BRRRR in Seattle, Washington (with before/after pics and numbers)

BRRRR in Seattle, Washington (with before/after pics and numbers)

Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes

I just finished a BRRRR just outside of Seattle, Washington. This deal had all sorts of complexity. It was an out of state deal (I live in the SF Bay Area), where I 50/50 partnered with a contractor, and got a private money loan before the cash-out refi. I'll walk through details (including pictures and numbers) below....

Purchased a short-sale property on 3/3/2017 for $218k. 

I had been flying up to seattle 3 weekends in a row looking at properties without luck, then this place came online on the MLS on a thursday with listing notes saying offers must be in by end of day friday to be reviewed on Saturday. We had under 36hrs to put in an offer so I had my agent swing by and we did a facetime video tour. That was good enough for me so we submitted a cash offer. List price was $169k, we offered $190k cash no contingencies. Saturday morning comes around and we were 1 of 11 cash offers. Selling agent kicked offers back 3 rounds, we came up and up and eventually got the deal. Its a 3br,1ba small, single story, SFH. We estimated $40k rehab and a $320k ARV.

Partner and loan structure: 

  • Private money loan for 90% of purchase price
  • Contractor partner and I each paid another 5% of the purchase
  • Contractor partner and I split rehab costs 50/50
  • I handle project management / design / financing / finding the deal/etc; contractor partner handles doing most of the rehab work (we subbed out plumbing/electrical and hired day labor for help with roof/paint/landscape/etc) (this is the 4th deal my contractor and I have worked together on, but first time being partners)

We spent 

  • $218,000 purchase
  • $41,500 on the rehab 
    • total gut + permitted electrical service change, plumbing, roof, landscaping/etc
  • $4,000 on holding costs
  • All in at $263,500
  • Estimated sale price if we were to list would be $330,000 
  • So we would net around $306,900 (7% to sell) minus  $263,500 = $43,400
  • Divide the above by 2 since my contractor and I partnered, we'd each net about $21,700

I went back and forth about selling vs BRRRR'ing and settled on the BRRRR since my long term goal is to get to 10 cash flowing properties, so I offered to buy out my partner from the deal, he was happy with that, so adding that to my costs, my total investment comes out to $285,200

I got an 80% loan on the new $330k ARV which allowed me to get back $265k, which means I net net DID NOT get all my money back out (very hard to do in seattle), and thus end up leaving about $20k of my own capital in the deal. So I have 20k invested in a $330k property with a $265k loan at 4%.

We're expecting it to rent for $2,200/mo. My holding costs (including maintenance/insurance/tax/etc) is right around $1800/mo

Here are some before pics; place was a dump! We had to wear masks for the first couple weeks

We spent 2 weeks simply on the demolition. Total project end to end took 14 weeks. I got the team custom T-shirts for moral! 

goodbye kitchen!

Had to mop the grease off the ceilings before we could prime! Ended up replacing a lot of drywall. 

bathroom in progress

Laser perfect

322sq ft deck!

And here are the final pictures....

My business partner and I on the last day!

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Investor · Los Angeles, CA · Member since 2016 · 577 posts · 240 votes
9y

Christian. I grew up in the Bay Area. Love your story and what you have done up in Seattle. I have been doing BRRR's for the last year in Memphis and Cleveland. Would love to connect and learn more about what you are doing and see if we can maybe do something together in the future. Great work!

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  • Investor · Montclair, NJ · Member since 2016 · 60 posts · 14 votes
    9y

    Thanks for posting! Congrats on your success! It's awesome to see someone invest out of state and build a team!! I'm in the NJ area looking to invest out of state too. Would love to connect and discuss further if you're open to it. Congrats again!

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Brian Hume:

    @Christian Wathne Is the cost associated with your initial private money loan included in your holding cost? Just curious on that process. Overall a great deal. Congrats. 

