House Hacking in Seattle/Bellevue Area

[Mario Mach]

Hey guys, I'm very new to BiggerPockets and RE investing in general. I am very eager to get started and will be spending a lot time learning from you guys around here.

So for those who are house hacking Seattle, I was wondering if you could provide some input. 

 Right now, I am renting a studio in dt bellevue. Paying $2000/mo on rent, and on top of that, they charge another $200/mo for parking. My lease will end in August. My hunch is that the rent will rise substantially for next year. 

I've read about house hacking and I think its a very attractive idea in my situation. From what I understand, you just put down a 3.5% down payment and then you rent out all the units except 1, to cover all the payments (including your monthly rent). 

I'm looking at single family houses, where there are 3+ bedrooms. I plan to live in 1 of them and rent the 2 other ones out to cover the mortgage + misc payments. Since I work in Redmond, I was thinking Bellevue is a decent choice but the area is relatively expensive. Are there other locations I should look into? And is this the right idea?

I would really appreciate if someone has experience could chime in. Thanks!

[Michael Haas]

@Mario Mach - you're 100% right, if you have great credit, good W-2 income, and just a little bit of savings buying a house hack is a financial no-brainer. We started with this strategy in 2013 and have 6 properties in King County / Seattle now.

Like Gray said, yes a higher purchase price won't change your down payment much but if you're only putting 3.5% down its unlikely that your lender will give you a very high pre-approval amount. Your first step should be to get this pre-approval - you might qualify for a $800k purchase price or a $400k purchase price, we really can't say until you share your financial info with a lender. Click on my profile and send me a message if you want the contact info for two good ones I use on my investment purchases.

Washington State Housing Finance Commission Down Payment Assistance (a mouthful I know, WSHFCDPA for short) is another option if you're having trouble swinging the 3.5% or more. To summarize, WSHFC is a non-profit dedicated to helping every Washingtonian own their own home, and this program allows us to take out a loan with 3% down, then get 4% down payment assistance so the cash required to close is super-minimal (as little as $6,000 in some cases, depends on the purchase price of the property though).

This strategy works really well when you can combine it with house hacking. One reason this works so well is that owner-occupant financing (when you live in the house) has lower interest rates than investor/landlord financing, so you get the best of both worlds if you rent part of your primary residence out – rental income, tax deductions, and low interest rates on your home loan. You need to attend a homebuyer’s class taught by a WSHFC trained Realitor and Lender, I’m trained and am teaching a few of these early this year. Let me know if you’re interested in the classes and I'll ping you when the date of the next one is set.

Cheers and good luck! Message me anytime if you'd like to grab a coffee and talk house-hacking, it's changed @Jess Haas & my life for the better!