All Forum Posts by: Rand Knutson

Investment Info:

Single-family residence buy & hold investment in Seattle.

Purchase price: $920,000
Cash invested: $80,000

Contributors:
Vishrut Reddi, Ryan Lehman, Sherief Elbassuoni

I partnered up with two other investors to buy this 9bd/4ba single family home. We are renting this by the room to traveling nurses and professionals on a monthly basis.

We were heavily inspired by our incredible agent, Sherief Elbassuoni, who has a similar model and system for managing room rentals. We have set up a very efficient automation system with airbnb to make the guests' room rental experiences frictionless.

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

Our agent, Sherief, brought this deal to us, and they were asking 949k. He did a fantastic job negotiating it down to 920k.

How did you finance this deal?

We used 20% down commercial financing.

How did you add value to the deal?

We furnished every room with TVs, mini-fridges, a workspace, and a bed. This makes it super desirable for tenants.

What was the outcome?

We currently have fully booked every room and will be gradually increasing the rates.

Investment Info:

Single-family residence buy & hold investment in Tukwila.

Purchase price: $756,000
Cash invested: $37,800

This was my very first real estate purchase, a 6bd/3ba house hack in Tukwila, WA. (Just outside of Seattle)
I bought this deal off-market from Todd Baldwin, a previous guest on the BP podcast who did house hacks in the greater Seattle area.
He already had it set up as a room rental, so I was able to just move into one of the vacant rooms as soon as a lease was up, and transitioned extremely seamlessly to being the new owner.

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

I wanted to invest in real estate since I was 18 in high school and first listened to the BP podcast. I saved up heavily ever since, and was able to use the four years of savings for the downpayment on this house hack.

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

I found this deal by connecting with Todd Baldwin, a previous guest on episode #392 of the BP podcast.

He was selling this as a turn-key room rental off-market.

How did you finance this deal?

I used a 5% down conventional loan.

How did you add value to the deal?

Right now I'm paying about $200/mo to live here, and when I move out, I should see around $600/mo in cash flow. Cash flow was not nearly the best benefit of this deal, as the market has done extremely well in the year that I've owned it, and it definitely made me a great equity return with luck-based appreciation.

Lessons learned? Challenges?

I learned that a 5% down loan is far more desirable than an FHA 3.5% down as you can remove PMI from the mortgage without refinancing.

Hey Joseph! I'm 23 as well and am starting to make oos BRRRR offers in the KCMO area. I currently have 1 house hack and my second deal under contract currently. Nice to meet you!

@Bryan Calzadilla I was looking for probably a month before I found an off-market deal from a former BP podcast guest -- It is a 2800 sqft SF home with 6 rentable rooms. I bought in Tukwila which is just south of Seattle. In general south of Seattle will be the best place for numbers in a house hack just since homes are at a lower price point.

Rent from the 5 rented rooms is 4700/mo

Mortgage is 3700/mo

Utilities, reserves and other expenses come out to 1000/mo so I'm essentially living in the 6th room for free!

Hey Bryan!

I'm a Software Engineer in Seattle. I graduated college in December 2020, and then bought my first house hack and started my job all in January! Seattle has a great outlook for real estate, appreciation has already made my house hack worth it many times over XD.

I knew I was going to invest in real estate and be a software engineer since high school. I mostly chose the career path of CS in order grow capital for my real estate investing faster, and I'm very happy with that decision.

I think tech is an amazing field to work in alongside real estate investing; find a company that respects your life outside of work, and remote or hybrid work helps with cutting out commute time! Let me know if you'd like a referral to one.

I plan on continuing a career in tech for 5-7 more years, then transitioning to part time real estate and part time other interests I have!

That financial freedom will be funded by my real estate investments; I'm on the hunt for my second deal and am excited to progress. Currently I'm looking at multiple strategies including another house hack, being an LP in commercial deal, and working with other Seattle investors to buy a vacation rental in western NC for STR.

One thing to note is a house hack in Seattle right now will likely not cash flow unless you have significant value-add. Mine is breaking even right now but the loan pay down equity and good prospects of Seattle market make it awesome. I should be cash flowing roughly 500/mo when I move out.

Awesome to connect!

Hi Andrew, if you do a 5% down conventional loan, you don't need to refinance your FHA loan in order to remove the PMI. So I'd recommend doing a 5% down if you have a little more capital for downpayment!

I would be most mindful of DTI when scaling this way, I'd say it is the limiting factor in qualifying for each next house.

Good luck!

Hi Minh,

My partners and I are investors in the Seattle area, and we're looking to getting into building container homes for airbnb short term rentals! How has your experience been over the past year or two with this model?

@Adrian Chu wow that’s awesome thanks for sharing! For the year you were renting it out, did you refinance out of the construction loan? If so, was your new loan conventional?

Hey @Shiloh Lundahl! I'm really looking forward to this as I found out about BP and have known I was going to invest in real estate since high school, and now I'm finally graduating college this December with a job lined up and ready to build my portfolio!!

The topics of this meet-up are strangely similar to exactly what I have been planning on doing, which is to execute the BRRRR strategy in Casa Grande/Coolidge. I just see a lot of appreciation potential in that market while still being able to reasonably cash-flow on the defensive side in case of a down-turn. My "ideal" deal is a single-family where I can be all in at around 130-140k, with an ARV of 170-185k.

My main priority right now is to find a fantastic investor-friendly agent with experience in Casa Grande, and a great Property manager. (I'd love to hear your and others recommendations :))

I'm super excited to get to know other investors, and will see you there either virtually or in person! (not sure if there are in-person spots available) Thanks.

I have the same query as @Matt Silverstone, if it wasn't from a HELOC, is there a reason to not estimate rehab higher than it actually will be?

Also, @Keith Shadle, you linked the post by Andrew Postell, https://www.biggerpockets.com/forums/48/topics/460294-how-to-cash-out-1-4-unit-property. He mentioned the strategy where you put a lien on the property from an LLC. Is there a reason you did not go for that route?

Thanks for the great post!