but I think it might be more realistic. I'm still very early in my real estate journey and largely unfamiliar with the area so any feedback on how to proceed would be greatly appreciated. Cheers!

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