Hi BiggerPockets, Newbie from Seattle here to learn REI

[Amit Ratwani]

Hi BiggerPockets!

I'm Amit, and I'm based in Seattle, WA. My dad has always been involved in real estate investing, which has helped my family weather multiple financial storms. Now, I want to learn how to invest in real estate and build long-term wealth.

For my first investment, I plan on getting into a small multi-family property (preferably a 4-plex). I've saved up roughly $70,000 for the down payment and rehab. If you could suggest any markets I should consider, that would be very helpful.

I'm excited to join the community and look forward to learning from all of you.

[Daniel McDonald]

Hey @Amit Ratwani! If you're based in Seattle could you house hack there? I am sure it's expensive but you need a place to live anyway right? I always encourage people to house hack if they can. I think it's the easiest point of entry for any investor. It's really been a game-changer for me. 

[Michael Haas]

I'd second @Daniel McDonald, @Amit Ratwani have you considered HouseHacking? Some simple Math:

Lets say you do a Seattle 4plex HouseHack w/ 5% down conventional (a new loan option for multifamily that's better than 3.5% down FHA, just DM me if you want the full rundown on why).

That $70,000 could purchase you a property up to $1,400,000... and to get a 100% ROI on your investment all you need is 5% appreciation on the property. The average appreciation rate in Seattle over the last 40 years has been 5.5%. Cashflow / rents will provide additional ROI but in our experience over a long hold time appreciation will always contribute more to your total ROI than cashflow. Interest rates will also be .25% - 1% lower on an owner occupied property than on a rental property.

Contrast that with buying out of state / non owner occupied properties. That $70,000 now has to go into a 20 - 25% down mortgage, allowing you to purchase a property for $280,000 - $350,000. Now, to see 100% ROI the property would have to appreciate 20 - 25% in value. Cashflow / rents will provide additional ROI but not enough to overshadow the more favorable loan terms and higher value of the househacked property.

This is an oversimplification but I'm sure you get the point! Happy to talk about the strategy more - we're up to 13 properties owned in WA now and wouldn't have been able to scale to that level quickly without househacking.

[Ali Nichols]

Hey @Amit Ratwani welcome to BP! Always happy to chat small multi-family strategies. 

[Julien Jeannot]

@Amit Ratwani

Welcome!

@Michael Haas very well articulated my exact thoughts. The house hack strategy is a powerful one in the Seattle market. I've used it myself on every property I've lived in and scaled to 10 properties and 14 units.

I used to be diversified in Memphis TN, a cash flow market, but quickly realized to build wealth, the faster strategy was to focus on equity build first. All my holdings are now in WA.

Feel free to reach out, I'm always game to share my experience.

[Dave Skow]

@Amit Ratwani- welome to BP ..is the plan to live in one of the units  or  will the plan be  to  rent  all the units  ?   this will make a large difference  with the  financing options you have .   I would recommend getting formally  pre approved for whatever scenario you are  wanting to persue ....this free process will get you organized / educated and  prepared to  react  whena nd if you locate a  property to make an offer on 

[River Sava]

Hi Amit -Welcome!!

Definitely check out Charlotte, NC. I am somewhat biased, but would be happy to talk about the market there further with you!