How we bought duplexes & built Tacoma DADU’s
THE FIRST HOUSE WE BOUGHT
The first house that my partner Alex and I bought was a not so pretty duplex in Central Tacoma. It was a 3 story classic Tacoma four square house that was built in 1905 and had already been converted into two separate units in the 50’s. I had a lot of anxiety about how much money we were spending, but I knew that I wanted to stop renting, and start building equity. The thought of having a renter help pay the mortgage was pretty enticing. We both had stable jobs at the time and were eligible for a conventional loan with 5% down. Additionally, we qualified for a higher amount when purchasing a duplex, as the income from the rental side, gets put toward your income during the loan process! Alex had some money saved and I was able to pull $10k penalty free out of my 401k to put towards our closing costs (I’d be happy to discuss this trick with you more if you’re interested). I ended up losing my job unexpectedly the week our house closed and the gravity of the commitment we’d made to this house began to really sink in. With nothing left but hope and a prayer, we dove into fixing up the upstairs unit in our new house, while we continued to rent out the other unit (passive income!).
The First Remodel
Although Alex had experience with outdoor construction (building decks, fences etc), neither of us had remodeled a house. YouTube became our best friend and trusted companion. I learned how to pull off trim, rip up carpets, scrape 100 year old linoleum (hello asbestos) and sand door frames. Alex was working full time in Seattle during the remodel which left only nights and weekends available for us to work together on getting the unit move-in ready. It took almost 2 months to complete and then we were able to move in! We spent the next year and half traveling abroad for a few months and then coming home and working for a few months. While we were traveling we would find short-term renters for while we were gone which helped allow us to afford longer term travel.
Tiny House Living
While traveling, we stayed in small studio apartments and realized that we didn't actually need that much space to be comfortable and happy. On that trip we decided to adopt a minimalist lifestyle and build ourselves a tiny house. When we got back to the states, we purchased some land across the Narrows Bridge and we hit the ground running (when I say we, mostly I mean Alex) by builing a tiny house in less than 3 months. I distinctly remember the morning we put the roof on the tiny house. I saw Alex was watching something on his computer, it turns out it was “how to install a metal roof” on Youtube. Needless to say, there were a lot of laughs (and tears) along the way. My point being, you don’t have to be an expert to start something. Although, please be safe... The tiny house was very tiny. It had a lofted bedroom and office area, bathroom, minimalist kitchen, couch, and table. It was designed to be tall enough to stand in the loft and we added windows on 3 sides in an attempt to feel as uncramped as possible. Once we moved into the tiny house, we were then able to rent out both units in the duplex which covered our mortgage and gave us a little extra to save for another property.
Our Tacoma DADU Garage Conversion
After the tiny house project went well (and we realized that we weren’t actually minimalists) we turned our eyes to other Tacoma properties with the possibility of building or converting an existing structure into a DADU (Detached Accessory Dwelling Unit). Our next property we purchased was a 770 square foot two bed one bath home with a detached garage on a 9000 square foot lot. We pulled out equity from our first property in the form of a cash-out refinance so that we could do this! We remodeled the house, moved in and then immediately started work on converting the detached garage into a two bedroom 1 bathroom unit, which we then rented out to an awesome nurse from Madigan Hospital. Once that work had been been completed and signed off from the city, we completed a cash-out refinance on THIS property to cash in on some of the equity we had built. We used that money to purchase a duplex in the North End of Tacoma with a giant detached shop for Alex’s business. That brings us up to today where we’ve purchased a mid century modern, 3 bedroom 1 bathroom house in the North End of Tacoma that we will renovate and move into. The home sits on an enormous 17,000 sq foot lot, that we plan to subdivide, and build a new home on in a year or two. (We plan to finance this build by doing another cash-out refinance on the first duplex that we purchased).
Now I Get to Help You
One of my favorite aspects about our journey is that it has given me inside knowledge of what it’s like to buy, build, and invest in the Tacoma real estate market. What at first seemed overwhelming, is really just a “one day at a time” learning experience. Part of this is what prompted me to become a real estate agent. I knew absolutely nothing when we bought our first home, and while our realtor that helped us was very kind, he didn’t explain much to me and I felt pretty lost throughout the process. I don’t come from a lot of money- we didn’t receive gifts from our family or parents, we figured out a plan and made it work. The fact that I now get to help other people buy properties and homes and build wealth is truly an amazing aspect of my job. I would love to help take this experience that I’ve gained and put it to use in helping others start their real estate investing journey in Tacoma. Shoot me a message, email or a call and let’s put together a plan of action to get you into your own property!
