All Forum Posts by: Steve W.

Hi Julian,

Given the following

Your Goal: “to deploy the equity that I have in the home into smaller multifamily investments”

Your Question: “whether the property is best to fix and flip or keep as a rental.”

My questions to you:

1. If you pull the equity out of the house, does it still cash flow as a rental?
   • I believe the attached report shows your current loan, not the cash out refinance; my expectation is that it would no longer cash flow if you did this. Making “keep as a rental” not a very good option.
2. What is the current value of the house?
   • You give the ARV after renovation, but we don't know that starting location for comparison.

Without knowing the answers to #1 and #2 above, my instinct is this:

You owe $190k. If you put $45k renovation, the value becomes $410k. If you sell, you stand to make $410k - $41k (10% selling cost estimate) - $190k (current debt) - $45k (renovation cost) = $134k.

Does the $134k help you build your portfolio more than keeping the house?

There may be other costs such as interest/fees in financing the renovation, but you get the point.

@Art Perkitny where did you get that data? It is a very clean presentation, I would be interested in using the same resource. Thanks

@Tater Raid Going back to the triplex - the total monthly payment is $1,767.78 - is that just PITI or also includes WSG, Electric, and Management? You don't have to answer that - I just have a hard time seeing the $700 cash flow once you move out, but that's not what you're asking for help on. In regards to estimating repairs, have you seen this, I thought it useful https://www.biggerpockets.com/renewsblog/2015/10/1...

Also, vacancy rate isn't just lost rent income, there is tenant placement fees, and cost with getting the unit ready for a new tenant such as repainting etc. If you have any property managers in mind you could ask a few what that process looks like and guidelines on typical costs. Also, if you plan on using a property manager on the duplex after you move out, I would discuss with them how managing such an arrangement would work. Looking for little tidbits that might shift your decision one way or the other. Again not what you were asking about, but just closing the loop.

If the numbers result in these cash flow positive scenarios, sounds like you've got good options. Your ending question makes it sound like you are pretty set on trying to make the duplex work though. My ending thoughts:

• @Brian Hughes makes a really good point about the long-term management plan of the duplex, things besides strictly money that give weight to a decision.
• Although you say the triplex doesn't cash flow until you move out, think of (yourself as the tenant) paying (yourself as the landlord). Living for free means you don't have to pay rent elsewhere, the difference is as good as cashflow as far as your bank account is concerned. 
• For either option (again, assuming truly is cash flow positive), there is value in being able to get started on your real estate journey. Which one gets you moving forward, is it the one that you can finance?

Curious - How did you find these deals? Congrats.  

@Tater Raid are you already working with a loan officer? With the first multi Just explain what you are trying to do and they should be able to tell you about the financing rules. If they say no then you can investigate other financing options or just cross it off your list.

The 2nd one you say $700 cash flow once you move out, but is that $700 after mortgage + taxes + vacancy + repairs, etc? Based off the numbers provided (only rent and mortgage) it seems to me those things are not included but maybe I am just missing it.

IMO when you analyze a deal you should consider yourself a tenant, for evaluating what the cashflow is. Because you are offsetting the cost of living somewhere else.

@Tyler Kennedy you mentioned "the Best Ever Apartment Syndication Book by Joe Fairless (and his podcast) covers pretty well how to do a full market analysis." I looked at the table of contents in the book and a market analysis section didn't jump out at me. Do you recall where in the book this is discussed?

@Angelica M Garzon

You can actually use bigger pockets to search for and reach out to community members of interest. It's under Networking/Members. This way you can find some people (agents, etc) in the area directly who can give you some boots on the ground insight.

Mind sharing how you do your market research, what resources you use to get what information?

@Sam R. You are right, I gave them a call, very friendly and helpful.

@Louis Chan Thanks for that map. I had looked at the county assessor map and it seems to me the zoning language is different. County looks something like "111" and Everett "R2" (not that those two are related, just examples of the language used). So, in the case of Everett, I am just going to use their maps instead.

As I mentioned, I called Everett zoning and they gave me some good information. Here is what I found.

1. An interactive map can be found here. Allows for ease of finding a particular address on the zoning map.

https://gismaps.everettwa.gov/apps/MapEverettDE/

2. Based on very recent zoning regulation updates, both R1 and R2 can have ADUs or DADUs. Classifying as (D)ADU means the property must be owner occupied, but the owner can either reside in the main unit or the (D)ADU. The ordinance can be found here

https://everettwa.gov/DocumentCenter/View/9328

3. However, R2 zoning also allows duplexes! Classifying as a duplex does not require property to be owner occupied.

4. The Zoning Code rules and regulations for (D)ADU and Duplexes can be found here, Chapters 5-7.

https://everettwa.gov/762/Zoning-Code

I haven't spent much time reading the Zoning Code yet, and will likely visit the zoning office to walk through items of interest as the need arises. Seems like this will set me on the path to answer the questions I initially stated in this post. If anything of interest comes up I will continue to document it here.

Of course anyone else who can chime in is welcome and appreciated :)

@Andrew Hill Thanks for the offer. I am working closely with an individual already who is giving me lots of assistance.

@Zack Clark Thanks for pointing me to that forum. Eye opening, but the conversation seems to have died out so I will continue to investigate here. I did not realize that zoning would be an issue. I had been expecting more along the lines of "requires dedicated parking space" or "kitchen may not have a stove" type of thing. 

So for zoning - specifically for Everett, does anyone know how to determine the zoning for a parcel, and if that zoning allows a MIL? For example, converting a (very large) garage into a separate (but attached) living space.

I would appreciate any insight others have, but in the mean time I will try calling some government offices and post here if I find my answer.

Hi Hailey

I'm curious to know more how she was unable to sell due to poor house maintenance. I've been watching the MLS like a hawk, specifically in Everett, and I can't believe some of the things that are selling, and the prices too. Additionally, it seems like a lot of flips are hitting the market too. Is it a SFR or multi-family?

Best of luck.

Hi everyone,

I work in the Kirkland area, looking to house hack within an hour commute. One approach I am strongly considering is a house with a separate living area, mother in law (MIL) suite, additional dwelling unit (ADU), etc. What kind of pitfalls should I look out for, for the greater Seattle area (I'm mostly looking at the north Bothell, Everett, Lynwood areas), and specifically in terms of laws and regulations that could catch me off guard? I'm definitely open to all other advice as well, but am concerned about buying a property where I think I can rent out the MIL, but then hit some law that prevents me from doing so, or causes expensive alteration to meet MIL regulations.

Thanks!