All Forum Posts by: John Barrett

@Lara Nicole I would argue that it's the rare property in Washington state that does meet the 1% rule.  The majority of markets that have high appreciation (specifically west coast) generally do not achieve 1% in monthly rent.  That said, it doesn't make investing in those properties a bad idea.  It is simply a function of what your personal risk vs return profile.

The challenge is to find properties that you have a strong plan for improving the current performance.  While this may not mean you will achieve 1%, it can be a great strategy for building monthly cash flow and significant wealth.  I would encourage you to look at the sub-markets surrounding the areas you like best.

John

@Matt Smith There are a lot of great areas surrounding Seattle that are great for rentals.  I would suggest using a site like citydata to figure out which areas meet your desired investment criteria.  Additionally, I would line up your financing so you know what your max budget is (you don't have to spend it all) and then look at what different types of properties you could purchase in the areas you have chosen.  It's a bit surprising how far your budget will or will not go depending on what areas you are looking at.  Finally, I would network with some agents and brokers who can help you locate the best deal based on the information you have figured out above.

Hope this helps.

John

@Monica Cabrera I would highly recommend speaking to an insurance broker.  There are some really big differences in costs between various carriers and what they will/will not cover.  Additionally, you will want to check in on our insurance overtime if you decide to add additional rentals as different carriers will have varying limits on the number of rental units they are willing to insure.

Best of luck,

John

@Mahmuda L. Earthquake insurance is readily available from a number of different carriers. Unfortunately, it does have a significant deductible, but it’s not as expensive as you might expect.

As for volcano insurance, you would likely have to get a special rider for that. :)

As you look at all the different elements of investing, if there is something you aren’t interested in doing there is usually someone you can pay to take it off your hands.

John

@Andrew Sanders You don't need to have an investment property to be an investor.  The fact you are spending the time to get educated about an area of investing that interests you makes you an investor.

WA state is a challenging market to break into due to the high cost of properties here.  Depending on the area you are looking at (Seattle for example) the cost can really be limiting.  My first suggestion for people is to spend sometime focusing on an area of RE investing that you are most interested in.  You can change your mind but start by picking one so you can avoid distraction (shiny object syndrome).  This will allow you to quickly filter through a lot of the noise in the market and only spend time on the properties that match your criteria (age, location, desired return, etc.).  Spend time to figure out what your financing plan is upfront and this will make your life a lot easier and your offers more competitive.

I can understand your desire to not want to be tied to your current job but understand that your W2 is a huge asset when you are starting out.  Your W2 provides a lot more access to capital at better rates than you could otherwise get.  If possible, try to re-frame the grind of work as not taking you away from your family but rather building the financial platform from which to launch a more independent future.

Best of luck,

John

@Ryan Eide I do not have any experience with either of these courses, but I am not sure they are going to help you to achieve your ultimate goal.  Is your goal to create a syndication and bring in other investors with you to purchase multifamily properties?

At this moment, the market for multi-family properties is extremely hot.  This seems to be true all over but is especially true here in the greater Seattle MSA.  As such, the majority of the people you would likely be targeting are already being contacted by multiple other parties trying to convince them to sell their properties.  You need to spend sometime developing your strategy for how you will compete in this market.  Some possible options could include the ability to close quickly (cash offer or hard money) or willingness to take over an asset in poor condition / occupancy.

I would focus on getting really clear on the following: property type you are interested in, your financing (include repairs if part of your strategy) and location (broaden your search to include areas with less competition).

Best of luck,

John

@Account Closed There is inherent risk in any action you take or don't take and we accept that as part of life.  No one can know when a natural disaster will strike, we do have the option of transferring the risk to other parties via insurance.  We carry earthquake insurance for this reason and that allows me to feel comfortable moving forward in an uncertain world.

John

@Andrew Ginnetti The good and bad thing about investing is that it is a choose your own adventure type of situation.  As such there are rarely any simple straightforward answers for exactly what you should do.  I will respond as best I can with a couple points for you to consider.

Establishing the foundational pieces for your future desired business is reasonable. I would argue though that it makes sense to grow into a more corporate structure overtime. Burdening yourself with regulations that are easy to mess up seems riskier than simply setting up separate accounts and operating as if you were accountable to the rules required for an LLC. This gives you the freedom to experiment / fail without consequence.

Your LLC does allow you to establish a business checking account which will help you build the credit for your business entity. That said, borrowing as an LLC is generally much less advantageous than borrowing in your personal name. The difference between a commercial loan and conventional can be significant. That said, there are a number of new lenders who can offer products that fall between these two that are pretty competitive pricing.

Best of luck,

John

@Andrew Sanders I have been investing in WA for some time but never joined WA State REIA. Currently have a membership to RHAWA which is great and used WA Landlord Association which is another good organization. There are also a number of local Facebook groups that are worth participating in.

For REIA, my take was that it was more interesting for people who are active real estate agents but that could simply be a misunderstanding on my part.

John

@Kobe McDaniel WAREI FB group is a great resource.  I would also suggest keeping an eye out on meetup.com for the Cascadia Investor Alliance.  They host meetups all around the area but they normally have one in Marysville on the last Monday of the month.  There was also another meetup that had started in downtown Snohomish that I am hoping will pick backup once people are allowed to congregate again.

John