From the AskAnton archive. This report retains its original figures and source dates. It is not a live market feed. Confirm current prices, rates, rules and property details before acting.
The Question
"Okay, so for someone who already has a paid-off house and has 6 figures stacked and ready to go, what is the play? The foreclosure markets aren't flooded yet, but is there something else to look at?"
Comment by @m.c.savio_presents on "Washington's Housing Crisis Is Worse Than You Think"
The Short Answer
You are right that the foreclosure flood has not arrived. The good news: in Washington, that was never the real opportunity anyway.
Homeowners are sitting on 2–4% mortgages and refuse to sell into a higher-rate market, so the distressed inventory everyone is waiting on stays bottled up. But while everyone watches the foreclosure list, Washington quietly rewrote its housing laws (HB 1110, HB 1337, HB 1345, HB 1998 and more), and those reforms opened a stack of plays that do not need a crash to work. With $100K–$300K in cash, my three favorites right now are:
- Build a DADU and sell it separately. Put a backyard cottage on a lot, then use Washington's condo / unit-lot rules to sell it as its own home. If your house is already paid off, you are the ideal candidate.
- Wrap or assume the seller's low-rate mortgage ("Subject-To"). Take over someone's 3% loan instead of borrowing at 7%, and your cash flow advantage is enormous from day one.
- Build a rural DADU. A 2026 law (HB 1345) finally lets counties permit detached cottages outside city limits, where land is cheaper and rents are strong.
Those are the teaser. Below is the full playbook of ten ways to deploy your cash, with illustrative numbers and the law behind each one.
Read This First: This Is Not Investment, Tax, or Legal Advice
I am a licensed Washington real estate broker and active investor, not a CPA, attorney, or financial advisor. This page is a general, sourced overview to help you ask better questions, not personalized advice. The dollar figures below are illustrative examples built from 2026 research, not quotes, projections, or guarantees. Several of these laws are new and still being implemented city by city, and creative-finance structures carry real legal risk. Verify every strategy with a qualified attorney, CPA, and lender, and confirm local codes before you act.
Why the Foreclosure Wave Never Came
Your instinct is correct, and it is worth understanding why, because it tells you where the real money is.
After 2020–2021, a huge share of Washington homeowners locked in mortgages between roughly 2.75% and 3.75%.12 With current rates far higher, those low-rate loans became some of the most valuable things people own. Nobody with a 3% payment wants to sell and re-buy at 7%. That "rate lock-in" keeps homeowners in place, keeps distressed supply from hitting the market, and is exactly why the foreclosure list you are watching stays thin.
So if you are waiting to scoop up cheap foreclosures, you may be waiting a long time. The 2026 edge in Washington is not distress. It is legislation. A wave of state housing laws unlocked density, accessory units, co-living, and rural cottages on land that used to be off-limits, and the investors paying attention are using those rule changes (not a market crash) to create value. That is what the playbook below is built on.
The Full Playbook: 10 Ways to Deploy $100K–$300K in Washington Right Now
Start with the three I like best, then keep reading for seven more legitimate plays. The top three are highlighted; pick based on how hands-on you want to be and whether you would rather build, finance creatively, or buy and hold.
★ My Top 3 Right Now
1. Build a DADU and Sell It Separately (Condo-ization)
Driver: HB 1337 + Seattle CB 120993 (2026)
Washington now requires cities to allow up to two accessory dwelling units per lot, with no owner-occupancy requirement, and lets a detached unit (DADU) up to 1,000 sq ft be sold as its own condominium.2 Seattle's 2026 update even permits two-story backyard cottages.25 You build a cottage in the backyard, file a condominium declaration, and sell the cottage to a retail buyer while keeping (or also selling) the main house. One lot becomes two sellable homes, no traditional land subdivision required.20
Why this is my #1 for you: you said your house is paid off. That changes everything. Most people doing this strategy have to buy a $600K–$700K house first just to get a lot. You already own the lot, free and clear. That means you can put your cash straight into the build instead of a down payment, and a paid-off home gives you the cleanest path to a construction loan or a HELOC to fund it. Your backyard may be the single best DADU site you could ask for.
Illustrative Example
Build a 1,000 sq ft DADU for ~$280K (roughly $280/sq ft) on a lot you already own. Condo-ize it (~$15K legal). A finished, separately-titled DADU in a strong Seattle neighborhood can appraise around $520K.15 Watch out for electrical service upgrades (a 400-amp panel can add $15K–$25K) and 6–12 month permit timelines.
Best in: Seattle (Ballard, Crown Hill, Beacon Hill, Columbia City), Kirkland, Shoreline, where the spread between build cost and resale is widest.
