All Forum Posts by: Inderpal Chadha

Any journey is exciting when one tastes success in the beginning. The first rehab fix and flipproject was a grand success and bolstered my confidence to move on this path. The secondproject was purchased right of the mls though an agent who specializes in identifying properties for investment, putting them under contract and then assigning it to investors. The experience of the agent was the main reason for purchasing this property. It was a 1948 house in Mt.Baker area of Seattle purchased for $425,000. The house was in a good condition, need updating and the kicker was almost 800 sq.ft of unfinished basement. I learned that a finished basement commands the same sq.ft price as the main floors. The rehab budget of $80,000 included upgrading the kitchen with new cabinets, counter tops and appliances, upgrading a bathroom on the main floor, expanding and upgrading the bathroom for master suite. In the basement, we added a full bathroom, a bedroom and a media room. No major surprises except for the bedroom, the concrete foundation had to be cut to have bigger window at three and half feet height for egress and some struggle with the old galvanized pipes. The good thing is we were right around our budget of $80,000. Everything on track till we got to the listing. The Seattle market in 2014 summer was super hot (as it is in 2015) but when we listed in October of 2014, the market was dead, the selling price was $645,000. There was some interest but no bites. The only thing biting us was hard money interest. Believe it or not, we had to take the listing of the market. Meanwhile we were able to refinance the property out of hard money to a conventional loan. At the same time I was also rehabing my third property (yes in parallel), lower price point of $425,000 - ARV. Both these properties sat on the market for 45 days in the winter of 2014 and were delisted. The story though ends on a profitable note for one and a minor loss for the other. Once we listed the properties back in February of 2015, the $425,000 property had two offers in three days and the $645,000 value property had an offer in 3 weeks. Hard money cost ate all of the profit on the lower priced property but we still came out with a decent profit on the higher priced property. Lessons learnt, take the summer off - do not buy properties for rehab in late Summer as they will get listed in Winter, look for hard money lenders who will lend for a period of more than 5 months at lower cost. Incidentally I have lenders now who will loan for a period of 12 months to 36 months and not charge extra points for extension.

Overall enjoying the journey, having fun and currently rehabbing four properties in parallel.

Thanks BP for all the podcasts and forum posts.

Hello

Great to see this discussion on rent to value. On the surface , the properties in Seattle metroplex will not meet the 1% rule but dig dipper and you will find values. The value call is not for the newbie though. One can find 100 year old homes in Seattle that can be rehabbed and there is a possibility to have instant equity if one plans to live there or rehabbed enough to create positive rental cash flow ( though still not meet the 1% rule) or fix and flip. We are working on two such properties one in the desirable west Seattle area and the other in the central district. One we are building with a mil and the house buyer can live in one section and rent out the mil for $1500 very easily. The other is a duplex and we are pulling down the 1900 structure and adding two new units. Yes difficult to find but not impossible.

Thanks

Inder

Most of the older properties in Seattle have unfinished basements (one has to be in a good area). Area is important, like good parts of West Seattle, Queen Anne, Capitol Hill, Magnolia, Broadview, Mt.Baker, Leschi to mention a few.  Better explained with an example, we bought 3856 38th Ave S Seattle , property in Mt.Baker area from the mls for $425,000. The house was very livable, not a run down (most of the properties we buy are ready to move in but the play is value add),   It had a huge unfinished basement. We did a bunch of improvements including adding a bedroom, update the bathrooms, update the kitchen, adding a full bath. created a huge media room, converted 3 bed to bath to 4 bed and 3 full bath. And sold it for $645,000. The only downside was we listed in November and the market was dead in November and December. We had to remove it from listing but when we relisted in February, it sold at full price in three weeks. Hard money ate into our profits though we still made decent money.

Currently working on three more flips at similar price points in West Seattle and Broadview of Seattle.  I will let you know how these pan out. hope this helps.

Thanks

Inder

Hello

Excellent information. I have been investing for two years , have a real estate license and contrary to belief, have done last four deals through MLS. I like to work in Seattle area, yes price points are high, but risk is low. The primary play is finishing basements (with enough head room) and that adds instant value.

@Ryland Taniguchi - I would be definitely interested in off market deals. 

Thanks

Inder

1. One from Auction

2. One from wholesaler

3.Three from mls

Thanks

Inder

Thanks, pigtails is what the buyer asked for and we are doing that for the 88 connections in the house.

Thanks

Inder

Thanks Mike, I was looking for some solutions here and thanks for this one.

Thanks, yes, I have accepted the inspection report and will have it fixed. Still learning, this is the third flip. Next one will watch out and budget for.

Thanks everyone.

Inder

Hello

We just rehabbed a property and is currently under contract. It turns out that the place has aluminium wiring and the inspector has asked to use copper connectors. I have come across this http://www.cpsc.gov//PageFiles/118856/516.pdf , which mentions that cheaper alternate to replacing the wiring is to use connectors. Has anyone come across this issue and any recommended solution.

Thanks

Inder

Hello

I have bought a house in central district of Seattle which is zoned LR2 , meaning one can build town homes. The lot size is 2880 sq.ft

Current zoning allows for 1.3 FAR - for green row houses, and one can build three row houses or 1.2 FAR for town homes and one can build 2 town homes.

The dilemma is , should I go for 3 row houses or 2 town houses. The sq.ft sales price is almost similar.

Does anyone have experience in the Central District or Capitol hill area and what will work best for resale or renting?

Thanks

Inder