First home in Seattle

[Aaron Wong]

Hi all! 

I am a New Yorker moving out to the Seattle area and am looking to buy my first home. I have been looking at houses in the UDistrict, Ravenna area and wanted to get some feedback on my findings. I have been primarily looking at houses with 3+ beds and 2+ baths. My plan was to live in one of the bedrooms and rent out the other two.

My criteria:

• 3 or more beds
• 2 or more baths
• Up to $750k

I would be using a 30 year conventional mortgage with 20% or more down. 

Assuming I could get $1k rent per room which I think might be really optimistic, I'd have to put upwards of 40% down to make this purchase cheaper than renting (assuming $1k a month rent that covers utilities, which I was able to find while I was in Seattle a few months ago). This does not even take into consideration any maintenance that I would have to do and still leaves me with negative cash flow. 

If I were to go the renting route, I'd pay ~$1k a month with all my utilities covered and I would have the $300k I would use as down payment to put into an ETF or something. With this information, my question is, does house hacking still make sense for me? Ideally I would like to put down less but that does not seem to be an option in these neighborhoods. I am pretty set on the neighborhoods due to the proximity to the university and the light rail station to downtown.

[Jess Haas]

It depends what your goals are. Are you looking to invest in more real estate after this first house? 
My advice. Rent for a year in a very central location(Capitol Hill, Downtown, Lower Queen Anne). Explore the neighborhoods and see what area you like and figure out your mode of getting around. As Michael we bought our first house in Ravenna not really knowing much about the Seattle area. It was fine the overall market appreciated, but a better return on our investment would have been found in neighborhoods south of downtown. 
To answer your original question, buying a house over renting is always better because you are building equity. Unless you plan to sell the house in less than 2 years. With realtor fees and moving costs at that point it’s better to rent.