Refinance to Add Units or Buy Another Property?

[Binyam Tedros]

My parents are refinancing thier home to use the money to create cashflow and would like some input on what you would recommend on doing. The house is in North Seattle (Shoreline) and they can pull out $540,000 cash by refinancing. 

The house has about is on 9,000 foot lot and we can easily add units to rent out but have no experience with construction or dealing with contractors. 

So the question is would you recommend dealing with construction when you don't have experience or would it be better to just another property cash somewhere else? 

[Michael Haas]

If the sum was smaller I would say try to build something, but that’s a hefty amount of money. If they’re really looking for long term sizable cash flow they’ll need more than one property, even if that one property has an additional unit. Buy with an eye to immediately convert ADUs or MILs or later on develop DADUs ( more expensive and less likely to have already been setup on a house you’re looking at ). Who knows, maybe the construction shortage here will wade a bit soon too. Tiny houses are also an option, but the city of Seattle recently banned them as STRs (which is really what they’re best for...)

Good luck! I focus on properties with more than one unit (ADU, MIL, Tiny House /prefab mostly) in WA so hit me up if you have more questions!