All Forum Posts by: Vic V.

Hello y'all !

I'm currently super stressed about the financials of a property I'm strongly considering in the S Juanita Area in Kirkland. I'm going to be primarily using the house as a primary residence. However, there is potential for a basement that can be converted to an ADU. I'm having a tough time making sense of these numbers to see if this will make sense for me

Here are the numbers I'm looking at 

House - 5 bed /3ba @ 900 k Financed with 20% down.  

MIL/ADU unit - 1bed / 1ba will need to spend around 12 - 15k to get this rentable and permitted. Any thoughts on the permitting cost of an ADU? Ive heard that Kirkland is more recently promoting ADU's but would be great to hear thoughts.

Rent potential from ADU - My agent claims that it could rent for upto 1600 per month but based a quick craigslist search I see independent apartments going for 1500-2100. Any thoughts on what might be a reasonable estimate to account towards my estimate?

Overall, my goal is to keep my monthly mortgage related expenses in the 3000- 3500 region. Considering that ADU income is taxable and both my wife and I currently have other full time jobs (cant claim a higher deduction in real estate work). Does this deal make any financial sense long term?

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@Michael Haas nice to e-meet you! We're in the same area and I'm wondering whether it makes sense for us to go down the house hacking route given there are complications. 

I also did some digging and looked at the City of Bellevue's site and found the following relevant text 

• Owner occupancy. An owner of the property must occupy either the primary residence or the ADU.
• Number of occupants. The combined number of occupants in the primary residence and the ADU may not exceed the number allowed by the definition of "family," Land Use Code (LUC) 20.50.020
• Size of ADU. The ADU must contain at least 300 square feet, and no more than 800 square feet, excluding garage area. If the ADU is located on a single floor, the Development Services Director may allow an increase so that floor area may be efficiently used, provided all other standards for ADUs are met.
• Size in relation to house. The area of the ADU may not exceed 40% of the combined area of the ADU and primary residence. Garage space is not included in this calculation.
• Existing single-family dwellings. ADUs are only allowed in existing single-family dwellings that received their final inspection approval at three years prior.
• Parking. The ADU must have at least one off-street parking space in addition to any parking required for the primary residence.
  

Now, does this mean that it'd be ok to have a stove IF an ADU met the above criterion? And based on your post, it sounds like without the stove the additional tenants would just be seen as roommates, in which case, I wouldn't need to worry about meeting the ADU guidelines set forth by the city?

Also, do you know if this rule also exists in other cities on the Eastside like Redmond/Bothell etc?

@Basit Siddiqi, thank you for responding to my question - While it sounds like I'll need to meet with a CPA to get more details about my specific case, can you share a few examples of rental losses that might be able to offset other income? Thanks again!

Thanks for the posts y'all

@Dave Skow - Do you have any recommendations for a lender? Also, your comment regarding the tax deduction seems to contradict @Edward Seid's post where he claims it can be used as a deduction. Could either of you clarify?

@Michael Haas from California. Given that both units cant be rented out per Bellevue rules(@Adrian Chu said), what qualifies as a ADU? Are they considered the same as a MIL unit? How different is that from having roommates?

Edward, what do you mean by STM?

I'm considering moving and buying into the Bellevue / Redmond/ Kirkland area. Ideally I'm looking for a 4 bed/3ba arrangment. I expect the property to be my primary residence but I'm strongly inclined towards one that has some kind of ADU/MIL unit. In the short term(max of 6 months), I'm hoping to rent it out until I can actually make the move there. Here are my questions

- The upper end of my budget is 900 - 950k. Is that a reasonable price point?

- In the short term , can I expect to be cash flow positive? If yes, would that be different if I had to rent it as a single unit?

- As an out of state investor on a visa, I will likely need a property manager to handle the property when its rented out. How much should I expect to pay for that? 

- if my cash flow ends up negative, can the difference be claimed as a tax deduction?

Apologies if my questions seem all over the place but I wasnt sure where else I'd be able to ask them. 

Happy to edit/ add more information if necessary. Thanks!