THE ULTIMATE SEATTLE HOUSE HACK (no, it is not renting out rooms)

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THE ULTIMATE SEATTLE HOUSE HACK (no, it is not renting out rooms)

Adrian Chu
Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes

This is a summary of learnings from a recent project I personally completed.  

Steps involved:

1. Buy a home with a large backyard

2. Get permits to build a detached ADU (DADU)/backyard cottage in the backyard

3. Build the DADU for around $200k-300k. I used a construction loan.

4. Split the two homes into detached condos.  (The City of Seattle allows this. Most other cities do not.)

5. Sell the DADU for $500k-750k+ (or keep it as a rental and cash out refinance.)

6. You get a great house to live in $150k-300k less than what you would otherwise pay for OR sell the main house as well for maximum profit.

Photos are of a recent project from 2017. I was one of the early adopters for this kind of project. Ask me anything!

Original home (retained)

New DADU

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Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
5y

@Adrian Chu we've been extremely curious about that strategy - essentially "Condo-izing" a single family lot.

Was this a hold for you, or did you sell one or both of the units?

If you're willing to share any advice, pitfalls, or stories from this project I'd love to hear them. With this being such a new strategy there's not a lot of info out there, and even fewer folks who have already executed it successfully.


Congratulations and thanks for sharing! I voted for this post and if I could vote twice I would have. 

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
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  • Angela Zaitz
    New to Real Estate · CA · Member since 2020 · 24 posts · 3 votes
    5y

    Are the utility lines separate? 

    0Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
    5y

    @Adrian Chu we've been extremely curious about that strategy - essentially "Condo-izing" a single family lot.

    Was this a hold for you, or did you sell one or both of the units?

    If you're willing to share any advice, pitfalls, or stories from this project I'd love to hear them. With this being such a new strategy there's not a lot of info out there, and even fewer folks who have already executed it successfully.


    Congratulations and thanks for sharing! I voted for this post and if I could vote twice I would have. 

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    7Reply
  • Bao Chau Tran
    Real Estate Broker · Mount Vernon, WA · Member since 2017 · 40 posts · 5 votes
    5y

    @Adrian Chu

    Can you expand on what your experiences with this? Was it hard to obtain a permit? I am curious as I am buying my first investment home in Tampa Fl. I wonder if I can apply to add an unit like this? Thanks!

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @Angela Zaitz:

    Are the utility lines separate? 

    Electric is separate.  Water/sewer is shared and can be sub-metered.

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @Michael Haas:

    @Adrian Chu we've been extremely curious about that strategy - essentially "Condo-izing" a single family lot.

    Was this a hold for you, or did you sell one or both of the units?

    If you're willing to share any advice, pitfalls, or stories from this project I'd love to hear them. With this being such a new strategy there's not a lot of info out there, and even fewer folks who have already executed it successfully.


    Congratulations and thanks for sharing! I voted for this post and if I could vote twice I would have. 

    It was a spec/investment project for me.  

    Now more and more of these are popping up all over Seattle and buyers are more open to purchasing them.  When I finished building the DADU, I wasn't able to sell it so I rented it out for a year. This year, when I listed it for sale, it got multiple offers, and we set a new record high price of $705,000 for ~800 sf.

    1Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @Bao Chau Tran:

    @Adrian Chu

    Can you expand on what your experiences with this? Was it hard to obtain a permit? I am curious as I am buying my first investment home in Tampa Fl. I wonder if I can apply to add an unit like this? Thanks!

    1. check if your jurisdiction allows detached ADUs

    2. check if you can split ownership of the two homes

    1Reply
  • Rand Knutson
    Seattle, WA · Member since 2017 · 19 posts · 14 votes
    5y

    @Adrian Chu wow that’s awesome thanks for sharing! For the year you were renting it out, did you refinance out of the construction loan? If so, was your new loan conventional?

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @Rand Knutson:

    @Adrian Chu wow that’s awesome thanks for sharing! For the year you were renting it out, did you refinance out of the construction loan? If so, was your new loan conventional?

     My construction lender offered a portfolio loan option for me, but yes, refinancing it to conventional is definitely an option.  

    1Reply
  • James Pou
    New to Real Estate · San Diego, CA · Member since 2020 · 1 post · 0 votes
    5y

    @Adrian Chu, so creative! What size lot or available back yard space do you look for? What's the sqft on the DADU?

    0Reply
  • Stephen Pirotte
    Flipper/Rehabber · Des Moines, WA · Member since 2020 · 4 posts · 2 votes
    5y

    @Adrian Chu

    Great post, thank you for sharing. Which neighborhoods of Seattle does this work best? How large a lot do you need?

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @Stephen Pirotte:

    @Adrian Chu

    Great post, thank you for sharing. Which neighborhoods of Seattle does this work best? How large a lot do you need?

    It works anywhere within Seattle city limits.  Min 3200 sf.  It is most optimal to do this somewhere with high exit values, since cost to build and effort are about the same everywhere.  My project was in View Ridge.

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    5y
    Originally posted by @James Pou:

    @Adrian Chu, so creative! What size lot or available back yard space do you look for? What's the sqft on the DADU?

     Min is 3200, but the bigger the better.

    0Reply
  • Daniel Alhadeff
    Professional · Seattle, WA · Member since 2013 · 54 posts · 14 votes
    5y

    That's really great Adrian.  Who was the builder of your DADU?  I am looking to doing something similar at my place in Seward Park.

    Thanks!

    Daniel

    0Reply
  • Christian Decker
    Real Estate Broker · Edmonds, WA · Member since 2020 · 54 posts · 32 votes
    5y

    @Adrian Chu

    Nice job! You have to be creative in this market to get the deals to work!

    0Reply
  • Drew Corwin
    Rental Property Investor · Seattle, WA · Member since 2020 · 9 posts · 4 votes
    5y
    Originally posted by @Adrian Chu:
    Originally posted by @Bao Chau Tran:

    @Adrian Chu

    Can you expand on what your experiences with this? Was it hard to obtain a permit? I am curious as I am buying my first investment home in Tampa Fl. I wonder if I can apply to add an unit like this? Thanks!

    1. check if your jurisdiction allows detached ADUs

    2. check if you can split ownership of the two homes

     
    Hi @Adrian Chu, I am also in the Seattle area and have been interested in this hack, but I am still getting held up on understanding how you split the ownership of the home/property. Was this a difficult process, and who did you talk to in order to do this? Thank you in advance! 

    0Reply
  • Kyle Wells
    Realtor · Lake Stevens, WA · Member since 2018 · 122 posts · 91 votes
    5y

    Thanks for sharing, Adrian. Great info here. 

    0Reply
  • Griffin Coxen
    Real Estate Agent · Seattle, WA · Member since 2018 · 12 posts · 7 votes
    5y

    @Adrian Chu Is the DADU accessible from the back of the lot or is there an easement across the lot of the original home? If choosing to sell the DADU, did you split the lot or is this wrapped into condo-izing the home and DADU?

    0Reply
  • Adrian Chu
    OP
    Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    1y
    Quote from @Griffin Coxen:

    @Adrian Chu Is the DADU accessible from the back of the lot or is there an easement across the lot of the original home? If choosing to sell the DADU, did you split the lot or is this wrapped into condo-izing the home and DADU?


     Just saw your question.  This one is accessed from the back of the lot thru an alley.

    0Reply
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