All Forum Posts by: Evan Dobrowski

Hi Mario,

I have invested in properties such as this in the past. The way I handled this was to rent out with all utilities included and charge more for rent and utilities were on me.  I know of other investors who had the tenant on the larger unit take all utilities and charge a little less for rent but that can create scwabbles between the two tenants if there is ever high utility costs.

Ultimately I made the decision to sell this type of property once the value was there and to upgrade to an actual duplex with separate utilities to avoid the unknown of utility bills or tenant fights.

You can have multiple FHA loans. I know this to be 100% true. You do not have to refinance them. You do have to live in the house for at least 12months but the longer the better. I have had good luck with FHA qualifications when living in house for as little as 15 months and as long as 3 years. With that being said from personal experience using house hacking method on duplexes.

However with the 4 plex prices you mention you are unlikely to qualify for FHA as you are in jumbo loan territory unless your finding deals on the 4 plex below the market value you listed in our first post.

Aside from the above info I will say I would not want to be at the leverage point your suggesting; but I'm not excessively aggressive in my investing strategy. To give an example of why. An FHA loan is going to offer a lower down but higher interest rate long term and reduced cash flow capacity. Using conventional you can get a loan as low as 10% down (maybe lower if you build a relationship with your lender) if you live in the property. What that offers you is a hire cash flow capacity which means bumps in the road wont hit as hard. And trust me everyone at some point has a bump in the road. It could be a job lose, layoff, tenants not paying rent, extended vacancy, tenant damages, etc. You might get lucky, but don't count on it. I have had water heaters that go out the 1st month in a place and roofs that go bad 10years earlier than expected because of wind damage. Things you won't know until living in the property.

Spokane still has deals if you can find properties with basements and convert to up/down duplex.  My family lives in Spokane and this technique is what they have done to acquire duplex rentals.  Lots of houses around the mall that have unfinished basements and the cost of finishing is sweat equity, $4000 permit, $2000 to have a contractor install an egress window, and another $3000 to have separate door installed.  

You not only get a more affordable home because your only paying the finished square footage at the time of purchase.  You also build sweat equity and when your done you have nearly doubled the property value.  My sister did this most recently with a purchase in June 20' completely the below unit in January.  She is now renting the downstairs unit which is 2bed 1 bath and covering her entire mortgage which was based on a $215K purchase price.

That Takes The Cake.  Best cupcakes in town, maybe all of WA, and awesome locally owned.

If your looking for a mountain town feel I would say that's not prevalent on the Olympic Peninsula.

I agree with Sharon, Leavenworth is extremely overcrowded. But Ce Elum/Roslyn area are similar without the tourists.  There are also places like Packwood which is definitely the small mountain town.  You might also want to consider the I-90 corridor in Idaho; places like Wallace, Kellogg, or Mullan.

@Sinjin Lee 

i have never been to Big bear lake or lake arrowhead but my wife and I do like in WA and have lived on the Olympic Peninsula with several properties out there for our eventual retirement.  Sequim is awesome, low rainfall, quiet country feel, access to all sorts of recreational activities, etc.

Port Townsend is great to except I disliked the spring and summer weekends because traffic goes crazy. One highway in and out with festivals happening that draw toms of people isn't my preferred situation.

Port Ludlow is another area that retirees love. It's got amenities, views galore if your in the right place, but almost no festivals.

i would advise against heading further south than port ludlow such as quilcene or brinnon.  They are nice places with great access to the outdoors but it rains a rediculous amount and crime rate is high.  I say a similar thing occurs in Port Angeles but not to the same extent.  The benefit to these 3 towns is extremely cost effective properties and housing.  Up until the pandemic you could buy a 2bedroom house near quilcene for $60K and in brinnon I have friends that have purchased for $20K. Not great places but they retired very young and have made the houses what they wanted.

@Brandon Vukelich

I like the plan of taking the cash and putting it into more doors.  However, where in WA are there triplex and 4plex options that aren't getting bid up. I see your a broker in WA, if you routinely search for those types of properties please PM me. I'm always searching zillow and redfin but deals don't seem to be available right now. As we all know you make your money on the buy not the sell.

My original thought was to sell, take the capital and put it into S&P500 until the market cools off. Then redeploy the capital into more doors.

@Will Fraser i have never invested outside of the PNW region. But it would be great to hear from an out of area investor like yourself. Where are you finding the market to be more reasonable but also not just dying like detroit?

@Sherief Elbassouni good to hear from you and great advice. The cash flow on this property is fantastic, better than one of my duplexes as well.  However, this property is old and part of my concern is that over the long term older properties require more maintenance and don't appreciate as rapidly as newer properties. Along with being more difficult to sell in a normal market because so many people want a house that's less than 20 years old.  Why I don't know, but that seems to be what I keep hearing from the 25-35 crowd.  Most want new homes, some except reality and will go 20year old homes, probably only 10% will go older than that and these are the first time home buyers.

As in most of the country the real estate in my area is going crazy!  When interest rates rise, prices have got to fall. Right now in my market area people are offering $50K - $100K over asking and waiving all contingencies. I live and invest in the Seattle-Tacoma area.  

Currently I live in a property I purchased to rehab while we use as our residence. This property also has a MIL we rent out as a house hack. I purchased this property in 2017 and my real estate agent is telling us the house has doubled in value and it might be a good idea to sell. My plan has always been to utilize the BRRR method and hold for the long term. But this house was built in the late 60's and I'm starting to think this crazy market might be a good time to sell. My understanding is that since I live in this property there are tax advantages to selling now rather than holding as a rental over the long term if the market is at a momentary peak. Obviously I understand that the property will increase in value over long time horizons. But if the market falls I'm thinking we may not see these prices for another 10 years.

I am wondering what do other BP members think?  Are you buying, selling, or holding in this market?  Where will the market go from here?  If you had a property that has doubled in such a short timeframe would you sell or hold?

Obviously a lot of factors come in to play here.  I will make sure to add we already have the new house we are moving to so it's just a matter of what to do with this one.  We could probably rent the property out with positive cash flow of $750 per month or sell and profit about $150K and roll that into the next property or pay off another rental.

If they want the best tax situation around try a place along the border but in WA. Walla Walla is a town right on the border and is very much wine country.  The nice thing is they can cruise to OR for shopping and save on sales tax.

if that isn't their style and they are looking for more of a hippie vibe check out Sequim, WA in the rain shadow and close to Port Townsend but with the amenities of a Costco, Home Depot, and green space 360degrees around you. Sequim kind of has it all, the entry to national forest and park land for all outdoor activities, right by both fresh and salt water fishing, gardening paradise, retirement community so generally quiet, safe, and very low crime rate. Golfing nearby and fantastic views from everywhere. Also one of the best family run cupcake shops that exists in the entire state.  But hey do me a favor and keep Sequim a secret my wife wants to retire their so we need real estate to stay reasonably priced.

What activities do they expect to spend most of their time with during retirement?

Hi Stephen,

PM me and tell me more about this deal