2. Wrap or Assume the Seller's Low-Rate Mortgage ("Subject-To")
Driver: Interest-rate arbitrage on 2020–2021 loans
This is the flip side of the rate lock-in problem. Some owners need to move (job relocation, divorce, distress) but cannot sell easily. You acquire the property and take over their existing 3% mortgage instead of getting a new 7% loan, either "Subject-To" (the loan stays in their name, you make the payments) or via a formal FHA/VA assumption.6 Your cash mostly goes to covering the seller's equity gap, not a 20% bank down payment. The result is a rental with a payment so low it cash-flows from day one.
The honest catch: almost every mortgage has a "due-on-sale" clause, meaning the lender can call the full balance due when title transfers. In practice it is rarely triggered while payments are current, but it is a real risk. Do these only with a real estate attorney, a proper structure (often a land trust), a third-party loan servicer, and cash reserves to refinance if the lender ever accelerates the note. This is not a do-it-yourself strategy.
Illustrative Example
A $450K home with a $360K balance at 3.25% assumed. You pay the seller ~$90K for their equity. Your payment runs ~$1,850/mo versus ~$3,100 on a new loan; market rent ~$2,850 → roughly $600/mo positive cash flow on financing nobody else can get today.
Best in: outer suburbs with lots of 2019–2022 FHA/VA loans: Kent, Auburn, Federal Way, Lakewood, Puyallup, and unincorporated Snohomish County.
3. Build a Rural DADU (Cottage Outside City Limits)
Driver: HB 1345, effective June 11, 2026
For years, you basically could not add a second dwelling on rural land. A new 2026 law changed that: counties planning under the Growth Management Act can now permit one detached ADU (up to 1,296 sq ft) per lot outside urban growth areas, sited within 150 feet of the main home on a shared driveway.357 Land is cheaper out there, rural rents are strong, and a modular cottage keeps build costs down. Great for a long-term rental, a mid-term rental, or a family compound.
The catch: water and septic. In many rural basins, adding a second dwelling requires proof of adequate water rights and septic capacity, so a feasibility study comes first.59 And build it permitted: unpermitted rural units face fines and triple permit fees under the new law.
Illustrative Example
Buy a $450K rural home, add an ~800 sq ft modular DADU for ~$180K plus ~$20K septic/utility hookup. Combined gross rent can reach ~$4,850/mo, netting roughly $950/mo after expenses, plus the equity you just created.
Best in: unincorporated Snohomish, Pierce, and Chelan counties, with Chelan especially strong given high rural-housing demand.
Seven More Plays Worth Knowing
4. Middle-Housing Land-Bank Flips (Paper-Only)
Driver: HB 1110 density mandates
HB 1110 effectively ended single-family-only zoning in larger Washington cities, requiring 4 units on most lots and up to 6 near transit.5 You buy an underused single-family lot near transit, get it entitled for 4–6 units, and sell the "shovel-ready" parcel to a builder, without ever swinging a hammer. Pure paper value creation.
Illustrative Example
Acquire at ~$480K, spend ~$45K on entitlement and ~$15K carrying over ~9 months, sell entitled at ~$680K → roughly $140K projected profit. Biggest risk: utility/sewer extension costs that can top $50K.
Best in: Tacoma, Everett, Renton, Shoreline, North Seattle transit walksheds.
5. Co-Living / Rent-by-the-Room
Driver: HB 1998 co-living (2025)
Washington now requires cities to allow "co-living" (individually locked rooms with shared kitchens) where multifamily is permitted.28 Convert a large house near a campus or hospital and rent by the room; total rent beats a single-family lease by a wide margin. It is hands-on (more turnover, mandatory cleaning), but the yield is hard to match.
Illustrative Example
A $580K six-bedroom plus ~$35K conversion, rented at ~$850/room → ~$5,100/mo gross versus ~$3,200 as a standard rental, roughly $1,100/mo cash flow after a property manager.
Best in: Seattle U-District and Capitol Hill, near Bellevue College, Tacoma, Spokane.
6. Distressed "Zombie" Home Flips (Hard Money)
Driver: tight inventory + asset-based lending
The distress that does exist is in neglected, vacant, "zombie" homes dragging down their blocks. Use fast hard-money financing to buy, gut-renovate, and resell to retail buyers who cannot or will not take on a project house.6 Your cash covers the down payment, points, and rehab contingency. The enemy is time: every month of permits eats hard-money interest.
Illustrative Example
Buy at ~$420K, ~$135K rehab, ~$22K financing cost → resell ~$690K for roughly $113K profit on a tight 120-day timeline.
Best in: Everett, Tacoma, Kent, Renton, Federal Way, Burien.
