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All Forum Posts by: Michael Smythies

Michael Smythies has started 7 posts and replied 60 times.

Post: Where in the US should I live?

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68
Quote from @Matthew McKee:

There are so many great markets to get into! It’s hard to give advice without knowing what you’ll find fulfilling.

Some markets to consider avoiding due to unreasonable landlord laws:

Las Angeles

San Francisco 

New York

Maine

Portland

Seattle

This isn’t a comprehensive list and I’m sure others will quote and add to it!

Congrats on moving to the greatest country on earth! 


 Hi Matthew, 

I'd be curious to hear your take on unreasonable landlord laws in Seattle specifically. I am a real estate investor in this area and am considering moving outside of Seattle due to this same reason. Could you highlight some specific reasons why the landlord laws here are 'unreasonable'? 


Thanks!

Post: Private money/investors capital

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Hi Nikko, 

I would recommend you listen to BiggerPockets episode 642 - Private Money: What the experts warn against before you lend (Or Borrow!). 

@Alex Breshears talks about all the ins and outs of private lending. This may be a great place for you to start. 

Post: Greater Seattle Investment Acquisition - $75k in capital

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Thank you for the your insight @Eric Yu

Regarding the Seattle market, why do you say that cash flowing STR's are hard to come by? Let's say that you buy a 3/2 home for $700k with a 25% downpayment. At 5.5% interest, your mortgage is going to be roughly $3,522.56. Assuming that this home can sleep 6-8 people with average occupancy and nightly rates, you're saying that you wouldn't be able to cash flow?

Do you mind breaking down the numbers for me? Would love to get some insight into why this might not work. Perhaps I'm missing something here. 

Thanks Eric!

Post: Greater Seattle Investment Acquisition - $75k in capital

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Hi Alex, 

Thank you for writing such a detailed response, I appreciate it. I have just sent you a private message. Looking forward to connecting with you. 

Post: Greater Seattle Investment Acquisition - $75k in capital

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Hi all, 

Following a recent cash-out refi on my first investment project located in downtown Seattle (described at length in my profile), I am left with approximately $75k in capital. I intend on using most (if not all) of this capital to move forward with a second investment property.  As I am still a relatively new investor, I am currently weighing my options on how to best use this money to keep the ball rolling. My ultimate goal is own multiple cash flowing properties in the Seattle area that outperform my active income streams. 

Being in the Seattle area, real estate is expensive. However, as a real estate broker working and living in Seattle, I know this area well and would prefer to stay in this market. Perhaps also worth mentioning here, is that I do have a potential source of private funding. 

Having said that, my possible options are: 

1) Purchase a value-add primary residence with ADU/DADU potential with a 5% downpayment. Use the extra money to rehab the home and rent out the separate unit(s) to subsidize my mortgage. (Pros: ownership of property, low downpayment, subsidized mortgage, future positive cash flow potential Cons: I already have a primary residence and am happy where I am and my capital is tied up in property with few ways of getting it out to continue investing).

2) Keep the $75k as reserves, obtain a private loan to purchase a BRRRR.  (Pros: possibility of owning a BRRRR with equity and cash flow using non of my own money, Cons: difficult to find real estate at 70% of ARV minus rehab costs in Seattle making it more difficult to pay back lender through cash out refi).

3) Keep the $75k as reserves, obtain a private loan to purchase a fix & flip. Focus on building up a strong cash position to then be able to leverage my money better in the future. (Pros: easier to pay back lender and produce profit quicker, Cons: do not maintain ownership of property).

3) Go 50/50 on an equity deal with private lender as partner in 2nd lien position. Have them fund the downpayment and rehab costs. Focus on building up strong cash position for future acquisitions. 

4) Use private lender to purchase value add STR in Seattle area. Refinance, pay off private lender and have a cash flowing STR.

