All Forum Posts by: Zachary Schnautz

@Tyler Blackwell That's a good point, they might figure since the flooring is mostly in good condition that not all of it will need to be replaced but I agree the margins are thin, making me wonder what the assignment fee is. I didn't run any comps since I'm not personally interested in the deal but if I was I'd definitely run some to be sure of the ARV as well, but having a real estate license would definitely help widen the margins and reduce selling costs. While profit margins are thin the rehab probably wouldn't take long at all depending on the contractor so it could be just a quick cosmetic flip situation; however, the roof is really the wild card in this deal and the part that would sketch me out the most since those can be costly, but then again that was about half the budget and it kinda looks like it just needs to be cleaned.

Hey Freddy,

More information about what your goals/strategies, how you plan to finance these deals, and where you're looking will definitely be helpful. Deals under >$260k exist in the Seattle metro areas but you likely won't find them on the MLS and these will almost always be full gut projects. These are also projects that will likely require you to be a cash buyer since your competition will almost always be cash buyers as well.

Like others have said, the most important part is to talk to people. You can cut out the middle man and market directly to potential sellers or use a wholesaler and pay their assignment fee for the convenience they provide if your time is better spent elsewhere. 

I hope that helps, and let me know if you want their information!

Yep, houses are still selling like crazy in my area. Less inventory with more buyers wanting to take advantage of low-interest rates. As a first time buyer myself looking for my first deal, I'm holding off for now and hoping to see less competition and influx of buyers thinking these mortgage rates won't last long (which my lenders have claimed they will likely last for the next few quarters). We looked at a duplex in Everett a few weeks ago that had 20+ offers, and a broker in my office had a buyer that outbid on a $6m property with 8 offers by an all-cash buyer. Definitely an interesting time, and not a bad time at all for sellers.

Hey Corban, I'm a little late to the party but thought I'd chime in.

I'm currently working on my first deal in Snohomish County, and like others have said you really have to be an equity buyer if cashflow is your goal here. We've been looking for either a small duplex we can house hack or live and flip a SFH in the Everett/Lake Stevens/South Marysville area since we're looking at low down options and duplexes are inherently more expensive and will require a bit more down. I have heard good things from other investors about Marysville in terms of growth and rental appreciation. I've been noticing the 2-4 unit niche is very, very competitive especially at a lower price point. One duplex in Everett we were looking at (although listed well under market value) had 20+ offers before the review date, so it's pretty crazy. Another strategy we have been using is looking for houses with unfinished basements (typically Everett seems to have the most of these), but the caveat there is more often than not these houses are quite old (1930-50s) and can still have original knob and tube wiring, cast iron plumbing, asbestos or lead-based paint which can add a significant amount of cost to rehab without necessarily seeing a proportional return. I think long term buy and hold might become a more common strategy if we do see prices drop, but I'm not super confident we will since our area is somewhat sheltered from a housing collapse due to a large portion of our workforce being employed in tech and Boeing.

Before I worked as an agent I was involved in the remodeling industry and we worked with several investors and (at least before Covid-19) the most common strategy was flipping since the market had been appreciating like crazy in certain areas it was almost a guaranteed return even if said investors didn't necessarily have the best processes. I'm anticipating these investors holding off on flips short term since it's not too clear whether they can simply bank on that same idea in the near future, but I'm sure those that have the processes down and excellent systems in place will still find great opportunities.

Another resource I'd recommend that I haven't seen anyone else mention is the Nuts and Bolts of Real Estate Investing podcast by the Seattle Investors Club. It's a podcast based out of the greater Seattle area and they often have local investors and other real estate professionals on and I've found it particularly valuable since our market is often very different than markets investors on other podcasts are in. 

I hope that information helps!

Hey everybody,

I've been looking into the possibility of building a DADU on my parent's property. I've begun researching the topic to find out if it's possible/feasible and would like to find out what financing options I may have. Due to local zoning and regulations, the DADU would be restricted to a maximum size of 1000sqft finished (not including the garage/shop area I'd like to build attached to said DADU). I've done some research on construction loans but haven't found much on how they would apply to ADUs. A low-down construction loan would be ideal, such as the FHA one close construction loan, but from my understanding that particular loan is limited to primary residences (which to be fair, I would likely occupy the unit for some time before turning into a rental in the future). The unit will likely need its own septic and well water system as the property is technically rural, but I'm trying to find out if it can at least connect to city water. I'm sure this will add significant cost either way.