7. Mid-Term Rentals (Traveling Nurses & Relocations)
Driver: corporate / medical / insurance demand
Furnished rentals leased 30 days to six months sidestep short-term-rental bans and lodging taxes while commanding a 1.5x–2.5x premium over unfurnished leases.34 Target traveling healthcare workers, corporate relocations, and insurance-displaced families near hospitals and major employers.
Illustrative Example
A ~$430K condo plus ~$12K furnishing rents ~$3,800/mo to traveling medical staff versus ~$2,100 long-term, roughly $750/mo net. Insurance placements can pay even more.
Best in: First Hill / South Lake Union (Seattle), Bellevue, Kirkland (EvergreenHealth), Everett (Providence), Tacoma.
8. DSCR-Leveraged BRRRR
Driver: non-QM DSCR loans
DSCR loans qualify on the property's cash flow, not your W-2 or tax returns,73 which makes the classic Buy-Rehab-Rent-Refinance-Repeat loop work again. Buy distressed, force value, rent it, then cash-out refinance up to ~75% of the new value to pull most of your capital back out and do it again.
Illustrative Example
Buy ~$310K, rehab ~$55K, new value ~$450K, refi at 75% (~$337K) recovers most of your cash to redeploy. Watch for DSCR prepayment penalties (often 3-2-1).
Best in: Tacoma, Lakewood, Bremerton, Spokane, suburban Snohomish, markets where rent-to-price supports the math.
9. Fee-Simple Townhomes via Unit-Lot Subdivision
Driver: ESSSB 5258 unit-lot rules
Building condos in Washington exposes you to strict construction-defect warranties. The Unit-Lot Subdivision (ULS) path splits a parent lot into individually owned "child lots" so you can sell townhomes fee-simple instead,76 which buyers and lenders prefer and which lowers your legal risk. This is a true development play, best with a builder partner.
Illustrative Example
A ~$380K parent lot plus ~$65K civil/platting and ~$780K to build three attached units → sell at ~$550K each (~$1.65M) for a projected developer profit near $326K.
Best in: Seattle, Tacoma, Duvall, Renton, Shoreline, Puyallup.
10. Semi-Rural Cottage Clusters on a Shared LOSS System
Driver: HB 2269 + DOH LOSS rules
A 2026 reform lets certain semi-rural areas build middle housing using a shared Large On-Site Sewage System (LOSS) instead of city sewer.67 That unlocks small cottage clusters near recreation that run as high-revenue short-term rentals. Highest complexity on this list (engineering, Department of Health permitting, STR caps), so it is for the most hands-on investor.
Illustrative Example
~$180K land plus ~$85K LOSS design/install and ~$580K for three vacation cottages → ~$135K/yr gross STR revenue, ~$85K NOI. Ongoing DOH permit fees are a real line item.
Best in: Chelan County (Leavenworth, Lake Chelan), Kittitas County (Cle Elum, Roslyn), tourist corridors.
The Whole Playbook at a Glance
Use this to match a strategy to how hands-on you want to be and how long you want to hold:
| Strategy | What Drives It | Effort | Typical Hold |
|---|---|---|---|
| 1. DADU + sell separately ★ | HB 1337 / Seattle CB 120993 | High (build) | 12–18 mo |
| 2. Subject-To / assumption ★ | Rate arbitrage | Moderate (creative) | Long-term hold |
| 3. Rural DADU ★ | HB 1345 | Moderate | Long-term hold |
| 4. Middle-housing land-bank flip | HB 1110 | Low (no build) | 6–12 mo |
| 5. Co-living / by-the-room | HB 1998 | High (tenants) | Long-term hold |
| 6. Zombie flip (hard money) | Inventory + lending | High (rehab) | 4–8 mo |
| 7. Mid-term rentals | Corporate / medical | Moderate | Flexible |
| 8. DSCR BRRRR | Non-QM loans | Moderate | Long-term hold |
| 9. Fee-simple townhomes (ULS) | ESSSB 5258 | High (build) | 12–24 mo |
| 10. LOSS cottage clusters | HB 2269 / DOH | Very high | Long-term / STR |
★ = my top three for a cash buyer right now. Effort and hold periods are general guidance, not rules.
Frequently Asked Questions
Is a foreclosure wave coming to Washington in 2026?
There is no strong signal of one. Most Washington homeowners hold 2–4% mortgages from 2020–2021 and will not sell into higher rates, which keeps distressed inventory bottled up. Waiting for a flood of foreclosures is likely a long wait. The more reliable 2026 opportunity is using Washington's new housing laws (HB 1110, HB 1337, HB 1345, HB 1998) to create value without needing a market crash.
What can I do with $100K to $300K in cash in Washington real estate right now?
