All Forum Posts by: Scott Ellis

@Jayson Cornwell, have you driven through the area?  I DO think the area will appreciate.  However, that could be in two years, or that could be in 20 years.  I know at least a dozen people who've moved to West Central over the past ten years to help serve that community—running nonprofits, starting churches, community gardens, etc. But it's a rough neighborhood—typically one of the poorest in the state with one of the highest rates of drug abuse and domestic violence.  Will it turn around being so close to Kendall Yards and downtown? Sure it will.  But the current "problem" members of the neighborhood have to go somewhere.  With the rest of Spokane having a pretty strong market right now (almost frothy in some areas), where do they go?  If you already have multiple generations living in a house, and you can't afford to move, you don't have a lot of options.

My good friend just built a 6-unit new-construction one block north. He's charging strong rents and it was a great investment.  But, the day I was helping him lay sod, three different people came up to ask us with questions. "Did you see someone run by with a flat screen tv?" "Hey did you see someone ride by carrying three bikes" "Hey, did you see a guy run by in the last 5 minutes?  He came in our front door and took all of our sets of keys for house, shop, and cars."

Jayson, I'd spend an evening down there. Have dinner at Veraci Pizza, maybe some ice cream at Brain Freeze, and then make your way up to the Backyard Bar on Broadway and stroll around for a bit.  There's a big difference between Kendall Yards and the Centennial Trail compared to two blocks north.

I think there are some great investment opportunities in that area, but I'd base them on their potential right now.  Any appreciation will simply be a bonus.

@James Marszalek, I'd check out Umpqua Bank's Expressline product. It's not secured, but if you're only looking for $1200, I'm not sure that your recovering credit will pose a problem. But I'd talk them. Shane Hughes at their downtown branch is awesome, and a fellow investor. They also have a Personal Secured Loan advertised, so they may have something in the middle that fits your needs perfectly. We have a HELOC and an Expressline unsecured line through Umpqua and couldn't be happier with the process.

Also, just spitballing here, but can you also open business lines at places like Home Depot or Office Depot?  This would be unrelated to your mortgage acceleration goals, but they do report monthly to the credit bureaus.  I'm using them now to start building business credit for one of my entities.

@Justin Young, respectfully, they're just what they sound like. Both are lines of credit. In my case, I log in to my online banking and see my checking account and my lines of credit. If my line of credit is for $10,000, I can transfer money from my line into my checking account and instantly have $10k available as cash. Then, I'd start making payments to pay the line of credit back down to $0. Secured lines mean your line of credit is secured by some sort of collateral—typically your property (in the case of a HELOC), but it could be cash. This way, if you don't pay the loan back, the bank doesn't just lose out. With an unsecured line of credit, the bank is making their decision based on you. They look at your job, income, and credit score.  These are harder to get, because if you default, the bank has to come after you personally without already having the rights to your collateral. 

As for James' strategy, do some searching around "mortgage acceleration strategy." I personally disagree with it, though I can see how others could be all for it.  Personally, I want to take as long as possible to pay off my mortgage.  Yes, I'm paying interest on it for that entire time, but I believe I can make more than 4-5% investing extra money into new real estate deals vs. paying down current ones. Also, you're locking it in in today's dollars.  In 30 years, inflation (and hopefully rents) will go up substantially; but your mortgage is locked in at today's dollars.  

@Dan Mann Have you been on the south hill lately? My wife and I just laugh when we look at the prices of some of our neighbors' homes we see going on the market right now.  But. . .they seem to be selling.

Everything is still way lower than the west side, but certain pockets right now are HARD to find great deals in.

And to your point, it'll be important to work with a local realtor.  If you live in Seattle, it's easy to hop on Zillow and start drooling at homes in the $40-60K range. But know that they're priced that way for a reason. A block or two makes a big difference in some of our neighborhoods.

I found both good and bad during my latest triplex rehab in Spokane.  I also learned some good lessons about trying to be my own GC. . . 

Anyone who would like referrals to various contractors, subs, or realtors can PM me.

I've worked with a few realtors recently, so I'm happy to share strengths/weaknesses of each and make introductions.

Hi @David Walker,

My 2 cents being a newer investor in Spokane with a house, a rental, and hopefully kids in the near future.

If you sold OR refinanced the duplex, you'd be able to qualify for another FHA loan in Spokane. That said, that also comes with PMI and higher closing costs, which you know stink.

In our house, we finished the walkout basement into a separate unit, which we rented for additional income.  Our plan is to shift that to an Airbnb rental upon having kids.  That way, we could have more control over determining the balance between our need to privacy/quiet with our desire for extra income.  

Another thing to consider.  Detached Accessory Dwelling Units (DADU's) are legal in Spokane, so you could potentially look for a primary residence that has the potential to someday have an apartment over the garage or in the basement.

If you are wanting to stay in real estate, I think this could be a good time to jump up a level on the pyramid.  Capture your appreciation in Richland and look for a 3-4 unit in Spokane.  Or, even partner with someone on, say, an 8-10 unit complex. There is a desire to play it safe, or get a larger house with kids coming soon, but I think that needs to weighed against the desire to continue building income producing assets, which will give you more freedom/flexibility down the road. There isn't a right answer, but it's certainly a discussion to have.

Lastly, my friend is an investor here and just refinanced his house in Richland. He's kind of kicking himself for not selling it and using the money to invest here.  I don't know all his reasons, but PM me if you'd like me put you two in touch for a 20 min. call.

Best of luck, and keep us up to speed with your decision.  Your journey and the lessons you learn will be valuable to others on the forum! 

@Aaron Miley, did this go through?  If so, how are things going?

And to answer the second part of your question: Even if you purchased homes previously, you can get an FHA loan at any time as long as you're going to be living in it for 12 months. You can have one FHA loan at a time.

However, one word of caution: My wife and I just went down this road for an FHA 203k loan on a triplex we purchased this summer. The 203k part is a special FHA loan which meant that we could roll all of the renovation work into the mortgage from the bank. Seemed like an awesome program (and it is), but we had to go through two different underwriting processes and the lender couldn't meet our closing deadline. In order to close, we switched to paying with cash (used our HELOC and a family member). Unfortunately, switching the funding method away from FHA caused FHA to send us all these invoices for things they had done as part of the process (lead based paint test, termite test, appraisal, an FHA consultant that checks in on the renovation work). All in all, it came out to about $4000 we paid out of pocket to FHA's vendors because our lender wanted to get the secondary buyer of the loan to underwrite and sign off upfront. We had no idea that these fees were even a possibility.

A regular FHA loan is LOT simpler than the 203k, but it would be worth asking your lender what fees you could incur if they don't fund the loan by the closing date.

Hey Jimmy Deringer , great work! We just finished rehabbing our second property--a triplex just up the hill from yours. Let me know if want to grab coffee sometime. Interested in chatting about funding opportunities in the local area.

Hi Peter,

Between my properties average, our rents average out to $500 per room.  On units with more than one bedroom, though, we lease by the room (i.e two college students each leasing a room in a 2 bedroom unit.)  This bumps up the profit a little over what I could get leasing that same unit to a young family.  Spokane's housing market, though lower than the west side, is strong right now, so I see the rental market strengthening over the next few years.

Hi Patrick, better late than never?   Kelly Wagner of Wagner's Painting is certified and is doing our house at the moment. Her husband's a cabinet maker, so they do some remodel work as well.