All Forum Posts by: Jake Alger

Hi @Adam Q Berry-Huff,

I agree with the comment above me.  You have a good problem to solve.

I'm not sure why people would be saying that Bellingham wouldn't see a dip in the market if the rest of us experienced one.  Financing problems would be universal and not particular to one area.  Perhaps they are basing that off of lower demand numbers than the big cities?  At least from the standpoint of foreign money?

If you were to sell, would you 1031 exchange the properties?  Wouldn't make much sense to realize the gains and wait for the possible "dip" to play out.  You'd end up paying more in taxes than your potential savings.  I think if you have a good cash-flowing property, there isn't a need to take the money and run, unless you see something more attractive to your investment strategy.

Also, keep in mind that the Redfin estimate is not the all-seeing, all-knowing market value for your home.  It can help give an idea of what it's worth, but don't expect perfection pricing.  Getting either a real estate broker to comp your house, or better yet, an appraiser to appraise your house are your, two best bets for closer, still not 100% accurate numbers.

Good to know @Jesse Kindra - glad you were able to get that worked out! Will keep you in mind if I ever have a client who runs into this problem :)

Thanks!

Hi @Jack B.,

I think my point was a little misunderstood. I wasn’t saying that people are renting over in Maple Valley instead of buying. My working theory is simply that people would rather rent since inventory is higher and live closer to the city, avoiding commutes and being closer to everything. Not that Maple Valley is much farther away but during rush hour commutes I can seem like it is. 

I’ve had first hand knowledge of this happening many times over with younger folks in the last year or so. 

You can also contribute to that fact that a lot of the overseas money hitting the market want the Bellevue school district, Kent school district, Issaquah school districts. 

There’s much more at play than what I originally mentioned, but those are my theories for slower appreciation. It’s only a matter of time before that changes. 

Hi Luke,

Cash-flowing properties can be found, just have to look further out. I’ll admit, they can be difficult to find since everyone is overvaluing properties in this market. 

Cash-on-cash seems to be what most people I’ve been talking to and clients I’ve been working with are using as a standard. Finding a number that works for them and moving quickly on properties once they become available is truly how it has to be done. 

Another strategy one of my clients has been doing is picking up properties at auction or really beat up on-the-market houses and fixing them to increase cash-flow. Almost like a fix-and-flip but a fix-and-rent. Now I’m talking about finding a property that needs less work than a flip, mainly cosmetic, that way the outlay of cash isn’t over the top. 

For locating properties, it’s best to have someone keeping an eye out for you, especially if this isn’t your day job. The market is moving far too quickly to drag your feet or not see a property when it hits the market. Just have to get the alerts and run the numbers I’m afraid. They’re out there!

Hi Tyler,

Your $6k debt given your income sounds like not much of an issue.  I would always recommend having cash in the bank as a "rainy day fund" for the unexpected.  Anything over that can be used for your investing purposes.

That said, do a bit of research into loans and how much you're going to need to put down in order to secure a loan.  While you mentioned 3.5% down, I think you're going to be hard pressed to find such an investment loan if it even exists.  Typically investment properties require a minimum of 10-15% down and that's usually at a substantial interest rate.  As you increase in property size, down payments required can be in excess of 25% (four-plex properties and bigger typically require 25% down).

This doesn't mean that you need to have the full amount for a down payment, you can get creative in how you come up with the down payment.  For instance, increasing the asking price of a home (provided it will appraise at the contract price) and ask for money back at closing with the seller.  This can be used to fund a portion of your down payment which can lessen your cash out of pocket.

There's tons of ways to secure properties, that's the fun of it!

Feel free to reach out if you have any questions!

Hi @Tess Robinson,

Absolutely, I would be thrilled to meet with you. I’ll connect through PM.

- Jake

Hi Christopher,

Congratulations on purchasing your first unit that you plan on using as a rental. That's a great step in paving your future. Also, performing the renovations likely gave you much needed and sought after knowledge of more than just purchasing, renting / selling a property. Kudos!

I would recommend doing a ton of due diligence, which is sounds like you're starting to do, before deciding whether or not you want to manage your own rental.  It may make sense at the beginning, but rentals, depending on how well they've been kept up and how well your tenant maintains it, can be a headache to manage.  If you have the available budget within your income and expenses, I'd almost always look into a professional for property management.  They give you the one thing you can't get back, TIME.

Also, as far as legal forms go, there are plenty of websites out there that provide them.  The caveat is understanding what forms you need, what each section means and what your legal rights and options are.  Those are best provided by an attorney practicing law.  Another option would be using pre-written forms that Real Estate Brokers / Agents use.

- Jake

Hi Joseph,

Sounds like you are on the right track in terms of looking for advice and wanting to achieve financial freedom!

I'm one of the advocates of investing close to where you live.  Why?  Because it's much easier to manage a property even if you hire it out to a company.  If something crazy happens, how amenable are you to jumping on a plane?  Not only does it take time out of your schedule, work, family, but it usually costs a pretty penny to get a last minute flight across the country.

However, it can be done.  Many people buy homes in other locations of the country, primarily based on price, which also sounds like why you'd be interested in doing the same.  Perhaps we would have to chat more privately about your needs and concerns, but I wouldn't take investing in Seattle out of the cards.  

There are plenty of opportunities for cash-flowing properties, appreciation or fix and flips.  The key is working with someone who knows the area, can locate good properties according to your needs and move quickly.  The move quickly part is key and has to be accomplished on both sides, yours and your broker/agent.  Without moving quickly and being willing and able to make an offer, it will likely take a while to secure a property.

I would recommend doing some more research on the Seattle area, but outside of the city.  Areas like Kent, Tacoma, Auburn, Everett.  There are plenty of opportunities there and you'd be close to your investment.

If I can be of any help, please feel free to reach out.  I love helping people in your situation find properties that can help them on their journey!

- Jake

Hi @Aditya Veluri,

No problem! Feel free to reach out if you need anything 😀 

- Jake

Hi Jeff,

I can only speak for my area of the country (Seattle, WA) and what is typical out here, 6%.  As @John Knisely mentioned, it's worth getting a second or third opinion and commissions are negotiable.  I will say that I have seen a 7% listing before but never anything over that.  Your case of a 10% commission seems excessive but without more backstory or knowing what's common in your area, I can't be 100% sure.

Go grab a few other opinions and see what's normal for your location.

- Jake