Olympia, WA investors, what do I need to know?

Question

Hello fellow RE investors,

My RE agent sent me a property to look at in Olympia, Wa. The numbers look OK, but I am worried about tenant protection laws in this blue state. I have a solid PM, who manages a property for us a little more south, who is not too worried about the property being in Olympia, and says that if he places quality tenants, there shouldn't be an issue.

For those of who with properties there, what can you tell me? Should I not consider investing there? Can you please share your experience with me? TIA.

Curtis Bidwell · Answer

I have had properties in Olympia for many years and watched the changes take place both statewide and locally. I have been to the legislature and city council meetings to testify against the so-called ‘tenant protections’ that are damaging rental opportunities for marginal tenants.

There is no “right answer” for you, but here are a few considerations.

1. Coming out of the city council meeting I determined to sell everything within the city limits as soon as it was expedient to. I am of an age that I don’t want to fight those unnecessary battles when the problems arise. Having said that, I renewed my excellent tenants with increases to make sure I’m as close to market as I can be -knowing that future increases will be limited. I will sell my SFR when they vacate and the multi-family when my loans come due (2-3 years).

2. In the city you have to have a State business license with city endorsements, register the property and have inspections (all at your expense).

3. The makeup of the council is extreme far left. Choose your politics, just know what that means … more regulation will follow. They publicly state their bias against property rights. The rule of law has been replaced with the rule of feelings, emotion and an ideological mandate.

4. Some investors thrive in this type of market knowing they will have strong equity growth as regulation tends to lead to fewer players, fewer available rentals and therefore higher prices (rents and property value). But they know they need adequate reserves to sustain them if/when there is a lawsuit or eviction to cover lost rent, repairs, etc. -which used to take 20-30 days but can now be multiple months.

Yes, a good manager can help mitigate some risks, but I’ve had excellent tenants move in that I eventually evicted - life happens to good people!

Does your manager offer a placement guarantee, where they cover the cost of eviction if tenant doesn’t work out?

Be sure to connect with the local meetups to hear from current active investors, get encouragement and insights and ideas of what people are doing in today’s markets!

Steven Hayes · Answer

The first 2 I got before the recent price and rate increases. The last 2 paid more and higher interest.

Steven Hayes · Answer

No real strategy, just wasn't good at the stock market so I tried real estate. Got the first duplex by living in one side renting the other. The next one needed a lot of repairs. Had someone help who works in construction that I knew. Came out ahead when selling that one and put 25% down on 2 others. So there is a total of 3 I have at this time. Without my job I couldn't have done this because sometimes they might need a new roof or other work. I don't know about the Olympia city limits, but in Lacey I don't need any kind of business license or special permit for duplexes.

Karen Hamblet · Answer

Who is your preferred property manager in the Olympia area?

Sam Rexford · Answer

Thanks for the break down! interesting. were you buying before the prices went crazy here last few years?

Sam Rexford · Answer

That's pretty cool, congrats! What was your strategy to acquire duplexes?

Steven Hayes · Answer

Hello I have lived in the Lacey area for a long time. Not earning a high income I have slowly invested in duplexes over the years. I about gave up when Inslee changed the rental laws here in favor of the tenants, but I was introduced to a very good property manager and have had good luck since.

Sam Rexford · Answer

Following. I live in Oly :) Interested to see where this thread goes. Happy to connect anytime as well if you're interested in hearing about the town. I do not own here, I am a renter here.

Olympia, WA investors, what do I need to know?

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