     Hi Brian, yeah it is. My rehab loan rate was lower than most

  • Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
    9y
    Originally posted by @Christian Wathne:

    Thanks @Pang Poeng! It's tough to see the depth from that bathroom picture, but its a 1ft x 3ft recessed shelf (same size as the window above it)

    Did you guys consider using a Schulter Or Wedi Edging on that Shower/bath Niche ? It looks good but the edging would have left a nice finish on the edges or corners. 

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Samip Garg:

    @Christian Wathne, awesome job. I want to know about the private lending part. How did you find the lender and what do they look for lending 90% on a run down property (initially) like this?

    Really inspired and hope I can pull off something like this....

    Congrats!! :)

     Hi Samip, my lender was found via networking. I've done 5 reasonably successful flips in the past and have documented numbers on them. When I approached this lender I had a short presentation showing what's in it for them, how I've created returns in the past, and what specific type of deals we're targeting; that got us the 'OK', then when we found a house we wanted we got a 'yes' on the lending within minutes because we had already agreed to terms and structure ahead of time. 

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y

    Thanks @Logan Turner, the approx $1800 cost number covers most that

    • $265k @ 4% with 30yr amortization = 1265/mo
    • tax = $233/mo
    • insurance = $81/mo
    • 10% rent for repairs/maint = $220/mo
    • total = $1799

    At his point (2 properties) I'm PM'ing myself but adding in 10% I would still cash flow a little

    Yeah; my all in counts hard money; private deal/low rates/no points

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Albert Bui:
    Originally posted by @Christian Wathne:

    Thanks @Pang Poeng! It's tough to see the depth from that bathroom picture, but its a 1ft x 3ft recessed shelf (same size as the window above it)

    Did you guys consider using a Schulter Or Wedi Edging on that Shower/bath Niche ? It looks good but the edging would have left a nice finish on the edges or corners. 

     Hi Albert, Yeah; we actually used a schluter where the tile walls end, but chose not to in the window or shampoo shelf; we thought it was a cleaner look without

  • Mercer Island, WA · Member since 2015 · 15 posts · 2 votes
    9y

    Christian, congratulations on a great deal. I know the area you purchased in (we have rentals it that area).  Nice not being in City of Seattle and having to deal with First In Time, cap on move in fees/deposit, etc etc. If you are not already a member, check out the Rental Housing Association of WA. Great leases, credit checks, education etc

  • Real Estate Broker · Seattle, WA · Member since 2014 · 1k+ posts · 427 votes
    9y
    Originally posted by @Christian Wathne:

    Thanks @Jennifer Slaughter, yeah, crazy growth and low inventory; it's getting more and more difficult to find deals to work with. 

    This property is in Renton. 

    We may have to start working further south to find deals that pencil out, but I'm for now I'm focusing on being within 30min of downtown seattle & bellevue 

     Renton is a good area.

  • Las Vegas, NV · Member since 2014 · 284 posts · 123 votes
    9y

    @Christian Wathne

    What price are you trying to rent this at?

  • Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    9y

    @Christian Wathne,

    Everything about this is on point, well done!   I normally like to scrutinize,  and find things I like/don't like with flips and take them to my houses, and everything you've done is A+!   good job! 

  • Investor · Sewickley, PA · Member since 2017 · 59 posts · 32 votes
    9y

    Just beautiful, and a couple of people beat me to it, but the shampoo shelf is fantastic! we are putting in something like that in every shower going forward...but we have never done a horizontal shaped one. Great idea!

  • Investor · Kalamazoo, MI · Member since 2015 · 30 posts · 5 votes
    9y

    A Very nice job just visited Seattle for the first time a couple weeks ago and loved it. I hope to own property there one day for vacation and airbnb.  

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    awesome place! Any reason you didn't add another bath/half bath/enclosed garage to the place? I feel like it would have increased your rent/price a lot.

