Another Bellevue 4-Plex House Hack

[Milton Johnson]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $495,000
Cash invested: $12,000

4-unit, townhomes in Bellevue near the military base. All 4 units were rented when the property was purchased - 3 of the 4 units had already been renovated within the past 2 years.

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

After my first house hacking deal, I learned a ton about what's needed to manage a property on my own. As long as I still had entitlements on my VA loan, I figured this was still my best option to continue my RE journey.

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

This was another FSBO deal that I found through Zillow. Put in an offer below asking, but we negotiated making the price contingent on the appraisal. The property ended up appraising over asking price and we settled on the asking price with $8K seller concession. The sellers also took care of all of the inspection items.

My opinion: didn't think it would appraisal at value, but personally feel like the appraiser fluffed values using future value instead of current value.

How did you finance this deal?

VA Loan: Since this was the second use of my VA loan and it was over my remaining entitlements, I ended up having to put in $8K as a down payment – after downpayment and seller concession, total cash in deal was about $12K.

How did you add value to the deal?

The previous landlords left rents significantly below market rents. Since 3 of the 4 units were on month-to-month agreements, those unit rents were raised to fair market rent for our local area with new leases. The last unit will receive notice of rent increase prior to their lease ending in a few months.

There is also a 5th unit that was gutted and unused when purchased that could be a 1 bedroom/1 bath or efficiency unit; hoping to have this done by summer.

What was the outcome?

Rents raised to fair market rent allowing this property to cashflow significantly. With everything rented including the 5th unit, pure monthly cashflow is expected to be ~$900+, conservatively.

Lessons learned? Challenges?

I spent pretty much all of 2022 looking for a property. There were a lot of bad deals and a handful of good deals - yet, almost everything was still selling. Kept on looking and ended up getting this property - which was actually on my watchlist due to the area. Although the price wasn't what I wanted (or thought it should be), the numbers told me that it was a deal that I couldn't pass up.

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

Tabitha Cooper with Berkshire Hathaway HomeServices as the Buyer Agent. Steve Kucirek with West Gate Bank on financing for VA Loans.