All Forum Posts by: Michael Haas

@Chen Tong , @Brian Sher , @Anjoli Elizabeth Rowe what are your assumptions for Cashflow? Unlike GRM or other metrics, cashflow is highly dependent on your loan amount and terms, as well as your CAPEX, Repair, and Vacancy assumptions. I typically run house hack numbers at 5% down, 8% CAPEX, 3% Vacancy. Those estimates could be seen as a little aggressive by some, but if you use low-cost handymen and do a basic rehab of the property when you buy it you should be able to keep those CAPEX and repair numbers pretty low.

With those assumptions cashflow deals are out there, even on the MLS. All our rental properties cashflow except for one (a development play) cashflow very well, and we did 17 deals for house-hacking or investing clients last year, all with cashflow at as little as 3.5% down (FHA). There's a TON of investors in Seattle, and we all wouldn't be doing this if we weren't able to find at least modest cashflow on deals.

As Sherief called out, adding value is key. It doesn't have to be a rehab necessarily, but you should always ask yourself "how can I maximize the rents from this property?" and "what angle might the seller, or other investors, be missing here?" Other ways to add value: Airbnb / STR part of the property, add a bedroom or more (but don't rehab the whole structure, add a basement ADU or backyard cottage (DADU), do a lot split, do an addition (we have an abbreviated permit process in Seattle for many additions under 700-ish sq ft)

Off market deals are definitely worth exploring, but its also worth calling out that there are plenty of pros out there that spend 100% of their time hounding for these deals. It's a long process to find an off market deal, and that search is best suited to long term investors willing to nurture a farm neighborhood for 1-5 years, with the bulk of the results typically coming towards the end of that period. 

Lots to type up I know! I talk a heck of a lot faster than I type, so feel free to message me to setup a phone call if you'd like to dive into this in even more detail. Cheers!

@Lucy Lang the market is definitely hot here, but Househacking works spectacularly well. We're on our 4th house hack personally, and have just been moving up and converting the old properties to 100% rentals as we go.

I think you're looking at some great areas! Price points tend to be lower on the South Side of Seattle than on the North Side, so if you like Edmonds, Shoreline, Lynnwood I would also consider Renton, Burien, and others on the South Side. A lot of this depends on your loan pre-approval amount and the affordability of each of those neighboorhoods.

Just a couple tips for you as you get started Househacking:

1. If you find a property with a second kitchen (ADU or MIL), be aware that 80% or more of those units have been built without permits. Not a deal breaker necessarily, but a risk to be aware of and mitigate.

2. Brush up on code requirements: in basements you're looking for egress windows that are 5.7 sq feet or more openable (3ft by 3ft casement style windows work best), and ceiling heights 6ft 8 inches or greater (as little as 6 ft 4 inches is ok under ductwork and beams though)

3. Check the unrelated persons count in any city you're interested in. Seattle allows 8 unrelated persons in a rental house, unincorporated Snohomish County allows 6, but some cities allow as few as 3-4. House hacking financials get significantly stronger as you increase the bed count above 4, or add a ADU or separate dwelling unit. *This is more important if you're "renting by the room" with roommates than if you're "Renting by the unit" in a multifamily or a single family with your own private kitchen and entrance.

4. I've had success with Househacks and cashflow rentals around Seattle by getting off the beaten path- there are established investors bidding up the price (and therefore compressing the cap rate) on many small multi-families, but those same investors are not going after large 5-9 bedrooms SFHs that you can househack by the room or split up with an ADU / MIL. Establishing a short term rental / airbnb in part of the home is another great way to maximize rental income. 

Cheers and good luck! Message me anytime if you'd like to grab a coffee or hop on a phone call and talk house-hacking, its my most used REI strategy and the most used strategy of my clients as well... and it has definitely changed @Jess Haas and my financial and personal lives for the better!

Great, thorough info @Kristi Kautz & @Jason Kudo . This thread is everything I love about BP - basic questions getting absolutely brilliant and well researched answers from pro's in the field.@Jason Kudo

Definitely wishing I'd pulled the trigger on a STR in Joshua tree when we were considering it back in 2017. It has a lot of the draws - close city center, great tourist traffic, good weather, reasonably inexpensive property (although it sounds like that changing).

Our STRs and AirBnB's here in Washington State are booking up like crazy as well - especially those with cabin / forest vibes. I'm excited to see how WFH culture changes and grows the STR industry here in WA and elsewhere...

@Huy Huynh I think those are great neighborhoods to be looking in. We have a rental and are investing around the new Kent-Des Moines Light rail Station, which is already well into construction. The area around Highland College should continue to increase in value (and rents) given the proximity to future light rail and the beautiful Des Moines waterfront. 

Renton is also undervalued and a good buy in my opinion, but the transit opportunities are more limited. There is a private company trying to establish a water taxi from Renton to SLU in Seattle, which could be a really interesting opportunity to attract Amazon employee renters if it pans out. 

We're on our 4th Househack here in Seattle - let me know if you'd like to hop on the phone or grab a coffee and chat more. Cheers!

Local laws should be the most important part of your calculations @Romina Grecu. Here in Seattle, Floating Homes have been a part of Seattle Culture (Sleepless in Seattle and many more films feature them!) but they have NOT been legal short term rentals since 2018.

@Eric Huang on the property you sent its hard to tell for sure, but a preliminary search shows just one tax parcel and Single Family zoning. The secondary dwelling may not be legal.

The listing agent also has a bad reputation. I know buyers don't typically care about that sort of thing, but agents do and it definitely can play a role in the transaction.

@Bisrat Arega CoC is heavily influenced by the down payment percentage - 10-15% CoC is usually achievable around here by house hacking (owner occupying) a property and using a 3.5% or 5% down payment, or using a 10% down "second home" or "vacation home" loan to secure a Airbnb / Short Term Rental.

With 20% - 25% down 12% CoC is not usually achievable for an "on market" rental property deal around King County.

@Brie Groves hit the nail on the head- I’d estimate 90% of buyers and sellers ask their agent to book the home inspection, and most agents like to use the same 1-3 home inspectors.

Even if it was legal, no decent agent cares about a $50 referal fee. We care about you providing our  client with excellent service, which in turn makes us look good for recommending you. 

Makes sense @Bhakti Khandagale - shoot me a message if you'd like an intro to some good lenders. My favorite lender, with Caliber Home Loans, is an investor herself with a 4 plex in Bothell. Bothell has gotten a lot more expensive, but there's opportunity there as well. I'm sure your husband would love that easy commute!

Nothing wrong with wholesaling in Seattle, there's lots of investors working here. 

My two cents- 

1. Wholesaling is a job, and one that usually pays a heck of a lot LESS than being a lawyer.

2. You don't need anyone's permission to get started. REI doesn't have a cover charge, and 9 out of 10 gurus are in that business because they think its easier to make money from you than from real estate. You might get lucky and pick one of the good ones and prosper, but I believe the odds of this aren't in your favor.

3. If you have substantial savings you should be house hacking multifamily in Seattle every year, or if your lifestyle doesn't support that buying 1 short term rental (with 10% down using a second home or vacation home loan) or 1 long term rental (standard 20-25% down) a year. Milk your w-2 for all its worth, and throw the extra money into good deals.

4. If only the largest REI focused website in the United States was free, and you had direct access to investors in your local market who aren't trying to sell you anything but are willing to share their advice and experience gained through dozens of deals. I wonder which website that is... ;)

Happy to talk with you more. I hound for my own off market deals, but I think wholesaling for others is a waste of time. I don't know much about this program, but it sounds like it focuses on using FB ads to wholesale properties, which doesn't sounds like a good fit for your goals.