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Bought my first house. What’s next?

Congratulations, now continue working for 30 years until its paid off. Sounds like a good plan? I didn’t think so. I want to spend my time on the beach, and traveling between Seattle, Egypt, and California.

Here are some ways to get passive income w/rentals, or make some money on a longer term plan:

  • Buy a multi-family building (2,3,4,5+ units). You need a 20% downpayment for this. Ranges from 500K to multimillions in WA State. Aim for an underperforming property (not fully rented, or has low rents) and improve the conditions + raise rents + market to get tenants. After that you can refi based on the new cap rate.
  • Buy in secondary markets here in WA. These are cities and area surrounding Seattle and Bellevue. Like Renton, Lynwood, Kenmore, Bothell, Everette, Kent. Great places to buy, each one of these cities have huge plans for large developments that will most definitely attract more residents that have been priced out of Seattle/Eastside areas. Those areas will experience a good push in home values and are relatively more affordable with better cap rates than Seattle and Bellevue.
  • BRRR Strategy: Simple idea, execution is not that easy, but doable. Find a fixer home (preferably off market), fix it up, put a renter in there and then refinance the home to pull the majority of your initial cash investment out. Take that capital, and repeat. BRRR = Buy, Remodel, Rent, Refinance.
  • Buy in Bellevue and take some negative cashflow for 5-10 years, bank on the properties appreciating and making up for that. This strategy is best suited for people with a large capital that have a more diverse real estate strategy.
  • Invest in construction – Invest in pre-permitted projects that are ready to build. Lower return than if you developed the land and got the permits yourself, but its a good option if you have a full time 9-5. You can then refinance and use the properties as rentals.

I hope this helps. Let me know if you want to chat about any of these more specifically.

-Hussein

What to Believe about “secret”​ off market deals!

OFF MARKET DEALS! What are they? How do you get access? I’m sure you’ve heard that phrase before. Basically, it’s a home for sale, that is not listed on the MLS for the public. The reason why off market homes are usually good deals, is because they aren’t listed. Meaning, you cannot find them online, this means less eyes on the property = less demand = no bidding and lower price. Off-market deals make a great way to build equity.

Now you may ask…Why are they sold off market? My answer is…does it matter? As long as the house is good and the price is right, the reason for it being off market shouldn’t matter to you. But because I’m a nice guy, here are some popular reasons: The house is in bad shape and sellers doesn’t want people going through their home, seller doesn’t want people to know they are selling, seller could have a very short time frame to sell and doesn’t have time to get the home “market ready”, and possibly seller doesn’t “believe in brokers”.

Not everyone has access to off market deals, even agents and brokers. If you are looking or interested in an off-market deal, work with brokers, agents or companies that are familiar with the investing space. It is essential to work with a broker that is familiar with off-market deals and how to navigate them, as they are different than traditional deals that you may find online. Also keep in mind that the broker you use has a healthy review rating.

All in all, be ready to roll up your sleeves and do some renovations (or hire someone to). Off market deals usually need work. From carpet and paint, to changing the roof or replacing the furnace, it all depends. Make sure if you’re buying one to get good estimates on pricing so you know how much you will spend. Also make sure to do the math and calculate if the equity gain is worth the hassle… for example you don’t want to spend 3 months renovating a home, only to gain 20K in equity, that is not worth it in my opinion.

Some of these properties need hard money loans due to them being

Talk to you soon,

Hussein

Don’t believe HGTV about “Flipping”!

HGTV and all the shows of people flipping houses for profit paint a very unrealistic picture for wannabe real estate investors, and here is why:

1-They don’t calculate all the costs incurred while doing a flip, which in the end, adds up, and eats into the profit.

2-Everything is staged, and streamlined. When flipping homes, you are bound to run into obstacles that TAKE TIME. Permitting, workers don’t show up, a sub contractor is booked up for the next 2 weeks, shipment gets delayed etc. They don’t show that on TV!

3-You have to be at the project every single day or at least a few times a week. Doing that while having a full time job can be tough, and almost impossible. Especially if you want to have a healthy work/life balance. I am sure many people already do 40 hours a week at your 9-5.

4-Finding deals is not easy. Once you decide to start flipping, and get in touch with an agent that in knowledgable about the investment side of real estate, you will need to move fast once there is a deal available. Deals come and go pretty quick, especially if its a good one. Get ready to drop what you’re doing to go check out the property, bring your contractor, and make a decision pretty quickly. Otherwise, someone else will end up with that deal.

5-Flipping houses can get stressful, especially if you’re a beginner. If you aren’t mentally and emotionally ok with losing some money on a deal, then don’t flip homes! Its a business, and there is risk involved, otherwise everyone would be doing it!

A safer alternative is rental properties, this is the true way to build long term wealth. You can always buy rentals at good deals, ones that need just some slight fix-up. Seattle and its surrounding areas are great markets for that.

PS – The picture above is of my most recent fix-flip project in West Seattle.

Don’t believe the “fake news”​ about Seattle’s real estate market!

It is very weird that the media likes to portray our real estate market as “crashing” or a “bursting bubble”.

We did have a slight correction in the summer and our inventory expanded to 2.7 months of inventory, however, we are now back at 1.6 months of inventory. Still seeing multiple offers in King County, and interest rates are rising.

Don’t let the media scare you from investing in real estate, don’t listen to your office colleagues that know nothing about the real estate market, but only read a headline of an article. Don’t let these people give you false information.

Get educated on the facts and make a well informed decision. If you need help, I can help you get the information necessary so you can make a calculated decision on how to make one of the best investments you can make.

Here are some other fun facts:

  • We are still the fastest selling real estate market in the country.
  • Prices are forecasted to increase about 4% this year (on average through king county) There will still be pockets and properties that see a higher rate of appreciation that is for sure.
  • Interest rates are forecasted to rise though-ought 2019 and expected to stabilize at 5.1%
  • Will still be low on inventory
  • Seattle is still a major attraction for big corporations resulting in 40,000 new Seattle residents in 2018 alone.