All Forum Posts by: Michael Haas

@Kp Singh do you currently own your primarily residence? Our Airbnb is very profitable, but your cash-on-cash return would be better with a low money down loan on an owner occupied BRRRR house hack or multifamily. The best cash on cash return is almost always going to be an owner occupied property because those loan terms are so favorable.

Make sure your insulation, weatherproofing, and framing are up to snuff - a lot of garages are built cheap and drafty, and you'll definitely want to address that before investing in finished space.

Drylock/seal the concrete. It might not need it but do it anyway, water is cruel. 

Do you already have water and sewer access, or are you running new pipe? Where's the panel, and do you have 3-4 open knock outs? 

I'd double check your budget - 10 K would be cheap for an under the table handyman conversion, and its not even close to what it would cost permitted with a legitimate licensed contractor. 

By “gas stove” do you mean a free-standing stove, kind of like a wood burner, or are you just talking about a furnace?

I’ve been going Cadet (in wall) heaters over baseboard. Same price but better efficiency, although they are noisier. 

Cadet or baseboard is my vote- decide early on if your holding the property or selling it- it might make sense to go mini-split in a high end flip but don’t over-improve your rentals!

@Rudy Manna - we've been BRRRRing in Seattle as well, but its still working out well enough that we're not looking out of state just yet.

I'd say focus wherever you have real estate and contractor connections, family, friends, or neighborhood familiarity. I'd try to minimize risk as well when going out of state, rather than just maximizing return. It would be a shame to chase ROI into an area where you get screwed by your agent and buy in the wrong neighborhood, get screwed by your contractor on the renovation, and get screwed by your property manager on the tenant management and maintenance.

Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1." - Warren Buffet

@Mark Watkins Townhomes and SFH's look pretty similar - there's just less long-term upside on a townhome as you have less land, and doing a lot split or addition typically isn't an option. With SFH's and all the up-zoning happening in Seattle you may be able to build additional units on your lot as prices continue to rise and the ROI for those kind of activities increases.

Condo's, as lower priced assets, tend to be more volatile - they'll get hit harder during recessions and often rise higher during booms. I'd steer clear though, I run the numbers on Condo's for clients all the time and am almost never pleased with their performance as rentals. 

As an owner-occupant, a single family house hack / basement ADU would get you a better CAP rate than a Multifamily in our market so that's another option.

You mentioned not knowing if you have enough Cash for a down payment - have you looked into different loan products? For an owner occupied multifamily going 3.5% down with an FHA loan is a no brainer. You're looking at $400-$850 k for that multifamily in the south end, or $700-$1,200k for one in the north end, so you can do that math by multiplying that by 3.5% plus some extra for closing costs.

PM me if you have more questions! We invest in the south end (5 properties) because it just makes more financial sense, but there are definitely ways to make it happen in the north end as well if work and friends have you anchored up there. Cheers!

I second @Aaron K. 's concerns about self storage - I'm 28 and don't feel confident investing in that asset unless the value-in-land is significant. Digitization of goods and records, combined with my generation's enchantment with minimalism suggest that that industry may have a shakeout coming in the next 10-20 years. I'd want to see the zoning and location of the land allowing me to pivot in the next 10-20 years to be confident in buying self storage.

@Jess Haas and I also open and close a couple different business and personal cards a year and use them for our flips - with $300-$500 sign up bonuses on many of these higher quality cards we end up putting a couple thousand dollars back in our pocket a year. Spark & Ink for business, Savor and USAA for personal are a few great ones. PM me for the full list, its a long one!

Oh, and if you shop for materials at Lowes definitely get their credit card - 5% back on all purchases adds up!

PS: All y'all newbie investors need to stop saying "Seattle is too expensive so I can't invest here". 

You can say "CAP rates are too low in Seattle, so I can't invest here" or "Regulations are too stringent in Seattle, so I can't invest here" but you need to stop assuming expensive properties can't cash flow. I'll take a 8% CAP on one $500k Seattle house all day over a 9-10% cap in Atlanta on 5 $100k houses - fewer headaches investing locally, less management, and fewer washer machines to break lol.

Welcome @Donald Thomas! Folks here can definitely help you out with some more specific recommendations if you can answer @Jess Haas 's questions. If you ask for advice with no specifics about your situation you're just going to get crappy advice. 

My two cents - you're going to get SCREWED investing out of state at this stage in your development. A buddy of mine just lost well over $15k on an out of state rehab, and he's a savvy investor that owns 8 properties in state.

A 3.5% FHA owner occupied loan on a FourPlex is easy money - @Todd Powell just dropped literally the most powerful early investor strategy on you, don't write it off so quickly. What about renting your home and moving into a 4 plex in Seattle or Tacoma?

Sounds like you're on the right track @Craig Early! I'd also take a look at Judkins Park - farther south form Kenmore but you're right on i-90 for an easy freeway commute. Getting a new light-rail station to the Eastside in 2023 as well. Anything off Lake City way/522 will probably be more affordable and could be easier to cash flow.

Lake Forest Park, Wedgewood, and Ravenna are real nice but definitely expensive - hard to find a deal or cash flow there but strange things happen sometimes so it doesn't hurt to look.

Let me know if I can help with anything!