Income Suite House Hacking in Seattle with Amanda
A high cost of living area can make it difficult to buy a property. But Amanda was able to successfully pull off house hacking in Seattle. The key to success was buying a property with a potential income suite to help offset the mortgage.
In this episode, we hear Amanda go from traveling the world, buying an income-producing home, to living on a boat so they could massively crush their debt, to traveling across the country for a new job, living in a camping trailer, and back to buying another house hack. Amanda explains the ups and downs of her house hacking experience. And the episode is filled with tons of great tips, tricks, and fun takeaways.
Let’s dive into house hacking in Seattle with Amanda.
House hacking in Seattle
After spending a year traveling the world, Amanda and her partner decided to move to Seattle. But when they got there, they realized how expensive housing was in the area. With that, when they decided to buy a house, they knew that they were looking for a unicorn. The house had to be close to downtown, within their budget, and have an income suite opportunity.
Understandably, the housing search for this unicorn took a while. In fact, it took ten months and ten offers to find the right property. Each offer required Amanda and her partner to have inspections conducted which cost between $500 and $1,000 per house.
The unicorn of house hacking in Seattle
The house they landed on was somewhat rundown. It had had renters living in the property for over 20 years, so there was a lack of care given to the home. The property had drop ceilings, asbestos problems, an odd layout, and an unfinished basement with an exterior access point.
Overall, the house had two bedrooms and one bathroom in the upstairs area with a total of 980 square feet.
At first, Amanda thought that transforming this basement space into a separate income suite would be easy. Unfortunately, it took a lot more effort than they had originally planned on.
The numbers of the deal
The couple bought the house for $550,000 with an FHA loan. They only had to put down 3.5%. But their monthly payments were around $3,300. That was a dramatic increase from their previous housing cost of $1,600.
Updating the home
Although the upstairs unit needed some work, it was completely liveable. So the couple moved in right away. Looking back, they wished they had painted it before moving in. They recently repainted the unit and it looks so much better.
The downstairs unit needed a lot of work. The couple got bids and quotes from a range of contractors to complete the downstairs work but the bids were astronomical. With that, they decided to go ahead and transform the basement into a liveable space by themselves. The project was very complicated, but with a combination of YouTube videos and a science background they figured almost everything out.
A helpful feature of Seattle is that there are several tool libraries around town. In each library, you can check out expensive equipment to complete specialized construction projects.
Overall, it took a year and a half to transform part of the basement into a 550 square foot one-bedroom apartment. The design of the space was a city modern look and they were able to repurpose materials found along the way to create a beautiful space.
The costs of renovation
The renovation was very expensive to complete even with the help of tool libraries. By the time they had finished updating the downstairs unit, they had completely maxed out their credit cards.
Beyond the financial costs, the project put a strain on their relationship. The couple had to work through their communication strategies to get through it together. Overall, the entire project was stressful. The thought of repaying their credit cards kept her up at night. With that, she thought of a crazy idea.
Moving to a sailboat
Shortly after they had finished the downstairs unit, Amanda had an idea to take advantage of an inexpensive boat slip outside of her office. She thought that if they lived on a sailboat, they could rent out the entire house. That would allow them to repay their credit card debt and not worry about the large mortgage payment.
With this plan in mind, she jumped at the chance to buy a sailboat for $1,900. She saw the boat on Craigslist and decided it was a good option with some minimal research. Although she didn’t have any sailing experience, they brought it home through the Puget Canal. They decided to live on this boat until they had paid off their credit card debt.
The boat was 27 feet long and didn’t have any water or electricity. So they were showering at the gym and using the WiFi from her office nearby.
The rental units from their Seattle House Hack
Since they moved out of the units, they were able to rent out the upstairs and downstairs units on Airbnb. They decided on Airbnb because they wanted to get the highest possible value out of the units to pay down their credit cards.
When they were deciding to use Airbnb, they used a site called AirDNA to help set the price. They made sure that their space was Instagram-worthy and soon people were booking the space.
In the summer months, they were bringing around $6,400 per month. Since they were doing everything involved in the turnover process by themselves, they were able to put most of that towards their credit card debt.
With the help of Airbnb, they were able to pay off their credit card debt in five months. They moved onto the boat in June and were back in their house by October. They recently sold the boat for $2,500.
Recently, Amanda accepted a job in Lake Tahoe. Since the couple’s ultimate dream was to live in Lake Tahoe, she decided to take that opportunity. For now, her partner is still living in Seattle in the downstairs unit. Currently, the upstairs unit is rented out to a nurse for $2,700 per month.
When Amanda first arrived in Lake Tahoe, she lived in a travel trailer because there weren’t too many affordable rent options. After searching for a few months, Amanda and her partner found a property to buy. Although they weren’t looking for a fixer-upper, they decided to put in an offer on a rundown property that was near the lake. Since they understood how much work would be required to update the space, they put in a low offer.
They closed on the property for $531,000. It is a 2,100 square foot three bedrooms two bathroom home. The layout of the property is somewhat odd, it has a living area in the garage with a walkway outside. The couple put down 5% using a HELOC from their last house. That put their monthly mortgage for this new property at $3,700 per month! But they have a plan to hack that expense.
In Lake Tahoe, the bulk of the economy happens during a short season. During that time, it can be difficult for businesses to find employees. With that, the economy brings in J-1 workforce employees from Eastern European countries. But these workers often struggle to find an affordable place to stay. Through a work connection, Amanda found out that these J-1 workers were paying $400-500 per month per person to find housing. Once she closed on the house, she reached out to a group of J-1 visa workers that needed a place to stay.
Amanda closed on the property on June 12th and the J-1 visa workers arrived on June 10th. So, she had to put them up in a hotel until she got the keys to the place. Once she closed, she moved in a few sets of bunk beds and closed off the downstairs area for herself. With 10 people staying upstairs, she was able to bring in $4,500 per month for the last three months.
Once the 10 J-1 visa workers moved out of the upstairs, Amanda moved into the larger unit. For now, she is planning to rent out the downstairs unit to more seasonal employees. With that, she’ll be bringing $1,600 per month to offset the mortgage cost.
They could do more, but they are planning to renovate the upstairs to change the layout. The goal is to update the spaces and create a way to connect the spaces. Although there would still be a door to separate the upstairs from the downstairs, they want to be able to rent out all of the space if necessary.
Looking back, Amanda contributes her house hacking success to staying flexible along the way. If you are interested in trying house hacking, then try to stay realistic about the timelines for any renovations.
The Famous Six
Let’s hear what Amanda has to say!
What is your favorite personal finance blog, book, or podcast that you’ve read recently?
What’s your favorite real estate related blog or book you’ve read recently?
What is your favorite destination so far?
Where will you travel next?
They will be getting married at a villa in France soon!
What is the biggest bucket list goal that you haven’t accomplished yet?
Becoming financially independent.
What is your favorite life hack?
Not picking a destination, but picking the cheapest flight for your next trip.
How to get in touch with today's guest:
Follow up Interview with Amanda:
For the close of season one, we did a special “Where are they Now” episode. We checked in with Amanda to see how her house hack in Seattle and in Lake Tahoe was working out. Be sure to check your favorite podcast player for the episode.
Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.
Check out the home page for “The House Hacking Podcast” here.