Southeast King County

[Corey Smith]

Hey BP!

For the last month I've tried to submerge myself in as much content around this site and other places as I could in order to feel more comfortable with moving forward. I'm at that point now, and would like to start moving on to the next step so that I don't get caught in a cycle of inaction.

I'm aware that the Greater Seattle area market is on fire and is a seller's market. I'm even in the process of preparing to take the RE Brokers exam so that I can try to take advantage of the sales side of this market (which could allow me to build some capital to invest with). But I still want to start making moves with REI soon, so I am trying to figure out how to proceed.

My long-term play is to build a portfolio of holds. But I'm thinking long-term holds wouldn't be a good play for the next year or two. So I would like to jump into a flip, since they shouldn't be long-term situations. Between flipping, doing work as an agent, and other saving, I want to be able to take advantage when the market does hit a downturn.

I say all this to ask for input on the Southeast area of King County (Let's say the Maple Valley Area down to around Orting/South Hill/Graham). I'd like to start getting some practice in with running numbers on deals and reaching out to owners, etc. Maybe even find a deal that I can jump on in the process. And I'm looking for advice on any areas in that region that may be good to make my Farm area. 

Thanks in advance!

[Ryland Taniguchi]

To answer your question on the PM on what I use to calculate our BRRR, here it is. This is the formula I use but I would love to hear what other BRRRR investors use.

My BRRRR formula.

Target price between $50,000 to $75,000 in Tacoma, Lakewood, Tumwater, Lacey, Olympia, Mt Vernon, Arlington, Sedro Wooley, and Oak Harbor. I look for this price range in these areas and expect to put $50 k to $60 k into the rehab and looking for an ARV between $200 k to $240 k. Don't let anyone tell you that these numbers are not possible. I have 7 deals that fit this criteria that I bought in 2016 during this crazy hot market. You will not find them on the MLS unless it is a subdivision type deal. Mostly likely it will be off-market.

Here is how to get a deal way better than a 2% rule in our local market here in Seattle. In 2016, I picked up a house for $71 k in Tacoma zoned R2 and 13,000 sq feet. I subdivided into two parcels (cost of $9,000) and the new parcel was worth $65,000 after I got it fully permit ready. $71 k plus $9 k is $80 k. So I basically got a property that rents at $1350/month for $15,000. In Tacoma. In a super hot crazy market where every agent tells you that there are multiple offers on every property.

Looking for 70% of ARV (After Repair Value)

After including closing costs, refinance costs, holding costs, interest reserves, and rehab costs, I want the Total Price To Get In the Deal to fit the 1% rule. Also, I want to be at 70% LTV when I get to the refinance.

I use the Bigger Pocket pro account calculator to calculate all this.