Downtown Seattle Condo BRRRR

[Michael Smythies]

Investment Info:

Condo fix & flip investment in Seattle.

Purchase price: $440,000
Cash invested: $218,000

In May of 2022, I purchased an off-market 2 bed, 1.5 bath condo in the heart of Seattle for $440k with 25% down. Located on 2nd Ave and Cedar, this older condominium building is situated steps away from the Seattle waterfront and well known landmarks such as the Space Needle and Pike Place Market.

Upon purchasing the property, our initial appraisal value came in at $550k (a whopping $110k more than what we paid!!).

What made you interested in investing in this type of deal?

Originally, I was planning on making this a fix & flip deal. However, upon further research, I decided that with the cost of selling and the uncertainty of the condo market here in Seattle, the BRRRR strategy was a better way to go. I was going to save approximately $40k in selling costs (e.g. commission, selling costs, staging, photography and other fees), save on capital gains, not be forced to use a 1031 and maintain ownership of the property for years to come.

How did you find this deal and how did you negotiate it?

As a real estate broker in Seattle, I often come across off market deals that are brought to me by fellow agents. This deal was brought to me originally in April of 2022. As my first investment property, I decided it was a good place to start.

How did you add value to the deal?

As soon as we closed, the rehab process began. Our rehab included full demolition, electrical and plumbing work, drywall, paint, hardwood install, bathroom tile (floors, shower and backsplash), bathroom cabinets + countertops, new doors, new trim, kitchen cabinets + countertops, appliances and fixtures.

What was the outcome?

We are currently approximately 90% done with the rehab process. Projected total rehab cost is about $85k, putting price per square foot at about $80. Utilizing the BRRRR strategy, our projected final appraisal will be between $700k-$750k, yielding a total profit of between $150k-$200k. Total gross rent will be about $3800-$4000 a month. Cash flow will be minimal if any, but I intend on using the profits to fund my next deal.

Lessons learned? Challenges?

As my first investment property, I learned a TON. Despite this being a financially successful acquisition, even more valuable was what I learned from it all. I learned important skills like connecting with contractors, estimating costs, project management, sticking to a schedule, dealing with angry neighbors, dealing with HOA complexities and much much more.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Regarding lenders, I used Rob Berg from Fairway Independent Mortgage to fund the deal. He has done many transactions for clients in the past and I trusted him enough to work with him on this deal. He is very professional, fast and best of all, he is communicative.