All Forum Posts by: Sherief Elbassuoni

@Rickie Patterson Jr, I like this attitude. 

Bring value to the BP community. 

Thanks for your offer

@Kc Brown, this looks like a great plan. Building ADU varies quite a lot based on the ADU SqFt and finishes you use. I have seen numbers around $140K-$200K.

Regarding added value, this will be a new property, so most of the construction cost should be reflected in the value of the house. That said, it really depends on the CMA analysis that needs to be done later on once we know the specific location, area, finishes,...

I hope this helps.

Feel free to reach out for any comments or questions.

Thanks!

@Essien Benjamin, 

In the greater Seattle area, many PMs charge the first month as placement fees, then they charge 10% for 1-2 doors. You can negotiate the 10% down if you have multiple doors with the same PM. When you divide the first month placement fee/12 month (8.3%) and add the standard (10%) management fees, the new management fees is actually (18.3%) not (10%).

For year two, if the tenants are renewing the contract, PMs around here typically ask for half a month rent (4.16%). If they are getting new tenants in year 2, they will charge a full month rent again (8.3%), so for year 2, your actual management fees ranging between (14.16% and 18.3%) depending on if tenants will renew or not.

This is why I self manage my properties within reach. 14-18% of management fees can easily reduce the +ve cash flow I have.

For your case, many PMs don't like to manage by room properties, and even if they do that, sometimes they ask for a higher percentage.

So you need to plug all of these management fees into your calculations to see if it makes sense to keep renting by room, or rent it as a whole unit.

@Hunter Schulz, I am not an attorney, and I can connect you with my real estate attorney. These are just some ideas, not legal advice. There are many benefits of LLCs. Just keep in mind that LLC properties most probably will need the 20-25% down. If you will be investing in-state and out of state, I saw investors set up different LLCs for out of state properties away from their Washington properties. Only your wife or you and your wife can be on the LLC and still run it as a "Single-Owner LLC". I saw different LLC structures, but one of them is (one LLC as a holding LLC), (another LLC for buy/sell/hold properties), (a third LLC for property managing the properties). The first LLC will be holding the later two LLCs if that makes sense. There are different set ups, but this is the set up I personally like. I will PM you one of my real estate attorney. Again, this is just my opinion, but the attorney will walk you through the details.

Best of luck,

@Kirsten Crotts, congrats on your first house hack deal. 

The greater Seattle market still has some low priced properties, but we may need to be creative in financing them.

A couple of questions, how did you finance your first deal (FHA or something else)? How many months ago was that?

Let me know and I can think about something for you based on your answers.

Thanks,

@Samuel Fletcher Hardy, The tacoma market is great. It has been appreciating quite a lot over the last couple of years. The VA loan will help getting you a decent 2-4 unit building with low to no down payment.

Even if you are planning to move next year (2021), we are expecting interest rates to stay low by that time frame. 

Feel free to reach out if you got any questions.

Thanks!

@Andrew Stephens, you are right, Tacoma is pretty overpriced with multiple offers on most of its deals. 

One of the good things about Tacoma is that it allows non-owner occupied Accessory Dwell Unit (ADU).

The next property may be your first house hack. You can buy something with ADU (or unfinished basement, finish the basement, and get the ADU permit), live in one-half, and rent the other half. In about two years, if you are ready to move to your next house hack, you are good to rent this house to two separate families, or two separate young professionals.

I have an ADU, and I went through the process.

Feel free to reach out over the phone and we can either chat over the phone or have coffee to discuss more.

Best of luck, thanks

@Joe Patton, thanks for sharing the deal numbers. It is great that you force appreciate the property by making some renovations instead of buying a turn key property. A question: was the $717,500 the asking price or you ended up paying more than listing price? I know that the Seattle market is pretty hot.

Thanks,

@Joyce G., doing floors and replacing the single vanity to a double vanity will not change the value a lot. If you wanted to lower what you currently pay, putting the money towards your loan is better than the minor remodel.

Please let me know if you got any questions.

Thanks,

@Taylor Norris, my criteria is if the property is within an hour of driving, I self manage. For more than one hour, I hire a PM. In the greater Seattle area, many PMs charge the first month as placement fees, then they charge 10% for 1-2 doors. You can negotiate the 10% down if you have multiple doors with the same PM. When you divide the first month placement fee/12 month (8.3%) and add the standard (10%) management fees, the new management fees is actually (18.3%) not (10%). 

For year two, if the tenants are renewing the contract, PMs around here typically ask for half a month rent (4.16%). If they are getting new tenants in year 2, they will charge a full month rent again (8.3%), so for year 2, your actual management fees ranging between (14.16% and 18.3%) depending on if tenants will renew or not. 

This is why I self manage my properties within reach. 14-18% of management fees can easily reduce the +ve cash flow I have.

Let me know if you got any comments or questions.

Thanks,