All Forum Posts by: Michael Haas

I agree with what others have said - Every house isn't for every buyer, and the Buyer's agent pay isn't anything you need to worry about as the seller. Simply counter with your absolute best offer and let them figure it out. They'll either accept (through the buyer increasing their offer, the realtor taking a pay cut, or a little of both) or they won't. 

@Bradley Dosch thanks for the BRRRR mention! Yes, BRRRR & variations of BRRRR are have been our primary investment strategy in Seattle over the last few years, and I'm happy to coach people on the strategy.

A couple things to look out for when BRRRR-ing in 2022:

1. BRRRR is a much riskier strategy in an increasing rate environment (which we are in now) than in a decreasing rate, or equilibrium rate market. Delayed Financing BRRRR (a variation on traditional BRRRR) allows you to refinance in less than 6 months, but for most traditional BRRRR investors they'll be looking to refinance at least 6 months after purchasing the property... and on a big project it might be 12 -18 months before you refinance. In an environment where interest rates are going up this can be risky, because you don't know what the market will look like when you complete the project. Rates are 6-7% right now, but if they rise to 10% after you complete your BRRRR will the deal still work for you?

2. Agent, Lender & Property manager relationships are key. The best & cheapest contractors don't need new business, so they may not respond or answer your calls if you haven't worked with them before. BUT, if you work through a agent or property manager that has spent between $100,000 and $1,000,000 on various projects with that contractor they'll be much more responsive! Everyone wants to work with clients and vendors that have been vouched for, and working with a experienced team gives you that credibility.

3. (usually) to BRRRR successfully you need to pay below retail price for the property, the renovation work, or both. That means that you can't use the first contractor that comes up on a google search, and that you can't buy the properties that everyone else is looking at and paying market value for. Diamond in the rough contractors & properties are a key component of the strategy.

4. Capital - aim to have 20% of the ARV in cash available for a BRRRR. That means if you're targeting a $1M exit, try to have $200,000 in cash available. Some hard money lenders will loan to you with less, but as a beginner you want to make sure you have lots of reserves in case your first project doesn't go according to plan. If that sounds like more money than you can afford no worries, there are lots of A+ investing strategies that require less capital, pivot to those and do BRRRR's later when you have more cash.

DM me anytime, good luck and don't wait to long to jump in- experience is the best teacher :).

@Azu Lee there's some great answers already above, so I'll just jump in to fill in the gaps others may have missed:

1. Is BRRRR method right way to go given current market conditions?

BRRRR is a much riskier strategy in an increasing rate environment (which we are in now) than in a decreasing rate, or equilibrium rate market. Delayed Financing BRRRR (a variation on traditional BRRRR) allows you to refinance in less than 6 months, but for most traditional BRRRR investors they'll be looking to refinance at least 6 months after purchasing the property... and on a big project it might be 12 -18 months before you refinance. In an environment where interest rates are going up this can be risky, because you don't know what the market will look like when you complete the project. Rates are 6-7% right now, but if they rise to 10% after you complete your BRRRR will the deal still work for you?

2. If anyone who has experience could spare time to chat about their experience in BRRRR in these market(virtually or any Seattle area)

DM me and I'll invite you into our Facebook Group & Monthly Meetup! Lots of BRRRR investors, myself included (I'm on BRRRR #4 & #5 right now).

3. Any tips on finding contractor estimates before buying the property?

Agent, Lender & Property manager relationships are key. The best & cheapest contractors don't need new business, so they may not respond or answer your calls if you haven't worked with them before. BUT, if you work through a agent or property manager that has spent between $100,000 and $1,000,000 on various projects with that contractor they'll be much more responsive! Everyone wants to work with clients and vendors that have been vouched for, and working with a experienced team gives you that credibility.

4. Initial cost to start out? (how much should I save before starting the flip/BRRRR)

There are many strategies to invest in Seattle with $20,000-$40,000 down, but BRRRR is not one of them. Its a cash intensive strategy, and I wouldn't consider it unless you have at least $100,000 cash (or a partner with $100,000 cash) in the bank. BRRRR gets easier as you get more capital.

5. Knowing what to look for in a fixer-upper houses calculate cost of repair and ARV exactly (or closest to real numbers)

Practice - most of the experienced agents and investors here have lost money learning how to do this, lean on their expertise so you don't have to!

5. Any other tips for newbies like me?

Build your team, and jump in! Experience is the best teacher!