Any direction/advice is much appreciated. At the end of the day, my ultimate goal is to simply take ACTION and not be stuck in analysis paralysis. As everyone here is well aware of, there are MANY different ways of making money in real estate. It is very possible that all these options are more than viable. However, I'd like to gather as much information/advice with my goals and circumstances in mind so that I can make best decision and deploy this capital in the most effective/efficient way. 

Thank you!! 

Post: Downtown Seattle Condo BRRRR

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68
Quote from @Michael Smythies:

Investment Info:

Condo fix & flip investment in Seattle.

Purchase price: $440,000
Cash invested: $218,000

In May of 2022, I purchased an off-market 2 bed, 1.5 bath condo in the heart of Seattle for $440k with 25% down. Located on 2nd Ave and Cedar, this older condominium building is situated steps away from the Seattle waterfront and well known landmarks such as the Space Needle and Pike Place Market.

Upon purchasing the property, our initial appraisal value came in at $550k (a whopping $110k more than what we paid!!).

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

Originally, I was planning on making this a fix & flip deal. However, upon further research, I decided that with the cost of selling and the uncertainty of the condo market here in Seattle, the BRRRR strategy was a better way to go. I was going to save approximately $40k in selling costs (e.g. commission, selling costs, staging, photography and other fees), save on capital gains, not be forced to use a 1031 and maintain ownership of the property for years to come.

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

As a real estate broker in Seattle, I often come across off market deals that are brought to me by fellow agents. This deal was brought to me originally in April of 2022. As my first investment property, I decided it was a good place to start.

How did you add value to the deal?

As soon as we closed, the rehab process began. Our rehab included full demolition, electrical and plumbing work, drywall, paint, hardwood install, bathroom tile (floors, shower and backsplash), bathroom cabinets + countertops, new doors, new trim, kitchen cabinets + countertops, appliances and fixtures.

What was the outcome?

We are currently approximately 90% done with the rehab process. Projected total rehab cost is about $85k, putting price per square foot at about $80. Utilizing the BRRRR strategy, our projected final appraisal will be between $700k-$750k, yielding a total profit of between $150k-$200k. Total gross rent will be about $3800-$4000 a month. Cash flow will be minimal if any, but I intend on using the profits to fund my next deal.

Lessons learned? Challenges?

As my first investment property, I learned a TON. Despite this being a financially successful acquisition, even more valuable was what I learned from it all. I learned important skills like connecting with contractors, estimating costs, project management, sticking to a schedule, dealing with angry neighbors, dealing with HOA complexities and much much more.

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

Regarding lenders, I used Rob Berg from Fairway Independent Mortgage to fund the deal. He has done many transactions for clients in the past and I trusted him enough to work with him on this deal. He is very professional, fast and best of all, he is communicative.

 Thank you Jess! We'll see how that appraisal turns out :) 

Post: Downtown Seattle Condo BRRRR

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Thank you Sherief!

Post: Downtown Seattle Condo BRRRR

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Investment Info:

Condo fix & flip investment in Seattle.

Purchase price: $440,000
Cash invested: $218,000

In May of 2022, I purchased an off-market 2 bed, 1.5 bath condo in the heart of Seattle for $440k with 25% down. Located on 2nd Ave and Cedar, this older condominium building is situated steps away from the Seattle waterfront and well known landmarks such as the Space Needle and Pike Place Market.

Upon purchasing the property, our initial appraisal value came in at $550k (a whopping $110k more than what we paid!!).

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

Originally, I was planning on making this a fix & flip deal. However, upon further research, I decided that with the cost of selling and the uncertainty of the condo market here in Seattle, the BRRRR strategy was a better way to go. I was going to save approximately $40k in selling costs (e.g. commission, selling costs, staging, photography and other fees), save on capital gains, not be forced to use a 1031 and maintain ownership of the property for years to come.

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

As a real estate broker in Seattle, I often come across off market deals that are brought to me by fellow agents. This deal was brought to me originally in April of 2022. As my first investment property, I decided it was a good place to start.

How did you add value to the deal?

