Primary residence turned into rental

[Scott Simpson]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $675,000

1925 single-family home was renovated (flip) prior to us purchasing it as our primary-residence. It's located in a hip and gentrifying neighborhood in Seattle called Phinney Ridge and close proximity to downtown and other desirable neighborhoods.

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

Moved to Seattle and wanted to own vs. rent (which was a mistake given the recession that hit 6-months later!)

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

Real estate agent suggested the neighborhood and property. It had been on the market for 4+ months and in late October they were heading into a dormant time for real estate. Price had recently come down $50K and we negotiated another $50K down.

How did you finance this deal?

Traditional (primary home) mortgage

How did you add value to the deal?

Landscaping

What was the outcome?

Solid rental property. Demand is high in Seattle in this area for single-family homes. With each tenant we've ratcheted up the rent to see where the max is for the market.

Lessons learned? Challenges?

As the rent we ask goes up, the less affordable it is to families to rent (at $4.5K a month, most can buy a home). I've had to compromise and 'house hack' by renting each of the 4 rooms to different folks willing to co-live. Interior cleanliness seems to take a nose-dive when strangers/friends co-live together (vs. a family renting).