Seattle looks like a hard market for cash flow

[Pavel Bennett]

I work in the Seattle area (east side) and have been searching for a house that I could live in and also start renting out a room or two. This would allow me to put my rent money towards building equity and also would be a great learning experience. The problem is that I haven't been able to find anything worth looking at as the prices are too high for positive cash flow. The only way to make this work (possibly) is to bet on future appreciation, but I'm not interested in speculating.

I was thinking about looking for deals out of state, but it won't be a place I can live in, so I miss out on being able to tax-deduct interest payments on the primary residence and other such perks.

What do you guys think I should be looking into?

[Tom Cafarella]

Hi, I am in Boston and we also are in a market where it is not easy to cash flow. There are a couple of things to consider:

1. Area you are buying in. In some of the mid to upper tier markets it may be impossible to cash flow no matter what you do. Typically speaking the mid to lower tier markets are much easier and you may need to go there in order to cash flow on day 1. We do that and we have pretty much all govt subsidized rental programs. The guaranteed money makes these markets worth it(in my opinion)
2. In general: Buying more units gives you a bigger discount per unit: I would never even consider condos, single fams, or 2 fams. Try to get 3 units plus per building and you will have a much easier time cash flowing. Once you get above 4 units, you can generally get much better deals because you are not competing with first time homebuyers who can get FHA loans for these properties.
3. If you want to get a really great deal, you should be marketing for properties before they hit the market. The steps for doing this are below:

Step 1: Determine what type of houses you want to invest in. This may seem simplistic but you really want to know exactly the types of houses that you want. For example, what geographic area, style of house, multi unit versus single family, size of the house etc.

Step 2: Once you know what you want to target, that allows you to then build the list. For example, if you want to buy single family ranges in a particular town, that narrows the search down and then you can move on onto step 3

Step 3: Find contact info for every one of these people: cell phone, home phone, emails, social media profile, home address, etc

Step 4: Put the information into a database: I like using a CRM like Follow Up Boss, but you can use an excel sheet to start

Step 5: Market to these people: call(on a dialer), email, message on social media, door knock, mail, etc. until you get one on one appointments with them