Any Seattle landlords here?

Question

Im curious if any of the Seattle rental laws are affecting how you run your rental properties.

I own a single faimly rental in Seattle and am considering selling to avoid any potential lawsuits due to laws surrounding rentals.

Any honest advice for a landlord in Seattle?

Jake Alger · Answer

Hi Jim,

I’d say it’s a toss up for what advice you may receive. I’ve had clients who have sold parts of their portfolios within Seattle city limits and 1031 exchange to other areas of WA or  out of state. I’ve known others who are OK with the ever changing laws because they’ve had long time tenants or ways of renting to friends / family members, reducing risk and liability.

There’s other good, rent friendly areas which will continue seeing good appreciation rates and without the same headache the Seattle laws provide.

That said, there’s ways around most everything, it really just depends how much time and effort you’re willing to spend managing the property.

Megan Shay · Answer

@Jim Gleon, I managed a handful of rentals in Seattle a few years back, right as all the new laws were going into place. Got out of Seattle right after getting all of them registered. Now I recommend to my investor buyers to avoid the City of Seattle. From the property manager perspective, a lot of those rules make me very nervous. I want to be able to use my best judgement when selecting tenants. I second @Jake Alger -- 1031. And might I recommend North Kitsap (specifically Poulsbo). :-) I'm biased because I live here, but it's still affordable here, and the ferry commute is much more enjoyable than being stuck in traffic. Ping me if you'd like more info on Kitsap.

Brian Hughes · Answer

I've got a Triplex (bought 2006) and duplex (2009)  in seattle.    The duplex is currently pending sale to a developer.   There are several reasons for that,   summed up they are:

1)  the duplex is the oldest property (pre-1900) and while well maintained,   is economically and functionally obsolete

2)  Located on L2 zoned land  (4 townhouses,   small apartment/ SEDU complex, etc) would be allowed on lot.

3)  I was ready to end house hacking,  I had lived in one unit of the duplex since purchase

4)  Lower unit (one I owner occupied) not habitable per Seattle rental inspection ordinance.   (totally fixable,  but see point 1)

5)   Increasingly complex, risky, and punitive seattle rental regulation ordinances already on the books

6)   Winter Rent Control is coming.   (right now more likely to be statewide like Oregon (passed) and CA (soon) than in city.    Kshama Sawant  (Seattle's most vocal socialist council member)  has been advocating for rent control of 5%+CPI allowed increase per year without vacancy decontrol.   So I am operating under the assumption that this is worst case scenario,  and statewide will be more moderate  (if moderate could be used as a term for rent control) - so if we have to have it,   I'd rather it be passed statewide.   That also gives it a better shot of being removed in the future when enough people see the negatives piling up.

I can take the proceeds from the seattle duplex sale and buy outright a fairly modern ~6 unit property (60's and up) in some secondary and many tertiary markets in western washington,    and with no more than 50% financing I can be looking at 8-12 units properties in secondary and tertiary markets.    I am being very conservative with any financing options since I am operating under the assumption that WA will get statewide rent control similar to oregon and CA  (7% + CPI) -  My Model has been to buy functional but needing maintenance-and-upgrade properties and then update them over a few years,  so I can probably work within that framework.    I don't really want to go out of state,   If I can't visit and be personally involved with my properties I might as well buy into a REIT or the stock market instead.

The triplex is a more modern building that I've sunk a lot of work into and is in nice shape ; It just recently got upzoned to residential small lot,   and I currently intend to hold for another 3-5 years,   then it will get traded up as well.

So I'm not getting out,  but I have modified my next-level plan to trade up and out of the seattle market.   I'm now most interested in markets like Burien  (have a 4-plex there),   Renton,   Kent, Auburn,  Tacoma,  Spokane, etc.   but there are many other secondary markets as well that I would also be interested in.

I also hired professional property management a couple years ago when some of the more intrusive Seattle rules hit,   but again this was a modification of my existing plan which required that anyway so I could keep scaling beyond what I could manage by myself while I still have a full time job.

Any Seattle landlords here?

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