All Forum Posts by: Michael Haas

Do you own your primary residence @Account Closed? $45k goes a heck-of-a-lot farther with a 3 - 5% down owner occupant loan than it does with a 20-25% down investment loan. If you don’t own your primary residence have you considered house hacking locally?

Congrats Molly- deciding to take action is the first step! There are lots of options for early-stage investors, even in the Seattle market- the key is to figure out what your competitive advantage is and exploit it. Our BRRRR advantage has been access to cheap labor, cheap capital, and being creative with our property layouts and rental arrangements.

A couple questions s for you: do you have enough capital to offer cash on non-Financeable properties? Do you currently own your primary residence and any other properties? Would you consider moving into this new BRRRR property as well?

House hacking your BRRRR can be a great tool to get you started, and the upside is even greater if you have cash or private money for the really hairy properties.

Welcome @Michael Stout! We lived in Tacoma for 4 years (Seattle now) and two of our closest friends own numerous properties in Proctor, the North End, and Hilltop. You're on the right track- we've grown our portfolio from nothing to 6+ properties by househacking, there's really no better way to get started!

There are still some good multi-families in Tacoma, and plenty of properties where you could add a MIL / ADU by finishing out a basement with its own entrance. If you go that route make sure to pay attention to the expensive stuff- plumbing location, presence of egress windows, and ceiling height.

Let me know if you'd like to grab coffee and talk more about house hacking in Tacoma. Cheers!

Welcome @Mike Chen! What is your experience so far with real estate - sounds like you haven't owned rental properties, but have you bought and sold primary residences? Do you currently own your home?

Definitely possible to cash flow in Seattle, especially on the south end. Bellevue may be a bit harder though. It helps you get a deal done if you aren't competing with retail home-buyers (aka - buy weird properties and fixers). There are also a lot of tax benefits to owning real estate that many investors don't take into account when comparing a Real Estate buy to other investment vehicles. 

To give you an idea of the properties you should be looking at though, here's my last six deals around Seattle, with 6-9% CAP rate and good cash flow.

1. N. Beacon Hill 7 bedroom, extensive cosmetic reno needed

2. West Seattle cabin - structural issues, cash only

3. Judkins Park 3 bed (with an option to make a DADU in the back of the large lot) - added a bathroom, extensive cosmetic renovation, some structural.

4. N. Beacon Hill estate sale (I won't even tell you how many bedrooms this one has, suffice it to say its a lot) - extensive cosmetic, rat infested, some water damage.

5. Admiral neighborhood (West Seattle) View 5 bed - Hoarder house (4 dumpster loads and 12 trailer loads of junk), Estate Sale, Extensive Cosmetic needed

6. Off grid cabin on Stevens Pass, Airbnb.

See any patterns? In Seattle buy in hold rental investments your friends are - 1. lots of bedrooms 2. absolutely disgusting properties with good bones or wierd properties that don't appeal to high income owner occupants, and 3. quick sales, especially estate sales or similar. Although most of these were on the MLS, they were often listings with no pictures besides the front door, and they were definitely not professionally staged lol.

PS: You should never count solely on appreciation as an investor, but at the same time owning 3-5 half million dollar properties and adding 200K to your net worth in those occasional 10%+ appreciation years isn't a bad deal!

PPS: Some of these were cash only properties, so you won't be able to access those deals unless you have the wealth, experience, or network to be trusted with someone else cash. With $400k you could definitely BRRRR those deals (Buy Cash, Rehab, Refinance your cash out of the deal, Rent, Repeat) You'll re-fi out of those properties so you do get to re-use a lot of the same cash over an over again and/or pay back your line of credit/investors, which definitely helps.

Cheers and best of luck! Feel free to message me with any specific questions, and definitely keep posting on BP - we're all here to help each other succeed!

In addition to RHA, Washington Landlords Association is a good industry group with resources to help you straighten up the leases & procedures in your business. The membership fee is peanuts- I think its just $60 or $80 a year. 

I'm not a lawyer, but to my knowledge @Brian Hughes's understanding of WA leases becoming month-to-month under the same terms when not renewed is correct.

@Blair Nye we lived in Tacoma for 4 years and loved it - Lincoln International District would be a good choice without putting you as far away from JBLM as great Tacoma neighborhoods like North End, Proctor, Hilltop, or Old Town would. Construction on I-5 around Tacoma has been going on for a decade, and traffic around JBLM and Tacoma in general is rough - definitely check commute times for all the short-list neighborhoods during rush hour. 

Thanks for your service and good luck with the move!

For a Seattle Short Term Rental you'll need a business license, Seattle business license, STR operators permit, and RRIO certification. The city of Seattle negotiated with Airbnb and VRBO to have the occupancy taxes taken directly out of your bookings, so at least those are filed automatically for you if you use the big STR platforms. Its a pretty big chunk of paperwork (and of course all those applications and permits have fees) but nothing you can't handle.

Condo's can be tricky- as Airbnb/VRBO have grown, many HOA's have banned short term (less than 6 month) rentals. The ones that haven't banned them usually have a extremely large number of investor owned units and short term rental units- I've shown quite a few with 50%+ of the units primarily being used as Airbnb's. Although an Airbnb here and there doesn't make much difference, the impact of those 50%+ Airbnb buildings is definitely negative- lockboxes on every railing, suitcases and confused travelers in the lobby, late night parties, cleaners constantly in and out, unauthorized persons entering and exiting the building...

You've got a great idea - we own short term rentals in Seattle, Stevens Pass, and Alaska, and our ones in Seattle are EXTREMELY PROFITABLE. My two cents- widen your search to low maintenance properties like townhomes, smaller stand alone homes, newer construction with hardscape, etc, as you'll have more flexibility for that arrangement if you don't have to answer to a HOA board- even if you find a HOA that allows STR's, it may only be a matter of time before the bylaws are changed and their banned, extinguishing your income stream.

Feel free to message me if you'd like to grab a coffee talk more about STR's - they took some practice to get started, but now they're a huge part of our portfolio and we're always happy to share what we've learned.

We used to have the same problem @Kevin McGuire, unable to find deals working with "investment minded Realtors" in Seattle. We'd consider investing where we grew up if that was any better, but we grew up just outside of San Francisco :). 

You have to get pretty creative in Seattle to get 6-8% CAP rates and great cash flow, and it seems like most Realtors either don't know how to put together a great deal or aren't willing to put the time in to do it.

We've been getting 6+% CAP by getting our rehab costs extremely low, focusing on large SFH's (6+ bedrooms, ideally with a finished basement unit or other ADU/DADU, often rented by the room), setting up systems and self managing, and waiving a lot of contingencies to get lower offers accepted.

Its been hard, but if you can figure that out its pretty great to have a portfolio cash flowing $1,000 / property AND appreciating at crazy Seattle rates most years!

We have a Short Term Rental in Homer, AK. I'm sure there are others on Bigger Pockets, especially if you consider both STR's and LTR's. Cheers!