As soon as we closed, the rehab process began. Our rehab included full demolition, electrical and plumbing work, drywall, paint, hardwood install, bathroom tile (floors, shower and backsplash), bathroom cabinets + countertops, new doors, new trim, kitchen cabinets + countertops, appliances and fixtures.

What was the outcome?

We are currently approximately 90% done with the rehab process. Projected total rehab cost is about $85k, putting price per square foot at about $80. Utilizing the BRRRR strategy, our projected final appraisal will be between $700k-$750k, yielding a total profit of between $150k-$200k. Total gross rent will be about $3800-$4000 a month. Cash flow will be minimal if any, but I intend on using the profits to fund my next deal.

Lessons learned? Challenges?

As my first investment property, I learned a TON. Despite this being a financially successful acquisition, even more valuable was what I learned from it all. I learned important skills like connecting with contractors, estimating costs, project management, sticking to a schedule, dealing with angry neighbors, dealing with HOA complexities and much much more.

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

Regarding lenders, I used Rob Berg from Fairway Independent Mortgage to fund the deal. He has done many transactions for clients in the past and I trusted him enough to work with him on this deal. He is very professional, fast and best of all, he is communicative.

Post: Downtown Seattle Condo BRRRR

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Investment Info:

Condo fix & flip investment in Seattle.

Purchase price: $440,000
Cash invested: $218,000

In May of 2022, I purchased an off-market 2 bed, 1.5 bath condo in the heart of Seattle for $440k with 25% down. Located on 2nd Ave and Cedar, this older condominium building is situated steps away from the Seattle waterfront and well known landmarks such as the Space Needle and Pike Place Market.

Upon purchasing the property, our initial appraisal value came in at $550k (a whooping $110k more than what we paid!!). As soon as we closed, the rehab process began. Our rehab included full demolition, electrical and plumbing work, drywall, paint, hardwood install, bathroom tile (floors, shower and backsplash), bathroom cabinets + countertops, new doors, new trim, kitchen cabinets + countertops, appliances and fixtures.

We are currently approximately 90% done with the rehab process. Projected total rehab cost is about $85k, putting price per square foot at about $80. Utilizing the BRRRR strategy, our projected final appraisal will be between $700k-$750k, yielding a total profit of between $150k-$200k. Total gross rent will be about $3800-$4000 a month. Cash flow will be minimal if any, but I intend on using the profits to fund my next deal.

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

Originally, I was planning on making this a fix & flip deal. However, upon further research, I decided that with the cost of selling and the uncertainty of the condo market here in Seattle, the BRRRR strategy was a better way to go. I was going to save approximately $40k in selling costs (e.g. commission, selling costs, staging, photography and other fees), save on capital gains, not be forced to use a 1031 and maintain ownership of the property for years to come.

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

As a real estate broker in Seattle, I often come across off market deals that are brought to me by fellow agents. This deal was brought to me originally in April of 2022. As my first investment property, I decided it was a good place to start.

Lessons learned? Challenges?

As my first investment property, I learned a TON. Despite this being a financially successful acquisition, even more valuable was what I learned from it all. I learned important skills like connecting with contractors, estimating costs, project management, sticking to a schedule, dealing with angry neighbors, dealing with HOA complexities and much much more.

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

Regarding lenders, I used Rob Berg from Fairway Independent Mortgage to fund the deal. He has done many transactions for clients in the past and I trusted him enough to work with him on this deal. He is very professional, fast and best of all, he is communicative.

Post: QOTW: what’s the average cost per sqft to rehab?

Michael SmythiesPosted
  • Real Estate Broker
  • Seattle, WA
  • Posts 62
  • Votes 68

Hi there, 

This is a question I often have regarding average rehab costs as well. I am working on a full condo renovation in downtown Seattle right now. We are approximately 90% finished. I've been keep tracking of all my rehab expenses and dividing that by our total square footage. As of right now, we are sitting at about $75 sq. ft. This includes demolition, new kitchen, two new bathrooms, minimal plumbing work, full electrical work, flooring, paint, drywall work, new trim, shelving and appliances. 

Curious to hear what others have to say.