Seattle/ Bellevue Area Investing

[Mike Chen]

Hello everyone, i am a total newbie to real estate but im always being told that real estate can make you a lot of money. However , looking at the overpriced homes in seattle and bellevue i only see negative cash flow. How are people making money in seattle's real estate? I have around 400k cash that i can use to invest, i am interested in short term rentals as well

any tips ? Thanks!

Thanks

[Michael Haas]

Welcome @Mike Chen! What is your experience so far with real estate - sounds like you haven't owned rental properties, but have you bought and sold primary residences? Do you currently own your home?

Definitely possible to cash flow in Seattle, especially on the south end. Bellevue may be a bit harder though. It helps you get a deal done if you aren't competing with retail home-buyers (aka - buy weird properties and fixers). There are also a lot of tax benefits to owning real estate that many investors don't take into account when comparing a Real Estate buy to other investment vehicles. 

To give you an idea of the properties you should be looking at though, here's my last six deals around Seattle, with 6-9% CAP rate and good cash flow.

1. N. Beacon Hill 7 bedroom, extensive cosmetic reno needed

2. West Seattle cabin - structural issues, cash only

3. Judkins Park 3 bed (with an option to make a DADU in the back of the large lot) - added a bathroom, extensive cosmetic renovation, some structural.

4. N. Beacon Hill estate sale (I won't even tell you how many bedrooms this one has, suffice it to say its a lot) - extensive cosmetic, rat infested, some water damage.

5. Admiral neighborhood (West Seattle) View 5 bed - Hoarder house (4 dumpster loads and 12 trailer loads of junk), Estate Sale, Extensive Cosmetic needed

6. Off grid cabin on Stevens Pass, Airbnb.

See any patterns? In Seattle buy in hold rental investments your friends are - 1. lots of bedrooms 2. absolutely disgusting properties with good bones or wierd properties that don't appeal to high income owner occupants, and 3. quick sales, especially estate sales or similar. Although most of these were on the MLS, they were often listings with no pictures besides the front door, and they were definitely not professionally staged lol.

PS: You should never count solely on appreciation as an investor, but at the same time owning 3-5 half million dollar properties and adding 200K to your net worth in those occasional 10%+ appreciation years isn't a bad deal!

PPS: Some of these were cash only properties, so you won't be able to access those deals unless you have the wealth, experience, or network to be trusted with someone else cash. With $400k you could definitely BRRRR those deals (Buy Cash, Rehab, Refinance your cash out of the deal, Rent, Repeat) You'll re-fi out of those properties so you do get to re-use a lot of the same cash over an over again and/or pay back your line of credit/investors, which definitely helps.

Cheers and best of luck! Feel free to message me with any specific questions, and definitely keep posting on BP - we're all here to help each other succeed!