Reach out anytime man, and good luck on the journey!

@Nick Littleton my wife @Jess Haas & I lived in a Tiny House for years, and now rent Tiny Homes on wheels, Yurts, and other unique accommodations on Airbnb. HouseHacking and Glamping / Landhacking are two of the most profitable and low cash investment beginner strategies in WA, so I like where your head is at!

A few years ago I would have said to buy a second property - with interest rates around 3-4% and appreciation roaring above 10% yearly buying more real estate almost always we more profitable than optimizing the real estate you already owned. That has changed though - we're not expecting as significant appreciation for the next few years, and interest rates are above 6%, so I don't think you lose as much by waiting to buy property #2 now. Yurts and A-Frames are some of the most cost effective structures to put up, and around here it is pretty common to skirt around the permitting issue by building them under 198 square feet (no permit required for outbuildings). The septic, water, and power hookups would still require permits, but depending on your risk tolerance and the size/privacy/location of your lot this is something that is often skipped as well. Without permits a Yurt can be built and outfitted for $40,000 (or less if you do the work yourself!) and can rent for $3,000 a month on Airbnb to break-even in a year or two. Those are good numbers, and with a 10 acre lot like yours you could repeat that process with multiple Yurts or other Alternate dwellings.

Tiny Houses are more expensive - when we had our first one designed and built in 2013 it was just $39,000, but that was before they became popular and everything became expensive. The same builder is now charging about $105,000. The break even point is a little longer for $105,000, but still a good investment option if you have the capital and don't want to put in any sweat equity - the best part of tiny houses is they can be built off-site and rolled right onto your lot, which is great in rural areas where finding contractors is difficult.

DM me if you'd like to talk more about the weird and wonky (but highly profitable) side of real estate investing :). Cheers & best of luck!

If you're investing in a cool climate Mountains 100% - the access to winter snow sports balances out the seasonality in colder markets.

@Brandon Bielas you mentioned the Seattle market - if the home is located within the city of Seattle there is no owner occupancy requirement (that was removed years ago in Seattle, Burien, Tacoma, and Bellingham). The ADU adds a lot of value, and jumping from a 3 bed to a 4 bed is only a marginal increase in value, so 100% keep the ADU.

@Kenneth Olsen There's a ton of HouseHackers here in WA - a combination of high-cost real estate and many cities (like Kirkland, Seattle, Tacoma, etc) having favorable accessory dwelling unit / backyard cottage laws makes this a great state for the strategy. I've sold a lot of HouseHacks in Marysville, Everett, and Snohomish - DM me if you'd like me to introduce you to some past clients that are househacking nearby. Cheers man, reach out anytime & lets all build community!

@Kyla Nicole Nickerson Jones what is your zoning? If its LR1, LR2, LR3, NC, or any other high density zoning I wouldn't sink any money into them - highest and best use is to tear them down and rebuild in those zones. I'd sell as many of them as you need to get the working capital to build on at least one of the parcels, or do a Joint Venture with someone who knows townhomes and secure financing to build out all 3. 

@Cody Cunningham the faster you can decouple your money earned from your hours spent the better. The two big ways to do that as a young person are:

1. Invest in Real Estate, Stocks, Crypto, or Small Businesses. Money doesn't sleep, which makes it a great employee :). Bonus points if you can use bank loans and leverage - I don't know many billionaires that got that way without using a little leverage to amplify their impact and return on investment. 

Take @Bradley Dosch & other's advice about HouseHacking as well - and I disagree about HouseHacking not being scalable. My wife Jess and I scaled 4 HouseHacks into now 10+ rental properties in a very expensive market because you can repeat househacks yearly for 1/4 the cost of a typical real estate investment. I'd call that very scalable. If you have $50k for your downpayment and that can buy you a $1,000,000 househack locally (5% down) or a $250,000 property out of state (20% down), which of those options will help you scale a high value real estate portfolio faster? Of course you don't have to househack forever, but its the #1 beginer real estate investing strategy by a huge margin in my book. #2 is STR investing, and #3 is BRRRR / Flip.

2. Start a business, or get into a success based / commission based role with uncapped earnings potential. As a lifelong entrepreneur I've had many years where I've doubled or even tripled my income... but as a W2 employee I doubt you can ask your boss for a 300% raise and get one!

Good luck Cody, and reach out anytime! Cheers,

Looks like its now Pending - did you have a client go after this one @Michael Smythies ?

As always, thanks for sharing your analysis :).