All Forum Posts by: Ramzi Muhtadie

Hey fellow Seattle investors,

I execute a BRRR strategy in the Seattle market coupled with a land arbitrage, whereby I purchase an SFR with a good candidate DADU lot , then condo the SFR and DADU so that I can refi or sell them separately.

To today I have completed construction 2 DADUs and just got permitted for my third.  

On the first DADU, market rates were great so when I completed the construction, I put into a condo structure and immediately refinanced and was able to get both around 3.5% as investor property condos.

my second DADU has no debt. I'm looking to put a HELOC on it, but it will need to be converted into a condo structure for that to happen based on the product that I found and like the terms of. I'm almost 3 years from construction, which is when my tax exemption on the improvements expires.

Now my question is, if I turn the SFR and DADU into legal condos, is there a risk that my original mortgage on the SFR a conventional one could be called?

Are lenders made aware when a single-family home converts into a condo?

To take it one step further, what if I sold a DADU after putting into a condo structure because then in theory the original Mortgage would have lower assets supporting it since the land of the DADU would not be encumbered by that debt anymore?

at the end of the day, it is what the owner of the debt has visibility to…. So just curious if anyone has experience in this domain.

Hey everyone. I just started doing rentals and have 3 doors. I live in the Ballard area and am hoping to get a couple referrals. thanks

The below is relevant to you for the following themes (all on one property :)

Seattle, MIL, Split Lot, House Hack, Remodel

Hey everyone!

I recently bought a home in North Ballard, Seattle.  The property is rather unique with 10k+ lot size (zoning is SF 5000) with a 2,500 sq ft home in the middle of the property. 

I bought the home for a few reasons: 

-up and coming neighborhood

-opportunity to house hack the basement

-opportunity to build a MIL to rent out. 

The challenges with the home for the original opportunity were:

-required a full gut job to be the standards I wanted

-3 big trees will need to be removed to build the MIL on the side of the house that makes more sense

Fast forward to today and things are pretty interesting:

- I have mostly completed the gut job at a slightly higher price tag than originally thought (shocker), but in-line with the contractor quote.  And in the process have found an awesome contractor who will be my go-to guy for everything in the future (including my eventual tree removal)

- I have also learned that the home behind me is owned by the son of the women who previously owned the house I bought and also sits on 10k sq ft with two beat up old homes that would be clear tear downs.

So...  I came up with this idea to try and put an offer for the neighbor's property, and redraw the lines of the combined 20k square feet into 4 conforming SF5000 properties.  Since my house sits in the middle of the property, I would just push it back 5000 and split the lots on the right and left of it.  May be hard to visualize, but it is feasible.  

Obviously the above models great, even if you factor in a big premium to get the neighbor to take the offer, a year of holding cost before construction can even begin on 3 additional homes, and plenty of expenses associated with engineering, sewer, permits etc. etc... My goal here would be to likely buy the property, split, sell one plat for liquidity, and develop two new rentals.  

I am posting becuase I want to take the important step of really understanding the between the lines stuff of the split.  I have reviewed the requirements from King County site, but I want to know the true difficulty given current market conditions and politics in the city.  

If this post generates interest, I'll lay down model assumptions and returns for those interested.  I was originally planning to do some property buys and rents in a more traditional manner, but this thing would generate about significantly more return and I have the cash to support the investment if I can get fully comfortable with the city approval process, but don't have the relationships.

Thanks for your thoughts everyone.

R