Long term I'd like for my parents to be able to keep the DADU as a rental and supplement their income as the rent would likely far exceed the loan payment since they are located in a HCOL area (Redmond, WA). I'd also like to build them a house for themselves in place of the current manufactured home on their land as it's falling apart and I figured the cash flow from the DADU rental would be able to pay for a construction loan for their primary residences as well. Short term I'd like to occupy the unit myself, so I was hoping that might allow for more favorable loan conditions similar to traditional owner-occupant loans; the only caveat would be the current property is financed in my parent's name and the loan for the DADU would likely be in my name. They do have significant equity in the property but have borrowed from it before, although I'm not sure to what extent so I'm not sure they would be comfortable pulling out a HELOC to fund the construction.

One last unique thing to consider is that I'd like to do a decent amount of the construction myself, as before I became a realtor I was in the construction world and was involved in all aspects of construction. I think doing a lot fo the work myself would be both gratifying and save a decent chunk of change in terms of labor cost. I mention this since I've noticed some loans require a designated general contractor. I wouldn't be opposed to getting my general contractors license for the sole purpose of electing myself as general contractor but from what I've read some loans do not permit this and would require a 3rd party contractor.  

Thanks for taking the time to read, let me know what you think!

Hey Willie!

The beautiful thing about real estate and this community is the huge amount of resources and information it provides for investors at any stage in their investing career. Taking action and networking is a great thing to be doing at the moment, keep up the momentum and by the time you're ready to buy, you will either know how or have the resources to find a great deal regardless of where the market is. The VA loan will also be a really great tool for you in your first purchase. Are you planning on sticking around Redmond? I lived on Novelty Hill for several years, it's a beautiful place but very expensive. We're looking for our first house hack as well so I'm hoping to see some deals surface in the next few months but the progress on the virus will be one of the major factors contributing to how accessible these deals become. I'd suggest stocking up on cash reserves as best you can and starting conversations with lenders and brokers such as myself in the meantime so when the opportunity arises you'll have everything set in place.

If you need any help in your search let me know, I'd love to help out!

I'm a realtor in the area and can confirm this. It's slowed a little bit but in the past week alone my city (Bothell, northeast of Seattle) has seen a 10.9% increase in the sale price from $603k to $669k, a 64% increase in new listings and a 50% increase in sold properties. CDOM has also dropped from 8 to 2, with many of the new listings in our office selling in a few days.

Hey River,

I was born and raised on the east side of Seattle and have been in the real estate industry for several years now. I have similar goals (cash flowing rentals) and the general consensus about our market is that it simply won't cash flow as well as other markets. Housing costs closest to the city are just too disproportionately high compared to what they would rent for. 6-7% cap rates seem to be considered good returns in our area, which probably sounds crazy to those in more lucrative markets. Most investors I have met stick to the flipping strategy the closer they are to city limits. I have personally worked on flips all over the Eastside but not too many within the city.

Many local investors I have met seem to see greater success outside of the city when it comes to cash flow. Tacoma specifically seems to be a very hot market in our state for investors so I might suggest looking over in that area. I would recommend following Tarl Yarber and James Dainard as they are active on BP and invest in that area, but seem to stick more to flipping. The few success stories I have heard from within the city of Seattle specifically were with short term rentals, but that has become a dangerous game hit very hard by the virus. It's unfortunate and I've been wanting to get into the rental game as well but our market really does not make it easy on us, especially with how low our inventory is but there has been slightly more potential for deals lately as buyers are staying home. I'm hoping we see some better deals in the future but it all depends on how long this virus sticks around.

I hope that helps and if there's anything else I can help out with let me know!

Hey Tiberiu, I just got my license with KW and went with Rockwell as well to get my education. I would recommend taking their practice exams until you can reach a score of 80-90% and you'll be fine for the exam. The actual exam is harder than the practice exams, but only because they word the problems differently. I might suggest putting extra effort into understanding all the terminology as there can be several different names for the same thing so it helps to have those understood well.

Hey Daniel, I've got some contractors I have worked for in the past that I can recommend. Shoot me a DM if you're interested, although it might be some time before work can start again due to the shutdown and construction being deemed non-essential (unless it is structural).