Starting out investing in SFH on the Eastside (of Seattle)

[Charlene Atlas]

Hi Everyone, my name is Charlene, happy to be joining this community! My husband and I are looking to buy our first rental property. We have a big renovation coming up at our primary residence and we are trying to align getting our first rental with the reno, so that we can stay there for a few months during the construction, and then rent it out. 

I have been learning from the BiggerPockets podcasts/website and I am almost done with "The Book on Rental Property Investing". We have also already gotten a HELOC setup and ready and we are working with a lender now to get prepared with a preapproval letter.

However, I am having a lot of trouble finding deals in the area we want to be in. With the restriction of us needing to live there for a bit and needing to stay near work (Redmond) and school (Kirkland), it is hard to find anything that will cash flow. We are looking in the Redmond and Kirkland areas.

Is there any chance for us to find a positive cash flow investment in these areas for a SFH? We are working with a realtor to send us possible homes, but all my 50% rule and 2% test checks are coming back not great. Any tips? Thanks!

[Michael Haas]

@Charlene Atlas yes, the Eastside is a appreciation play, not cashflow - as Adrian mentioned the rents are comically low for the market value of the properties there. I live in North Beacon Hill - have you thought about Judkins Park, Beacon Hill, and the other neighborhoods just across the i-90 bridge from the Eastside? Rent to price ratios are better there, and I can get to our office in Bellevue in less than 20 minutes.

A piece of advice - it sounds like you'll be living in this rental property for about 6 months, and (ideally) you'll be holding it as a rental for 30+ years after that. I'd prioritize the rental, not your personal housing, and either commute for 6 months or just rent an Airbnb in on the Eastside and buy your rental where it makes sense. Any money saved by not having to pay for a place for your family to stay is going to be overshadowed by the Eastside not having the cashflow you're looking for.

That said, there are some strategies that work on the Eastside. Kirkland is a great example - they allow development of TWO detached DADU's, and also allow you to condominiumize the lot to sell the house, DADU 1, and DADU 2 all separately. Cashflow is still weaker, but you can bag $500,000 or more of equity building out a Kirkland lot with that strategy. 

Happy to talk more - feel free to shoot me a DM. Cheers!