Strong options include building a DADU and selling it separately (HB 1337), taking over a seller's low-rate mortgage via Subject-To or assumption, building a rural DADU (HB 1345), middle-housing land-bank flips (HB 1110), rent-by-the-room co-living (HB 1998), mid-term rentals for traveling medical staff, DSCR-financed BRRRR, distressed flips, fee-simple townhomes via unit-lot subdivision, and semi-rural cottage clusters. The right one depends on whether you want to build, finance creatively, or buy and hold.
I have a paid-off house. What is the single smartest move?
A paid-off home is a major advantage. The cleanest play is often to build a DADU in your own backyard: you already own the lot, so your cash goes into the build instead of a down payment, and the equity in your home makes a construction loan or HELOC easy to secure. Under Washington's condo and unit-lot rules you may be able to sell that DADU separately later. Your free-and-clear lot can also fund other strategies through a HELOC or cash-out, though borrowing against your home adds risk and should be modeled with a professional first.
What is "Subject-To" or assuming a mortgage, and is it legal in Washington?
It means acquiring a property and taking over the seller's existing low-interest mortgage rather than getting a new loan. It is legal, but nearly every mortgage has a "due-on-sale" clause that lets the lender call the balance due when title transfers. The risk is rarely triggered while payments stay current, but it is real, so these deals should always involve a real estate attorney, a proper structure (often a land trust), a third-party loan servicer, and reserves to refinance if needed. It is not a do-it-yourself strategy.
Can I really build a backyard DADU and sell it on its own?
Yes. Under HB 1337 and Washington's condominium and unit-lot-subdivision rules, a detached ADU can be given its own title and sold separately from the main house, without a traditional land subdivision. Seattle's 2026 rules even allow two-story DADUs. Budget for permit timelines of 6–12 months and possible electrical service upgrades, and confirm your specific lot and city's adopted code before you start.
Are rural ADUs allowed in Washington now?
As of HB 1345 (effective June 11, 2026), counties planning under the Growth Management Act can permit one detached ADU up to 1,296 sq ft on rural lots outside urban growth areas, sited within 150 feet of the main home on a shared driveway. The key constraints are water rights and septic capacity, so a feasibility study comes first, and the unit must be properly permitted to avoid fines.
How much does it cost to build a DADU in the Seattle area?
As an illustrative range, a 1,000 sq ft detached unit often runs roughly $250K–$400K (about $280–$500 per square foot), plus utility hookups and legal/condo fees. Costs vary widely by lot, slope, and required service upgrades, so treat any number as a starting estimate and get real bids.
Do I need to be a full-time investor to do any of this?
No. Some of these are passive (mid-term rentals, a DADU you hold and rent); others are active (flips, development). What matters most is building the right local team, an investor-savvy broker, a real estate attorney, a CPA, and the right lender, before you deploy cash. That is exactly what a quick strategy call is for.
Sources & Further Reading
Primary Washington legislation, agency guidance, and market sources behind the strategies above. Illustrative dollar figures are 2026 research estimates, not quotes or guarantees. Always verify current local code with the jurisdiction and your own professionals.
- WCRER, State of Washington's Housing Report (UW Washington Center for Real Estate Research).
- Washington State Legislature, HB 1110 (Middle Housing).
- City of Seattle OPCD, Implementing HB 1110 (PDF).
- Washington State Legislature, HB 1337 (Accessory Dwelling Units).
- WA Dept. of Commerce, Accessory Dwelling Units (ADUs).
- Seattle Real Estate Central, Seattle ADU & DADU Guide 2026: Costs, ROI & Builder Resources.
- HouseHack Seattle, Bill 1337 & Washington ADU Rules for Investors.
- Washington State Legislature, HB 1345 (Rural Accessory Dwelling Units).
- MRSC, Expanded Housing Options for Counties: Two 2026 Bills.
- Chelan County, New Rules for Accessory Dwelling Units in Rural Areas.
- Snohomish Health Dept., Septic Permitting.
- South Sound Housing Affordability Partners, HB 1998 Co-Living Requirements Fact Sheet (PDF).
- City of Bellevue, Co-Living Housing Land Use Code Amendment.
- BiggerPockets, The Beginner's Guide to ADU & DADU Investing.
- BiggerPockets, Building ADU/DADU in Seattle (investor thread).
- BiggerPockets, Mid-Term Rentals: Where to Start.
- Easy Street Capital, DSCR Loans Guide 2026.
- Duvall, WA, Unit Lot Subdivision Fact Sheet (PDF).
- WA Dept. of Health, Large On-Site Sewage Systems (LOSS) Program.
- WA Dept. of Commerce, Planners' Newsletter: 2026 Legislative Update.
- City of Renton, Washington State Housing Legislative Updates.
- City of Kirkland, Middle Housing Code Amendments.
