Goals to Acquire First Rental Property in WA

[Lucy Lang]

Hi Everyone! I'm new to Bigger Pockets and my goal in 2021 is get started with acquiring my first rental property. It'll be a SFH with a MIL unit or ADU where I can house hack and use the collected rent to pay down my mortgage. I need to get the ball rolling and eventually utilize other RE strategies such as BRRRR.

I am located in Seattle, WA. Currently look at homes in Edmonds, Shoreline, and Lynnwood. 

For my agents/investors, do you have any other suggestions? What has your experience been like with this market? Would love your feedback/input. 

Thanks in advance! 

[Michael Haas]

@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!