All Forum Posts by: Gallagher Wilson

@Account Closed I'm happy to answer questions, though I don't have direct knowledge of multi-fam down here. I live in Lynnwood, own a SFR in Shoreline, and have looked at a lot of prospects north of downtown Seattle. I haven't looked south of there because I don't know it well. Goes without saying probably, prices are high, returns are low but the appreciation is to die for right now. If you're in the Vancouver area though, it shouldn't be anything surprising. Feel free to PM and good luck!

Not tax advice (ask a tax lawyer/CPA), but here is my experience: You can receive as a gift up to $14,000 from each individual tax free, (I'd this this when purchasing my first house). The mortgage company will likely want to see letters statement that XYZ relative gave you $xx,000 as a gift and they are not expecting repayment.  Now, technically its sketchy, since I'm assuming your family members will expect repayment, either as equity or cash on sale, so your not really receiving a gift.  IF they want a signed letter stating that AND your relatives expect repayment, you just gotta decide whether your comfortable lying to your mortgage company. Just my .02$.

What specifically are you looking to learn? The best learning method is to dive in. Yes, prices are high, cap rates are low, but roughly translated, that indicates very low risk. You'll pay a premium, but the rise in prices doesn't seem to be slowing down.  It depends what strategy your looking for, I opted for a long term buy/hold so up-front purchase price was less of an issue.  If you want to try and find a deal, maybe leverage personal connections and network.  See if there is someone you know looking to sell their house, but have yet to sign a listing agreement.  Make them an offer for an off-market sale and save both you and them some serious money (this was my strategy).  If your hoping to flip, hard money is available, but competition for distressed properties is fierce.  There are lots of ways in, just have to get clever and start talking to people around you!

Personally, I've lived in a house with oil heat (rental when I was younger), and I hated it. To me, as a potential buyer, its a big negative. I love the flexibility the natural gas has. For me, yes, the ARV would have to be shifted down. OR come at it with a lower offer and have gas service hooked up (I'm assuming since you mentioned comps having NG that its available in the neighborhood).

@Jessie Nunley I don't recommend cutting out family just because they're negative, but certainly doesn't mean you have to listen to them. However, something I've heard that has been helpful: You will be the average of the 5 people you spend the most time with. That said, you wanna get serious and good at REI? Find 5 people who you aspire to be like, and spend time with them, work deals with them, etc. If you're doing it right, you won't be sitting around listening to the negativity, and those you choose to surround yourself with can help reinforce your goals!

@Laura Costello Good question! It depends, sounds like this friend is going to be relatively passive in the project, more like a private equity partner. In my current deal, I'm setting up a similar scenario, borrowing $150-200k. The terms I arrange with my partner was not profit-sharing, but just 10%APR. On a short term investment (~4-6mo) he can make $7-10k for doing nothing but lending me the money. That to say, you could structure it differently than profit sharing, don't assume that you'll need to give that much away to borrow their money. They can make 10% in the stock market right now, but that may not last, and its they have no knowledge/control advantage, so in essence your providing a safer investment with better terms. IF I were to set up profit sharing for a private equity partner, I don't think I'd be inclined to do any more than 25% but it will totally depend on what they need to make it work.

That said, all my thoughts are moot if they want a more active role. Then you would want a formally drafted agreement outlining percentages of capital input, workload and profit/loss splits. Good luck!

Have you made a formal (on paper) offer and have it signed? Have you put up earnest money?

I'd do that first, you should be able to find a standard state-specific RE offer contract online, or an attorney should be able to provide.

Then yes, you can head to a real estate attorney to set it up.  In our state (I don't know whether this is true everywhere or not), the escrow offices have limited practice officers who can perform the functions of a real estate attorney, specific to purchase and sale agreements, and its likely a lower cost than the attorney. 

Wish I could help, but I'm in the same boat. Trying to figure out where to start flipping after having my first buy/hold last year.  I'd start by reading thru J Scott's book on flipping houses, tremendously useful, though I've noticed since he wrote it in 2012/2013-ish during the bottom of the market, some of the advice on market conditions is very dated, and harder to apply in Seattle-area. I'm a big believer in partnerships.  Even if you can't find a mentor, consider finding a friend/partner with complimentary skillsets (if you're really good at business aspects, find someone with construction experience, or vise versa).  With a good attitude, and good team, you can figure out how to get it off the ground!

Good on ya for trying! There's money to be made in the up and the down, but its definitely tough right now. I bought a NOO SFR house last year in Shoreline, by all metrics here, it wasn't a great deal. The only benefit I got was it was off-market, so I didn't pay the 10-20% premium that the bidding war brings. We put 25% down, and with that, our PITI payment is just over $2k/mo. The house was a 8/10 condition when we bought it, and we spent a few weeks making it a 9/10. It rented in a day at $2400/mo to great, stable tenants, and I haven't looked back. I'm 10 months into the lease. We've taken every penny of the cash flow, and saved it for a bad day. Bottom line: I decided demand was so high, even a marginal deal was better than nothing. I could probably sell the house today for $80k more than I paid for it. I call it a win, win, but if I'd run it by the numbers, I'd never have bought. Use your judgement, but don't over-analyze either.

@Derek Duplechin good for you! Awesome work on that house. You've figured out how projects can snowball in timeline, which is the opposite of the debt snowball your hoping for.  Still, it looks good, and if your numbers are right, it'll be awesome! Congrats.