I'm 22 years old, living in Seattle and looking to invest asap in either a SFH or multiple units... I hate renting. I have about $36k in liquid savings and just got preapproved for a $332k conventional loan at 4.875% interest. I know that's not a lot in Seattle, but it paints a picture for my buying power.
So my question is, do you think I should start investing this year or hold off? Seattle is extremely competitive and it’s virtually impossible to find market deals with positive cash flow. So I would basically be investing in the gain on appreciation/reversion. And if I was to do this, even an investment in a condo then might make sense. Can someone with more experience paint a clearer picture for me on what makes the most sense? Thanks!!
Rental Property Investor · Everett, WA · Member since 2015 · 458 posts · 386 votes
7y
@Evan Anderson you certainly can get started but you need to be careful that purchasing does not put you in a tough position financially. I would make sure that your quoted interest rate will not increase if you choose to put a lower down payment. While you can use low money down options for purchasing your first property, this will result in higher recurring monthly mortgage payments. It's not a problem, just something you need to plan for.
Do your research on any areas that you plan target. Given your budget, it will limit some areas near Seattle. However, you can find properties in Tacoma and north of Seattle in the price range you have listed. There are pro's and con's with each property type and different strategies for each regardless of what type of property you are looking at. House hacking with roommates maybe easier to start with given that the prices for multifamily properties are high at the moment. You may also be able to find a condo that will meet your criteria, just be cause of the HOA fees.
Real Estate Broker · Seattle, WA · Member since 2018 · 10 posts · 7 votes
7y
Yes. You can start investing now which is the good news. If you are willing to invest in multiple unit which it’s sounds like you are open to it then if you owner occupy a duplex, triplex or four unit, you can use the income(from other units) to help you qualify for a larger purchase price.
Since this would be your first buy. You would also be able to use FHA financing which means you could get in for as little as 3.5% down.
You have plenty of money to start but yes finding the right deal is the tough part. I would recommend talking with agents and get them to send you over deals.
Real Estate Broker · Bellevue, WA · Member since 2017 · 172 posts · 107 votes
7y
Hi Evan,
Everyone's goals are different and many find themselves asking very similar questions right now. The Seattle market, and in more broad strokes, the whole Puget Sound area, has been extremely difficult to cash-flow the past few years for investors. Don't get me wrong, deals can be found, but they are far and few between, and when occur, are very competitive.
It kind of sounds like you're looking to more of an owner occupied scenario, which gives you more options than a straight investment. If that's the case, I think definitely putting money into something where it's not a 100% toss-to-the-wind every month is worth taking a look at. In terms of whether you should hold off or start now is really a personal choice. None of us have a crystal ball about what next year will bring -- will prices be lower, will they be higher? We simply have projections and experience to make our bet.
I'd be happy to chat with you more in regards to your situation and answer any questions you may have. Feel free to reach out.
Real Estate Agent · Renton, WA · Member since 2017 · 204 posts · 151 votes
7y
@Evan Anderson It's always a good time to buy the right deal in real estate like @Jake Alger we don't have a crystal ball however if it pencils out for you than go for it. I just had a client bought his firts home and he rented out his upper unit and lived in the lower unit and actually paying $800 less than what he was paying in rent. He oringally wanted a multifamily but couldn't find one in his budget so he decide to house hack. Happy Investing!!
Rental Property Investor · Everett, WA · Member since 2015 · 458 posts · 386 votes
7y
@Evan Anderson you certainly can get started but you need to be careful that purchasing does not put you in a tough position financially. I would make sure that your quoted interest rate will not increase if you choose to put a lower down payment. While you can use low money down options for purchasing your first property, this will result in higher recurring monthly mortgage payments. It's not a problem, just something you need to plan for.
Do your research on any areas that you plan target. Given your budget, it will limit some areas near Seattle. However, you can find properties in Tacoma and north of Seattle in the price range you have listed. There are pro's and con's with each property type and different strategies for each regardless of what type of property you are looking at. House hacking with roommates maybe easier to start with given that the prices for multifamily properties are high at the moment. You may also be able to find a condo that will meet your criteria, just be cause of the HOA fees.