All Forum Posts by: Alex Lucille

Agree with the majority of folks on here that Zillow isn't very good with their estimates, what I try to do is figure out what comps have actually rented for and what comps are currently available. To figure out what places have rented for in the past I use rentometer.com and for current rentals I use Craigslist/zillow/apartments.com etc to find as many comps as I can. I use the historical to understand what things are actually renting for and the currently available to understand what my competition looks like in order to land somewhere just above the average.

I was in a similar situation two years ago, my recommendation (ymmv): Keep contributing max match to 401k, savings could go to traditional ira if you can meet income requirements. You can pull ira money out for primary residence purchase and 401k loan options are good once you have enough of a balance, you can usually borrow up to 50% and repay over 5 yrs, 10 if primary, paying yourself 5% interest as you do. This combined with a brrrr strategy is what we did to get into our first rental, now looking for the next opportunity using the same down payment. If you haven't already done so, run the numbers on your current home and see what it would look like as a rental, sometimes starter homes make decent cash-neutral equity opportunities that you can then sell within 3 years of putting into service tax-free.

Justin Frye I allow pets because I have found that people are willing to pay a lot in pet rent in my market and at this point I've offset any potential damage a pet could do. Also, Not that this is a hard and fast rule or something I look at when screening but I have also found that *among well-qualified tenants*, pet owners tend to be more responsible, timely, communicative, etc... than non pet owners.

I am looking to find my first mfh deal in the Tacoma area (2-5 doors) to self-manage. Any locals with advice on finding deals/wholesaler/investor/realtor contacts welcome. Thanks! Alex

I'm in a similar position, bought a townhome in north Seattle 3 years ago, lived in and am now renting for cashflow (see my other post for full details) i would be interested in connecting to discuss and share networks

Bumping this thread, anyone have thoughts?

I'm interested, prefer east side any day of the week/weekend or downtown after 7

@Account Closed I'm in the same boat as you and recently asked a similar question in another post, do you have any financial info to share about the property (see my post as an example)? I am not an expert but the experts in my network are optimistic about the seattle real estate market and think we are in for another 1-3 years of above average growth, but I think we all have the nagging question you have :). Other folks have pointed out a lot of the reasons for optimism but I thought I'd throw one more in there for discussion:

I think that the light rail and other transportation infrastructure projects will improve the value of real estate in places like burien and northgate as it will eliminate commuting time/costs as a reason to avoid these areas.  I know this is highly speculative but I am interested in hearing other seattle folks thoughts on this.

Newbie here, looking for advice on how to evaluate my current rental.  My goal is to use a buy-and-hold strategy to develop cash-flow properties over the next 10 years by investing 30-50k/year while still working full-time.  Specifically looking at whether my plan should be to hold this rental for the long-term and eventually do a 1031 exchange once its fully depreciated or sell it within the next two years to take advantage of the tax-free capital gains.

Details:

Location/description: North Seattle 1400 sq foot 3br/2ba 3 story townhome built in 2009, rough neighborhood on the border of a good one to the south.

Address: 1238 n northgate way seattle, wa 98133

Purchased as primary residence in 2014 for $360k with $72k down, $65/mo HOA which covers landscaping and governance

In 2016 after meeting 2yr occupancy req., property appraised for $475k so we pulled 70k our by refinancing into a 30yr @3.75% with a principal+interest payment of $1600 + 300 for taxes and insurance and rented it out for $2500/mo, renter pays utilities, we manage the property, new loan amt is $340k.

Other identical townhomes in our development and others like it have sold for $600k, so I would say that I could conceivably sell the home once the current lease is up and walk away with $200k factoring in all selling costs.

I expect that we will be able to raise rent to 2700-2900 in the next 2 years or so and possibly up to 3200 in 2021 as there is a light rail being constructed that will drive a lot of demand from people commuting to downtown seattle.

Specific Questions:

Since I refinanced and took my initial investment out of the property, this seems to skew all of the standard evaluation metrics (IRR, Cap Rate, etc...), if I factor equity into the equations this looks like a terrible return and if I don't its a great return. How would you evaluate this property? are there other factors/numbers I need to look at?

Applying the 50% rule to this property it looks like we are running negative, however since this is a brand new home, we are managing it and demand for this type of rental is through the roof I think that this rule does not apply, is there a more precise calculator anyone could recommend for estimating costs for newer homes?

Applying the 2% rule to this property, it would need to rent for $7200/month, this is not in the realm of reality for any properties in seattle, even 1% is a lofty dream.

If I sell this property I would likely either be sitting on cash for a while or I would need to look at out-of-state deals as the seattle market does not currently offer many lucrative buy-and-hold REI opportunities, are there other options I am not seeing?

Thanks in advance for your thoughts!

Alex