  • Commercial Real Estate Broker · Snohomish, WA · Member since 2015 · 2 posts · 0 votes
    9y

    Beautiful job!  The kitchen is fantastic.  Would you share the details on that? Where did you get the cabinets?  What was the countertop material?  Is the floor laminate?

  • Investor · Fremont, CA · Member since 2014 · 20 posts · 6 votes
    9y

    Congrats @Christian Wathne. Place looks awesome and numbers look good too. Hope to do something similar in future. All the best.

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    9y

    That looks fantastic Christian, as well as a great profit! Congrats!

  • Olympia, WA · Member since 2016 · 45 posts · 8 votes
    9y

    Nicely done! Looks great!

  • Investor · Marylhurst, OR · Member since 2017 · 2 posts · 0 votes
    9y
    This looks great. Awesome job and congrats!
  • Charlotte, NC · Member since 2017 · 1 post · 0 votes
    9y

    Hi guys.  Quick question.  How did the purchase go from 190k to 218k?  Is that difference the payback to private money investors?

  • Insurance Agent · Seattle, WA · Member since 2010 · 63 posts · 27 votes
    9y

    @Christian Wathne Love the BRRR! I write insurance for quite a few BRRR's and flips and love seeing the before and after. Gems can still be found in Seattle. You have to be patient and consistently on the hunt. Keep digging Bigger Pockets!

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Linda S.:

    @Christian Wathne,

    Everything about this is on point, well done!   I normally like to scrutinize,  and find things I like/don't like with flips and take them to my houses, and everything you've done is A+!   good job! 

     Thank you Linda! 

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Karen S.:

    Just beautiful, and a couple of people beat me to it, but the shampoo shelf is fantastic! we are putting in something like that in every shower going forward...but we have never done a horizontal shaped one. Great idea!

     Thanks Karen! I've been doing this same 1x3 window and matching 1x3 shelf for some time now in most bathrooms; everyone seems to love it. So much more attractive and functional than the standard small ones

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @David Zheng:

    awesome place! Any reason you didn't add another bath/half bath/enclosed garage to the place? I feel like it would have increased your rent/price a lot.

     Yeah David, you're absolutely right. 

    Unfortunately the current floor plan didn't give us any good ways to add a bath to the existing footprint so we would have had to actually add sqft to the structure; which ended up not having the right roi to be worth while

  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Constance Wilde:

    Beautiful job!  The kitchen is fantastic.  Would you share the details on that? Where did you get the cabinets?  What was the countertop material?  Is the floor laminate?

     Hi Constance, yeah absolutely. 

    • - Cabinets & quartz counters were from Pius in seattle; they have good pricing, a good showroom and are fairly quick to turn around
    • - cabinets are the 'grey shaker' for the kitchen, 36 inches tall was the right size for our 94 inch ceilings to give us cabinets that go all the way to the ceiling; and 'white shaker' for the bathroom vanity; same counter on both
    • - floors are laminate from costco; "harmonics camden oak"; I they're 8mm thick, 6 inch wide and 48 inch long and have a pre-attached pad; great texture on the surface and solid quality feel; would definitely buy again
    • - kitchen backsplash was from home depot online (couldnt find subway I liked both the look and price of in store) called "jeffrey court classic brick" in 2inch x 4inch size for $2.89/ft
    • - appliances were the entry level samsung stainless, with a counter dept fridge
    • - cabinet handles and faucet were from amazon; cabinet handles are brand "Probrico" in the 5 inch size. We've previously used the "T Bar" style handles but felt those were fading out of style
  • Investor · San Jose, CA, Bellevue, WA · Member since 2016 · 327 posts · 257 votes
    9y
    Originally posted by @Jason Green:

    Hi guys.  Quick question.  How did the purchase go from 190k to 218k?  Is that difference the payback to private money investors?

     our original offer was $190k, but we had to bump it up alot higher to get the deal due to competition. Actual purchase was approx $215k and there were about 3K in closing costs

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