All Forum Posts by: John Barrett

@Rodrigo Bell I think this comes down to whether or not you want to spend the time, effort and money to become good at doing the real estate agent roll.  I took the real estate agent training classes. I found the information really interesting and valuable but never got a license as I don't have the time to dedicate to it. Maybe that will change in the future but not now.

Instead, I have built relationships with agents and I use them when I find a property that I want to purchase and they know how to smooth out all the crazy things that happen in closing a real estate purchase/sale.  Yes, it costs money to have an agent involved in the transaction but I have always felt their knowledge and expertise have been worth paying for.  Liability is also another factor that can't be ignored.

In my opinion, I have found using agents worth the costs.  The benefits of these relationships (access to deals, solutions to problems, etc.) make agents an invaluable resource to growing one's portfolio. Just some thoughts while you figure out the highest and best use of your time.

John

@Evan Leibovitz This is a highly personal question as it will ultimately come down to what level of risk you are willing to take on and what inconveniences you are willing to tolerate.  I am personally reluctant to take on a property that will be cash flow negative when it is fully rented at market rates.  That said, there are numerous examples of people on this forum that have used this strategy successfully.

In your case it sounds like you are interested in house hacking.  So if the $2k is roughly equivalent to market rent for an area the this is a reasonable strategy for getting ownership of a property and keeping your monthly rent expenses stable.  If you are willing to rent out a room, you could in theory drive down you monthly living expenses further.

Best of luck,

John

@Alicia Marks My wife & I invest in a HCoL area in WA state. We have built decently sized portfolio (28 units, mix of mostly small multifamily with one commercial property) over the last 5 years using the BRRRR method.
Our plan has been to establish a strong financial foundation of properties that provide very strong cash flow while capturing the high market appreciation (maximize returns while minimizing our risk).

The challenge we now face is whether to keep targeting smaller multifamily properties due to the historically low interest rates and very favorable loan terms or look for smaller commercial (roughly 10+ unit multifamily) properties even though the financing is not as favorable (at maximum will need to refinancing by end of year 10) and cap rates are extremely low?  In today's market current inflation is actually higher than the rate we are paying to borrow for 30 years. 

The second question is what criteria do you use for deciding when it is the right time to expand your model to look at other opportunities that you may not have considered previously?  Whether looking at new investment types or making a change in profession?

Thank you and I greatly look forward to hearing your thoughts.

John

@Vandana R. I am personally not a huge fan of condos but have known many people who started by purchasing them and then trading up.  Depending on where you work, I would suggest at looking at the cities surrounding Seattle as there can be better priced opportunities.  Especially if this is a starter home I would personally look at the trade off of adding time to my commute for a couple years in order to get the best possible property.

Ultimately, it is the combination of factors that will determine what is the best choice for you personally.  Since this will be your home quality of life needs to be one of the factors you consider. 

Best of luck,

John

@Laron Coach I have heard that WA Federal & Coastal Community Bank are both places to start with getting a HELOC. BECU is another popular credit union here but they are pretty conservative with their underwriting. As @Annchen Knodt mentioned it is worth going through the pros/cons of both doing cash out refinance vs a HELOC. 

A lot of people love HELOC but my preference is generally more for the cash out refinance as the money is in hand and the rate is fixed so you know what you need to generate in order to make your desired return on your money. My limited experience with HELOC's is they can be reduced or frozen and as a result the money can end up being unavailable at an in opportune time. I can't imagine how frustrating it was for people to be looking to tap a HELOC in 2008 only to find out they couldn't.

Best of luck,

John

@Pete Perez YouTube is a great resource as you can pretty much learn how to do anything on there.  A lot of this stuff seems really scary before you do it, but isn't all the complex once you get started.  Spend 20 minutes watching videos online and you'll have a much better sense of what you are comfortable taking on. 

With the sink, just make sure you know where your water shutoff is in the event you have any issues with the shutoff valves under the sink but other than that, it's really straight forward.

Best of luck,

John

@Pete Perez While expensive, this seems pretty common for doing the demo work.  Contractors are hard to come by at the moment and all prices are elevated.  That said, I have often done the demo work myself as it's an easy way to save costs on a project.  It's not free as it does take your time and the cost of the dumpster but it's an easy way to contribute to the project and get more insights on what the property challenges will be.

Then you can have your contractor give you a bid on a empty area where they can see all of the work to be completed.

John

@Xiaolong Yin I would recommend starting by doing a lot of research on the properties currently listed on the market. The criteria you have listed is great in that it is very specific. At this time the market for multifamily properties is extremely hot. As such, you are not very likely to find something meeting this specific criteria listed on the MLS as the strong demand for this asset class pushes down the returns.

I would suggest spending some time determining what strategy you will employ to generate the return you are looking for.  This could be finding off market deals, distressed properties or possibly development plays.  The key take away is that you'll likely not be able to find what you are looking for on the market and will instead need to have a plan for how you will create value in the underlying asset to generate the return you want.

Best of luck,

John

@Jordyn Bash In general it is pretty challenging to make your primary residence into a strong cash flowing rental in an expensive market.  This usually has more to do with the fact that prices are high and you can put down less of a down payment on a personal residence.  That said, the tax exemption on the capital gains for a personal residence is a powerful tool for growing your wealth overtime.

If I were in your position, I would start by figuring out what is most important to you at this time personal happiness in your housing or investment goals).  Even though this is a real estate investing forum, the correct answer is entirely up to you and what you want.  Different choices may change the timeline for when you will start investing in rentals but will not eliminate your ability to do so.  Once you have this figured out you can start determining the next steps.

Best of luck,

John

@Sean Hayes I really liked the Cascadia Investor Alliance that used to host in person meetups in Marysville.  There is also an investor meetup that's held at Rory's in Edmonds on the 1st Thursday of the of the month which I thought was also a good group.  My work & family schedule makes it difficult to attend a Thursday night meetup so I haven't been able to attend much.  For virtual meetups, I really like the Seattle Investors Club but more are starting to pop up it seems every week.  In a lot of ways you just try a bunch of different ones until you find one that you like.

That said, if you are always welcome to reach out and I will provide you an insights I can about my choose real estate niche.

Regards,

John